i!i ^m' m 5.. o M C? BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF Henrg M. Sage 1891 2.ai..06.^.. ^sLdim Cornell University Library HF2046 .R65 1908 Trade and tariffs / 1924 032 519 633 olin The date shows when this volume was taken. To renew this book copy the call No. and give to the librarian. MAIiB- 1912 HOME USE RULES. All Books subject to Rocall. Books not used for instruction or researeh are returnable witliin 4 weeks. f^, Volumes of periodi- -'"**' cals and of pamphlets are held in the library • as much as possible. '" ' '^^^3& •^"'^ special .purposes .' they are given out for ^ a liipited time. , , „£•■ ' Borrowers should MAY 5 19!54'ff'*5 not use their library K,„0'^^'^ privilegesfor the bene- fit of- other persons. Books not needed ' .Hi-K .f^ tZ' during recess periods . 1/ 'df -<) should be returned to ' * the library, or arrange- ments made for their return during borrow- er's absence.if wanted. Books needed bj' more than one person are held on the reserve list. when the giver wishes it, are not allowed to circulate. Readers are asked, to report all cases of books-marked or muti- lated. Do not deface books by marks and writing. Cornell University Library The original of tliis bool< is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924032519633 TKADE AND TAKIFFS America , . . The Macmilladt Companv 61 & 66 Fifth Avenue, New York Australasia . The Oxford University Press, Melbourne Canada . . . The Macmillan Company of Canada, Ltd. 27 Richmond Street West, Toronto India . . Macmillan & Company, Ltd. Macmillan Building, Bombay 309 Bow Bazaar Street, Calcutta TEADE AND TARIFFS BY JOHN M. ROBERTSON, M.P. LONDON ADAM AND CHAELES BLACK 1908 Zc'b. /te| A . 2 3 (^v^^ PEEFACE The present -work is an elaboration of a slight sketch published, under another title, in 1904. The object of that attempt, as of this, was to deal with the fiscal problem under all of its various aspects — historical, statistical, economic, political, social, and ethical. Incomplete the book inevitably remains, under all of these heads; but it may at least indicate to the general reader a number of facts and con- siderations of which the propaganda of " tariff reform '' either takes no account or gives no account that is trust- worthy. It is perhaps unnecessary to say that such an attempt implies no failure to appreciate the many treatises and handbooks on free trade already available. On the con- trary, the author would take this opportunity to urge upon every reader to peruse in particular the admirable Hand- hook to the Tariff Question published by the Free Trade Union ; and to express his own indebtedness not only to that but to the many books and special pamphlets upon which his notes show him to have drawn for information. In an inquiry covering so much statistical ground it is practically impossible to escape error ; and the author can but plead that he has taken as much pains over the whole matter as the scanty leisures of parliamentary and platform life permit of. Vlll CHAP. TRADE AND TARIFFS § 8. English and Irish Trade § 9. English and Colonial Trade § 10. Smuggling . . . § 11. Early Pleas for Free Trade § 12. Summary . 6. Distress and Unemployment under Protection 7. How Free Trade has been won . 8. Free Trade Doctrine in Other Codntribs . PAGE 52 58 61 65 68 71 91 99 PAET III THE SUCCESS OF FREE TRADE 9. Free Trade in Holland .... 10. Free Trade in Britain .... § 1. The Cheapening of Food § 2. Trade Expansion in the Eighteenth Century § 3. The Reforms of Huskisson and Sydenham g 4. The Legend of " Supremacy " under Protection § 5. Before and after Free Trade . § 6. British versus American Shipping . § 7. Expansion in Export Trade . 11. Free Trade in New South Wales 109 118 118 122 126 130 135 139 153 159 PAET IV THE MODERN FAILURE OF PROTECTIONISM 12. The General Failure Ig3 13. Unemployment and Emigration . . . .174 14. Wages and Cost op Living 188 CONTENTS PAET V THE PROTECTIONIST CASE CHAP. 15. Protectionist Hallucinations 16. The Argument for Retaliation . 1 7. The Argument from " Dumping " . 18. The Argument prom Unemployment 19. The Argument for Revenue . 20. The Argument for Colonial Preference 21. The Effects of Protection on Food Prices 22. Protection is Parasitism 23. The Final Futility of Protection PAGE 206 215 227 239 249 254 261 269 276 PART VI THE ETHICAL PROBLEM 24. Political Ethics under Protection 25. The Ethics of the Corn Laws 26. Trade Unionism and Protection . 288 299 310 APPENDIX. Protectionist Fables INDEX 313 323 TRADE AND TARIFFS PART I THE PEESENT PEOTECTIONIST MOVEMENT CHAPTER I THE CONFLICT OF PROTECTIONIST DOCTRINES When Mr. Chamberlain in 1903 began the campaign against free imports, the gist of his argument was that the slowness of the expansion of British exports of manufactured goods in modern times proved the unsoundness of the present fiscal system ; that a quickening of the expansion could be caused only by a resort to a preferential tariff; and that such quicken- ing would tend to cure the evil of unemployment. The export figures for the year 1902, which Mr. Chamberlain had before him, were : — Goods wholly or mainly manu- factured in the United Kingdom,£226, 887,268; Miscellaneous and Unclassified (presumably bric-^-brac, manufactures, and books), £4,170,830; other produce, £55,886,939. For the year 1906 the figures stand: — Manufactures exported, £305,528,196; Miscellaneous and Unclassified, £5,664,192; other produce, £64,328,950. For 1907 the further increase in the first item was £36,645,655. In 1902 the excess of exports over imports in manufactured goods was 113 millions. 1 1 2 THE PEESENT PROTECTIONIST MOVEMENT In 1906 it was 178 millions. And these increases had been continuous. Now, it cannot be doubted that if this un- precedented increase of exports had occurred under a pro- tective tariff, it would have been hailed by the protectionist party as a splendid proof of the efficacy of their system. As it is, they admit, what they cannot dispute, the greatness of the expansion. Yet they continue to indict the system of free imports on the score that, despite the increase, there is a considerable amount of unemployment. Obviously, this very fact is the decisive refutation of their own primary pleas. They had said that free trade was fatal to expansion : the vast expansion has occurred under free trade. They had explicitly committed themselves to the doctrine that increase in the export of manufactured goods is the measure of industrial prosperity, and is the remedy of unemployment. The defenders of free trade, on the other hand, expressly denied both propositions, pointing out that a good export trade was compatible with lack of employment in the great building trade — to name no other. Thus it is precisely the protectionists' case that is discredited by the continuance of unemployment in 1907. That fact has dis- proved one of their initial assertions. Indeed, the widespread distress from unemployment in the United States and Germany in the past winter has com- pelled protectionist speakers in the House of Commons to disavow the pretence that a policy of tariffs precludes un- employment. Mr. Austen Chamberlain and Mr. Walter Long have confessed as much. Nonetheless, the false pretence continues to do duty on Tariff Eeform platforms, placards, pamphlets, and journals ; the majority of protectionists being wholly confused as to the bearing of their doctrine in this connection. In the same way, they emit contrary declarations as to the main object of their movement. One set of propagandists declare that it is to broaden the basis of taxation and increase revenue for imperial purposes,^ or for social purposes such as Old Age Pensions. Another set assert that it is to increase employment, revenue being only a secondary consideration. ^ ' So Mr. Balfour in 1908. 2 So Mr. Samuel Storey in 1908. CONFLICT OF PROTECTIONIST DOCTEINES 3 Still more explicit contradictions marked the evolution of Mr. Chamberlain's policy, rapid as that evolution was. His first pronouncement was for simple Colonial Preference, with a tax on food, by way of "holding the Empire together." Soon, in view of the general opposition, he saw fit to propose protective duties on manufactured imports as well as on food ; and when popular resentment of the latter form of burden became still more clamant, he proceeded to explain that what was laid upon some forms of food was to be taken off others, such as tobacco. Thus there was positively to be a lighten- ing of the tax on a product of our commercial rival, the United States, imperfectly supplied by any of our colonies ; and the plea for an " instrument of negotiation " was abandoned in that connection. As regarded the beneficial effects of Pro- tection, we were informed in consecutive speeches that it has raised foreign wages, and that the lack of it leaves us open to the invasion of the products of sweated labour — that is, the labour of protectionist countries. Concerning dumping we are similarly assured that it tends to be constant on our shores for lack of a tariff, and that it is an expedient resorted to by our rivals only in times of depression. Depression in protectionist countries, then, is by implication chronic, if not constant. Nor is this all. That there is complete confusion as to first principles in the present assault upon free trade in this country may be at once seen by any one who will closely compare the positions of Mr. Balfour and Mr. Chamberlain. The former professes to think that universal free trade would be the best order for the world ; and he avows his belief that the policy of protectionist countries is "doubtless costly to them," though also injurious to us.^ Mr. Chamberlain, on the contrary (though he also says " I am a Free Trader "), professes to feel that the consensus of most nations in the policy of Protection raises a presumption that theirs is the right course ; and he further proposes as his ideal a system of exclusively imperial trade, in which Protection is an 1 Economic Notes cm Insular Free Trade, pp. 23, 14. Mr. Balfour, it is true, speaks elsewhere (p. 17) in a contrary sense, but such self-contradiction is a constant feature in protectionist propaganda. CHAPTER II THE CONSENSUS OF PKOTECTIONIST STATES Let us first consider the doctrine of Mr. Chamberlain — that Protection is advantageous. At the outset we must put aside as clearly irrelevant his language about " ruin." In no rigor- ous sense of the term can a nation as such ever be said to be " ruined " by mere fiscal policy, even the most vicious. There is no case of such national " ruin " in vrritten history. Fiscal vice certainly hastened the military "ruin" of the Roman Empire, and the general decadence of the Spanish Empire in the sixteenth and seventeenth centuries ; and fiscal vice, as apart from import duties, obviously keeps Turkey backward now, even with a low tariff on imports. But in the ruin of Rome the primary and fatal factor was the system of conquest and the resulting exaction of tribute, which, coming in the form of unbought food, destroyed the agriculture of Italy without permitting of the substitution of any equivalent body of productive industry.^ The secondary factors in the process were the universal suppression of self-governing institutions and the resulting paralysis of political character. The whole empire was morally eviscerated. But the direct result of the most vicious fiscal policy, as such, is simply to increase ^ A recent protectionist writer (Welsford, The Strength of Nations, 1907, pp. 3, 9), after noting tliat under tlie tribute system "neither goods nor services were given in retarn," assumes that those "free imports " of extorted tribute in the form of food were nearly on all fours with the free imports which a free-trading country Imys by its exports. This is a, fair sample of current protectionist economics and sociology. CONSENSUS OF PEOTECTIONIST STATES 7 greatly the total amount of distress in a nation by checking the production and distribution of wealth, thus making it unprosperous relatively to other nations, or relatively to its known possibilities. And seeing that the prosperity of nations varies in respect of their natural resources as well as of their fiscal systems, and that resources vary greatly to begin with, it is only by a careful analysis that we can determine how far even relative distress is the result of fiscal policy. The same country, under the same fiscal system, may be " prosperous " in one year and distressed in the next; and still the fiscal system may be a great aggravator of the distress. To say, then, that mere avoidance of national "ruin" raises a pre- sumption of wisdom in any fiscal policy, is idle. The problem is, whether any given policy in any country promotes or hinders the production and distribution of wealth. No fiscal policy can make Iceland relatively rich. And no fiscal policy can alone "ruin" the United States, or even the United Kingdom, which in the first half of the nineteenth century actually did suffer enormously from Protection. We have simply to ask, then, for the present, whether protectionism maximises or minimises the production and distribution of wealth. And at the outset we have to note that, by the nearly universal consent of the " civilised nations," free trade within the limits of a nation is highly advantageous to its people as a whole. Certain tolls or octrois are indeed retained in certain European countries as means of local revenue, but nobody pretends that they directly help industry; and the United States and united Germany alike practise free trade as between the States composing their aggregates. It is there universally admitted to maximise the production and facilitate the distribution of wealth. If then it is not practised as between France and Germany, the United States and Canada, the reason can hardly be that protective tarifis are known to have such a maximising effect on either side. If it were heartily believed that of the two States, Saxony and Prussia, either had gained by a tariff against the other, the one which believed itself to have gained would surely denounce the resort to free trade. But no such protest is heard. It is not now pretended that either 8 THE PEESENT PROTECTIONIST MOVEMENT State is making a commercial sacrifice for the sake of non- commercial benefits. Nobody believes, again, that trade on either side of the Thames, say, would gain by setting up reciprocal customs duties at both ends of the bridges which cross it in London. All men admit that the total volume of trade would thereby be lessened, both sides suffering. Thus protectionism, in the terms of the case, admittedly minimises the production and obstructs the distribution of wealth. But even if the North American and German States, or any of them, did believe that by accepting internal free trade they were individually sacrificing a commercial advantage in order to secure some other, no one State can affect to believe that the advantage had been reciprocal. If Prussia believed that she gained by setting up tariffs against Saxony, she could not well believe that Saxony gained also. On that view the tariffs should have been retained, whereas the majority in each protectionist State to-day welcome the lowering of a tariff against them. That is to say, in terms of their general doctrine, all protectionist States are checking each other's production of wealth. Either they are right or they are wrong in their theory. And either way, what is to be said of their collective wisdom ? Wherein does it differ from the folly of two litigants who " ruin " each other in sheer revenge ? Evidently, as between Mr. Chamberlain and Mr. Balfour, we must thus far side with the latter. To argue, from the general resort of the nations to Protection, that Protection is advantageous, is to commit a gross fallacy. On the face of the case, all believe that they are successful in injuring each other, and that the success of each involves its suffering corresponding injury at the others' hands. How then can it be pretended that their agreement in the manner of their action ought to make us suppose that they are wise 1 As well say that because all the members of a given family are always fighting, a solitary neighbour ought to doubt the wisdom of his peaceful life. On every principle of sound reasoning, the fair presumption is that protectionist nations are collectively wrong. They collectively raise that pre- sumption by their very doctrine. CHAPTER III THE CONTRASTED THEORIES If it be asked whether the present protectionist movement in England stands for any new economic doctrine, the answer must be substantially a negative. It of course appeals to new figures ; by some it is vindicated mainly as a plea for new sources of revenue, apart from any other consideration ; and some of its publicists profess at times to hold a midway position between protectionism and free trade, aiming at Protection upon some lines, and at free trade upon others. But even these are not new formulas ; and the movement as a whole gives voice to every form of protectionist doctrine that has emerged in the long history of trade legislation. Apart from the special thesis of inter-imperial preference, which returns to the practice of seventy years ago, the new movement is merely a revival of that which, under the names of " Eetaliation," "Reciprocity," and "Fair Trade," rose from time to time among us in the past generation. Always changing the name, the promoters have now boldly annexed the reasonable and descriptive title of the moderate free traders of the United States, who really are seeking to reform a tariff, not to create one. But under all the names the movement is the same. The need that the State (now " the Empire ") should be self-feeding and self-sufficing ; the need to employ our own people ; the unfairness of foreign competi- tion ; the success of Protection elsewhere (concurrently with the existence of much " pauper " or " sweated " labour in the 9 10 THE PRESENT PROTECTIONIST MOVEMENT successful countries) ; the urgency of retaliation and the need for a tariff wherewith to retaliate, — all the old medley of incoherent empiricisms comes up in the struggle, every single theorem having its partisans, and no man endeavouring to correlate them. Of the recanting free traders who lead the movement, not one has ever professed to explain wherein lies the fallacy of the arguments on which, for the greater part of his life, he founded with perfect confidence. Those arguments are simply ignored, and the protectionist arguments which they claimed to confute are now recited without a hint of the source of their new efficacy. The theoretic bases of the conflicting causes, then, remain unchanged : all that has happened is that certain politicians have on this issue changed sides ; some avowedly because they were not satisfied with the latter course of our foreign exports under free trade (though an unprecedented increase in those exports has failed to bring them back) ; others on the plea that " we must broaden the basis of taxation " ; yet others on pleas as to the need for federating the Empire. Sir Vincent Caillard, whose first essays seem to have helped to inspire Mr. Chamberlain, grounds his whole case on the assumption that the colonies will accept a preferential system under which they will turn from manufactures to agriculture, letting us manufacture for them, and finally assenting to "free trade within the Empire." ' Nothing is more notorious than the determination of the colonists to do no such thing ; the thesis is not so much a chase of a will-o'-the-wisp as a proposal to run a train against the danger signals. On either of the other pleas before us, protectionism has still to justify itself against the close-woven inductive and deductive argument which constitutes the economic case for free imports. That thesis, as put by a long series of economic reasoners, from Petty and North to Smart and Hobson, is in brief that, to quote Adam Smith, the effects of any form of Protection "can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally flow of its own accord," relatively lessening the productivity ' Imperial Fisml Reform, 1903, pp. 95-98, 111, 125, 139, 144, 149-50, 162 167, 169, etc. THE CONTEASTED THEORIES 11 of labour, and therefore the real wealth of the community. The extreme application of Protection would be that imagined by Smith — the making of wine in Scotland from grapes grown under glass, at a cost of about thirty times that for which the thing can be done without glass or Protection in France. Between that vision of extravagance and the natural adjust- ment of things lie all the operations of protectionism; the difference is simply a question of the amount of labour wasted. Does the present-day protectionist, then, take up an intelli- gent and intelligible position with relation to this fundamental issue 1 Has he any test or measiu-e of economic fitness ; any scheme which limits his commercial progress towards the com- mercial growing of oranges under glass t He wants to employ home labour : has he made any calculation of the extent to which " making work " can be arguably expedient 1 Precisely how far, or nearly how far, does he desire to go in maximising the expenditure of labour in relation to the product ? He has not yet proposed to destroy or abandon machinery : he is even a professed believer in labour-saving appliances ; how then does he reconcile his proposal to have goods made under conditions of greater difficulty of production than those per- mitted by free imports 1 On what basis does he reckon the compensation which he appears to take for granted ? To put these questions is merely to find that there is no answer. Present-day British protectionism, called " tarifi' reform," has no economico-scientific basis ; no calculation of compensations ; no idea of measuring loss from productive friction against any of the forms of gain on which it reckons. It talks of putting no duty on imports of raw material, yet proposes to tax food, giving in the latter case merely the pretext that this is necessary in order to "give colonial preference," whereas the same pretext could equally well do duty for the taxation of raw material. All the while, flour is a raw material of industry as well as a food ; and wherever a producer of raw material clamours for Protection — as in the case of hops and granite — the propagandists of protectionism back him up. Of raw material no pretence of definition is forthcoming. Half our industries use partially manufactured articles as their raw material; but no tariffist can or will 12 THE PRESENT PEOTECTIONIST MOVEMENT tell how they will fare should his party come into power. Particular leaders promise particular industries that their partially manufactured raw material shall not be taxed. Thus Mr. Bonar Law has openly undertaken that his party would under no circumstances tax the imported steel plates or other materials which are used in shipbuilding. Meantime the general campaign is being supported by British producers of those very materials, who demand to be protected against the foreigner. Already it is clear, then, that the present protectionist movement is merely a recrudescence of the protectionism with which we are familiar in our own history. It proceeds on the old medley of crude impulses — jealousy of "the foreigner " ; the incoherent sentiments of " Britain for the British " and " our trade for our Empire " ; the belief in a " balance of trade " ; the dread of an excess of imports over exports, justifiable only by the old belief that such excess is paid for either in bullion or in " securities " ; the dream of making " the foreigner " contribute to our revenue ; the notion that to make work is to make wealth ; the insane fear that our great industries can be destroyed by an increas- ing importation of foreign goods, we producing less and less. Such, at least, are the avowed pretexts which appeal to uninstructed minds, and some of which, unquestionably, actuate even some instructed men, who, moved by considera- tions of the " imperia,l " order, dispose of the contingent economic problems by phrases about making up for a slight rise in the price of bread by stability of employment — the said stability, as a result of Protection, being taken for granted. The more eifective impulse is, of course, the desire of particular classes of producers for the extortionate profits which they see being made by similar producers in protectionist countries. In no other respect can our protectionists be said to have learned anything from foreign experience or foreign doctrine. German protectionism, in so far as it can be said to have any theoretic or quasi-scientific basis, proceeds upon the doctrine of Friedrich List, to the effect that such a country as Germany must pass through the specific " industrial " stage in order to THE CONTRASTED THEORIES 13 build up an all-round civilisation such as has been developed by England, and that only under Protection can this be done in the teeth of English competition. Upon List's premises there is no ground whatever for an English return to pro- tectionism. Ill as he knew or understood English commercial history, and much as he relied on the dicta of protectionist authorities like Anderson, List never for a moment coun- tenances even the survival of Protection in England in his own day. Writing in 1841, he expressly censures the English aristocracy for meeting the interest charge of the national debt " by the imposition of taxes upon articles of consumption, by which the existence of the working classes is embittered beyond the point of endurance."^ Whatever be the merit of List's doctrine from a German point of view, it does not even pretend to be applicable to English conditions. For either the economic or the moral harm wrought by Protection in foreign countries — the squandering of national resources in some, the paralysis of enterprise in others, the riot of rapacity in all — the protectionist has, of course, no eye. Such a propagandist as Mr. Kirkup, actuated on the one hand by socialistic dislike of laissez-faire, and on the other by concern for national greatness, accepts the tarifiBst solution without a hint of knowledge of the corruption it has else- where involved, the enrichment of the capitalist, the de- moralisation of legislatures. Where he is thus remiss, the average protectionist, fishing with zest in troubled waters, is tridy pococurantist on such issues. It is well, then, that even before re-examining his pleas, so often refuted in the past, we study the operation of his motives and his methods in our own commercial and industrial history, in which pro- tectionism was so long a potent force. Having studied its "natural history," we shall be the better prepared to deal with it as a present factor. 1 The National System of Political Economy, Eng. trans. , ed. 1904, p. 44, note. PART II THE HISTOEICAL EVOLUTION CHAPTEE IV THE TRADITION OF INTERFERENCE WITH TRADE § 1. Medieval Customs Duties The argument that "so many nations would not adopt Protection unless it did them good" is, as we have seen, ill fitted to bear analysis. If it be put to the test of history, it will be still further invalidated. And a short survey of the historic antecedents, British and foreign, may be for many as good a way as another to reach the heart of the problem. Import duties, it is needless to say, are among the oldest of fiscal expedients ; and a protectionist purpose is seen already at work in Europe in the Middle Ages. Only gradually, however, does it take the modern form. In England, for long, the customs revenue was raised largely upon the exports of wool and other forms of raw produce ; and what " pro- tection" there was arose from three main motives — (1) the preservation of food supply and the embarrassment of the enemy's trade in war time ; (2) the protection of agriculture, woollen manufactures, and shipping; and (3) the guarding of bullion supply. But one characteristic all of these courses had in common — they were invariably ineffectual save for 14 MEDIEVAL CUSTOMS DUTIES 15 harm. Thus we find Richard I, in 1194, forbidding the ex- port of corn or any kind of victual " that England might not suffer from the want of its own abundance." ^ Such a law of course cannot have been effectual in time of peace, when there was a surplus for export ;^ and in 1339, when there was war with France, it was enacted "that no corn be exported till further ordinance be made therein " ; which proves that the statute of Richard had not been operative. Again, in 1360, after the treaty of Bretigny, a statute enacts that corn shall not be exported to any foreign port but Calais and those of Gascony^ — the King's foreign possessions. This limitation again must in due course have lapsed, for in 1382 Richard II is found granting the "Petition of the Commons, that no corn shall be any more exported under colour of the royal license elsewhere than to Calais, Berwick, Gascony, Breste, and Cherburg, paying the Custom due thereon." * Evidently the general veto had been used as a means of extracting revenue by way of export duty under the form of charge for licence ; and the Commons preferred to check exportation, by way of keeping down the home price. In 1394, however, there comes a new Petition of the Commons " that whereas growers can obtain no reasonable price for corn within the kingdom, free passage for it may be granted to them, except to hostile countries,"^ and this in turn is granted, with a reservation of power to the Crown to interfere. This power is thought to have been freely used to suspend the freedom of export ; ® but the law was confirmed '' and amended * in the next century, apparently on the principles of the petitioners ' Triveti Annales, sub ann. 1194, Ed. Eng. Hist. Soo. 1846, p. 142. Matthew Paris and Roger de Hoveden malte no mention of the law. "^ Even in time of war it was disobeyed. It is told of Eichard I, that at Saint Valery he seized five vessels laden with English corn for the King of France, hanged the seamen, and slew also some monks, possibly concerned in the transaction. Then he divided the corn among his soldiers (not "the poor," as is stated by Macpherson, and after him by Craik). See Matthew Paris and Roger de Hoveden, svJ> ann. 1197. Cp. Trivet. s 34 Ed. m. c. 20. * Hall, Hist, of the Customs Revenue, ed. 1892, i. 233, citing Rot. Pari. iii. 141, 54. ' Hall, i. 238, citing iio<. Pari. iii. 320, 29 ; Act 17, R. II. c. 7. " Cunningham, Qrowth of British Industry and Commerce, 4th ed. i. 407. ' i Hen. VI. 0. 5. '15 Hen. VI. c. 2. 16 PAST INTERFEEENCE WITH TRADE of 1394, as an "attempt to keep up the price of corn, and so to encourage the farmer to carry on and to improve tillage." ^ That there had been continued resistance is shown by the fact that the confirmation of 1425 required to be followed up by the Act of 1436, which made freedom of export absolute only under condition that the home price of wheat should not be above 6s. 8d. the quarter. Here the interests of the consumer are safeguarded. But in 1463, under Edward IV, the Hanse merchants having taken to importing corn, a new veto is placed on importation save when that price has been exceeded — the concern now being definitely the protection of the corn-grower.2 What has happened thus far is (1) a check on food eiport in time of war, followed up by (2) a practice of "royal license " to export it in time of peace — the establishment, in fact, of a new export duty, which, however, is not heavy enough to restrain export to the extent of keeping prices low. Accordingly the " general consumer " seeks (3) to strengthen the check, and the crown is well pleased to accede ; until (4) the "pull" of the corn-growing interest is sufficiently strong to obtain freedom of export up to the 6s. 8d. limit. Finally, (5) the same interest obtains a veto on importation beyond the same price limit. Part of the explanation would seem to be that corn-growing and wool-producing, or at least the dealing in those products, became more and more a matter of " business " during the Wars of the Roses, when the feudal nobles were destroying each other. In regard to wool-working, it is not till the fourteenth century that any systematic attempt is made at fostering. When in 1271 Henry III had a commercial quarrel with Flanders, he sought to injure the enemy by prohibiting the export of wool and the importation of worsteds — a thing he had tried to do before in 1261 j^ and at the same time he ofiered the rights of Englishmen to those Flemings who settled in England, while he banished the rest.* But this policy of ^ Cunningliain, as last cited. ^ Cunningham, as cited. ' Craik, History of British Commerce, 1844, i. 127. * H. W. C. Davis, England under the Normans and Angemns, 1904, p. 509 ; Gibbins, Industrial History of England, 1894, p. 52. MEDIEVAL CUSTOMS DUTIES 17 exclusion of manufactures was not persisted in. Weaving for export seems not to have been practised in England at all till after the Conquest, when Flemish weavers settled at Norwich.^ The natural movement was to the export of the raw material, wool, which England supplied in abundance, chiefly to Flanders ; ^ and the taxes long continued to be laid on the export, all the more after Edward III had continued the policy of encouraging the Flemish settlement of weavers. Only in time of war (1337), however, does the Parliament of Edward III put a temporary veto on wool export and on the importation of foreign cloth; and then, too, foreign cloth- workers are allowed to remain.^ The duty, doubtless, was for a time substantially paid by "the foreigner," England being the main source of the Flemish supply ; but the tendency would be to encourage other sources ; and it was probably a decline in the Flemish demand for the artificially dear English wool, rather than the mere temporary protection of cloth-making,* that gave to English manufacture the stimulus which led to the export of crude cloth gaining ground upon the export of wool.^ To maintain the high price of wool {por mieulx garder le haut pris des leyns) is the avowed object of the strange statute of 1390,^ enacting that no denizen of England should buy wool save of the sheep-owner, except in the staple ; that no Englishman buy any wool of any person but for his own use, "as to sell at the staple and for to make cloth." The whole export trade was thus put into the hands of the foreign merchant;' and the chronicler Knighton records that in consequence of the veto on export by English dealers there was a disastrous glut in many ^ Cunningham, Growth of English Industry and Commerce, 4th ed. i. 190. ^ In 1284, however, many British monasteries had agreed to sell their wool to the Florentines. Cunningham, i. 198, 210, and App. D ; Green, Shcyrt Rist. chap. v. sec. 1. 3 11 Bdw. III. cc. 1, 3, 5 ; Cunningham, i. 193, 305. * Dr. Cunningham (i. 308) writes in his text, with regard to the war measure of 1337, that " the workers in England had thus a complete monopoly of the home market," while admitting in a footnote that "this protective system was not completely enforced for any long time." The veto of 1271 nominally lasted four years, and there were "evasions." Id. pp. 192-3 and note. " Hall, i. 76 ; cp. Craik, i. 144, 149. For a long time the woollen cloth exported was both undressed and undyed. Craik, ii. 11, citing Baleigh. 6 14 Rich. II. c. 4. ' Cp. Craik, i. 149. 2 18 PAST INTERFERENCE WITH TRADE places for two or three years, reducing the growers to the greatest distress.^ As late as 1391 the customs on exported wool amounted to £160,000, though the quantity was un- usually low; and seeing that in 1354 the duty amounted to 40 per cent of the value, the inference of checking of demand by high duties seems the right one. But there has to be added the factor of the injury to trade in Flanders by the harassing regulations and bitter strifes of the trade communities there. In Ghent and Bruges the jealousies of weavers and wool-dealers, complicated by the standing feud of the pro-French and anti- French factions, led to bloody tumults in 1301 and 1302, 1500 lives being lost in one riot in the latter town in the latter year.^ At Ypres in 1303 all the magistrates were slain in a riot arising out of a demand by workmen for the suppression of rival industries in neighbouring villages. Brussels in 1312 was for a time given up to pillage and massacre as a result of practical civil war between the plebeians and the commercial magistrates of the principal cities of the weaving trade in South Brabant. Such desperate evils demanded earnest attempts at remedy ; and the " Laws of Cortenberg," framed by an assembly of nobles and burghers to regulate trade affairs, secured comparative peace for a generation.' But the medieval fatality of ingrained strife between trades, classes, and cities at length checked the democratic evolution ; and in the fifteenth century there was a general relapse towards despotic conditions. Under monarchic management the unhappy Netherlands fared no better. In 1448 the Duke of Burgundy exacted from his subjects a duty of 18s. on every sack of salt ; in 1449 a tax upon wheat ; in 1451 a duty on herrings at Sluys and a duty on wool. These were finally rebelled against by the men of Ghent ; whence arose a war, in which they were beaten, and for which they had to pay a fine of 300,000 riders, with 50,000 riders damages.* But the cities had inflicted quite as serious evils upon themselves. 1 Ohrmiicon Henrici Knighton, ed. Rolls, 1889-1895, ii. 314-15, sul ann. 1390. 2 Mlmoires de Jean de Witt, Fr. ed. 1706, pp. 34, 35. ^ Grattan, The Netherlands, 1830, p. 38 ; David, Manuel de Vhiatovre de Belgigue, 1847, pp. 142, 143. ■* Macpheraon, Annals of Commerce, 1805, i. 670, citing Meyer. MEDIEVAL CUSTOMS DUTIES 19 Mismanagement of trade by restrictive laws was thus no specialty of monarchic and other feudal governing factors : it was of the very nature of the medieval view of life ; and traders could always be trusted to impose restraints on their own careers of their own accord. To take Italy as an illus- tration, it may suffice to note that there, "in nearly all parts of the peninsula, were drawn up corporation statutes, the work of the central power, in which prohibitions and penalties multiplied, the inevitable effect being to condemn to a slow death the institutions to which they were applied. Heavy fees on entry into a profession, harassing supervision of pro- duction, manifold fines, distrust of every kind of initiative and spontaneity " ^ — such were the phenomena of trade regulation in democratic states. " One thought inspired all the measures taken by the Italian commonwealths in regard to commerce and industry. They were filled with the idea of securing for themselves a monopoly, which was necessary for their mode of manufacture, conveyance of goods, and intercourse with foreign countries."^ Again, "in many of the towns of Germany and the Netherlands a desperate struggle took place during the thirteenth and fourteenth centuries between a burgher oligarchy who monopolised the municipal government . . . and the artizans organized in their craft gilds ; the craftsmen fighting first for the right of having gilds of their own, and then for a share in the govern- ment of the town."^ And in England "we find the mer- chants bribing John to revoke the London weavers' charter, and the weavers buying it back again"* — a process paralleled in the earlier and later strifes between the weavers and the general body of citizens.^ The whole machinery of the medieval gilds, in short, obeyed the primordial bias to privilege. Old gilds became oligarchies, and new ones rose against them, to become 1 Prof. E. Nys, Researches in the History of Economics, Eng. trans. 1899, pp. 52-63. 2 Id. p. 55. " 2 Prof. W. J. Ashley, Introd. to JEng. £con. Hist, and Theory, 4th ed. 1906, i. Pt. ii. pp. 78-79. * A. L. Smith in Social England, illust. ed. i. 522. ''^Breutano, History and Development of Cfilds, 1870, p. 56. 20 PAST INTERFERENCE WITH TRADE exclusive in their turn. Craft-gilds battled against the dominion of merchant-gilds, which had originally included craftsmen ; gilds of both sorts broke up into special trade- gilds by reason of the jealousies set up by variety of occu- pation ; the butcher must not deal in hides, or the skin-seller kiU his beasts ; capital drew apart from labour, throwing upon it as far as possible the burdens of taxation ; the craft- gilds became increasingly capitalistic in their turn, the tanners separating from the shoemakers, and the shoemakers from the cobblers ; and apprentices were denied the right to set up on their own account, till " the craft-gilds everywhere had sunk down to mere societies for the investment of capital."! ^jj(j a,s group plotted against group, so district strove against district, and the town against the village, men combining as neighbours only to beggar the neighbours who were a little farther ofF. Monarchic countries proceeded on the same inspiration as others. If they had any moral advantage, it came of the occasional subordination of local to national interests. It has been loosely summed up that English trade before Edward I was municipal ; under him it became national ; and under Edward III it became international.^ The prevailing Euro- pean practice was that strangers — that is, not merely aliens but men from another town or county — everywhere paid special tolls, could not deal with other strangers, except at fairs or at some special markets, and, with the same excep- tions, could not sell by retail.^ In Florence, so late as the seventeenth century, this principle still held good, peasants coming to town being permitted to sell their wine only by wholesale, and the privilege of retailing being reserved to the " nobility and gentry." * Against such atomism as this the English kings, Edwards I and III, operated in their own interests — "to wit, the increase of customs and the easier negotiation of loans" — and "had broken down many of the ' Brentano, §§ 4, 5. 2 Op. Cunningham, i. 186, 261, 265 ; H. Hall, in Social England, illnst. ed. ii. 146 ; and Prof. W, J. Ashley, Introd. to Eng. Econ. Hist, and Theorry, as cited, pp. 8, 9. ^ Prof. W. J. Ashley, as cited, p. 13. ^ Letter of Dudley North, in Idves of the X'orths, Bohn ed. ii. 26-27. MEDIEVAL CUSTOMS DUTIES 21 barriers in the way of alien merchants, especially those which limited their residence in England to forty days, and pre- vented their going inland. . . . Edward III had even gone further, and by the statutes of 1335 and 1351 had abolished all restrictions. Merchants and all other persons, of what- ever condition or estate they might be, were by the former Act permitted to trade with whomsoever they pleased, and by the latter to sell in gross or at retail, or by parcels, at their will. But these measures disturbed the very founda- tions of medieval town life " ; ^ and many petitions against them came from the towns. Only the general support of the landowning class, who wished to deal directly with the foreign traders, made possible the persistent legislation in their favour.^ Thus even measures tending towards partial freedom in trade were passed not for freedom's sake, or for the general good, but for the advantage of a class and of the king's exchequer. The Crown, on the other hand, with varying degrees of assent from the conflicting sections of the commercial and landowning population, imposed crushing restrictions on trade by way of facilitating its collection of customs, especi- ally in the matter of "the staple," an arrangement to the effect that all goods of a particular kind should pass through a given place at home or abroad. The original " staples of the kingdom " were wool, sheepskins, and leather ; but the word came to mean both the articles of chief export and the places officially fixed for their collection, passage, or assess- ment. In this matter the changes were incessant during a long period.^ In 1313 a charter of Edward II "to the mayor and council of the merchants of the staple " ordains that all merchants, native or foreign, buying wool and wool- felts for export, instead of taking them, as formerly, to several places in Brabant, Flanders, and Artois, shall henceforth take 1 Ashley, as cited, pp. 13-14 ; Gibbins, Industry in Ungland, 1896, p. 128. 2 Cp. 1 Bdw. III. St. i. preamble, and c. 1 ; confirmed by 25 Edw. III. St. iv. c. 2. The plea is for the interests of "prelates, earls, barons, nobles, and the people," and " knights, citizens, and burgesses," as against " some people of cities, boroughs, ports of the sea, and other places," who seek to exclude foreign merchants. 3 Prof. Ashley, as cited, vol. i. Pt. i. pp. 111-113. 22 PAST INTERFEEENCE WITH TRADE them to one staple in one of those countries to be appointed by the said mayor and council, who thereupon fixed it at Antwerp.! In 1326, nevertheless, it was removed altogether from the continent, and fixed at certain places at home — Cardifi" being one of them.^ In 1328,' in the next reign, it is enacted that all staple regulations shall cease, and merchants may go and come with their goods freely " after the tenor of the Great Charter"; yet again in 1332 new staples are established, to be again abolished in 1334 ; where- after a new staple at Bruges in Flanders is established in 1341, and transferred in 1348 to the newly captured town of Calais.* In 1352 the staple is set up in London.^ Then again, in 1353, the Ordinance of the Staples ^ removes the staples "for ever" from Calais to nine English, one Welsh, and four Irish towns ; and this arrangement lasts for ten years, whereafter the staple is again fixed at Calais — to be brought back to England — with a number of changes in the towns — in 1369,' in consequence of the renewal of war with France. In 1376, on the petition of the people of Calais, the staple is restored to them, and made to include all the main articles of English export; but in 1378,^ merchants from Genoa, Venice, Catalonia, Aragon, and other western ports are permitted to do their business at Southampton; and in 1382,^ all merchants are empowered to export wool and leather to any country save France, upon paying the Calais duties in advance. Then in 1384 the wool staple is shifted from Calais to Middelburg; in 1388 i'' it is put back; and in 1390 ^^ it is brought once more to the English towns appointed in 1353. Next year, however, the lords of the Council are empowered to fix upon other towns on the coast; and yet again the staple tacitly returns to Calais, remaining there till the capture of the town by ' G. L. Craik, Hist, of British Commerce, 1844, i. 120-1. ^ Macpherson, Annals of Ootmnerce, 1805, i. 497. 3 2 Edw. III. c. 9. * Rymer's Foedera, v. 618, , ^ Ghronicon Henrioi Knighton, ed. cited, ii. 74. , « 27 Edw. III. St. ii. o. 1. ' 43 Edw. III. c. 1. 8 2 Rich. II. St. i. i;. 3. » 5 Rich. II. st. ii. c. 2. " 12 Rich. II. c. 1. " 14 Rich. II. o. 1. MEDIEVAL CUSTOMS DUTIES 23 the French in 1538, whereupon the staple is set up at Bruges.^ Our economic historians have made no attempt to elucidate this amazing record, beyond admitting^ with Ochenkowski, that " fiscal motives " were largely operative.^ The chronicler Knighton expressly asserts that in 1352 the staple was set up in London " to the great emolument of the King, and to the great damage of aliens and merchants." ^ It may be added that the perpetual changes are intelligible only as results of pressure, chiefly pecuniary, by the local and commercial interests concerned. One thing is clear. While one of the objects of the government is always presumably national advantage, the result must have been habitual restraint of trade.* Behind the policy pursued there was no deeper science than rule of thumb. In the words of the protectionist Professor Hewins, " When we read the statutes or the Rolls of Parliament we are impressed with the absence of definiteness of aim or policy." "Looking through the Statute-book, our first impression is that commerce, during the latter half of the fourteenth century, was so cramped by absurd regulations that progress was well-nigh impossible. But the measures of this period were the result of practical efforts to cope with difiiculties by men who were untram- melled by any theoretical system. Edward III took counsel with his merchants in making provision for the regulation of trade." ^ Quite so. It was the policy of the axe-to-grind, and in that "untrammelled" practice we have a simple illus- tration of how similar methods might work to-day. § 2. Navigation Laws The same kinds of light and leading were at times brought to bear upon shipping, with similar results. "The com- 1 Craik, i. 120-4. ^ Prof. Ashley, Pt. i. p. 112. The "advantages'' to merchants alleged by Prof. Ashley are proWematic. Cp. Cunningham, i. 312-13 ; Hall, Hist, of Customs Revenue, ed. cited, i. 30 ; and in Social England, ii. 149. 3 Ohronicon, as last cited. Knighton adds: "Nam emolumentum regis, per tale incrementum, ut dioebatur, continebat summam MCII libras ultra quam aliquis rex habuerat ante. " * Cp. Hall, i. 35. '^ W. A. S. Hewins, in Social Englatid, ii. 335, 343. 24 PAST INTERFEEENCE WITH TRADE mercial restrictions [of Edward III], though they hampered, did not entirely destroy English shipping," says Dr. Cunning- ham, lucidly adding, "but there were other causes which led to its decline." ^ So there was passed the first Navigation Act 2 (1381), whereby "to increase the navy of England, which is now greatly diminished, it is assented and accorded that none of the King's liege people do from henceforth ship any merchandise in going out or coming within the realm of England, in any port, but only in ships of the King's liegance." The results seem to have been nil.^ Richard II could not protect English shipping from pirates, and his successors in turn " tried, with but little apparent results, a variety of expedients for giving protection to English shipping and the English coasts." * It was of course found that the Act of 1381 merely restrained trade; and in 1409 Henry IV is found giving permission to the merchants of Venice to bring their laden vessels into English ports, to trade between these ports and Flanders, and to load with English wool, cloth, or other merchandise for the home voyage.^ This permission was confirmed by Henry V, though that king, with his new fighting ships, might at least have hoped to check piracy. A protective policy is again found on foot in 1463, when a parliament of Edward IV, legislating against the export of wool, enacts also that no Englishman may export or import goods in foreign vessels if he can do it by vessels of the realm.^ Another expedient is tried in 1485, when Richard III grants to English shippers a monopoly of wool-carrying to Florence. Yet again, in 1488, an Act of Parliament under Henry VII declares that because of the "minishing and decay of the navy and idleness of the mariners," the country is on the way to ruin ; and ordains that exports shall go only in English bottoms, and Gascony wines and Toulouse woad be imported only in the same. After a protracted and fruitless trial the measure is modified in the year 1552 by an Act of Edward VI,^ which states ^ English Industry and Commerce, 4th ed. i. 394. 2 5 Rich. II. St. i. c. 3. 3 Cp. Craik, i. 164. « Cunuingliani, i. 409. 5 Craik, i. 164. 6 1 Edw. VI. c. 1. 7 6 and 6 Edw. VI. c. 18. NAVIGATION LAWS 25 that the former Act "was supposed to be made for the maintenance of the navy of this realm, and also to the intent and upon good hope and trust to have had the same wines and woad at more easy prices than before they had been; the experience whereof has ever sithen, and now of late most of all, appeared to the contrary, for that the said wine and woads be daily sold at such excessive prices as hath not before been seen within this realm; and the navy of the realm thereby never the better maintained." It is now provided, accordingly, that importation in foreign ships shall be lawful between February 1st and October 1st in each year. For some time the liberative movement maintained its strength, for in the first year of the reign of Elizabeth ^ the Act of Henry VII is wholly repealed, on the score that by reason of such enactments " there hath not only grown great displeasure between the foreign princes and the king of this realm, but also merchants have been sore grieved and endamaged " by the retaliations of foreign states. Experi- ence had shown, to all save the monopolists, that "protec- tion " of shipping never promotes it. Nevertheless the Act of Elizabeth, though only "for a period of five years, and thence to the end of the next Parliament," still provides " for shipping in English bottoms," and merely specifies the cases in which merchants may use foreign ships. Four years later (1562), Burleigh, who seems to have been opposed to restric- tions on foreign shipping in general, but was concerned to discourage wine-drinking,^ threw his weight on the side of the monopolists, leaving them, however, to import wine as freely as they would. There is an explicit renewal of the Act of Henry VII in an Act^ "to endure for ten years" from 1564. This is a general measure "for the better main- tenance and encrease of the navy of this realm of England." Clause 1 allows any subject to export fish in an English ship free of duty ; clause 2 provides that no toll shall be taken of fish brought in in such a ship (with reservation of the 1 1 Eliz. 0. 18 (1558-1559). '■' Cp. Cunningham, English Industry and OoTnmerce, ii. (ed. 1903), 70-71. 3 5 Eliz. c. 5, cl. 8. 26 PAST INTERFERENCE "WITH TRADE privileges of Kingston-upon-HuU) ; clause 8 enacts that no fish, victual, or wares shall be carried from one English port to another in a stranger's ship ; and clause 1 1 re-enacts that no French wines or Toulouse woad be imported save in English-owned vessels. Perhaps the most remarkable part of the measure is the enactment^ that every Wednesday is to be a "fish-day," as Saturday is already.^ It is carefully explained that the Act "is purposely intended and meant politickly for the increase of fishermen and mariners, and repairing of port- towns and navigation, and not for any superstition to be maintained in the choice of meats " ; and it is further enacted that "whosoever shall by preaching, teaching, writing, or open speech notify that any eating of fish or forbidding of flesh mentioned in this Statute is of any necessity for the salvation of the soul of man, or that it is the service of God otherwise than as other politick laws are and be ; that then such persons shall be punished as spreaders of false news are and ought to be."^ There is no reason to suppose that this queerly "politick" law was ever extensively obeyed;* and in 1584 it was repealed^ "as concerneth the eating of fish and restraineth the eating of flesh upon the Wednesday," though still "victuallers shall utter no flesh in Lent, nor upon Fridays or Saturdays." As to the other provisions for multiplying fishermen and mariners, an Act of 1570 *" revives the provision for the free export of fish, declaring that it greatly increased the navy and fishermen, but says nothing about imports in foreign ships ; whence it may be inferred that the old veto had once more lapsed. A continuance Act of 1588' provides con- cerning that of 1562 that "so much only ... as at this present standeth in force, and not heretofore at any time 1 Cl. 14, 15. ^ This was a scheme of Burleigh's. Cxmningham, as last cited, p. 68. 3 Cl. 39, 40. ^ In the usual dastardly fashion, poor women, were at times pilloried for breach of the law, while rich men could buy licences to disregard it. Cunning- ham, p. 68 and note, 5 27 Eliz. c. 11. 8 13 Eliz. c. 11. ' 31 Eliz. c. 10, cl. 19. NAVIGATION LAWS 27 repealed, shall continue . . . unto the end of the next Parliament"; and another continuance Act of 1594^ dubi- ously provides that "so much of the said Statute ... as heretofore at any time was repealed " " shall from henceforth be repealed." The improvement in English shipping and commerce in the reign of Elizabeth was in fact due to the positive activities of private enterprise, facilitated as they were by the freedom to export iish, and not by negative laws. But there were still to come the Navigation Acts of Cromwell and Charles II, so long defended by the coercionist school despite their proved injuriousness to commerce. It is, in fact, still frequently maintained, on the authority of Adam Smith, especially among protectionists who accord him small authority upon any other score, that the naviga- tion laws greatly benefited British trade. His words are certainly emphatic enough, albeit confused : — The defence of Great Britain . . . depends very much upon the number of its sailors and shipping. The Act of Navigation therefore very properly endeavours to give the sailors and shipping of Great Britain the monopoly of the trade of their own country. . . . It is not impossible that some of the regulations of this famous Act may have proceeded from national animosity. They are as wise, however, as if they had all been dictated by the most deliberate wisdom. National animosity at that particular time aimed at the very same object which the most deliberate wisdom would have recommended, — the diminution of the naval power of Holland, the only naval power which could endanger the security of England. . . . The Act of Navigation is not favourable to foreign commerce, or to the growth of that opulence which can arise from it. . . . By diminishing the number of sellers ... we necessarily diminish that of buyers, and are thus likely not only to buy foreign goods dearer but to sell our own cheaper than if there was a more perfect freedom of trade. As defence, however, is of much more importance than opulence, the Act of Navigation is perhaps the wisest of all the commercial regulations of England.^ Smith usually qualifies his rasher utterances, and has done so here by his caveat about restrictions of trade and defence versus opulence ; but rash readers have ignored his admissions, 1 37 Eliz. 0. 7 ol. 21. ^ Wealth of Nations, b. iv. ck. ii. 28 PAST INTERFERENCE WITH TRADE and continue to cite him as a witness for one form at least of Protection. Yet on no point has Smith been more com- pletely confuted by his own school.^ The Navigation Act not only restricted British naval power by restricting trade and opulence; it entirely failed to injure Dutch commerce and naval power. The protectionist Professor Ashley, never- theless, pronounces that " on the question whether they [the navigation laws] were useful in the seventeenth century, most unbiased readers of history will agree with Adam Smith"; and, citing only Thorold Rogers in opposition to Smith, he writes : ^ "It is amusing to see how the extreme Free Traders have hastened to declare that Adam Smith was quite mistaken, and that the navigation laws did nothing for English shipping." If Professor Ashley had gone back to M'Culloch's note on the navigation laws, or to the work of Dr. Cunningham,^ he would have seen, with or without amusement, the testimony of Roger Coke in 1671 that by the operation of the Navigation Act England not only suffered greatly in general commerce, but lost within two years the greater part of the Baltic and Greenland trade ; and that Sir Josiah Child in 1691, while decidedly approving of the Act on political grounds, corroborates. Child, in fact, testifies (1) that the former English trade with Russia has gone to the Dutch, and (2) the Greenland trade to the Dutch and Hamburghers ; (3) that the East country trade has fallen by more than half in England, while in Holland it has increased tenfold ; (4) that the Dutch have won from England the trade in Spanish wood with Bilbao, the East Indian spice trade, the trades of Scotland and Ireland, and a great part of the Plate trade with Cadiz ; and (5) that England has further no share in their trade with China and Japan and Surinam.* The author of the Essay on the Cause of the Decline of Foreign Trade, ^ no less explicitly testifies that the Act, 1 Mr. Kirkiip, however, like Professor Ashley, thinlcs it unnecessary to investigate the question. He quotes Smith's words {Progress ajid the Fiscal Problem, p. 19) as if they settled everything once for all. 2 Tlie Tariff Problem, pp. 35-36. ^ English Industry and Commerce, li. (ed. 1903), 212. * Pref. to the second and later eds. of the New Discourse of Trade. = Ed. 1756, p. 60. NAVIGATION LAWS 29 instead of increasing Britisli shipping and seamen, had diminished both, and had further imposed new burdens on English industry. As a previous writer had pointed out, " the Danes, taking advantage of this Act, raised their prices and customs upon us for pitch, tar, and timber, near double, and the Leiflanders the same for hemp and flax " ^ ; while, as Roger Coke mentioned, the building of ships in England became one-third dearer within two years of the passing of the Act.^ Professor Ashley has indeed claimed to show elsewhere that the Act stimulated shipbuilding and seafaring in the American colonies ; but the later increase in the English shipping was demonstrably due to other causes. And as regards the whole reign of George II, while the nominal amount of our exports nearlydoubled,risingfrom£7,891,739 in 1726 to £14,693,270 in 1760, the amount of native shipping in our foreign trade, which was 432,832 tons at the beginning of the reign, was not more than 471,241 tons at its close.^ It can only be in total ignorance of these historical facts that a protectionist writer aflSrms the " supremacy of our mercantile marine " to be "the result of the bitter century-long struggle between England and Holland for commercial supremacy. . . . Our navigation laws played their part with supreme success, and the Dutch attempted to meet them by Free Trade methods with complete failure." * The " supreme success," as we saw, was a matter of destroying our shipping trade on half a dozen routes, the Dutch being the gainers ; while the only direction in which England could hold her own was in that of her monopoly trade with her own colonies. ^ Britannia LaTiguens, p. 68. 2 Messrs. W. S. Lilly and C. S. Devas, in their edition of the obsolete work of Sir J. B. Byles, Sophisms of Free Trade and Popular Political Economy Examined (Lane, 1904, p. 317), carefully garble the testimonies cited by M'Culloch, and then, after so diluting the historical proposition on the free trade side as to make it seem of little importance even if true,. pro- ceed without a word of rebuttal to say that " we shall do well to regard these and the like authorities with a certain amount of scepticism. Questions of historical causation'are of exceeding difficulty." That is to say, we are to be sceptical of all testimony that tells against protectionism, but credulous of every unsupported assertion in its favour. Questions of historical causation, in this view, become difficult only when free-traders raise them. 3 Craik, ii. 201-2. * Sir Vincent Caillard, Imperial Fiscal Reform., 1903, p. 79. 30 PAST INTERFEEENCE WITH TRADE The fact was that the Navigation Acts, in the fatal way of all Protection, kept our shipping relatively backward and unpro- gressive. Early in the seventeenth century we find Ealeigh urging his countrymen to copy the economic methods of the Dutch, who built ships specially adjusted to each species of trade.i Under the reign of monopoly no one seems to have dreamt of learning from aliens. Porter ascribed to the irrational system of tonnage measurement in use down till 1835 the fact that "the greater part of our merchant vessels are the most unsightly in Europe, and, what is of far more consequence, sail badly, and are very unmanageable in bad weather and on a lee shore. For this last reason," he added, " the loss of life that has been occasioned has been exceed- ingly great." ^ But while the method of measurement may in some degree have encouraged clumsy shipbuilding, the whole history of protected industries, with their proclivity to the obsolete, justifies us in setting down much of the evil as the effect of monopoly. § 3. Bullion Laws and Others It is unnecessary to spend much time in tracing the history of the devices of the English or any other govern- ment in the Middle Ages to prevent the precious metals from leaving the country. The policy was the same all round, and equally futile everywhere, — from Spain, whose tributary income of bullion leaked out at every port by reason of her lack of productive industry from the sixteenth century onwards, to England, whose coin was freely current on the continent despite all the laws against export, and this without any injurious drain upon England.^ In 1307 Edward I (collecting treasure for his attack on Scotland) is found absolutely vetoing all removal of bullion or coined money from the country ; and though in the very next year an exemption had to be given to French merchants by Edward II, the law was obstinately and vainly insisted on in general. In 1335 and 1343,* under Edward III, fresh 1 Works, ed. 1829, viii. 356. ' Progress of the Nation, ed. 1851, pp. 458-9. ' Maopherson, i. 619, 623. ^ 9 Edw. III. st. ii. ; 17 Edw. III. BULLION LAWS AND OTHERS 31 measures of the sort are passed ; while in the next two reigns, in 1390 and 1400/ there is offered the compromise of permitting foreign merchants to take away half the price of their goods in bullion, provided that they take the other half in English produce. All the while the original ordinance of Edward I permits remittance by bill of exchange, which, "if it did not carry money out of the country, produced precisely the same effect by preventing money from coming in." ^ Naturally the laws availed nothing; and Parliament in 1402 and 1403,^ with futile persistence, repeated the useless enactment of 1400. At length, in 1404, a gleam of light penetrates to the legislature, and the restrictive acts in question are declared to be " utterly void and annulled for ever " as being " hurtful and prejudicial " alike to the king, the realm, the merchants, and aliens and strangers.* Yet in 1429, under Henry VI, it is again enacted that no English- man shall sell goods to any foreign merchant except for ready money, or for other goods delivered on the instant, under penalty of forfeiture.^ In the following year, the same Parliament complains that, as a result of this Act, " the English merchants have not sold, nor cannot sell nor utter, their clothes to merchant aliens, whereby the king hath lost his subsidies and customs . . . and English merchants, clothworkers, and others, the king's liege people, in divers parts of his realm, greatly annoyed and endamaged." The Act of 1429, accordingly, is amended, and sales at six months' credit are permitted.^ But in 1439 the meddlers are at work again, and a new Act ordains, in the ancient manner, that no foreign merchant shall sell goods to another foreigner in England — a new limitation of the volume of trade. Later, in 1453, we see the nature of the procedure by which legislation is procured. Parliament ^ grants the king the import duties of tonnage and poundage for life, and at the same time extra duties from " denizens * and aliens " on wool and other staple export wares. A tax of 40s. is imposed 1 14 Rich. II. c. 1 ; 2 Hen. IV. o. 5. ^ Craik, i. 132. 3 i Hen. IV. 0. 15 ; 5 Hen. IV. o. 9. ■* 6 Hen. IV. c 4. 5 8 Hen. VI. o. 24. " 9 Hen. VI. v. 2. 7 30 Hen. VI. * I.e. foreigners domiciled in England by letters-patent. 32 PAST INTEEFEEENCE WITH TEADE on every alien merchant keeping house in England ; 20s. on those staying six weeks; and £6:13:4 annual tax on every alien merchant during the king's life. Here we have a recrudescence of jealousy of the "foreigner," for in 1382 it had been re-enacted that "all manner of merchant strangers, of whatsoever nation or country they be," if at peace with England, should come and go freely at their will.i Evidently the mercantile class in the interim had acquired influence. The sequel shows that even with those handicaps laid on, the foreign traders could successfully compete; for an Act of the first year of Eichard IH complains that foreigners habitually sell by retail at fairs and markets. All the while there is going on spasmodically a policy of direct protection. Acts being passed under Henry VI, under Edward IV, and under Eichard III, with the object of excluding as many foreign manufactured goods as possible. The idea that exports must be paid for by imports had not yet entered the English political conscious- ness. Only when trade was visibly paralysed by ruinous imposts was there any learning from experience. In 1454 a subsidy of 12d. in the pound was granted on all merchandise exported by denizens, aliens, or Hansards, and the export duty on wool was raised from 33s. 4d. to 34s. 4d.; whereupon it was represented to Parliament that the former tax would check the sale of woollen cloth, and the latter lower the price of wool. Accordingly, exports to the staple of Calais, or by licence to the Mediterranean, were exempted from the extra duty.^ So utterly haphazard was the fiscal practice. Again, in 1459, the merchants of the staple at Calais, having lost heavily by the grants of licences under King Henry's seal, obtained, doubtless at a price,^ a promise to issue no more. And yet again, in 1487, under Henry VII, we have Cardinal Morton exhorting Parliament to take measures that " whatsoever merchandise shall be brought in from beyond the seas may be employed upon the commodities 1 5 Rich. II. St. ii. c. 1. ^ 31 Hen. VI. c. 8. ^ In 1464 Edward IV acknowledges a debt of £32,861 to the merchants of the staple at Calais, and assigns them a yearly share of the wool subsidies. Macpherson, i. 677, citing Cotton's Abridgment. BULLION LAWS AND OTHERS 33 of this land, whereby the kingdom's stock of treasure may be sure to be kept from being diminished by any over-trading of the foreigner." ^ The will to leave trade free was as remote from human instinct in politics as the will to permit freedom of any other kind. ^ Bacon, Life of Henry VII. Ellis and Spedding'a ed. of Works, vi. 81. Spedding accepts the view that Bacon's report of this speech is, according to the old practice, an ideal utterance drawn np by himself. This is not clear ; but, in any case, the doctrine was that universally current at the time. CHAPTEE V JLGSOPOLY AXD PEOTBCIIOS Df BEmSH HISTOBT I 1. Earlg Prdedumsm The age-kmg praedee <^ intaderenee iritJi ezptsie and hnfaete, staples and EMp^ng, liad bo tbimn^ily haMtoated nil^B and txaders to the Mea of regvUating tzade and malriiig reremie oa£ of it, tliat irlien in the eonrse (rf sodal erolndoa it became poe^le to piaedse "pioteetioD '^ jecopet on behalf ai par&olar teadee, the pdii^ was eoAftaeeA vith all the zeal (tf ecommde aiwi poUtieal ignorance. Und^ Meary YI, Edward IV, and £idiard lEL, we hare ee^i, a pofiejr of pzoteetirai to mannfaetiiiczB emi^ges from time to time in the medley of en^irieal legolatiffiDs of tzade. Ihuing the Wars of tlie S^^ee the land^owmng hi&asaee natmalty w^rt hackvard widi the deetmetiffli of die amtoezaey, and the txading is^aeace came to Hie fatrnt It ffi a notewoctliy isuU ihak Aroa^uNit tjie stiu^Ls the fcsxigp. eanaoeree of the ecMintiy expanded, aod the ixa/^ag dase had a ecHT^ponding ia&aeaee with the kings. Hms it wae that whereas of (M the hooded e]ass resisted in^ort dnties on the goods thef wid^ to 1m^, the mamtfartaring clas now sooeeeded in ^tting Each duties imposed. It h rady fair to note that examj^ and jHtirocation ai times came finm abzoad. In 1M9 Vsa^aaa&eat eaaebe ihat •whereas En^kh dcMi^ hare been exeb^ed firom 'Brabaist and the otha* dfflmnkms of the Duke c^ Buigandj, with die reeiilt of great disti-eEs amraig iSae men wearers, foUerg and djets, acd the women weJistez^, EARLY PROTECTIONISM 35 carders and spinners of England, the products of those dominions shall be excluded from England unless the Duke's edict be repealed.^ But the lesson was soon improved on, and this after the provocation had been withdrawn. The motive avowed, of course, is patriotic, and the tactic of the earlier interferences is noticeably "popular." In 1455 the "silk- women and spinners of the mystery and occupation of silk- working " in London are represented as complaining that the Lombards and others, "imagining to destroy the said mystery and all such virtuous occupations of women in the said realm," are importing such articles as the silk-women make, instead of bringing unwrought silk as formerly — this at a time when the English were exporting much woollen cloth instead of raw wool " as formerly." The resulting Act - is tentative, it being ordained that during five 3'ears none of the enumerated articles should be imported, excepting girdles from Genoa ; all offenders being fined £20 and their goods forfeited. As the Act was not renewed in 1460 it had either failed or excited hostility. But the same spirit is seen at work more vigorously than ever in 1463. The protection of the silk-women is then renewed in the former terms ; ^ imports of wheat, rye, and barley are prohibited unless wheat is at 6s. 8d., rye at 4s., and barley at 3s. ; * and Parliament further enacts on the one hand the exclusion of imported manufactures of nearly every kind, and on the other hand restricts the exports of raw wool. In both cases the plea is the encouragement of trade. As to wool exports, the enactment is ' that because the chief and principal commodity of this realm of England consisteth in the wool growing within the said realm, and to the intent that sufficient plenty of the said wools may continually abide and remain within the said realm, as may com- petently and reasonably serve for the occupation of cloth- workers of England . . . whereby the cities, boroughs, and towns of the same realm, fallen into great and piteous desolation, ruin and decay, by the occasion of idleness may be, if God will, multiplied 1 27 Hen. VI. c. i. ^ 33 Hen. VI. c. 5. s 3 Edw. IV. c. 3. •* Id. c. 2. = Id. u. 1. 36 PROTECTION IN BRITISH HISTORY in inhabitation, and by labour restored to tbeir ancient joy and prosperity, no alien shall export wool, and no wool shall be exported by any one, save to Calais. As regards the excluded manufactures — which include woollen and silk wares, laces, horse furniture, ironware, work in other metals, leather goods, cards, and so forth — the plea is that "artificers of manual occupations, men and women," throughout England, "be greatly impoverished and much hindered and prejudiced of their worldly increase and daily living " by imports of manufactured goods " whereof the greatest part in substance is deceitful and nothing worth in regard of any man's occupation or profit." The value of this latter plea may be gathered from the fact that the same Statute complains of the discredit done at home to English trade by putting rubbish in wool; while again in 1465 ^ Parliament fixes the sizes of woollen cloths on the score that "the workmanship of cloths and things requisite to the same is and hath been of such fraud, deceit, and falsity that the said cloths in other lands be had in small reputation, to the great shame of this land." In these matters the honours were apparently even. Further enactments against smuggling ^ tell the simple story of empirical trade policy ; and a provision that woollen manufacturers alone shall have the right to make contracts for wool in advance tells how the trade interests operate.^ Hostilities with Flanders further stimulate the policy of exclusion. The Duke of Burgundy having issued an ordinance "never to be repealed," excluding from his dominions all English cloth and yarns. Parliament retaliates by excluding from England all products of his dominions, excepting provisions, while all woollen cloths made in any country are similarly prohibited.* Another touch of primitive policy occurs in the enactment (made upon the bitter complaint of the " horners ") that no horn shall be exported until after the home demand is fully supplied. Concerning such provisions it may be taken for granted that they were generally disobeyed. Within two years' time the over- 1 Edw. IV. c. 1. " Same Act, cc. 2, 3. * 0. 4. ^ c. 1, § 7. EARLY PROTECTIONISM 37 powering needs of trade suflBced to abrogate at once the " never to be repealed " edict of the Duke of Burgundy and the English retaliation : a new treaty of commerce is made in 1467, and traders are allowed free entrance on both sides, with reservation only of the right to veto export of provisions; while further Acts against smuggling, in 1472, reveal the failure of prohibitory legislation in general. In 1482, Richard III being concerned to win the favour of the trading classes, the law of 1463 is re-enacted for four years — a term extended in 1484 to ten years ^ — but the enormous list of prohibited articles is almost farcically significant of the extravagance of the scheme ; and its failure must have been complete. That failure is tacitly admitted in course of time. It is not easy to see, indeed, how the prohibitive policy could work while express reservation was made of the " liberties " vested in the Dean of the chapel of St. Martin's-le-Grand ^ — a reiterated provision which made the tenants of that foundation free importers as against all other traders,^ until the privilege was repealed in the next century.* But even without such an anomaly to discredit it, the prohibitive policy injured too many traders and consumers to be successful; and in 1496 we find Henry VII arranging with the Archduke Philip the Infercursus Magnus between England and the Netherlands, whereby free entrance is given to merchants on both sides. In the same year it is enacted^ that whereas foreign merchants who had been made denizens by letters-patent had abused their privilege to pass foreign merchants' goods as their own, they shall henceforth pay customs and subsidies as do strangers. This is in effect a permission of imports on a customs basis. The people of England being still behind those of several continental States in handicraft, the foreigners multiplied ; till at length the insular spirit, of which we have seen the legislative ebullitions, took the form of a kind of popular plot to attack the foreign residents of London on May-day, 1517. The popular grievance was : 1 1 Rich. III. cc. 10, 12. 2 3 Edw. IV. ^. i. ^ Macpherson, i. 676 and ru>te. * 14 Hen. VIII. i;. 9 ; 5 Eliz. o. 8. « 11 Hen. VII. c. 14. 38 PBOTEOTION IN BRITISH IlISTOKY how miserably the oommou artifloers lived, uud Boivrce could get any work to find them, their wives tuid oliildreu, far there wore Buoh a number of artifloers slrangovii, tliat took away all the liviug iu manner. And also how tlie English merohauU oould have no utterauou [I'.o. eale], for the merohant stnvugers bring in all silks, cloth of gold, wine, oil, iron, and suoh other meroliandise, that no man almost bviyeth of lui Etiglishmau. And also outward, Ihoy carry so muuh English wool, tin, and lead, that Englishmen that adventure outwai'd can have uo liviug. And fai'ther ... the strangers compass llie city round about, in Southwark, in West- uiiuster. Temple Bar, llulborn, St, Martin's, St. John's Street, Aldgate, Tower Hill, and St, Catherine's, and forestal tlio market , . , which is the cause that Engliahmuu want and starve, and tli>«y live abmulautly in groat pleasure. . . . And much moi-e, for the Dutchmen bring over iron, tinibor, leather, and wainscot ready wrought, nails, looks, baskets, oupboai'ds, stools, tables, chests, girdles, witli points, saddles, and painted cloths, so that if it wure wrought here. Englishmen might have some work and liviug by it.' The former Acts prohibiting importation of foreign wares, nocordingly, had failed of their purpose j and the temper now displayed towards foreigners tolls of the inspiration (it work all along, During the lust week of Api'il several men were imprisoned for attacks on foreigners ; and an attempt by the Government on May-eve to cheek the plot in advance brought on a riot, in which the Compter prison and Newgate wore broken up and the prisoners in question released; whereafter the houses of a number of foreigners were plundered. The guns of the Tower had actually to be fired towards the city before the author! tios wore able to check tho riot and arrest some throe hundred of the rioters. A nvmiber woro tried, and condemned to be hanged, drawn, and quartered j but only one was exeoutod. A lesson had been partly learned j and another was learned when, in 1C37, an English Act of Parliament having absurdly prescribed tho length an(^ breadth for linens imported fi'om Brittany, the French refused to be so regulated. Those linens having been normally paid for ' HiiU'h Olwoniole, od. 1800, pp, 688-7. Hull rooitos ouo or two olwouri) cnaoH of poraoiml gilovniioo ngaiuHl foreigiioio, but thoy nro suoh an to maltu it quite clear that Jeiilousy of foreign Imports luul importer* wus tlio rwvl gt'oini(l of quurrel. EARLY PROTECTIONISM 39 by English woollens, the English weaving and export trade was at a standstill, and the meddling Statute had to be repealed.^ The lapsing of the prohibitive policy, further, is implied in the Aet of 156S,* which newly forbids the imporfettion of gii-dle*. rapiei-s, knives, gloves, stirnips, etc., etc. This was in effect a new measure of war : and the Duchess of Parma, as Regent of the Xotherlands, retaliated by excluding all English goods from the ports in her jurisdiction. The "Merchant Ad\-entui-ers of England' were thus forced to carry their cloths to Embden in West Friesland ; whereupon Philip II. excluded thenx thence. Once mor-e both sides suffered so much that they were glad to retiu-n to the basis of the IntfrcHrsus MaffHus.^ Thus the nature of the impulses to a " protective " trade policy, aud the evils of that poUey, had been fully exemplified ill the experience of the thirteenth, fourteenth, tifteenth and sixteenth centuries ; and the foreign trade policy of Elizabeth's r^ign. in eonsoqueuce, headed somewhat towards free intet^ coittse,* But the habit of interference was far too deeply rooted to be yet eradicated ; and the old tendency to protect one domestic interest against the i-est came into plj>y with new activity. One of the legislati%-e features of the ivign of Edward TI is a series of attempts to prescribe methods of production, Acts being passed to spectfy the proper ways tif making malt, lesither, doth, and so on : and one mesvsiu^ * forbids the " engrossing "" of tiuine^l leather save by saddlers, cordwainers, etc. Then, in the first year of the reign of Mary' w© have an Act declaring that bv the operation of the former measure not only " many shoemakers aud cobblers have been forced to give up their occupations," but " all kind of stuff made of leather is mora slenderly and deceitfully wrought and made than ever before ; nevertheless as dear or dearer." In the unsophisticated msinner of the time it is further suggested that the former Act was "procured for the singular commodity of a few rich shoemakers and other > as H»n. ^^Ir. o. *. ^ 5 Hit c, r. ' 5 aiul 6 Biw. VI. v. 15. • 1 Msr. s«$. iii e. S. 40 PROTECTION IN BRITISH HISTORY artificers, that are now common regrators and engrossers of leather." The Act of restriction is accordingly repealed. The possibilities of interested interference revealed by it, however, were not at an end. Even the Act limiting the restrictive powers of gilds had probably stood for the influence of classes who were galled by them.^ The policy of excluding foreign manufactures, too, was still persisted in. An Act of Mary's first year ^ confirming one of her father's reign, which had inferribly fallen into disuse, directs that '' no man shall buy above one dozen hats or caps made out of this realm " ; and an Act of Elizabeth, in the name of the all-pervading wool interest, insisted that English woollen caps should actually be worn ^ by all males above six, on Sundays and holy days, under penalty of a fine. The attempt to exclude foreign cutlery, too, is renewed.* § 2. Early Monopolies Elizabeth in turn drifted into a policy of monopolies that caused profound discontent, which it needed all her prudence and her craft to allay by concession ; and the continuance of the same policy by her successor did not a little to set up the strained relations between crown and commonalty which led to the Civil War. It is true that Elizabeth's first grants of special privilege (1565) were really patents for new inventions or methods rather than monopolies ; ^ but after the death of Burleigh she quickly passed that dividing line — " at the importunity of her servants," according to the proclamation of her successor in 1603.^ James doubtless acted by the advice of his council.'^ Monopolies had been granted in starch, tin, fish, cloth, oil, vinegar, and salt ; * and when a Member of Parliament exclaimed, on hearing the list read over in the House in 1601, "Is not bread among them?" he struck the ^ Cp. Cunningham, English Industry and Commerce, i. 521-3 ; Prof. Ashley, Tntr. to Eng. Econ. Risl. i. Pt. ii. 145. ^ 1 Mar. ses. ii. c. 11, confirming 21 Hen. VIII. c. 9. ' 13 Eliz. u. 19. < 6 Eliz. o. 7. ^ Maopherson, ii. 141. ^ Cunningham, English Industry and Commerce, ii. (1903), 288, note. ' Gardiner, History of England, 1603-164S, i. 101. 8 D'Ewes' Journals, p. 646. EARLY MONOPOLIES 41 keynote of a memorable debate.^ But James in turn drifted in the same direction. In 1 6 1 4 he raised a storm by granting a patent for the manufacture of glass, on the plea of encouraging industry, and giving a charter to a company formed for ex- clusive trading with France;^ and in 1621 such monopolies and patents were declared to be far more numerous than in Elizabeth's last days.^ The king recalled some of the most absurd,* but the evil subsisted ; and, in the form of the monopoly of the East India Company, lasted till 1813. At a time when interference with trade was part even of the populist tradition, it was a matter of course that kings should indulge in it to the limit of their safety. Even Burleigh, one of the most thoughtful statesmen of his time, not only meddled precariously in many trade matters,^ but held absolutely (as did Raleigh) by the bullion delusion,* which was the basis of the whole mercantilist policy of the two succeeding centuries. Our economic historian, whose learning is so much more helpful to students than are his judgments, has put forth, in regard to that system, the singular opinion that, as its object was "securing power," its wisdom " is apparently justified by the striking develop- ment of national power which took place during the period when it lasted. England first outstripped Holland and then raised an empire in the East on the ruins of French dependencies."'' This remarkable induction he gives as yielded by " the logic of facts," though he proceeds to indi- cate misgivings, as he well may. Seeing that France was as mercantilist as England, and yet lost her possessions, the " logic of facts " which enables professors at a pinch to turn protectionists would seem to prove both terms of a contra- diction. And as Holland contrived to defeat Spain, she would seem to possess in turn the required vindication of her policy. English mercantilism is rationally to be judged by its traceable reactions on English life; and these leave small room for conflict of judgment. 1 Hallam, Constitutional History, 10th ed. i. 259-361. » Gardiner, ii. 237. ^ Gardiner, iv. 1. ^ Id. p. 85 ; Cunningham, ii. 287, note. 5 Cunningham, ii. (ed. 1903), 63-74. « Id. p. 71. ' Cunningham, ii. (1st ed.), 16-17. 42 PROTECTION IN BRITISH HISTORY It is' a singular fact that while both Elizabeth and James thus incurred obloquy by granting the most questionable monopolies to courtiers, they both declined to give a patent to William Lee, the curate who, in the last decade of the sixteenth century, invented the stocking-frame. Elizabeth's first refusal, it seems, was made in a temper, because the machine made coarse woollen stockings instead of fine silk ones. But when Lee, in 1598, produced the silk stockings, she still refused a patent, and James took the same course, on the score that hand-knitters would be thrown out of work by it.i Here we have the true " Sisyphist " theory of industry, as Bastiat called it, set forth, too, by princes who actually did grant monopolies which restricted both trade and industry. The only possible explanation is that in the latter cases private interest — whether financial or personal — was strong enough to override the Sisyphist tradition. But the doctrine that labour must remain wasteful in order to keep people employed — a doctrine which would have condemned the superseding of the fire-drill by flint and tinder, and the tinder-box in turn by the lucifer match — remained a ruling principle of constitutional legislation in Britain long after British princes had ceased to dare to bestow monopolies. § 3. The Woollen Trade The supreme example of protection as applied to one industry is the legislation in favour of the woollen trade which began in 1666, when it was solemnly enacted^ by the Restoration Parliament that nobody should be buried in anything but wool, under a penalty of £5. It would have been equally to the purpose to provide that the required quantity of wool should be buried by itself, or burned ; but the legislature showed no misgivings. As late as 1787 we ^ Dictionary of National Biography. Henri IV had tlie sagacity to invite Lee to France, where the manufacture was set up at Rouen. After the assassination of Henri and the subsequent troubles, Lee died of grief about 1610 ; whereafter his workmen, being persecuted, returned to England, where they managed to set up the beginnings of the hosiery manufacture at Nottingham. 2 18 Ch. ii. c. i. THE WOOLLEN TRADE 43 find a historian of commerce pronouncing that " this is certainly a wise and salutary law, as it is a means of con- suming a considerable quantity of our slight woollen manufactures ; yet such is the vanity of too many that they will rather forfeit £5 than be instrumental in promoting our own most important manufacture." ^ This in an England where, for a century, cotton spinning and weaving had been employing labour, and where already the cotton manufacture absorbed an annual import of over ten million pounds weight of raw material. Disobedience to the woollen law, of course, was common ; so in 1678 the Act of 1666 was repealed, and replaced by one^ of a more stringent kind, which established provision for its enforcement. Every parish incumbent was to in- vestigate every burial, and certify as to the facts ; and an army of searchers was established to do the work. The use of cotton continuing to increase, an Act was passed in 1700 ^ " for more effectually employing the poor," which provided that all wrought silks. Bengals and so forth, from Persia, China, or India, also all calicoes printed there, should after 1701 be compulsorily re-exported. Later, all French cambrics, lawns, and calicoes, painted, printed, stained or dyed, and all wrought silks, were put upon the same footing, having to pay duty even for the purpose of passing through the port of London to another country. The merchants, writes Smith, " are afraid lest some of these goods should be stolen out of the warehouse, and thus come into competition with their own." * It was in this generation that " some of the counties in the neighbourhood of London petitioned the Parliament against the extension of the turnpike roads into the remoter counties. These remoter counties, they pretended, from the cheapness of labour, would be able to sell their grass and corn cheaper in the London market than themselves, and would thereby reduce their rents and ruin their cultivation." ^ 1 Anderson, Origin of Cominerce, ii. (1787), pp. 487, 547. (Reproduced in Maopherson's Annals of Commerce, ii. 523, 692. ) 2 30 Ch. II. c. 4. ' 12 Will. III. c. 10. * Wealth of Nations, b. iv. cli. iv. * Id. b. i. ch. xi. Pt. i. 44 PEOTECTION IN BRITISH HISTORY This, one of the classic records of English protectionism, is to be paralleled in Dutch history by the narrative of the resist- ance of given cities to any improvement in the means of communication enjoyed by others. The motive operates alike in all countries. " This wholesome law," says the old protectionist historian concerning the Act of 1700, "greatly revived the drooping spirits of our own silk and stuff manufacturers." ^ Neverthe- less, by the same writer's confession, twenty years later the use of calicoes had become so general as to be a pretext for chronic riots among the silk and woollen weavers of London ; whereupon a new Act was passed ^ prohibiting the wearing of calicoes, under a penalty of £5 to the wearer, and one of £20 to the seller. In the same sagacious Parliament it was further provided that no buttons or buttonholes should be made of " cloth or other stuff," in order that the consumption of raw silk and mohair yarn should be encouraged. Protection was thus more fiercely applied in the interest of one or two home industries against others — to the extent of protecting A against B, and against A — than against "the foreigner"; for in the year 1700, it being found that English prohibition of Flanders lace led to an exclusion of our woollens from Flanders, the former prohibition was repealed.^ The pressure of the interest of the woollen trade, which was at this point bound up with that of the land- owners, could force free trade in Flanders lace, as against the ostensible interest of English lace-makers ; but no combination of English interests could yet avail against that of the land- owners and woollen manufacturers. All the while the protected interest confessedly languished lamentably. In 1729 the protectionist Joshua Gee offers "reasons why the demand for our woollen manufactures do not increase," and confesses that France beats us in neutral markets.* The trade was, in short, being constantly and grievously injured by protective policy in general. In 1744 the author of the ^ Anderson (in Maopherson, ii. 709). 2 7 Geo. I. c. 7. 3 12 Will. III. c. 11 ; op. Smith, Wealth of Nations, b. iv. eh. ii. ^ The Trade and Navigation of Great Britain Considered, 6th ed. 1760, pp. 69, 72 (oh. xxviii.). THE WOOLLEN TEADE 45 Essay on the Causes of the Decline in the Foreign Trade points to " the many petitions to Parliament complaining of the decay of the -woollen manufacture," and "the starving condition the poor are reduced to in the clothing counties " ; and he too points to an explanation. The prohibition of the import of Irish cattle had set Irish farmers upon breeding sheep, to produce wool ; and when that industry in turn was struck at by a brutal law to prohibit the export of Irish woollen manufactures, the Irish had perforce to sell their wool cheap to France, whereby the French woollen trade was greatly advantaged as against the English.^ At the same time the constant and blind effort to exclude foreign goods necessarily restrained the exportation of all English goods save those which were produced under special advantages. The result was that, as the Essayist just quoted puts it, " 'tis felony in England to export wool ; and yet they who furnish all the world with wool have least of the manufacturing of it among themselves."^ As late as 1792 Arthur Young notes that " of all the great fabrics of England that of wool is least prosperous, and has been most complaining, of which the proofs are before the public : the policy therefore has failed." ^ § 4. The Silk Trade Not dissimilar was the history of the silk trade, which we have seen obtaining repeated protection in the fifteenth century. In 1504, again, there was prohibition* of the import of silk or part-silk ribbons, laces, girdles and corsets, with freedom of trade, even on the part of foreign importers, in other silk articles, and in raw and unwrought silk. As Bacon explains, the goods prohibited were the only forms of silk stuiF then manufactured in England ; and the object was to protect what manufacture did exist.^ It will be observed that the previous measures of protection had done nothing to extend the business of silk-making ; and it would seem to 1 Ussay cited, ed. 1756, p. 63. " Id. p. 33. 3 Travds in France, Bohn ed. 1890, p. 354. « 19 Hen. VII. c. 21. = Life and Reign of Henry VII. Ellis and Spedding's ed. of Works, vi. 233. 46 PEOTECTION IN BRITISH HISTORY have been the example of France, where the manufacture was introduced about 1520, and the coming in of French refugees under Cecil, that stimulated it in England.^ In 1629 the silk-throwsters of London were incorporated ; ^ and in 1661 they presented a petition in which they claimed to employ above 40,000 men, women and children. The result was a statute imposing an apprenticeship of seven years upon all silk-workers.^ Many more interferences followed, the trade making no great further advance till the arrival in 1681 of the French refugees who established themselves in Spital- fields,* there doing for the silk trade in particular what their kindred did for so many other industries in Britain.^ Still, however, much silk was imported from France — an average of £712,000 worth in each of the three years 1686-88" — though a great importation of raw silk from India was noted as early as 1681;^ and protection was resorted to as a matter of course, especially as against France, the then " natural enemy," all trade with whom was vetoed, first in 1678, and again in 1689.^ And as raw silk was a French product, this was included in the veto. In 1698 the Royal Lustring Company obtained a monopoly ; ^ but the fashion changed, and the Company collapsed before the term was up.^" In 1713 the Company of Silk Weavers in London, while alleging that their trade was twenty times as great as it had been in 1664, petitioned against the articles of the Treaty of Utrecht which, proposing a reciprocity of low duties, favoured a renewal of trade between France and England.^^ Addison helped the silk- weavers with his satire. The Memoirs of Count Tariff; and on their appeal and other grounds the articles in question were rejected by Parliament. The introduction in 1718 of water-power machinery, on an Italian model, for si Ik-throwing, ^^ might have done much under a free system; but in 1722 it ' Cunningliam, English Industi-y and Commerce, ii. (3rd ed.), 84 ; Mao- pherson, Annals of Commerce, ii. 59, 191, 231. 2 Maopherson, ii. 359. 3 13.14 cj,. II. c. 15. * Cunningham, ii. 330 ; Maopherson, ii. 617. '' Cunningham, ii. 605. ^ Maopherson, ii. 620. ' Id. p. 604. 8 Cunningham, ii. 458-9. » 9-10 Will. III. o. 43. " Maopherson, ii. 701, " Id. iii. 34, " Cunningham, ii. 519, THE SILK TRADE 47 was enacted that whereas the trade " has of late years been greatly improved," and is hindered by duties both on raw and thrown silk, bounties shall henceforth be given on exportation by way of drawbacks.^ Naturally this did little good; and the lowering in 1749 of the duties on raw silk from China, Carolina and Georgia gave little help, the bulk of the importation being from or through Southern Europe.^ The explanation of the policy followed was that the woollen trade was jealous of that in silk as of that in cotton,^ and strove to keep silk for home consumption at a high price, though prepared to tolerate bounties on export. Under this enlightened handling the silk trade throve as might be expected. In 1764 the Lords of Trade were petitioned by the silk-weavers, the throwsters and the silk- mercers severally, the first demanding to be protected by double duties against importation of foreign wrought silks and velvets ; the second pleading for lighter duties on raw silk ; and the third asserting that there was plenty of employment but lack of labour to do the weaving work.* Thus instructed, the Lords of Trade left things as they were, and early in 1765 the journeymen weavers made vast and riotous demonstrations against the importation of French silks ; whereupon the entry of silk stockings was prohibited.^ The old Act of Henry VII was made more severe. Next year the prohibition was extended to all foreign silks and velvets save those of India and the silk crapes and tiffanies of Italy, which were taxed extra.^ At the same time (1765) the duties on raw and thrown silk were somewhat lessened and the drawback on exports abolished, save in the case of goods sent to Ireland and not to be re-exported. But still the trade languished; and in 1769 there were more sanguinary riots among the silk-weavers, who had now established trade unions to raise wages and to make levies on those at work, 1 8 Geo. I. c. 15. 2 The Navigation Act of 1651 expressly exempted silk, whioh might be brought from Holland or Flanders if the importers made oath that it had been brought overland from Italy. Cunningham, ii. 209. Cp. p. 250. 2 Compare Cunningham, ii. 463, 516-17. * Macpherson, iii. 407. 5 5 Geo. III. c. 48. ' 6 Geo. III. o. 28. 48 PROTECTION IN BRITISH HISTORY ia aid of those on strike.^ Thenceforth the legislation affecting the trade combined the prohibition of imports with the prohibition of combinations among the workmen.^ But in 1784 new duties were imposed on raw silk; in 1786 Pitt left in force the prohibitions against importation of silk goods while making his reciprocal treaty of commerce with France; and in 1795 new duties were imposed on raw and other forms of silk. Thus, like the other protected trades, that of silk subsisted in shallows and miseries until the dawn of the free trade era. In 1793 it was estimated that in Spitalfields alone there were 4500 looms standing idle. In the period from 1776 to 1799 the unaided cotton trade, burdened by the duties on raw material, increased its imports of that material from 4 '4 to 264 million lbs., and even the imports of Spanish wool rose from 1'5 to 3 '8 million lbs., while that of silk increased hardly at all,^ the cause being as much the paralysis of progress by the prohibition of competitive imports as the duties on the raw material. The imbroglio of trade jealousies, encouragements, discourage- ments, burdens, and prohibitions checked development even at a time when new forces in the form of machinery were creating new possibilities of expansion. As regards the quality of the products, the backwardness of the protected silk trade from first to last was notorious. Huskisson declared in 1824 that "to the prohibitive system it was to be ascribed that in silk only, in the whole range of manufactures, we were left behind our neighbours."* As an Edinburgh reviewer argued unanswerably in the following year, there was no reason to doubt that if silk had been treated as was cotton — if the manufacturers had been allowed to import their raw material free "and been obliged to depend on their own genius and invention for their ascendancy in the home as well as the foreign markets " — we should have "made equally rapid advances in both these great depart- ments of manufacturing industry."^ All the while, by the 1 Macpherson, iii. 491. ^ E.g. Acts of 1777, 1782, 1789. ' Macpherson, iv. 470. ■* Speech of March 24, 1824, cited in Bdinhurgh Review, vol. xliii. p. 83. ^ Edinburgh Review, vol. xliii. Novemher 1825, p. 81. THE SILK TEADE 49 testimony of Bowring, given before the Parliamentary Committee of 1831-32, the unquestioned superiority of the silk manufacture in France was due to the fact " that it is, of all the manufacturing interests of France, the least protected." ^ Competition had there spurred alike invention and artistic effort. Lyons had a school of art largely devoted to eliciting such effort in connection with manufactures, and successful designers rose to partnerships. Needless to say, no such developments were attempted by the protectionists of England. § 5. The Scramble of Interests Such facts as the foregoing are wholly ignored in the heedless sketch of English industrial evolution which in Friedrich List's National System of Political Economy does duty at once for history and historical philosophy, and has served to educate a generation of protectionists in Germany. The theory there set forth is that "England" in the eighteenth century was skilfully building up equally each of her great staple industries by vigilant Protection. In reality there was not in existence any such political organisation as List imagines. There was merely a chronic clamour of self-seeking classes in Parliament,^ whose tribes, as Smith noted, "became formidable to the Government, and upon many occasions intimidated the legislature." ^ The woollen trade would gladly have strangled the cotton trade altogether, and did its best to do so. If the interest of England as a whole was ever considered, it was by men, in Parliament or out of it, who were powerless against the banded landlords and the shouting trades, or were themselves bewildered by the sham statistics and pseudo- science of traders who, as Smith put it, knew how trade enriched them- 1 Vol. xix. of Conunittee Reports, 1831-32, p. 520. 2 The protectionist Gee on this head agrees with Smith. He observes that the merchants in the House of Commons, "by the mutual opposition of those who are engaged in different interests, rather puzzle than give light to the argument in debate." Pew traders, he adds, "however knowing and skilled in their own way, give themselves the trouble to look further than what concerns their own particular interest." The Trade and Navigation of Oreat Britain Considered, end. ' B. iv. chap. ii. 4 50 PROTECTION IN BRITISH HISTORY selves, but had no concern to know how it enriched their country.^ But indeed not one man in a million had any scientific comprehension of the whole problem ; and country gentlemen fought for their pockets exactly as did the manufacturers. § 6. Early Corn Laws The proof of this was the addition of a system of bounties on corn exportation to that of the Corn Laws. In the chance-medley of legislation for trade, as Smith points out, an Act of 1663 ^ wrought partially for freedom by modifying the law of Edward VI against engrossing of corn, to the extent of allowing dealers to buy when wheat did not exceed 48s. the quarter, provided that they did not sell again in the same market within three months. But in 1670 ^ there was laid upon imported wheat a duty of 1 6s. when the home price did not exceed 53s., and a duty of 8s. when the price was between that and 80s. So glaring a measure of class favouritism was modified in times of distress by temporary statutes ; * but the principle of protection to landowners was thus clearly established. In 1660, on the other hand, exportation of corn was permitted^ when wheat did not exceed 40s. the quarter; in 1663 the liberty was extended to the price of 48s., and in 1670 it was made unconditional. Thus all pretence of concern for the consumer had been over-ridden by the self-interest of the bulk of the landed class, under the plea, of course, that all increase of total home production of corn was to the national advantage as constituting a security against dearth. Nominally there was a poundage payable to the king on exported corn, but it amounted only to Is. per quarter on wheat. At length, in the first year of William and Mary, the landed interest was able to go to the length of establishing a bounty on all exportation of wheat, and the small export ■^ Wealth of Nations, b. iv. ch. i. par. 10. The trade arguments were addressed, in Smith's words, "by those who were supposed to understand trade, to those who were conscious . . . that they knew nothing about the matter." = 15 Ch. II, u. 7. 8 22 Ch. II. c. 13. ■• Smith, b. iv, e, 5. » 12 Ch, II. c, 4. EARLY CORN LAWS 51 duty was taken off where the price was below 48s. Ten years later it was abolished. The economic reasoning relied on to justify the bounty was indeed more complex than that which accounted for the old prohibitions of export. It was to the effect, as aforesaid, that every extension of agri- culture was a further guarantee that the nation could feed itself. But the real motive was, of course, sheer class gain and trading profit; and while the bounty never availed to cheapen corn to the English people, since it always carried off the surplus in years of plenty, it actually did enable the Dutch at all times, and the French in times of dearth, to buy English corn cheaper than the English did.^ Thus the principle of " defence " was stultified from the first. Some stimulus to commerce and industry was given by the Peace of Paris in 1763 ; and some influence, further, had been gained by the writers on the side of free trade, both French and English ; so that in 1766, a year of dearth, there began a series of temporary enactments suspending the high import duty on corn, till in 1773 there was passed a law reducing it to a nominal tax of 6d. when wheat was at or above 48s., and providing that bounty and exportation were to cease together at a price of 44s. As this prevented the former artificial increase of prices, the landed interest of course protested, alleging all manner of harmful results. We have the express testimony of a Committee of the House of Commons in 1821, substantially representing the landed interest, that the period before 1773 was one of " comparative stagnation in our agriculture," while that from 1773 to 1791 was the one of "most rapid growth and improvement." ^ But improvement had meant outlay ; and what the landlords of all periods seek first is rents. Finally, when the free trade movement, which reached its height for that period in Pitt's treaty with France in 1786, was definitely arrested by the French Revolution and the consequent reaction, it became easy to pass in 1791 an Act imposing a prohibitory duty of 24s. 3d. when the price of wheat was under 50s., with a duty of ' Cp. An Essay on the Causes of the Decline of the Foreign Trade (ascribed alternately to Decker and Eichardson), ed. 1756, p. 65. ^ Eeport quoted by Villiers, Speeches, p. 243. 52 PROTECTION IN BEITISH HISTORY 2s. 6d. on prices between 50s. and 54s. ; and allowing the 6d. duty to apply only above the latter price. Thus, in a period of reaction, was riveted the particular protective duty which ultimately became the means of most completely discrediting Protection. § 7. Fishing Bounties Among the minor exploits of British protectionism in the eighteenth century may be noted the operation of the system of bounties to the herring fishery. Not content with paying a bounty on the fish, which worked out at about the equiva- lent of their price — from 17s. to 27s. per barrel — the Government gave a tonnage bounty, "proportioned to the burden of the ship, not to her diligence or success in the fishery"; whereupon, naturally, vessels were fitted out "for the sole purpose of catching not the fish but the bounty. In the year 1759, when the bounty was at 50s. the ton, the whole buss fishery of Scotland brought in only four barrels of sea- sticks [herrings cured at sea]. In that year each barrel of sea-sticks cost Government, in bounties alone, £ 11 3 : 1 5s. ; each barrel of merchantable [repacked] herrings £159:7:6."^ The bounty to the " busses," further, was a direct discourage- ment to the boat-fishery, which did not share it, but which was the more suitable to the industry. The boat-fishery, accordingly, was for the time destroyed. As a result of all the expenditure in bounties there was, of course, no lowering of price, and apparently no improvement in the fishery ; for a number of joint-stock companies established to exploit the bounty mostly lost their capital and disappeared.^ § 8. English and Irish Trade It may not be uninstructive, further, to take account of the application of the ruling ideas concerning the control of trade to the relations of England and Ireland on the one hand and those of the mother country and the colonies on the other. Apart from the penal laws directed against the 1 Wealth of Nations, h. iv. ch. v. ^ Id. ib. ENGLISH AND IRISH TRADE 53 Roman Catholic religion in Ireland from 1663 onwards, and the Anglican animosity towards the Presbyterians of Ulster, the whole anti-Irish policy of the seventeenth and eighteenth centuries is simply a process of "protecting" English pro- ducers against their fellow - subjects across St. George's Channel. This has, indeed, been latterly urged in excuse of the procedure, as against the charge of deliberate wicked- ness. English administrators, it is argued, were seeking not to ruin Ireland but to safeguard English interests. So be it. We are here concerned not to comment on the moral inspira- tion of English policy in Ireland in the past, but to note how the spirit of Protection sufficed to carry English statesmen, for more than a century, as far towards the economic ruin of Ireland in every direction as their unintelligent measures could compass. They certainly contemplated the suppres- sion, as far as possible, of every species of enterprise in which Irishmen promised to compete with Englishmen : that is to say, to keep one part of the United Kingdom in primitive penury in the supposed interest of the " predominant partner." There was no idea, in the legislation in question, of developing Ireland upon one line while England developed upon another. Strafford, indeed, fostered the Irish linen trade while deliber- ately repressing the rising woollen manufacture ; and while showing no scruples on the latter score, he resisted the attempts of the home Government to restrict Irish exporta- tion in general in the interest of English trade. '^ But the ruling opinion in England, once the protectionist view of things had taken general hold, was that all Irish trade should be subordinated to English. The injustice can be seen rooting itself, as it were, in the soil of economic pseudo- science. "Until the Cattle and Navigation Acts of 1663 there was no Act on the Statute Roll for laying a single restraint on the trade and manufactures of Ireland, or for imposing any duty on the manufactured products of Ireland 1 Cunningliam, Growth of English Industry and Commerce, ii. 368-70 ; Gardiner, History of England, 1603-164S, viii. 39 ; Lecky, History of Ireland in the Eighteenth Centmy, 1. 175; Miss A. E. Murray, History of the Commercial Relations between England and Ireland, 1903, p. 97. Gardiner and Lecky credit Strafford with founding the linen manufacture. It existed, however, long before his time. Cp. Lecky, i. 32, 178. 54 PROTECTION IN BRITISH HISTORY when imported into England." ^ The protective Acts of the Yorkist and Tudor kings treated Ireland as part of the king- dom, even when English artisans complained of Irish com- petition.2 But after the Civil War there had grown up in England a medley of animosities towards Ireland and her medley of inhabitants ; on the part of the mass of English- men towards the Irish Catholics ; on the part of Royalists towards the host of Cromwellians who had been settled on confiscated Irish lands ; and on the part of a number of English nobles towards the Duke of Ormonde, who possessed vast Irish estates, and who as Lord-Lieutenant sought to guard Irish interests ; and, yet further, towards the Crown, which stood to gain an influence through any development of Irish wealth.^ When, accordingly, in the peace after the Restoration, an outcry began to arise in England against the importation of Irish lean cattle,* Parliament readily passed a Bill prohibiting it between July 1 and December 20 of each year.^ The immediate effect was severe distress in Ireland, the Cromwellian settlers being perhaps the hardest hit.^ Yet in 1665 the English cattle-breeders, pleading low prices and falling rents, petitioned for a complete exclusion of Irish cattle; and though the Bill to that effect was rejected by the Lords, another was carried in the following year.^ This Act vetoed the importation from Ireland of cattle, sheep, swine, beef, and pork; and in 1668 and later further Acts extended the prohibition to Irish mutton, lamb, butter, and cheese.* As any sound economist could have foreseen, this legisla- ' Miss Murray, as cited, p. 6. Even tlie Navigation Act of 1663, thoiigli it did not name Ireland as sharing in tlie privileges conferred on England, did not exclude her ; and her trade with the colonies still continued. Leoky (History of Ireland in the Eighteenth Century, i. 11 i) is in error in stating the contrary. Miss Murray states the facts on p. 41. 2 Cp. 3 Edw. IV. c. 4, and 4 Edw. IV. c. 1. 3 Cp. Cunningham, ii, 371-3. ' There has been some confusion as to whether it was fat or lean cattle that were in question. Cp. Cunningham, ii. 373, and Miss Murray, pp. 24, 29, 40. 5 15 Ch. II. i;. 8. ^ Cunningham, ii. 373. ' 18 Ch. II. c. 23. 8 20 Ch. II. c. 7 ; 22 and 23 Ch. II. c. 2 ; 32 Ch. II. c. 2. ENGLISH AND IRISH TRADE 55 tion soon recoiled upon England. English meat prices rose rapidly, and the pasturers had to pay exorbitant prices for Welsh and Scotch lean cattle; while the Irish, driven to fattening their cattle, developed a foreign trade in meat and dairy produce, hides and tallow, which soon competed successfully with that of England.^ Not only on the Continent but in the colonies the new Irish produce under- sold the English, and Irish shipping began to multiply while the English began to lose ground. Of necessity, Irish importation from England further declined, and not only foreign but English ships began to victual in Ireland by preference. Yet further, the veto on Irish exportation of sheep led to an increased breeding of Irish sheep for wool, and to an export of that which lowered English wool prices, while the Irish began to develop rapidly their woollen manufacture in rivalry with the English.^ In 1660 and 1662 all export of English and Irish wool to Scotland or to foreign countries had been prohibited,^ and now it was feared to shut out Irish wool from England, lest it should be smuggled to foreign countries or worked up * in Ireland. The bafHed protectionists of England sought, however, to develop the Navigation Laws to the injury of Irish trade ; and the Acts of 1670 and 1671 provided that a large number of the main articles imported from the colonies should not be carried thence to Ireland save through England.^ Meantime, Scotland and Ireland excluded each other's products ; Scotland first prohibiting Irish cattle, beef, and corn, and Ireland the linen, woollen, and leather manufactures of Scotland. The principle of Protection was in full sway, province legislating against province, and the predominant partner at once in- tensifying every centrifugal tendency and checking its own powers of commercial and agricultural development in the eflFort to injure its dependencies. For, all the while, English 1 Miss Murray, as cited, pp. 33-35, and refs. ; Thomas Sheridan in vol. entitled Same Revelations in Irish History, ed. by Saxe Bannister, 1870, p. 142. 2 Miss Murray, pp. 35-41, 63-54. Cp. Cunningham, ii., 374-6. " 12 Ch. II. c. 32. * Miss Murray, p. 46. ^ 22 and 23 Ch. II. c. 26. In the eighteenth century many more articles were put in the same category. 56 PROTECTION IN BRITISH HISTORY rents did not rise, and agricultural distress was widespread. Roger Coke, writing in 1671, speaks of "thousands of farms thrown up since this Act" of 1663; and of thousands of which the rent had to be "abated, some above ^, others above ^, others above ^ ; some, I know, which after two years lying waste, are abated one-half." ^ The basest blow of all, however, was yet to come. After the Revolution of 1688, Ireland, after suffering, as before, more than either England or Scotland from stress of strife, began rapidly to recuperate; and in the years 1696-98 the total trade was found to have greatly increased, largely by reason of the expansion of the woollen manufacture. The English manufacturers accordingly began to petition that such burdens should be laid on the Irish trade as would neutralise its natural advantages. The result was that at the beginning of 1698 the Irish Parliament was actually called upon, through the English Commissioners of Trade and Plantations, to pass a Bill imposing an export duty of 43J per cent on Irish broadcloth, with proportionate export duties on other stuffs. Over this monstrous demand even the sub- servient packed Parliament of Dublin naturally hesitated, and the matter stood still. Six months later, however, fresh pressure was applied ; and on the pretence that if Ireland gave up her woollen trade England would encourage her hemp and linen industries, the Parliament of Ireland passed the measure which began the ruin of her woollen trade — an industry of far greater extent and importance. The first duties imposed were of 20 per cent on the " old " drapery goods, and 10 per cent on the new; and there seems to have been a confused understanding that these were to be merely "countervailing" imposts. No such promise was kept. In 1699 the English Parliament in turn passed an Act ^ absolutely prohibiting the export from Ireland of all goods made or mixed with wool. The woollen trade was thus effectually stifled ; and on the other hand no adequate effect was given to the promise to encourage the linen manufacture. Ireland had been allowed ^ to export her hemp, ' Cited in An Essay on the Decline of the Foreign Trade, p. 59. 2 10 and 11 Will. III. o. 10. 3 7 and 8 Will. III. c. 39. ENGLISH AND IRISH TRADE 57 flax, yarns, and linen to England duty free; and in 1705 she was permitted to send coarse linens to the colonies.^ But in 1717 this permission was made conditional upon the admission of British linens into Ireland duty free ; ^ though all the while Irish coloured linens were subject to a prohibitive import duty in England and Scotland. When, a generation later, Ireland sought to encourage her hemp industry by a bounty on exported sail-cloth, the British Parliament retaliated, and she was " not only prohibited from granting bounties on her own hempen manufactures " but " forced to admit British bounty-fed sail-cloth and canvas duty free," ^ while a British Act further granted bounties on the importation of hemp from the American colonies.* Thus were the promises of 1698 fulfilled. It was to no encouragement from England, and to no schemes of Protection by her own Parliament, that Ireland owed the final development of her linen trade in the eighteenth century — the one success which relieved the record of planned impoverishment and calculated depression. The factors were the energies of her people, withdrawn per- force from woollen manufactures, and such climatic advantages as she may have had for linen-making. It was in the natural course of things, therefore, that a determined movement for freedom of trade should arise in Ireland when the colonies, largely reinforced by Ulstermen whom England had taught to hate her, showed the way ; and political necessity in 1779 extorted that freedom from the British Parliament. But in the very next year the British Government sought through the Lord Lieutenant to prohibit the export of Irish provisions from Cork ; and in the short period of Irish independence prohibitive British duties on Irish goods played their part in driving the Irish Parliament to a similar though a more moderate policy.^ Thus from first to last did the protectionist spirit generate alike political and economic evil® in the 1 3 and 4 Anne, c. 8. ^ 3 Geo. I. u. 21. 3 Miss Murray, p. 125. ■* Id. ib. ^ Miss Murray, as cited, ch. xi. 8 It is sometimes argued by tarifiBsts — though fear of Home Eule makes the plea unpopular with them — that under Grattan's Parliament protective 58 PROTECTION IN BRITISH HISTORY relations of the two countries, till at length the Rebellion of 1798 left a torn and exhausted Ireland to be included in a political Union which has not to this day evolved a unity either of interests or of feeling. § 9. English and Colonial Trade In the case of the American colonies, as in that of Ireland, the evil begins in 1663, when the Navigation Act in eflfect provided that European goods should reach the colonies, and colonial produce the mother country, only in English ships — though they might be colonial built. Imports from the colonies were already subject to duty like those of foreign countries, one of the first Acts of the first Restoration Parliament having laid a duty of 5 per cent on all articles of merchandise imported into or exported from any British possession.^ This policy was developed by the Navigation Acts, and again by the Act of 1672,^ which subjected the trade of the colonies with each other to a tax equal to that levied on their produce in England. This policy subsisted without modification until in 1703 bounties began to be paid for the importation of colonial pitch and tar. In 1719 a parliamentary Bill was introduced proposing to encourage similarly the importation of timber, by way at once of producing return cargoes for British ships and diverting the Americans from manufactures. To make more sure of the latter object, however, clauses were inserted providing that no American should manufacture iron wares — that, as a colonial writer put it, "no smith in the plantations might make so much as a bolt, spike, or nail."^ The House of Lords added a clause enacting that no forge should be erected in the colonies for making pig or cast iron into bar or rod iron. duties greatly helped Irish commerce. A study of Miss Murray's narrative and statistics will show, on the contrary, that the expansion arose from the mere liberation of Irish trade, and had reached high-water mark before the protective duties (small in any case) were imposed. 1 12 Ch. II. c. i. 2 25 Ch. II. c. 7. ^ Macpherson, Annals of Commerce, iii. 72. This seems to he the origin of a phrase often ascribed, without a reference, to Chatham. ENGLISH AND COLONIAL TRADE 59 Naturally the colonists were glad to see the Bill dropped, preferring loss of facilities for exporting timber to loss of all power of iron manufacture. In 1737 a petition was presented to Parliament by a number of merchants calling for encouragement of the importation of colonial iron and hemp in the interests of shipbuilding and naval power, the argument being now that there was no better way of discouraging the manufacture of iron wares in America than to encourage the production of pig and bar iron. The idea was a " colonial preference," an extra duty being laid on all foreign bar-iron save that coming from America, and the existing duty being repealed as regarded the latter. At the same time a duty was to be laid in the colonies on all iron imported there from Europe. Of course the ironworkers of England opposed the appeal, and the landlords, as owners of the woods, supported them ; so that nothing came of the proposal,^ for the time. In 1750, however, it was renewed by Charles Townshend, in a Bill to abolish the duty on colonial raw iron. At the same time the measure stipulated that no one in America should be permitted to erect a mill for slitting or rolling iron, or a plating forge to work with a tilt-hammer, or a furnace for making steel. But even this scheme was not sufficiently protective for the leading British interests. Not only did the ironmasters denounce it from their point of view : the tanners backed them on the score that a diminished consump- tion of British wood for the charcoal then used in iron- making would afifect their supply of bark ; and " the clergy and gentry foreboded injury to the price of woodlands " ; while the ironworkers and traders of Birmingham, though favourable to the free importation of bar-iron, prayed, from "compassion" to the "many thousands of families in the kingdom who must be ruined" if Americans were allowed to attempt iron manufactures, that the proposed restrictions should be carried yet further, so as to "secure for ever the trade to this country." The House even divided on a proposal to demolish every slitting-mill then existing in America, and the project failed by only twenty- ' Macplierson, Annals of Gomanerce, iii. 214-15. 60 PROTECTION IN BEITISH HISTORY two votes. But a return of all existing mills was required, and a veto was laid on any increase of the number ; wtile the importation of the raw colonial iron was limited to the port of London.! The restrictions placed upon colonial importation and exportation had one great outstanding result — the habitual practice of smuggling by the colonists ; ^ and this, on retro- spect, can be seen to be the line of rupture between them and the mother country. It was the irritation caused by this natural reaction against the British policy that set Grenville in 1764 upon his plan of making all the naval officers on the American coast customs officers, with a share in all confiscated cargoes.^ Their way of fulfilling their duties aroused new and deep exasperation, and they far outwent Granville's aims. Despite the Navigation Acts, there had long subsisted a recognised trade between the British colonies and the Spanish possessions in North and South America, and further, between the former and the French possessions in the West Indies. This trade the new customs officers treated as contraband, making wholesale seizures. The outcry was such that the British Government authorised the trade,* proceeding further to allow bounties on importation of colonial timber, with permission to the colonies to sell it in Ireland, and in Europe south of Gape Finisterre. But in the very Act legalising the colonial trade with Spanish and French possessions, there was laid down the principle that a revenue must be raised in the colonies to defray the expenses of defending them. The mother country, avowedly holding and controlling the colonies in her own interest, insisted that they should pay her the cost of holding them ; and new severities were planned to put down smuggling. Then came the Stamp Act, the beginning of the end. Protection thus dismembered the empire. It is vain to affirm, as protectionist writers are still fain to do, that " the ^ Bancroft, Hist, of the American Revolution, 1852, i. 70-72. Cp. Macpherson, Annals of Commerce, iii. 280 ; the Gommons Journals, vol. xxv. pp. 1053, 1091, 1096 ; and Act 23 Geo. II. o. 29. ^ Grahame, Hist, of the United States, 1836, iv. 169. 3 Id. iv. 170 sq. * i Geo. III. c. 15. ENGLISH AND COLONIAL TRADE 61 obstinacy of George the Third " was the disruptive force.^ George did but persist in a course which grew spontaneously out of the whole trade policy of his kingdom ; and had he been enlightened enough to wish to let the colonists manage their trade and fix their taxes in their own way, he would have been opposed by the most powerful interests of his own kingdom. Their theory of trade, conceived in egoism and born in ignorance, was the. very engine of division, alike at home and abroad. Even as it maintained lasting hatreds and costly wars between the nation as a whole and foreign peoples — alike those of the same stock and religion and those of other stocks and creeds — it wrought the irretrievable schism between the mother country and her American colonies, and the still more tragical sunderance between the peoples of England and Ireland.^ But at home, through all the machinery of social life, the tendency was the same. § 10. Smuggling In nothing, perhaps, was the self-frustrative power of Protection so constantly seen as in the perpetual presence of the smuggling trade. We have seen it generated in Ireland and in the colonies, but it was no less active a force at home The " England " which retrospective protectionists suppose to have been collectively bent on " building up " industries was in nothing so much at one as in readiness to buy the im ported goods which evaded the customs. Smuggling was in fact one of the great industries of the period,^ though, as Smith notes, it was " the infallible road to bankruptcy," * not because of lack of profit, for the profit was as nearly pro- portional to the hazard as in hazardous trades in general, but because of the habits it engendered.^ The smuggler, as ^ So Mr. Kirkup, Progress and the Fiscal Problem, 1905, p. 191. 2 These conclusions I find anticipated by E. H. Eoberts in his Govern- ment Revenue, Boston, 1884, p. 59, and by G. L. Bolen in The Plain Facts as to the Trusts and the Tariff, New York, 1902, p. 261. ^ Defoe, in his Tour, pronounces It the one main industry of the south of England, from Thames' mouth to Land's End. * Wealth of Nations, b. i. ch. x. ^ Smith (b. V. ch. 11.) seems to think that it was the forfeitures and penalties which ruined the smuggler ; but the escapes were always far in excess of the captures. Cp. Social England, v. 472. 62 PEOTECTION IN BEITISH HISTORY such, had the general sympathy, the nation in the mass being sufficiently conscious of the moral merits of the protective system. As Smith put it, men perfectly disposed to respect the laws of " natural justice " made light of artificial vetoes ; and " not ijaany people were scrupulous about smuggling when, without perjury, they could find an easy and safe opportunity of doing so."i The "without perjury" is charitable, but the tradition concerning " custom-house oaths " is less so ; and if, as Sir "William Hamilton has affirmed, " England became the country in Europe proverbial for a disregard of oaths," ^ the protective system assuredly had something to do with it. Exporting heavy goods, and importing light goods and liquors. Englishmen ran to smuggling as no other people did, unless it were their kinsmen in the American colonies. In the nature of the case, the history of smuggling can never be adequately written ; ^ but common knowledge justifies the assertion that it stood for an immense and far- reaching demoralisation.* "Agriculture suffered, for the wages paid by the smugglers were high. A man hired by a gang received half a guinea for each journey and 1.3 lbs. of tea, his horse and all expenses being found." The social historian can supply a map of the regular smuggling routes ; ^ and it would seem as if, at some periods, the secret traffic in tea and brandy were greater than the open — if secrecy can be predicated of a trade which was at times carried on openly by gangs of from fifty to a hundred men. "In 1733, as we read, ' Smugglers being grown to such a degree of insolence as to carry on their wicked practices by force and violence, not only in the country and in remote parts of the kingdom, but even in the City of London itself, going in gangs, armed with swords, pistols, and other weapons, even to the number 1 Wealth of Nations, h. v. ch. 2. ^ Discussions on Philosophy, 1852, p. 454. Cp. p. 528. ^ An official " Correspoudence " on the subject -was published in 1816; "Papers " in 1821 ; and many Excise Eeports in 1833-36. * Bowring in his evidence before the Parliamentary Committee of 1831-. 32 alternately argued that the smuggler was a " public benefactor," employ- ing labour that would not otherwise be employed ; that his work was destroying legitimate trade ; and that it was profoundly demoralising. All three propositions were separately provable ! ' Social England, as last cited. SMUGaLING 63 of 40 or 50, by which means they have been too strong not only for the officers of the revenue, but for the civil magis- trates themselves, who have not been able to put a stop to these pernicious practices even by the assistance of such regular forces as have been sent to their aid, and dispersed along the coast at the request of the gentlemen of the country.' The smugglers were in sufficient force to beat off the Government sloops. In the ten years before this date, 250 officers had been beaten and wounded; six had been killed outright. In the Report of a Committee of 1745, we read of gangs of smugglers numbering 40, 50, 60, 70, and even 90 men; the last-mentioned gang had 112 horses and a guard of 10 armed men. "A report of 1783 states that the trade was carried on by vessels of from 30 to 300 tons, carrying from 12 to 100 men, and 6 to 24 guns. At this date the cargoes consisted chiefly of spirits, tea, tobacco, snuff. East India goods, wines, drugs, cambrics, laces, and silks. Smugglers could bid defiance to the revenue cutters ; sometimes they would seize and scuttle them. To suppress the trade the Government employed 42 cruisers aggregating 4912 tons, with crews numbering 1421 men, and armed with 389 guns. Captures were not often made ; but in 1784 a great prize fell to the lot of H.M. sloop Orestes — a vessel of 300 tons, with a cargo of tea, brandy, silk, and lace, the value being estimated at over £30,000. It was claimed in 1786 that smuggling, as a trade, had been in great part abolished. An Act of this year contained a multitude of regulations which it was hoped would render it next to impossible to smuggle the smallest article from on board a vessel. The hope was vain, for the very next year saw a new Act with a vast multiplicity of regulations. So it went on till there were at last on the Statute Book more than a thousand Acts relating to smuggling. In 1821 it was asserted in the House of Commons that at a single station there were 52 fishing boats engaged in smuggling." i The humour of the situation was appreciably heightened by the fact that large quantities of silks were made in 1 I quote from an article on Smuggling by Alfred Marks in the New Age, Dec. 17, 1903. 64 PROTECTION IN BRITISH HISTORY Spitalfields and Manchester for the smuggling market,'^ as to-day they are specially manufactured for "bargain sales." But this did not alter the fact that an immense amount of smuggling was done. Porter has shown that in the period from 1827 to 1843, when the repressive service was much better organised than it had been in the eighteenth century, the quantity of silk smuggled into England from France — as proved by comparing the goods entered in France for export with those entered at the custom-houses in England — was almost exactly equal to that which paid duty— 3,153,020 lbs. of the former and 3,179,112 lbs. of the latter. The average duty during the period was nearly £\. Had it been 10s. the smuggling would probably have been given up; the revenue would have been as great ; the cost of the repressive service would have been saved ; and the public would have been saved an outlay of £38,618,708, which went to main- tain a demoralising industry.^ In the case of other articles the proportion of smuggling seems to have been similar, according to the results arrived at by a careful student: — "In 1765 smuggling in spirits had greatly decreased, tea being the chief article. In 1781 smuggling had so increased that severer Acts were passed against the practice. Act followed Act, but smuggling still increased. In 1766 a careful calculation had been made of the quantity of tea imported from China ; it was estimated at over fourteen million pounds. Of this amount not much more than five million pounds were consumed on the Con- tinent, leaving nine million pounds for England, and of this the half was smuggled. In 1784 it was computed that less than eight million pounds out of a total consumption of eighteen millions paid duty. The loss to the revenue by smuggling was estimated at £2,000,000. To understand what this means we must remember that the whole revenue of the country amounted to little more than £15,000,000."^ ^ This at least was asserted in the evidence given to the Lords' Committee on the Silk and Wine Trade, 1821 (Second Rep. p. 26). Another assertion was that the bulk of the goods sold in London and other places as smuggled were of British manufacture ; hut this is incredible. " Progress of the Nation, ed. 1851, p. 223. Cp. Bowring's estimate, given on p. 241. ^ Art. on Smuggling, by Alfred Marks, above cited. SMUGGLING 65 All this was, of course, economically only less monstrous a waste of labour than that caused by protection in general, and special demoralisation accompanied it. Men who began as adventurers ended as brutal ruffians ; children were brought up to lying and spying ; regular industry, slow at best to develop, was put at a discount by the pleasures and profits of the life of " free traders," as the smugglers of the age of Protection were called.^ All the while, according to a well- known anecdote, the men who in Parliament voted for duties on imported goods had no scruple in buying goods which paid none. Something perhaps of " English hypocrisy," much certainly of English lack of lucidity, may be set down to the atmosphere of legislative unreason which surrounded English trade and industry for five hundred years. § 11. Early Pleas fen- Free Trade In this long reign of error, indeed, there was not lacking rational exposition and argument to the contrary. At all times, probably, there was a perspicacious minority who realised the unwisdom of the prevailing laws concerning trade, but were powerless to enlighten the complacent ignor- ance of those who made them. Only when enlightenment reached a powerful king could it prevail against the brute forces of prejudice and class interest. Lesser voices were lifted in vain. As M'CuUoch has pointed out, the official letter given to Sir Hugh Willoughby and Captain Richard Chancellour on the beginning of their explorations in 1553, the year of the accession of Mary, " evinces the most enlarged and liberal views of commerce, and would do no discredit to the statesmen of our own time." ^ But such views could not prevail in contemporary Parliaments. In the seventeenth 1 From the story " Fair Trade and Foul Play " in Sir Walter Eunoiman's Tolume, Looking Seaward Again (Scott, 1907), I gather that the northern smugglers called themselves "fair traders" in the first half of the nineteenth century. In the eighteenth, however, that title was claimed by the regular dealers (Anderson, Origin of Oommerce, 17, 89, iv. 554), the smugglers then using the term "free." Sir Walter Eunciman's story, above cited, gives a remarkably vivid idea of the moral atmosphere of the "trade." 2 Introd. to M'Culloch's ed. of the Wealth of Nations, 1839, p. xxv. M'Culloch quotes from the letter, as preserved by Hakluyt. 5 66 PEOTECTION IN BRITISH HISTORY century it was generally admitted that the supremacy of the Dutch in trade was largely due to their low custom-duties ; and in all countries enlightened men could appreciate the force of the argument of De Witt, that " navigation, fishery, trade, and manufactures, which are the four pillars of the State, should not be weakened or encumbered by any taxes ; " but the reasoners could not prevail against use and wont in other lands. In 1677 there appeared in England a tract in which were set forth not only the benefits of free trade but the fallacy of the common theory that it was advantageous to import only durable commodities.^ Years afterwards, Locke was still under the dominion of the old prejudice ; and in 1678 the importation of French commodities was prohibited for three years ; which prohibition, after being repealed, was re-enacted in the reign of William III., on the avowed ground that the trade with France was a " nuisance." Again, Sir William Petty, in his treatise On Taxes and Contributions, published in 1667, laid down quite scientific doctrines as to labour and value ; and in his Political Anatomy of Ireland (1691), discussing the evil law of 1664, prohibiting the importation of cattle and beef from Ireland, on the score of the trade interest of England, thus anticipates and sum- marises the scientific refutation of all Protection : — If it be good for England to keep Ireland a distinct kingdom, why do not the predominant party in Parliament, suppose the western members, make England beyond Trent another kingdom and take toUs and customs upon the borders ? Or why was there any union between England and Wales ? And why may not the entire kingdom of England be further cantonised for the advantage of, all parties ? ^ And yet again, in the terse and masterly Discourses on Trade of Sir Dudley North, published in 1691, the whole logical problem of trade and currency regulation is luminously solved in the free trade sense.^ But Petty could not convey enlightenment to the politicians of his day; and North's treatise, it seems, was designedly suppressed. It was not ^ M'Oullooli, as cited, p. xxvii. ^ Political Anatomy of Ireland, ed. 1719, p. 34 ; cited by M'CuUoch. ' See the extracts by M'Cullooh, which are given also in his Principles of Political Economy, introd. EARLY PLEAS FOE FREE TRADE 67 that these men were "mere theorists,'' unable to appeal practically to practical men. Petty, North, and the author of the tract of 1677, were one and all practical experts, knowing trade thoroughly from the inside, but capable of comprehensive views where the ordinary trader has none. The fatality was that unintelligent self-seeking prevailed by sheer force of numbers in the council-chamber, while the many, unwitting of their interest, were deceived. The best that could happen was that occasionally one interest might be strong enough to overcome, not for freedom's sake, a stupid restriction, such as it might perhaps be still ready to impose on others. Thus, as we saw, the Parliament of 1663, which so notably injured English agri- cultural interests in the effort to protect them against Irish cattle imports, gave partial relief from the old laws against engrossers of corn, thus really helping agriculture. At times a trader suffering from stupid interference might be stimulated to think out the whole matter and reach a free-trade creed, as happened in the case of the anonymous author of Considerations on the East India Trade, published in 1701, who points out forcibly the essential folly of those theorists whom Bastiat long afterwards labelled the " Sisyphists," who make labour the end and not the means of the maintenance of life : — " We are very fond," he writes, " of being restrained to the con- sumption of English manufactures, and, therefore, contrive laws either directly or by high customs, to prohibit all that come from India. By this time 'tis easy to see some of the natural conse- quences of this prohibition ; — 'Tis to oblige things to be provided by the labour of many, which might as well be done by few ; 'tis to oblige many to labour to no purpose, to no profit of the kingdom, nay, to throw away their labour, which otherwise might be profitable. 'Tis to provide the convenience of life at the dearest and most expensive rates, to labour for things that might be had without. 'Tis all one as to hid us refuse bread or clothes, tho' the providence of God, or bounty of our neighbours, should bestow them on us ; 'tis all one as to destroy an engine or a navigable river, that the work which is done by few may rather be done by the many." i 1 M'CuUoch, as cited, p. xxxiii. 68 PROTECTION IN BEITISH HISTORY But while, on mercantilist principles, the East India Company, with its strong influence, was able from the first to obtain exemption from the law prohibiting the export of bullion, on the score that the result of its dealings in India was a total gain in bullion,i the Company did not, of course, dream of giving up its monopoly of the Indian trade ; and that subsisted till 1813, always relatively unprofitable as compared with lines of trade in which there was competition.^ The more enlightened and scientific reasonings of economists, pointing towards freedom as the cure of many evils, appealed only to the more enlightened readers. It is true that the plain failure of Protection to secure prosperity gained atten- tion for treatises such as the Essay on the Causes of the Decline of the Foreign Trade, published in 1744 and reprinted in 1756, and to Hume's Political Essays, published in 1752. But up till Hume's appearance in the field even the sounder writers — with the possible exception of North, and in some degree of Petty — had mixed much fallacy with their argumentation. Even Locke remained under the bullion delusion; and the anonymous essayist of 1744 propounds many erroneous theses. A rapid advance in economic science began with Hume ; but the reaction against the French Revolution arrested all progress, and the nineteenth century began in political and economic obscurantism. § 12. Summary The summary of our survey is that during the whole history of England, down to the beginning of the nineteenth century, every conceivable kind of blunder had been made in the regulation of trade and industry. Trade had all along been hampered by some form of unintelligent interference. It was fettered from the first by local, professional, and national jealousies and animosities. When the crown was not bleeding it of immense customs-duties, often taken by simple seizure, or stunting it by forcing it to pass through one or other remote and inconvenient staple, it was being bound by the restrictions set up by the unenlightened egoism of the gilds ^ Wealth of Nations, b. iv, ch. i. , near end. ^ Id. ib. SUMMAEY 69 and other trade-unions of its own practitioners. The ruling motives all round are fiscal extortion and mutual malice. But even apart from malice, untold evil has been wrought throughout centuries by sheer delusion. Economic science could not well grow up before astronomic ; and in the latter half of the seventeenth century the majority even of educated Englishmen still derided the doctrine of Copernicus. Even had the rulers of Europe had access to the counsels of scientific economists, even had men like Dudley North been at the council board of every king, no State could then have been ruled by their wisdom. Trade laws and fiscal systems perforce expressed the prevailing views of the trading or land- owning classes ; and the summing-up of the whole chaotic mutation is : the imposition of the unenlightened will of the strongest interest for the time being. Now it is the fisc ; now the gild ; now the land-owning class as consumers ; now the same class as producers ; now the latter in combination with a class of manufacturers ; now a combination of traders ; and so on. The bullion delusion maintains, century after century, an apparatus of law that visibly and constantly fails to do what it is planned to do ; yet not till there arises an overwhelming consensus of scientific opinion on the subject in the nineteenth century is the passage of bullion unimpeded. The self-seeking of classes and interests is not less potent to misgovern. We have seen a long series of monopolies imposed on the com- munity down till the last and most intolerable — that of the corn laws. Every abuse in turn is defended as vital to the welfare of the nation : every reform is denounced as an enactment of ruin. The navigation laws rapidly wrought great and demonstrable harm to the English trade ; but, once established, they created vested interests ; and these interests, backed up by plenty of ignorant prejudice, fought for them to the end. Contrasted with the actual sordid scramble of selfish separate interests — the long series of brutal exploita- tions of the public by gangs of intriguing traders and class combinations, the complete disregard of all existing economic science, the utter empiricism of the entire procedure — such a picture of connected and calculated national policy as is 70 PROTECTION IN BRITISH HISTORY drawn by List in Ms account of English commercial evolution is revealed as a mirage, in the style of the worst school of German historiography. In comparison, the procedure of Adam Smith, even when fallaciously speculative, is illuminating and helpful. The England of List's imagination, an entity with one continuous will and one high conception of national interest, conscious of destiny and sagaciously preparing for freedom by constraint, is as vain a chimera as was ever palmed off on unstudious credulity in the name of science. It is not difficult, in view of the past, to see why free trade is but slowly won. To succeed, the principle must triumph over the desperate resistance of wealthy and power- ful classes ; for only such classes are ever able to secure positions of monopoly. Above all, it has to triumph over the fruitful medium in virtue of which all sinister interests are wont to thrive, to wit. Ignorance. CHAPTEE VI DISTRESS AND UNEMPLOYMENT UNDER PROTECTION If, after a survey of economic history down to the nineteenth century, any doubt can remain as to the fact that private and not public interest is the determining factor in establishing and maintaining protective systems, the fair-minded inquirer can hardly fail to be convinced by a study of the conditions of English life in the first half of the nineteenth century. In the last quarter of the eighteenth, despite hampering trade laws, and largely in virtue of new mechanical inventions, England had distanced all other countries in her staple manu- factures. Increasing her manufacturing population more rapidly than agriculture could expand under normal condi- tions, she was in a position to buy with her manufactures the food that her own harvests might fail to yield. Now, if ever, it might be supposed that the fundamental fact of trade, the inevitableness of barter, would come home to the general consciousness. Pitt mastered it, and partly carried his point in the French treaty of 1786, against the resistance not only of normal Toryism, but of Fox and Burke, of whom it is hard to believe that they were not sinning against light. ^ Were it not for the outbreak of the French Revolution the ^ Fox, remarks Mr. Hammond, "wag not a free-trader " {Charles James Fox, 1903, p. 210) ; and Mr. Morley pronounces him (Burke, M.L. series, p. 125) "ostentatiously ignorant of political economy." But Burke was his mentor, and Mr. Morley notes (p. 127) Burke's " deplorable perversity " in opposing, " with as many excesses in temper as fallacies in statesmanship, the wise treaty with France, in which Pitt partially anticipated the commercial policy of an ampler treaty three-quarters of a century afterwards." 71 72 THE HISTORIC EVOLUTION commercial gains ^ -would probably have made the conviction general ; but upon that cataclysm there followed a political reaction which for a generation checked every order of pro- gressive thought, and in the reactionary period Protection was carried to the uttermost. The costs of war alone sufficed to put an end for a generation to experiments in the reduction of import duties. Pitt ceased to be a reformer, and the landowning interest became supreme, the manufacturers rivetting the corn laws by adhering to Protection on their own account. Let it be assumed that, down to 1815, high corn prices had been in general the result, not of the corn laws, but of bad seasons and the state of war,^ which made cost of trans- port enormously high.^ According to protectionist reasoning, the resulting high prices of corn should have meant wealth and employment for the nation at large, especially as foreign competition in the home market was practically at an end.* In point of fact, England repeatedly reached during the war period the lowest depths of misery, as in the starvation of 1795 ^ and the collapse of trade and industry in 1811, when " there was scarcely a cotton manufacturer in the kingdom who had not diminished by one-half the number of persons employed in his mills, and many of the smaller manufacturers had discharged their people altogether." ^ But, indeed, save in the rare years of cheap bread, commercial distress prevailed throughout the entire war, and trade oscillated between 1 See p. 123. ^ Tooke, Thoughts and Details on the High and Low Prices of the Thirty Years, 1793-18S2, 2nd ed., Part II., § 8 ; Part III., §§ 2, 3. 3 Tooke {High and Low Prices of the Thirty Years, 1793-18^2, 2nd ed., p. 323) puts the cost in some cases at over 50s. per quarter. Yet "in the two years 1809 and 1810, when the power of Napoleon was at its height, when his will was law throughout the continent of Europe, and when bis most strenuous efforts were directed to place England in a state of perfect commercial isolation, we imported from that continent 2,002,039 quarters of various kinds of grain, chiefly wheat, and of this quantity 988,898 quarters came to us direct from France and from the Netherlands, which then formed in effect a part of the French Empire " (Porter, note to his translation of Bastiat's Popular Fallacies, 1849, p. 162). ^ Tooke, as cited. Part III., § 5. ^ See Nicholson, History of the English Com Laws, pp. 42-43, citing Cockbum's Memoirs, i. 63. ^ Speech of the Chancellor of the Exchequer in 1811, cited by Tooke, p. 82. DISTRESS UNDER PROTECTION 73 speculative high prices and wholesale bankruptcy. Let us, however, separate the war period from that of peace, and, to trace the specific effects of sheer Protection on trade, industry, and employment, let us begin our survey in 1815. One fact will then be established, that under Protection there can take place an intensity of unemployment and misery such as has never been seen in a free-trading country. It is in 1815 that the corn laws become definitely and aggressively the expression of the supposed interest of the agricultural class — that is, first and last, the landlords — con- sidered as deserving of Protection against all the other interests combined. As one able and not intemperate writer put it in 1822, the Committee of Inquiry into agricultural conditions in 1813, "actuated by a mixture of ignorance and selfishness, hardly to be credited in men of their station in society, ventured to recommend the prohibition of import except when our own wheat should be at or above 105s. the quarter." ^ This was more than even a legislature of land- lords dare venture on ; but the protectionists, defeated then, returned to the attack. Sir Henry Parnell, chairman of the Committee of 1814, declared himself "the friend of free trade," but argued that because-" the price of corn in England had risen higher than in any other country in Europe, in con- sequence of the interruption of late years of our communica- tion with the continent," an " artificial system " must be set up by which those war prices should as far as possible be maintained.^ The Minister Huskisson, a free-trader in theory, argued to the same end, but on the ground that " our com- merce and manufactures were encouraged and forced by pro- tections, by bounties, and by restraints on importation," and that agriculture was entitled to the same treatment. Thus the trading classes^ were hoist with their own petard, and the arguments put forward by some for a free trade in corn alone were naturally disregarded. The best reasoning on the subject was that of Baring (afterwards Lord Ashburton) 1 Joseph Lowe, The Present State of England, 2nd ed., 1823, p. 178. '^ Charles Knight and Harriet Martineau's History of the Thirty Years' ^ Peace, Bohn ed. i. 42. ' That is, the protectionists among them : many must already have been free-traders ; witness the petition of London merchants to Parliament in 1820. 74 THE HISTORIC EVOLUTION against the plea that high duties on corn imports would keep prices steady : — " Steady prices," he insisted, " were never produced by restric- tion. Apply the doctrine of restriction to any one county in Eng- land, and it would be found that . . . bread would be alternately high and low, according as there was a good or bad harvest in that particular spot. ... As the whole of England was to any particular county in this respect, such exactly was the whole of Europe as to England." i It is noteworthy that four of the greatest landowning peers — Buckingham, Carlisle, Devonshire, Spencer — and three of the leading statesmen of the day — Grey, Grenville, Wel- lesley — had signed a weighty protest against the raising of the margin of free importation, which then stood at the price of 66s. per quarter of wheat. With Baring, they denied that such a measure could produce either abundance of supply or steadiness of price. Nevertheless, by a large majority of both Houses, the point of free importation was fixed at 80s. per quarter. Of all protectable products, grain is that of which the price can be furthest heightened without counter- vailing limitation of demand ; and the landowning class, having the power to force up prices against all others, collec- tively used their power without scruple. For the moment prices continued to fall because of a good harvest, which meant " the suffering of the landed interest ; " but "the bad harvest of 1816 intervened, and gave a respite from that state of distress." ^ Before the respite the land- lords had not only secured the removal of the property-tax from land, on the plea that land could then pay no rent, but demanded further protection.^ The state of war had iu fact done the usual work of protection, the result of prolonged high prices having been that "the race of small careful farmers vanished from the earth, and gave place to a legion of the most luxurious and insolent of all the class of getters of sudden wealth." * These were the men whom three good ^ Knight, as cited, i. 43. 2 Tooke, i. ed. 1824, p. 314. Cp. Kuight, as cited, p. 48. » Knight, as cited, pp. 33, 44, 46. * M. p. 49. DISTRESS UNDER PROTECTION 75 harvests " ruined," and whom the corn laws were now shaped to restore, at the cost of those who had been " ruined " by the years of high war prices. As all good economists could see, the imposition of enor- mous import duties on corn was quite certain in the long run to injure agriculturists. If the landlords had been the persons to suffer the injury it might be said of them that their avarice overreached itself. But it was the farmers who suffered. In a series of bad years the enormously high prices paid for wheat, whether during war time or under the high tariff, set them upon extending cultivation to poor soils and offering or agreeing to higher rents. In a run of plentiful years the low prices were " ruinous " ; the poorer lands had to be left out of cultivation ; the high rents had to be paid while the farmer could pay anything; and he went on till his capital was exhausted.^ " Of late years," writes Lowe in 1822, "the income of farmers is in a manner suspended; and of the rents they at present pay, a large proportion is drawn from their capital." ^ Corn is, in fact, the product ^ See the testimonies from farmers elicited by the Agricultural Distress Committee of 1836, and quoted by Villiers in the House of Commons in 1840. Speeches, People's ed., pp. 151-58. And cp. the citations in Tooke, Tlumghts on Prices, i. (2nd ed.), 295-300, as to previous periods. ^ Joseph Lowe, The Present State of England, 2nd ed., 1823, p. 141. See also below, p. 79. Professor Nicholson, in his History of the English Corn Laws, first casts doubt upon and then denies the commonness of agri- cultural distress under the corn laws. "For many reasons," he remarks, ' ' the complaints of farmers on the depression of agriculture must be received with caution" (p. 169). Soon (p. 171) he is "strengthened in the belief that, on the whole, farming must have heeu fairly prosperous, in spite of the complaints of chronic depression ; " and finally he is confident (p. 181) that ' ' in spite of all the complaints of depression, the enterprising farmer was prosperous." The only reason adduced for thus discounting a great mass of testimony is Porter's remark {Progress of the Nation, ed. 1836, i. -.48) that farmers must have been economically very different from other men if they wasted their capital in speculative extension of farming. This argument misses the problem. Farmers lost their capital because of the special allure- ments set up by protection and the fatality of rising rent. And gold-mining shows plenty of evidence, of the tempting force of chance gains. Indeed, Professor Nicholson in a previous passage admits the facts: "Under the stimulus of high prices inferior land was cultivated. . . . The increase of supply ... in good seasons led to a fall of prices that was to the producer ruinously low. . . . Farming became a highly speculative business, and, as nsual, the speculator over-estimated his chances of success" (pp. 93-94). Quite so. 76 THE HISTORIC EVOLUTION at once ,most capable of being forced to a bigb price by protection, and least capable of staying at that price, simply by reason of the incalculable variations of yield. Want of intelligence long kept the farmers blind to this plain truth ; but the landlords, of course, were in a different position. In seasons of high prices they were able to raise rents ; and in seasons of low prices they could go on exacting them until the farmers were drained. No class thought less of the public good. The landlords actually demanded that foreign corn should be no longer warehoused duty free, as had hitherto been done by way of rational provision against dearth ; and they proposed to prohibit all imports of tallow, cheese, butter, rapeseed, and linseed.^ They were able to raise the duties. On the other hand, the speculative expansion of exports at the close of the war ended in total collapse. The high import duties, following on the state of war, had kept con- tinental producers back; and our exporters, seeking to sell without buying, had to sell on the Continent and in the United States below their home prices ; ^ as had already happened to them in the United States at the close of the War of Independence.^ In the spring of 1816, accordingly, there was general unemployment and distress. It began on the land. " Whole parishes," it was declared in Parliament, " had been deserted ; and the crowd of paupers, increasing in numbers as they went from parish to parish, spread wider and wider this awful desolation." " In Suffolk nightly fires of incendiaries began to blaze in every district ; thrashing machines were broken or burned in open day ; mills were attacked. At Brandon, near Bury, large bodies of labourers assembled to prescribe a maximum price of grain and meat, and to pull down the houses of butchers and bakers. They bore flags with the motto, ' Bread or blood.' " ' Knight, pp. 62-53. 2 Id. p. 53. ' Levi, History of British Commerce, p. 57 ; Ugo Rabbeno, The American Commercial Policy, 2nd ed., 1895, pp. 105-6, 153 ; Professor E. E. Thompson, Political Economy, Philadelphia, ed. 1882, pp. 343, 349 ; and Brougham, as there cited. A similar speculative rush of exports took place when the French were driven out of Portugal in 1811 (Tooke, Thoughts on Prices, i. ed., 1824, p. 89), probably with similar results. See, again, p. 84, as to specula- tive exports to South America in 1810. DISTEESS UNDER PROTECTION 77 In the district of Ely the extensive rioting led to thirty-four death-sentences, of which five were carried out. Soon the distress reached the miners and iron-workers, those of Staffordshire being reduced to utter destitution, and those of Merthyr being little better off. In the Loughborough district, the " Luddites," who had begun machine-breaking in the distress of 1812, resumed operations, seeing in machinery the cause of a distress really resulting from systematic strang- ling of production. In Glasgow and Dundee the starving poor rioted with hardly less violence. And the upper classes could but set up inadequate subscriptions and still more inadequate relief works.^ It was due to Cobbett and not to the Government that the distressed folk began to turn politicians instead of rebels.^ The outstanding facts of the case were that wheat in 1816 was at 103s. 7d., and that in 1817 it rose from 104s. to 112s. 8d. This, of course, was far above the limit of free importation ; but the raised duty had checked foreign growers, and had at the same time checked trade. And we see the check to trade persisting year by year. Depression and unemployment are the chronic symptoms of the system. In 1806 the mills of New Lanark, under the management of Robert Owen, were closed for a period of four months, in which he achieved the feat of paying his hands full wages : ^ and at other times; while keeping the mills going, he had to turn away many applicants for work.* In 1818 the cotton spinners of Warrington brought before the then youthful Robert Peel this account of their trade con- ditions : — The principal cotton mills here work from half-past five in the morning till half-past eight at night, so that the poor children are called out of bed at five, and it is nine at night when they get home, some of them being under six, many under eight years of age. . . . We understand Mr. is intending to send a petition 1 Knight, pp. 61-70. 2 Dunckley (The Ghurter of the Nations, 1854, p. 1.32) gives the credit to Huskisson's reforms ; hut these did not suffice to put comfort in the place of distress. 2 Lloyd Jones, Life of Robert Owen, ed. 1905, p. 66 ; Podmore, Robert 1906 i. 84. * Podmore, as cited, i. 213. 78 THE HISTOEIC EVOLUTION against the Bill, though, his factory has not worked ten hours per day upon an average for the last three years, sometimes stopping two or three days in a week, sometimes a week or a fortnight at once, and at other times working eight hours per day, just as he finds a market for his goods. When the trade goes well he com- pels them to attend fourteen to fifteen hours per day. ... He has now twenty-seven persons, from six to twenty-one years of age, for 27s. per week, that is one shilling each upon an average.^ In 1820, a writer in the Edinbmgh Beview thus describes the industrial conditions in Lancashire and Yorkshire, and at Coventry and Nottingham : — In Lancashire the weavers are divided into dififerent classes ; and wages vary from 6s. to 12s. a week for fifteen hours' labour a day. They are nearly destitute of fuel and clothes ; their bedding consists only of sacks filled with straw and chips ; and their food is at once deficient in quantity and of the coarsest and least nutritive kind. But the condition of the children is chiefly calculated to excite sympathy and compassion. The necessities of their parents had occasioned their being employed in factories from the tenderest years ; and at this moment a very large propor- tion of the half-starved children of the manufacturing districts are shut up for twelve or sixteen hours a day, to the irreparable injury of their health or morals, for a recompense of not more than 2s. or 33. a week. The distresses of the cloth weavers of Yorkshire are, if possible, still more severe than those of the cotton weavers of Lancashire ; and the combined operation of taxation and the poor's rates has reduced the smaller proprietors and farmers nearly to the same hopeless condition as the manufacturers. Perhaps, however, the silk weavers of Coventry and other places, and the frame-work knitters of Nottingham, have sunk the lowest in the scale of degradation. Last May, a petition was presented to the House of Commons by Mr. Moore, from the Mayor and Corporation of Coventry, stating that the poor's rates on the landed property in the district contiguous to the town amounted to 45s. per acre, and to 19s. per pound on the rents of the houses within the town, but notwithstanding this enormous assessment, the weavers were in a state of the greatest distress. Many thousands were absolute paupers, and depended entirely for support on the rates. Of those in employment, such as had frames of their own, 1 C. S. Parker, Sir Robert Peel, 1891, i. 259. DISTEESS UNDER PROTECTION 79 and who worked sixteen hours a day, were only in receipt of 10s. a week ; the second class, whose frames were furnished by the master manufacturers, earned in all about 5s. 6d. ; and the third, or inferior class of workmen, only from 23. 9d. to Is. 6d. a week, or from 5jd. to 3d. a day. ... It is universally admitted, that a falling off in the foreign demand for British manufactured produce is the immediate cause of the present want; of employment, and, consequently, of the low wages of the manufacturers.^ Meanwhile, agriculture showed no permanent gain from the restriction of imports. "A great meeting of agricul- turists had been held at Lewes on 3rd December 1821, the results of which had shown that, under the existing taxation, both local and imperial, little or no rent was in some districts obtainable."^ In 1822 a new Committee sat to inquire into the "agricultural distress." In 1822 some relief was given to commerce by a new modification of the navigation laws. Already, in 1815, as a result of the retaliation of the United States, those laws had been modified to the extent of allowing goods to be imported from the States in American ships; and in 1822 Mr. (after- ward Lord) Wallace modified the law further by allowing to the remaining colonies greater freedom of intercourse with each other and with foreign countries by admitting Dutch vessels, and by allowing South American produce to be imported direct, instead of going, as formerly, through certain ports of Spain and Portugal. The result was an expansion of British trade.* In 1824-26 Huskisson took further steps in the direction of free trade, (1) substituting for the total prohibition of certain foreign manufactures — notably the silk goods of France — an ad valorem duty of 30 per cent., and (2) repealing or greatly reducing the import duties on a number of raw materials, including raw silk and thrown silk, flax, and wool. The result was an improvement in all of these 1 Edinburgh Review, May 1820, vol. xxxiii. pp. 232-33. The reviewer further cites a petition by the frame-knitters of Nottingham in August 1819, in which they say: "For the last eighteen months we have scarcely known what it was to be free from the pains of hunger." 2 R. M. Gamier, Annals of the. British Peasantry, 1895, p. 335. 8 Diinckley, as cited, pp. 40-44, 102-106. 80 THE HISTORIC EVOLUTION industries, 1 especially the silk trade ; but before the reform took effect there was a great bank crash,^ which was followed by much unemployment in the woollen industry. The follow- ing extract tells its own story : — UXEIIPLOYKD WOEKEES IN LaNAEKSHIRE On Saturday last a meeting of weavers' delegates from the various districts in this neighbourhood was held in the usual place. The object of the meeting was to receive from the several districts an account of the number of weavers out of employment, which statement it was intended to lay before the Lord Provost and Magistrates. The following are the returns given in : — Anderston contains 708 looms, of which 386 are idle. Ballieston Toll con- tains 150 looms ; of these 98 are emptj'. The district of Xorth Bridgeton contains, in whole, between 400 and 500 looms. The returns are only from about one-half of this district, which contains 150 empty looms. From the centre and south districts of Bridgeton the accounts are incomplete. In the former 180 and in the latter 60 empty looms were taken up. In Charleston there are 132 idle. In Cowcaddens, of 300 looms, 120 are idle. In Clyde, Bell, and Tobago Streets, of about 500 looms, there are 74 idle; and 100 working webs which cannot average 8d. a day. In Dry- gate there are 105 idle ; in Drygate Toll, 73 ; in Duke Street, 18. In Grorbals, containing 365 looms, there are 223 idle. In Havannah, out of 130 looms, there are 48 idle. In the district of Keppoch-hni, of 70 weavers, there are 20 idle. The district of King Street is divided into ten wards ; returns are only given in from four, which contain 70 empty looms. In Pollockshaws, containing about 800 looms, there are 216 idle. In Rutherglen there are 167 idle. In Springbank, of 141 weavers, there are 58 unemployed ; and in Strathbungo, containing 104 looms, there are 28 idle, 25 of whom are married men. Parkhead, Camlachie, and some other extensive districts have not yet given in their returns. The delegates, before separating, appointed a general meeting to be held in the Green this day, to decide upon an address to the Magistrates, requesting them to endeavour to procure employment for the idle hands.^ ^ Harriet Martineau, Bistory of the Peace, Bohn ed. i. 447 sg. ; Dunckley, pp. 42-43, 116-119. 2 Martinean. p. 479. 2 Glasgow Saiwrday Chronicle, March 1826, cited by Combe, The Consti- tution of Man, 1828, App. pp. 313-14. DISTEESS UNDEE PEOTECTION 81 In England matters were no better. In the spring of 1826 there was such fearful suffering among the poor of the manu- facturing districts that . . . the people rose up against the power- looms, which they believed to be the cause of their distress ; and in one day every power-loom in Blackburn, and within six miles of it, was destroyed. ... It was a mournful spectacle in Lanca- shire that week in April, the mob going from town to town . . . snatching their food from bakers' shops and public-houses ; throw- ing stones at the soldiers and being shot down . . . leaping from two -storey windows to escape the soldiery, after having cut up every web and hewn down every stick and beam within ; striking at their pursuers with table-knives made into pikes ; with scythes and sledge-hammers ; swimming canals, hiding in woods, parading the streets of towns, to the number of 10,000 at a time, frightening the night with cries of hunger and yells of rage. ... On the first day, three persons were killed by the soldiers ; on another day, nine ; here, it might be seen, that wounded men were carried away across the fields ; there, the street was found, when emptied, to be " much staiaed with blood." ... In the first week in May, the Manchester operatives rose again ; and then the Bradford wool- combers and weavers met to consider " the present unparalleled distress and famishing condition of the operatives," and could think of no way of mending it but by breaking windows. There were inquests first, and trials afterwards ; but no relief. In Lanarkshire, the noblemen, magistracy, and gentry of the county, assembled to consult upon the wretched and helpless state of the Glasgow operatives, knew no better than to throw the blame on the invention of machinery. In Dublin, the starving silk-weavers formed in procession, to exhibit their hunger in the streets. . . . At Carlisle, the starving weavers mobbed one of the candidates for the city, clamouring for the repeal of the corn laws and radical reform ; and a riot ensued, in which a woman standing at her own door, with a key in her band, and a little girl in the street, were shot through the head. ... In Norwich, the unemployed weavers, who would not take work at the wages which the manu- facturers could afford, kept watch at the city -gates for goods brought in from the country. They destroyed one cartload in the street, and threw the cart into the river ; broke the manufacturers' windows; cooped in a public-house three men from the country who had silk canes about them ; and kept the magistracy busy 82 THE HISTOEIC EVOLUTION and alarmed for some weeks. About 12,000 weavers in Norwich were tlien unemployed, and the whole city in a state of depression, the more harassing from its contrast with the activity and high hope of the preceding year.^ Peel wrote to Goulbourn : " At home the prospects are gloomy enough. The great cause of apprehension is not in the disaffection, but in the real distress, of the manufacturing districts. There is as much forbearance as it is possible to expect from so much suffering." ^ A parliamentary committee sat to "inquire into the expediency of promoting emigra- tion." ^ Parliament of course decided that the corn laws should not be discussed at such a time ; but Ministers ventured to suggest that the 300,000 quarters of wheat then in bond should be released ; and after protracted discussion, on a promise that no duty should yet be fixed for the other half million quarters required to meet the distress, the landed interest reluctantly gave way, after a specially strong opposi- tion in the House of Lords.* The silk trade soon revived, as a result of the reduction of the import duties on raw and thrown silk, a home market being now found for the products which were no longer ousted by the cheaper silks smuggled from France. But the great woollen industry could only slowly advance by reason of the fatal check put upon exports by such import duties as those on corn. "In Barnsley [in 1829] the wages of the working classes averaged only twenty pence a week. In Sussex the labourers were employed on the roads at fourpence and threepence a day. In Huddersfield the people did not on an average earn more than twopence daily. Labour was so cheap and so abundant that the men were employed to do the work of horses and oxen. In Hampshire and Cheshire peasants could be frequently seen harnessed to waggons, ' degraded to the labour of brutes.' " ^ In 1830 "the manufacturing operatives of Lancashire and Yorkshire were, in many instances, receiving only 3d. and 4d. a ^ Harriet Martineau, History of the Peace, ii. 24-27. 2 C. S. Parker's Sir Robert Peel, 1891, i. 415. " Martineau, ii. 32. " Id. p. 28. ° Spencer Walpole's History of England, ed. 1878, ii. 531. DISTEESS UNDER PROTECTION 83 day for more than 12 hours' labour." "The people of this country had for some time past been suffering cruelly. . . . Statements of agricultural distress, mining distress, and manufac- turing distress were made, echoed and re-echoed. Sometimes they ■were met by qualified assent, sometimes by vehement contradiction ; but they still continued to be made. . . . Agricultural labourers were found starved to death, having tried in vain to support nature with sorrel and other such-like food. In vain did landlords abate their rents and clergymen their tithes ; wages continued to fall, and had at length reached such a point of depression that they did not suffice to support existence. At the time to which we refer the quartern loaf cost lOd. . . . The agricultural labourers . . . began to break threshing and other agricultural machinery. . . . The peasantry, finding no more machines to break, or forcibly prevented from breaking them, began secretly to set fire to stacks of corn or hay." ^ Great as was the industrial distress at this time, the excitement over the struggle for parliamentary reform sufficed to keep in the background any scheme for economic and fiscal reform. Then from 1832 to 1835 the wheat harvests were very good,^ bringing some comfort to the peasantry ; and the increased demand in the home market helped industry. But while the rest of the population were thus prosperous, the farmers were being ruined by the low wheat prices, and their distress in turn was repeatedly discussed in Parliament.^ When, again, seasons of high prices relieved the farmers, trade languished, and the country which at the end of the Napoleonic wars had " exclusive possession of all the markets in the world " * found itself losing some of them to foreign competitors. " At this very moment," said Villiers in the House of Commons in 1838, "there are thousands of persons suffering the greatest privations from no other circumstance than from their trade having passed into the hands of foreigners. ... In Nottingham, for instance, how many are now enduring the greatest distress 1 Molesworth's History of England, 1830-1874, ed. 1874, i. 32, 51-52. ^ Martineau, iii. 481. 3 Molesworth, i. 381, 396 ; Villiers, Speeches on Free Trade, People's ed. pp. 75, 151. ■• Villiers, Speeches, as cited, p. 69. 84 THE HISTORIC EVOLUTION from tlie loss of the hosiery trade, of which they have been success- fully deprived by the Germans? The Germans not only have ceased to demand the hosiery of this country — formerly an article of extensive import with them, — they undersell us in every part of the world in this article ; . . . they undersell us in Nottingham itself, after paying 20 per cent duty. . . . There is hardly a branch of our trade that has not been affected by foreign competition. We find from authenticated returns that all the countries that we have compelled by our restrictive system to engage in the cotton manufacture are, after several years' ex- perience, not only able to maintain their ground, but are also making progress. This is the case in France, Austria, Switzerland, Prussia, and the United States. . . . Whole branches of the hardware trade have left Sheffield, and are now carried on in the provinces of Rhenish Prussia, where it will be found that the best white bread is l|-d. per lb., and meat 3d. per lb." ^ In the following year Villiers was able to show that Switzerland — then a country of low tariffs — was successfully competing with England in Europe and America : — We find that though formerly we supplied her with goods and yarns, she now takes but little from us, and only the finest description of goods; and that not only does she supply herself, but that she also exports three-quarters of what she produces, and meets us successfully in the Italian, Levant, and North American markets. ^ As to the general progress of foreign manufactures in competition with British at this period, we have a fairly authoritative statement from the Chamber of Commerce of Manchester, presented in 1838 in a petition to Parliament. It proves that in the full reign of Protection, British " supremacy " in manufactures had ceased, and that there had arisen precisely the state of things which protectionists to-day falsely allege to exist under free trade — increased exportation of raw or slightly manufactured materials and diminished exportation of manufactures. A few extracts will suffice : — 1 ViUiers' beeches, pp. 72-74. 2 jg, DISTKESS UNDER PROTECTION 85 Your petitioners view, with great alarm, the rapid extension of foreign manufactures, and they have, in particular, to deplore the consequent diminution of a profitable trade with the Continent of Europe. . . . Whilst the demand for all those articles, in which the greatest amount of the labour of our artisans is comprised, has been constantly diminishing, the exportation of the raw material has been as rapidly increasing. Several nations of the Continent not only produce sufiicient manufactures for their own consumption, but they successfully compete with us in neutral foreign markets. Amongst other instances that might be given to show' the formidable growth of the cotton manufacture abroad, is that of the cotton hosiery of Saxony, of which, owing to its superior cheapness, nearly four times as much is exported as from this country; the Saxons exporting annually to the United States of America alone, a quantity equal to the exports from England to all parts of the world ; whilst the still more important fact remains to be adduced, that Saxon hose, manufactured from English yarn, after paying a duty of 20 per cent, are beginning to be introduced into this country and sold for home consumption, at lower prices than they can be produced for by our manufacturers. Further proof of the rapid progress in manufacturing industry going on upon the Continent is afforded in the fact that establish- ments for the making of all kinds of machinery for spinning and weaving cotton, flax, and wool have lately been formed in nearly all the large towns of Europe, in which English skilled artisans are at the present moment diligently employed in teaching the native mechanics to make machines, copied from models of the newest invention of this country, and not a week passes in which individuals of the same valuable class do not quit the workshops of Manchester, Leeds, and Birmingham to enter upon similar engagements abroad.^ It was not only on the Continent that "the foreigner" was learning to beat us at our own boasted business. The United States also, possessing the raw material of the cotton manufacture, with an abundant supply of cheap food, was rapidly learning to undersell England in the markets of Mexico and South America, nay, in Calcutta, despite an 1 Free Trade, and the Manchester School, 1903, pp. 139-142, where the whole petition is reprinted. 86 THE HISTORIC EVOLUTION extra duty.^ Such developments were inevitable while England taxed her imports of raw cotton, as of old, in the interest of the woollen trade, and flour (a " raw material " in the cotton trade) in the interests of agriculture. In 1838 Chartist riots began to add to the general gloom and fear ; ^ and while the free-traders strove with new zeal to rouse opinion against the corn laws, matters went from bad to worse. In April 1840 Villiers read to the House of Commons the following extract from a report of an inquiry made at Bolton a few weeks before : — In the cotton mills alone, about £95,000 less have been paid during the last twelve months. Many of the mills have been entirely stopped for all or part of the time, and with only two exceptions all have worked short time for a considerable portion of the past year. I have made a very careful calculation from extensive personal inquiry, and assert most confidently that altogether there must have been at least ,£130,000 less in wages in the Bolton Union. Now add this £130,000 less in wages to the £195,000 more for food, and there is a total loss to Bolton of £325,000. What are the consequences ? There are now in Bolton 1125 houses untenanted, of which about fifty are shops, some of them in the principal streets. Here is a loss to the owners of £10,000 to £12,000 a year. The shopkeepers are almost ruined by diminished returns and bad debts. There were, a short time ago, three sales of the effects of shopkeepers in one day. Distraints for cottage rents occur daily. The arrears of cottage rents, and the debts to shopkeepers, are incalculable, but they must amount to many thousand pounds. The pawnbrokers' shops are stowed full of the clothing, furniture, and even bedding of the destitute poor. Fever is also prevalent. . . . The outdoor relief to the poor is three times greater in amount than on the average of the three years ending 1838. South of Bolton, four miles, a large spinning establishment, giving employment to 800, and subsistence to 1300 persons, has been entirely stopped for nine months. The proprietor has upwards of 100 cottages empty, or paying no rent, and, although possessed of immense capital, finds himself unable to continue working his mills to advantage. Entering Bolton from Manchester, another mill, requiring 180 1 Free Trade and the Manchester School, pp. 87-90, citing evidence collected by the manufacturers of Glasgow. ^ Martineau, iii. 494. DISTRESS UNDER PROTECTION 87 hands, has been entirely standing for eighteen months. In the centre of the town, another, 250 hands, stopped several weeks. North of Bolton, one mile, a spinning, manufacturing, and bleach- ing establishment, on which 12,000 persons were dependent for subsistence, has been entirely standing for four months.^ When, in 1841, Peel came into power by the protectionist vote, defeating the Whig Ministry, who had proposed to modify the corn laws by reducing the duty to 8s. a quarter on wheat, the distress had become more dire than it had been even in 1826. In a well-known passage in a speech delivered in 1845, Macaulay described the destitution of 1841 as he had witnessed it : — In 1841 the capitalist was doubtless distressed. But will anybody tell me that the capitalist was the only sufferer, or the chief sufferer ? Have we forgotten what was the condition of the working people in that unhappy year 1 So visible was the misery of the manufacturing towns that a man of sensibility could hardly bear to pass through them. Everywhere he found filth and nakedness and plaintive voices and wasted forms and haggard faces. Politicians who had never been thought alarmists began to tremble for the very foundations of society. First the mills were put on short time. Then they ceased to work at all. Then went to pledge the scanty property of the artisan ; first his little luxuries, then his comforts, then his necessaries. The hovels were stripped tUl they were as bare as the wigwam of a Dogribbed Indian. 2 But even this vivid testimony is not more instructive than the details of the industrial collapse throughout England. The free-traders of that age have put them on record : — Passing rapidly through the land, let us ask what was the condition of that extensive and wealthy district of which Leeds and Bradford are the principal centres. In the township of Leeds alone, and within four years, thirty-nine persons or firms connected with the woollen manufacture became bankrupt, with liabilities amounting, in the aggregate, to half a million sterling. To these we must add the failures of eighteen flax and tow spinners, sixteen 1 ViUiers' Speeches, pp. 171-2. * Speeches of Lord Macaviay, People's ed. 1866, p. 204. 88 THE HISTORIC EVOLUTION macliine makers, sixteen wool-staplers, and nine stuflf and worsted spinners, — all of wMcli occurred within the same time and in the same town. Six shillings and eightpence is above the average amount of the dividends which were paid on this enormous mass of insolvency ; and the total loss accruing from these cases alone, cannot be set down at less than a million sterling. In Bradford one-fourth of the mills were idle, and the value of mill property had declined fuU thirty per cent. So little machinery was wanted, that the wages of machine-makers had fallen, in five years, to little more than one-half, and the trade itself seemed on the verge of extinction. In the populous district of Thornton Road thirty- one firms failed or compounded with their creditors, and fourteen others declined business ; their total amount of had debts being more than a million and a half. Passing into the neighbourhood of Nottingham, we find, in that town alone, 10,580 persons, nearly a fifth of the population, receiving parochial relief, with a reduction of wages, through a period of six years, of as much as twenty-five per cent. Entering the region of hardwares, the various trades of Birmingham show the same depressed condition. Silver-workers, platers, screw-makers, brass-founders, and those engaged in the coal and iron trades, were now receiving only a half, and in some cases only a third of the rate of wages paid them a few years earlier. On a Saturday night many a master had to carry his goods to the pawnbroker, before he could pay his men. A stranger wandering through the town might count in fifteen streets upwards of four hundred empty houses ; and not a week passed without some instance of death by starvation gaining a melancholy publicity through the medium of a coroner's verdict. Of the vast trade in iron which Wolverhampton formerly carried on with the United States, only one-sixth remained. From injuries sustained in the same quarter, Sheffield had lost more than a fourth of its staple industry ; wages had declined some forty per cent ; pauperism was doubled ; and in the course of five years no less than £20,000 was expended by four trades alone in the relief of unemployed workmen. Transferring ourselves into the woollen districts of Gloucester, Somerset, and Wilts, we meet the same picture. At Frome, from 1831 to 1841, population had considerably decreased; rents were fifty per cent lower ; one-sixth of the houses were unoccupied ; and the only item of increase was the poor rate. Of Bradford, Stroud, Uley, Wootton, the same tale could be told. Comparing the DISTEESS UNDER PROTECTION 89 whole county of Gloucester at the two periods just mentioned, we find a diminution of fifty per cent in the number of looms employed ; and the number of manufacturers who still held their ground was less than the number of those who had failed during that short interval. In Coventry one-third of the population was unemployed ; in Spitalfielda eight thousand looms were idle, and twenty-four thousand persons thrown upon parochial relief j in the whole of the Metropolis one thousand letterpress compositors and nine thousand tailors were altogether without work. Other trades throughout the kingdom were in the same condition. To visit the ironworks of Scotland, the colliers of Staffordshire, the glovers of Yeovil, the carpet-weavers of Kendal, the glass-blowers of Warrington, the shawl-weavers of Paisley, and the flax-spinners of Dundee, would only be to encounter similar proofs of the entire prostration of industry. In Paisley, for example, no less than thirty failures took place within a few weeks ; in less than a year two-thirds of the whole number of the manufacturers became insolvent ; while one-third of a population which is distinguished, even in the north, for industry and ingenuity, were thrown upon the public for support. It was, however, in the manufacturing districts of Lancashire that the vials of wretchedness seemed poured out to their last dregs. It is unnecessary, after the facts that we have given, to look at the commercial statistics of the case ; we will confine ourselves to a few of their social results. In Bolton, only a third of the people were fully employed ; the poor rate had been tripled in five years ; fifteen hundred houses within the borough were unoccupied, and wages had experienced an immense decline. We might infer from these facts alone the condition of the working classes, but we have at hand the surer test of figures. The net earnings of 1003 families averaged only Is. 2d. a head per week ; more than half the beds in their possession were filled with straw ; they had among them 466 blankets, not quite one to every ten persons ; while only one-half could boast the humble luxury of a change of linen. At Stockport, Ashton, Oldham, and the other large towns, the picture of misery was but slightly varied. In Wigan, the receipts of 2000 families were only sufficient, if all laid out in bread, to buy each individual twenty-two ounces a day. The spectacle of distress which meets us when we turn to Manchester is projected on a gigantic scale, and filled up with more harrowing details. At the instance of a number of charitable 90 THE HISTORIC EVOLUTION gentlemen, 12,000 families were brought under visitation, and the mass of destitution which was thus brought to light almost exceeds belief. To buy themselves bread, thousands had parted with every stick of furniture and every rag of clothing beyond the merest wants of decency.! And still the tale goes on : — At Leeds, the pauper stone-heap amounted to 150,000 tons; and the guardians offered the paupers 6s. per week for doing nothing, rather than 7a. 6d. per week for stone -breaking. The millwrights and other trades were offering a premium on emigra- tion, to induce their "hands" to go away. At Hinckley, one- third of the inhabitants were paupers ; more than a fifth of the houses stood empty ; and there was not work enough in the place to employ properly one-third of the weavers. In Dorsetshire, a man and his wife had for wages 2s. 6d. per week and three loaves j and the ablest labourer had 6s. or 7s.^ No wonder that in 1842 Peel wrote to Croker : "Without improvement, we are on the brink of convulsion, or something very like it."^ But still he held on. Any recovery of industry served to postpone the vital reform. Protection of agriculture was the dogma and the supposed interest of his party ; and all the while the agricultural interest was in such chronic distress that in 1845 Cobden could move for a select committee to inquire into its causes and extent. Only the conjunction of a new dearth in England with blight and famine in Ireland made possible the resolution on Peel's part which rang the knell of protectionism so early as 1846. ^ Dunokley, The Charter of the Natioiis, 1854, pp. 65, 69. ^ Martiueau, iv. 157. ' Croker's Correspondence, 1884, ii. 385. Cp. pp. 383, 391. CHAPTER VII HOW FREE TRADE HAS BEEN WON The argument from the practice of protectionist States is latterly mnch employed at one special point — the alleged falsification of a prediction by Cobden that the adoption of free trade by Britain would be speedily followed by the conversion of the rest of the world. Before pronouncing on the special issue, let us make sure what Cobden actually did say. The published assertion of Mr. Chamberlain ^ is that Mr. Cobden based his whole argument upon the assumption, which he made in all good faith, that if we adopted Free Trade it would mean free exchange between the nations of the world ; that if we adopted Free Trade, five years, ten years, would not pass without all nations adopting a similar system. The italicised phrase is so utterly false that it might alone serve to discredit the cause in which it is used. The sole passage which the protectionists are able to cite from Cobden, before the repeal of the corn laws, as to his hopes of the adoption of free trade by foreign nations, in imitation of us, is this, from his speech of January 15, 1846 : — I believe that if you abolish the Corn Law honestly, and adopt free trade in its simplicity, there will not be a tariff in Europe that will not be changed in less than five years to follow your example. This was said only in the very last year of the anti-corn- law struggle; and there is not the slightest trace in that ' Reprint above cited, p. 184. 91 92 THE HISTORIC EVOLUTION or in the rest of Cobden's speeches of his ever once having " based his argument " for free trade on the " assumption " alleged by Mr. Chamberlain. So far was he from admitting that foreign adoption of a free trade policy was necessary to our success in it, he expressly argued to the contrary ; " It is' our policy to receive from every country ; and if foreign countries exclude us, it is only a stronger reason why we should throw open our ports more widely to them." ^ Nor is the alleged assumption made in the passage before us. Cobden predicts simply change of tariffs in the direction of free trade; and this change he makes contingent on the adoption by England of " free trade in its simplicity." When was that attained 1 Strictly speaking, it never has been ; but the last process of tariff reductions did not take place until 1860, the very year in which Cobden effected his Com- mercial Treaty with France. And in 1864, so far was Cobden from a firm faith in the fixity of even tariff reductions in France that he writes to M. Chevalier : — I confess I am not satisfied that you do not continue to make further reforms, if only to guard against reaction in those already made. Time is passing. It is now four years since we arranged your tariflF. Are you sure that in 1870 you will be so completely under the Free Trade regime as to prevent the Government of that day (God knows what it may be) from going back to Protec- tion after the Anglo-French treaty expires ? ^ All the while Cobden remained a convinced free-trader. Neither he nor any of his colleagues ever dreamt of arguing that the value of free trade for us depended on its adoption by other countries, though they naturally hoped that a good example would be followed. But it may be granted that at some moments they had been over-sanguine ; that they failed in 1846 to realise fully that other countries must go through just the same sort of battles against class interest as they themselves had fought in Britain ; that they did not for the moment — though Cobden did soon afterwards — take into ^ Speech at Dundee, in Dundee Advertiser, Jan. 19, 1844. See the longer extract in the Cobden Club's pamphlet, Fact versus Fiction, ch. iv. 2 Morley's Ufe of Cobden, ii. 439. HOW FREE TEADE HAS BEEN WON 93 account the risks run by the cause from the political vicissi- tudes of nations. Cobden, in other words, did not in 1846 realise the significance of the fact that it took seventy years of powerful propaganda to make possible the decisive act of free trade legislation in Britain. Adam Smith's Wealth of Nations was published in 1776. As we have seen, it was not by a long way the first promulgation of free trade doctrine even in this country ; but Smith's book was the first powerful preaching of the principle by a notable author. With all his deductiveness. Smith was essentially a practical publicist ; and he was under no illusion as to any speedy adoption of his ideals. He even underrated the possibility of their realisation. " To expect, indeed," he writes,^ " that the freedom of trade should ever be entirely restored in Great Britain, is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but, what is much more unconquerable, the private interests of many individuals, irresistibly oppose it." "If," he adds, "a member of Parliament opposes monopolies, and still more if he has authority enough to be able to thwart them, neither the most acknowledged probity nor the greatest public services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists." Even with such a treatise as the Wealth of Nations for a text-book, a beginning in the way of systematic reform was hard to make. Only after seven years is any mention of Smith's book to be traced in Parliament ; ^ and though the younger Pitt so far acted on Smith's teaching as to conclude, in 1786, a most useful treaty of commerce with France, with the result of doubling the trade of the two countries in three years, and so setting France upon making similar treaties with Holland and Russia, the whole reform fell to the ground on the outbreak of the war against the Revolution in 1793. The Constituent Assembly in 1791 ' B. iv. ch. ii. 2 Buckle, Introduction to the History of Civilisation in England, ch. iv. note, 60. 94 THE HISTOEIC EVOLUTION had been strongly in favour of a low tariff; but the war temper, significantly enough, swept away the free trade movement in both countries.^ A lesson partially learned was thus lost; and Smith's influence had to be built up afresh. Not till twenty-one years from the date of the issue of his book, after a good many parliamentary refer- ences, is the financier Pulteney found quoting in the House, with approval, the saying that Dr. Smith " would persuade the present generation and govern the next."^ A few years later we find opponents speaking of Smith as one whose doctrine some proposed to make a basis of legisla- tion.^ Yet, though Huskisson in 1825-29, Sydenham in 1831-40,* and Peel in 1842 and 1845, effected many tariff reductions in directions in which there were no great vested interests to fight; though, indeed, Villiers presented in 1842 a petition from the chairman of a conference of 720 delegates, wherein " all the principal branches of manufacturing indus- trial employment and capital expressed their desire to give up all legislative protection whatever,"^ it was not till 1846 that there was effected (for 1849) the repeal of the landlord- made corn laws. Up till 1845 Peel and Gladstone resisted the demand, pleading vested interests, prescriptive rights, even "virtual contract." No official Liberal leader had accepted the prin- ciple of repeal ; and Lord Melbourne had pronounced it the maddest of all political proposals. In 1843 Brougham and Roebuck, both free-traders, vehemently condemned the Anti- Corn -Law League for its extremeness. In 1844 Joseph Hume was defeated on his free trade motion by 235 votes to 49. In the same year Cobden was profoundly depressed by the adverse vote of 328 votes to 124;® and Gladstone, who had previously refused to grant Cobden a committee to ' Cp. Armitage-Smith, The, Free Trade Moveinent, 2nd ed. 1903, p. 40. ^ Parliamentary History, xxxiii. 778, cited by Buckle. ^ E.g. in the treatise Onomia, or the Science of Society, 1801. * Sydenham's reforms are often overlooked. lu eight years of office he reduced or modified over 700 duties. Porter, ed. 1851, p. 358. ^ Villiers' Speeches, p. 233. " M. M. Trumbull, The Free Trade Struggle in England, 2nd ed. 1892, pp. 147, 155, 172-3. HOW FREE TRADE HAS BEEN WON 95 investigate the effects of protective duties/ pronounced the whole agitation " most mischievous," ^ further speaking of the League as "a thing of no great practical moment," whose "parade and ceremonial were perhaps the most important features about it."^ And it was notorious that the con- summation in 1846 was hastened by the pressure of special distress from a bad season, which moved Sir Robert Peel — long, perhaps, a free-trader in theory * — to give up the corn tariff, after having declined to do so in 1842, when, having won his election as opposing Lord John Russell's plan of modifying the corn duties, he removed the duties on a multitude of other articles. Seeing that at that time seventeen taxed articles, out of many hundreds, produced 94 J per cent of the total customs revenue,^ corn was the vital article from the protectionist point of view, and the reforms of 1842 did not seriously touch the protective principle. And seeing that Lord Palmerston, a professed Liberal, was still in favour of a permanent duty on corn, it is clear that the battle of free trade even in 1846 was far from having been won on the merits of the principle. Had not the harvest of that year being ruined by rain, and had good years followed, the repeal of the corn laws might have been delayed for another generation.^ This becomes the more clear when we realise that only gradually and grudgingly did the bulk of the working-classes in the towns come to acquiesce in the free trade policy. The movement was essentially a middle-class one,^ and almost until the hour of victory many of the town-workers, with Chartist sympathies, were hostile,^ while the Owenite move- ment stood aloof from both Chartists and Liberals.* In 1839, at a great anti-corn-law meeting at Rochdale, at which John Bright spoke to the free trade resolution, the ' Hansard, 3rd ser. vol. 73, col. 895, March 12, 1844. 2 June 25, 1844. Hansard, 3rd ser. vol. 75, col. 1424. " Morley, Life of Cobden, 1. 294. I cannot find the passage in Hansard. ■* This was Cobden's view. See Morley's Life of Oobden, i. 237. " Id. p. 236, note. ^ See Appendix. 7 Cp. Morley, Life of Oobden, i. 248-9. * Cp. Harriet Martineau, History of the Peace, Bohn ed. iii. 494. s Podmore, Robert Owen : a Biography, 1906, ii. 453-7. 96 THE HISTOEIC EVOLUTION Chartist James Taylor proposed an amendment to the effect that before agitating for a repeal of the corn laws the people should obtain possession of their political rights ; and this amendment was carried, "the Chartists at that moment having the ear of the working-classes in the chief towns of Lancashire and Yorkshire." ^ Later, in 1844, Cobden and Bright, by the admission of the Chartist historian, triumphantly defeated in open debate at Northampton the Chartist orator Feargus O'Connor. But this was regarded by O'Connor's fellows as a display of incompetence on his part, they being previously convinced that Cobden 's position was "a flimsy one";^ and it is certain that multitudes of artisans were much more concerned to resist the introduction of new machinery than to repeal the corn laws. This opposition of the town -workers was not without reasonable grounds, though the agricultural labourers, who gained little or nothing in wages by high prices of corn, and were miserable alike in good years and bad, gave Cobden their support, such as it was.^ For a whole generation the discussion on free trade had been obscured by the controversy as to whether high food prices did or did not raise wages, and whether low food prices would lower them. It is only fair to note that some of the early free-traders condemned the corn laws as tending to drive manufacturers' capital out of the country by keeping wages high and so reducing profits. A moderate protectionist, M'Donnell, writing in 1826, opposed this doctrine, which was ostensibly supported by some of the reasonings of Adam Smith.* M'Donnell contended, justly enough, that the high wages paid in England to mechanics as compared with those of continental countries were substantially determined by the higher English standard of comfort, or norm of expenditure.^ Most of the disputants ^ G. Bamett Smith, ZAfe and Speeches of John Bright, 1881, i. 138-9. "^ R. G. Gammage, History of the Chartist Movement, 1894, pp. 253-5. ' Cp. R. M. Gamier, Annals of the British Peasantry, 1895, p. 342. In the earlier days of the corn laws, Cobbett refused to recognise them as the evil to be remored. He assailed the " taies " in general. iS. pp. 338-9. * In the chapter on Bounties, b. iv. ch. v. par. 8. Some ascribed such a view to Rieardo ; but this was a misconception. » A. M'Donnell, Free Trade, 1826, Pt. i. sects, ii., iii. HOW FEEE TEADE HAS BEEN WON 97 on both sides failed to realise that the higher English wages were paid for a considerably higher rate of production than that of the other countries, and that profits and wages might therefore increase together as compared with those of the continental countries. De Quincey, founding on Eicardo, had indeed shown clearly enough ^ that it was only increase in relative quantity of labour, and not of wages, that reduced profits. This the better economists on the free trade side realised ; and M'Donnell admits that he is " fully aware that freedom of commerce is advocated by many on difi'erent grounds " ^ from that of fear of high wages. Still, that fear was avowed by some ; and Cobden had constantly to meet what he called "the fallacy of 1815 " — that his real aim was to raise manufacturers' profits by making labour cheaper. Even Gladstone, when opposing the free traders in 1842, talked of " the fallacy of cheap bread." ^ Cobden, who had always been sound in his economics, had never had any such aim ; and he crushingly confuted the charge * by showing that again and again, when bread prices were abnormally high, wages had fallen very low,^ the simple reason being that high food prices limited the power to purchase other goods, and, checking production, restricted the demand for labour. He might have cited further the old argument of Petty,^ virtually acquiesced in by M'Donnell,^ that in times of cheap food labourers were least willing to work. But between the fallacious arguments of mistaken free-traders and the taunts of protectionists who ascribed their doctrine to the entire free trade movement, the workers were naturally suspicious, and slow to come into line. They, then, like the protectionists who in 1846 reluctantly supported Peel, were substantially carried away by the pressure ' In his Dialogues of Three Templars in the London Magazine, 1824. 2 Work cited, p. 220. ' Tramtmll, as cited, p. 72. * Villiers also, in 1840, cited testimony to show that in Stockport, "although the standard of wages is continually falling, the necessaries of life are advancing in price" (Speeches, p. 189). See also his speech of the same year, p. 145. ^ This had been shown by M'Donnell in 1826 from the evidence before the Lords' Committee of 1814. "Work cited, pp. 243-4. ^ Essays in Political Arithmetick, 3rd ed. 1698, p. 205. ' As cited, pp. 244-5. 7 98 THE HISTORIC EVOLUTION of sheer necessity, the menace of famine, and were not converted by any economic argument. The case has been put, with some exaggeration, by one student of movements of opinion : — An historian would stand convicted of ignorance or folly who should imagine that the fallacies of Protection were discovered hy the intuitive good sense of the people, even if the existence of such a quality as the good sense of the people be more than a political fiction. The reasons in favour [of the principle of free trade] never have been, nor will from the nature of things be, mastered by the majority of any people. The apology for freedom of commerce will always present, from one point of view, an air of paradox. . . . It is idle to suppose that belief in freedom of trade — or indeed any other creed — ever won its way among the majority of converts by the mere force of reasoning. . . . Much was due to the opportune- ness of the time.i And if this were so in England, there can be no difficulty in understanding how, in countries where the need for free imports of corn is never so pressing as it often was in England before 1846, the ordinary arguments for protective duties may still capture many of the workers as well as their employers. What preserved free trade after 1846 was on the one hand the plain continuance of the need for free food, and on the other the overwhelming confirmation of the free trade case in the total expansion of trade and employment. From that point dates a new era in industrial politics. Chartism dis- appeared because the worst pressures of misery did ; and to the workers who had looked at him askance Cobden gave new possibilities of democratic evolution.^ ' Prof. A. V. Dicey, Lectures on Law and Public Opinion in England, 1905, pp. 23-25. " Cp. Brougham Villiers, The Socialist Movement in England, 1908, p. 62. CHAPTEE VIII FREE TRADE DOCTRINE IN OTHER COUNTRIES We have now to consider the effect of the English step upon the policy of foreign countries. We tend to discuss the issue as if England in 1846 were suddenly presenting a new example. She was doing no such thing. Not only had Holland, long before, achieved something like general free trade : Prussia had by the law of 1818 adopted a tariff which went much further in that direction than the English free traders could yet hope to go; and in 1825 the free-trading Minister Huskisson in the House of Commons could only express the hope that " the time would come when England would follow Prussia's example." " Reciprocity " in those days meant the proposal to respond to foreign reductions of tariffs by reductions of ours. English protectionism had in fact refused to follow the Prussian lead, save in respect of minor concessions, for nearly a generation before the repeal of the corn laws. And it was only under pressure of Prussian retaliation that in 1825 Huskisson was able to carry the modification of the navigation laws by the "reciprocity" principle.^ Above all, it is to be remembered that the protectionist party in England, so long all-powerful, had in foreign eyes a fair prospect in 1846 of regaining power and re-enacting the corn laws. So late as 1850, Disraeli's motion for " compensation " for agricultural distress as against the removal of the corn laws was supported by Gladstone, > See Note XI. to M'Culloch's ed. of the Wealth of Nations, near end. 99 100 THE HISTORIC EVOLUTION and was lost by only 21 votes, 252 backing it, and 273 opposing.^ In Germany, too, a protectionist reaction had been set up from 1841 onwards, proximately by the propaganda of Friedrich List, whose System of National Economy had been published in that year, but primarily by the "dumping" policy of the British iron-producers and cotton manufacturers.^ It must always be kept in view that this form of provocation passes in economic history for an English invention.^ It spontaneously arose, in fact, out of the exigencies of trade crises ; but foreign producers from the first have as readily seen in it a malicious device to wreck their industry as our own producers have done when latterly it has been turned against themselves. This happened when, in 1783 and 1815, British exporters of miscellaneous goods to the United States at the close of hostilities found that their blind competition had glutted the market, and were forced to sell at any price.* The American producer not only resented this consummation as a deliberate attempt to annihilate his business, but was able to persuade the American politician of the danger of letting such a thing be done by the " natural enemy," who would thus make the Republic incapable of supplying its own needs in time of war. Hence a great stimulus to American protectionism at an early stage. Equally potent, of course, was the factor of British egoism in the matter of the corn laws. "From our own Minister at Washington," said Villiers in 1838, "we learn that the American Govern- ment justified its tariff by the exclusion of her corn from our market. And we know that the tariff was opposed by those States whose products we did suffer to be imported."^ N"aturally the agricultural interest carried the day in the States as it did in England, where the opposing forces were 1 Molesworth's History of Englatid, 1830-1874, ii. 326-8. ^ Cp. Percy Ashley, Modern Tariff History, 1904, pp. 20-22. 8 Cp. Prof. "W. J. Ashley, The Tariff Problem, 1904, p. 70. * Cp. Eabbeno and Thompson, as cited above, p. 76 ; also Coxe, as cited )y Craik, iii. 102. Coxe asserts that the sales below cost were still going on n 1787. ^ C. P. Villiers, Free Trade Speeches, People's ed. 1884, p. 71. See the estimony in question cited by Prof. Nicholson, History of the English Corn Laws, 1904, p. 129. FEEE TEADE in OTHEE COUNTEIES 101 already so much stronger. And something similar happened in Germany in the 'forties of the nineteenth century, List abetting. Yet withal there was a powerful movement towards free trade in the United States at the very moment at which Cobden put forth his qualified prediction. It is commonly forgotten that when Peel introduced his free trade policy in 1846 he was able to quote the Secretary to the Treasury of the United States, E. J. Walker, who had recently said : — By countervailing restrictions we injure our own fellow-citizens much more than the foreign nation at whom we propose to aim their force ; and in the conflict of opposing tariffs we sacrifice our commerce, agriculture, and navigation. Let our commerce be as free as our political institutions. Let us, with revenue duties only, open our ports to all the world.i And this deliverance was in some measure given effect to in policy. The United States tariff of 1846 was relatively so moderate that it has been spoken of by one protectionist writer as "sponsored by the British nation";^ and in 1857, despite the absorbing pressure of the slavery question, and despite the fact that the South was anti-protectionist, the new tariff provided for " a reduction of about 25 per cent all round on the duties levied by the Act of 1846; . . . and the general level was lower than in any period since 1816."^ It was, in short, a free-traders' measure.* Even in Germany the progress was soon equally marked. As early as 1848 the agricultural societies of Saxony petitioned the Frankfurt Parlia- ment against customs duties of every kind. Amongst publicists and in academic circles there had since 1848 been a vigorous Liberal school, whose leaders included John Prince Smith, who, though an Englishman by birth, settled in Germany first as a teacher of languages, and won great influence there from the 'fifties onwards, being elected both to the Prussian Diet and the Imperial Eeichstag ; 1 M. M. Trumbull, The Free Trade Struggle in England, 2nd ed. 1892, p. 230. Cp. Percy Ashley, Modern Tariff History, 1904, pp. 184-7; Thompson, Political Economy, 3rd ed. p. 355. ^ Bolles, cited by P. Ashley, p. 187, note. Cp. Eabbeno, The American Commercial Policy, 1895, p. 185, and Taussig as there cited. 3 P. Ashley, pp. 193-4. * Rabbeno, p. 186, and citations. 102 THE HISTORIC EVOLUTION W. A. Lette, a high Prussian State official ; Max Wirth, honourably associated with the Trade Union movement ; Otto Michaelis, an able economic writer and publicist, who ended his career in the Ministry of Finance ; Schulze-Delitzsch, the founder of co-operation in Germany ; Julius Faucher, for some years the leader of the pro- gressive party in the Prussian Diet ; and others. At the instiga- tion of Prince Smith and Faucher, a Free Trade party was organised in Berlin, and its influence gradually extended from North Germany to other parts of the country. Prince Smith especially was un- wearied in the agitation which he carried on both by speech and writing on behalf of the economic theories which had just won so signal a triumph in England. He travelled a large part of the country as an apostle of the Free Trade gospel, imparting every- where some at least of his own enthusiasm and conviction, organising societies, encouraging the establishment of literary sheets in the service of the new faith, and successfully identifying economic with political and parliamentary Liberalism. Not only so, but like all enthusiasts, he contended for the immediate introduction of unequi- vocal Free Trade, without half measures or compromise of any kind. To those who, only partially convinced of the unwisdom of a protective policy, pleaded for slow and cautious progress in the new direction, he replied that any dallying with Protection was a mere protraction of economic injury. It was, he quaintly said, like docking a dog's tail an inch a day, just to spare its feelings. To anticipate a move- ment, so far did his temporary influence go, that at the beginning of the 'sixties he was able to convince some of the agricultural societies of "West and Bast Prussia — later a hotbed of extreme protectionism and agrarianism — that their truest interest was a policy of free imports. It was not long before the heresy was recanted. Free Trade principles also found expression in the Economic Congress formed in 1858 by Lette, Wirth, Victor Bohmert, and Pickford, which first met at Gotha, and the German Commercial Diet (Handelstag), an organisation of Chambers of Commerce and Industry.^ Thus far had progress been made on the general impulse set up by the English free trade propaganda and the repeal of the corn laws in 1846, in a country where, since 1815, the Zollverein system had been pro tanto a witness for free trade. Upon the more complete establishment of the prin- ciple in 1860, when the abolition of the remaining tariff at > W. H. Dawson, Protection in Germany, 1904, pp. 23-25. FREE TRADE IN OTHER COUNTRIES 103 once made possible the new Anglo-French treaty of com- merce, there followed in 1862 the new treaty of commerce between France and Prussia, and in 1865 the extension of that treaty throughout the entire area of the German Zollverein. Bismarck became Minister - President in 1862, just in time to carry the already-drawn treaty through the Prussian Parliament. "Little now remained to complete the transition to Free Trade, and that little was done during the succeeding eight years. In 1868 the duties on wine were reduced, in 1869 those on sugar likewise. Then came in 1873 the reduction of the iron duties, and finally in 1875 their entire disappearance was enacted from the first day of 1877. This clear abandonment of a protectionist policy was the work of three Prussian Ministers — Martin Friedrich Rudolf Delbriick, Otto Camphausen, and August von der Heydt." i Yet another experience went far to justify Gobden's general conviction that example in free trade would count for more with foreign nations than precept, in the shape of negotiations. The Navigation Law, as we have seen, was modified in 1822, " but up to the time when a Committee of the House of Commons was appointed in 1847 to inquire into its policy and operation, few persons had been sanguine enough to hope for its entire removal from the statute-book." ^ That Committee having reported for its abolition, it came to an end at the close of 1849, and immediately the Netherlands and the United States revoked their retaliatory laws. " Other States which had not adopted our rule of restriction against foreign shipping have been led by our recent legislation on the sub- ject to forego the intention they had plainly intimated of following that rule." ^ As political prediction commonly goes, Cobden's forecast had been remarkably well justified. Those who, in the face of such facts, continue to speak of Cobden's qualified predic- tion as one wholly discredited by the sequel are merely suppressing the truth. What has happened since 1860 in the United States, and since 1870 in Germany and France, is a reaction from a great advance actually made towards free 1 W. H. Dawson, as cited, p. 25. 2 Porter, Progress of the Nation, preface to 3rd ed., 1851. ^ Id. ib. 104 THE HISTOEIC EVOLUTION trade on the lines of Cobden's forecast ; and, as we shall see, the reaction has not occurred as a result of any proved harm in free trade to the economic and industrial development of those countries. Cobden, we have seen, was far from being sanguine as to the permanence of the gain actually made in France. Had he been asked, then, whether reaction were not possible in America and Germany, he would certainly not have disputed the risk. Nay, he probably would not have denied the possibility of a protectionist reaction in his own country. John Mill expressly declared that in his opinion "even, perhaps, protection of the home producer against foreign industry" would be one of the "very natural (whether or not probable) results of a feeling of class interest in a governing majority of manual labourers." ^ But neither thinker would have admitted for an instant that such a retro- gression in human affairs was in itself an argument in favour of Protection. The explanation of the retrogressions in Germany, France, and the United States is obvious and simple. In each case it is primarily the result of a new and pressing need for fresh revenue either for the liquidation of war debts or for fresh militarist expenditure. In France, indeed, the explicit declaration by Louis Napoleon, before his coup d'Mat, in favour of Protection ^ seemed to constitute a special obstacle to free trade progress under his rule. Yet even in France the critical movement set up by Bastiat in 1846 was very influ- ential, and there has never ceased to be a free trade party there to this day. What prevented its success from the start was the fact that, on the one hand, there was never any such prolonged urgent distress from lack of food as forced reform in Britain, and that, on the other hand, extremely strong protectionist interests in manufactures had grown up during the Napoleonic wars, which neither the Bourbon nor the Orleanist Government could countervail.^ The Government of the Third Empire, in turn, failed in 1856 in an attempt to substitute a tariff for prohibitions by legislative Act, though ^ Considerations on Representative Government, oh. vi. ^ See the passage cited by Cobden, given by Morley, Life, ii. 363. ^ H. 0. Meredith, Protection in France, 1904, pp. 4-5. FEEE TEADE IN OTHER COUNTEIES 105 a number of duties were reduced or abolished by proclama- tion of the Executive, afterwards ratified by the Chambers, in 1864, 1856, and 1859.1 Then the Cobden Treaty of 1860, which, with the supplementary agreements of 1861, did not require such ratification, made a clean sweep of prohibitions, and substituted duties, mostly moderate ; while the duties on raw cotton, wool, and other raw materials were removed, and a duty of Is. Id. per quarter substituted for the old sliding scale on corn. Similar treaties were made with other Powers, and in 1866 the Protection of shipping was abolished, save as regarded the coasting trade. But all this had been done in advance of public opinion ; and, though France undoubtedly prospered industrially under the Third Empire, the burden of debt imposed by the great war with Germany was quite enough to account for the rapid reaction to protectionism which began in 1875. That, how- ever, was reinforced by the two factors of (1) the great in- crease in the food supply from North and South America, which began to reduce English rents in the 'seventies, and (2) the vine disease, which made protectionists of many who had been free traders.^ Once begun, the movement of reaction went from bad to worse, the agrarian party forcing the pace. As the case stands. Protection in France is ostensibly — though not really — the interest not of a small landlord class, as formerly in England, but of a large peasant proprietary. Most of these really gain nothing by it, but they are nominally protected. The representatives of agriculture, accordingly, join hands with the protectionist manufacturers to make products dear all round. In Germany similar explanations apply. The reaction began immediately on the removal of the last protective duties in 1875 — a measure which, like the Cobden Treaty in France, was the act of a strong Government rather than of public opinion. The industrial collapse which so signally followed the extravagant inflation of German trade set up by the receipt of the French indemnity,^ and which was assuredly due to that inflation, not to free trade, gave ^ H. 0. Meredith, Protection in France, pp. 9-10. 2 Id. p. 13. ' Cp. Dawson, p. 30. 106 THE HISTORIC EVOLUTION the protectionists their required pretext, though such a Con- servative historian as Von Treitschke explicitly admitted that the changes of the free trade period had "given to the working class a great increase of wages, without parallel in German history." i A heavy fall in prices gave his oppor- tunity to Bismarck, who, since the establishment of the German Empire, had been constantly chafing under the insuflBciency of the "matricular contributions" of the com- ponent States for its military needs, as he regarded them. The fixed character of the contributions annoyed him, as it did the Emperor — a protectionist by bias. Growing more and more hostile to the system, Bismarck simply turned protectionist for the sake of an imperial revenue. It is quite clear that he was well content to be a free-trader while he was con- cerned only to govern Prussia,^ and his conversion to Protec- tion was pure opportunism. When, under his influence, Germany in 1879 set up a moderate tariff, reaction set in on all hands, affecting France, Russia, Austria, the United States, and the British Colonies, and raising its head in England in the shape of a " Retalia- tion " movement. As usual, the German results were in many cases extremely bad, iron prices falling in despite of duties, and textile exports falling off.^ As is also usual in such cases, however, the interests aided by the tariff held on desperately, Bismarck abetting ; and the ill effects of tariff were sought to be cured by higher tariffs. Enormous unemployment followed in 1880; emigration, which had fallen to its lowest in the free trade period, rose rapidly to ten times that figure,* and the cost of living rose rapidly to a height never known before. This led, under Caprivi, to a modification of Protection by way of commercial treaties, beginning in 1892 and lasting till 1903; and, though tariff wars with Spain and Russia chequered the process, the lowering of tariffs was generally admitted to have been beneficial,^ the agrarians alone protesting violently. Whereas German trade, on the whole, had been stationary in the ' Written in 1874. Cited by Dawson, p. 31. " See the whole question thoroughly handled by Mr. Dawson, oh. iv. ^ Id. pp. 79, 80. * See the figures in oh. xiii., below. ^ Dawson, p. 124. FEEE TEADE IN OTHER COUNTRIES 107 'eighties, and had advanced in the 'nineties, that of France in the former period went forward, and in the latter period back, by reason of increased Protection ; and German emigra- tion once more fell to a very low figure. ^ But the agrarian party organised itself till it came to rule the situation, and in 1902 once more a system of high protection set in. In the United States, finally, while there were all along elements of reaction such as have been seen triumphing in France and Germany, and fermenting chronically in Britain, the main factor in the protectionist reaction after the low tariff of 1846 was unquestionably the need for revenue in the Civil War, and later to pay off the debt it had involved. " The Secession War was the original cause of the abolition of free trade and resumption of protectionism." ^ The con- stitution not permitting of an income-tax, high excise duties for revenue were imposed, along with tariffs ; and when the excises were withdrawn the tariffs were left. Great protected interests being thus generated, the system took a hold which has never since been thrown off, though several times shaken. The facts that "the years 1846 to 1860 were in the United States years of great and solid prosperity, that all industries made continuous and genuine progress . . . ; that the shipping rapidly increased ; that the production of cotton augmented," and that " the wealth of the nation increased 126 per cent," ^ could not avail to prevent the resort to Protection, and therefore the disasters of Protection could not avail to secure a return to freer trade. In the United States the agricul- tural class — the class which rules the situation in France and Germany — is the one which is exploited, being insusceptible of Protection for itself, and too ill organised to overcome the combination of the manufacturing classes. The interests are different, but it is always a class interest which rules. Having regard, then, to the prolonged and desperate character of the struggle by which free trade was won in England in the first half of the nineteenth century, there is nothing historically surprising in a similarly slow or even 1 Brentano, cited ty Dawson, p. 127. ''■ Rabbeno, The American Commercial Policy, 2nd ed. p. 113. 3 Sumner and Wells, cited by Rabbeno, p. 180. 108 THE HISTORIC EVOLUTION much slower rate of conversion in other countries. In Britain the principle of free trade stood in 1845 somewhat as it now stands in Germany, where it is upheld by a strong and intelligent minority, and resisted by an interested majority, eked out by some disinterested doubters. But in Britain in 1845 there was one great force which is less effective to-day. Neither in Germany nor in the United States, confessedly, is there anything like the acute distress from protectionism that existed in Britain and Ireland in 1846. Our distress rose specially out of lack of food, whereas America has a great supply of food, and Germany suffers mainly from comparative dearness of beef and wheaten and rye bread, and the increasingly high prices of all articles of general consumption. By these high prices the workers suffer, but many traders gain. Why, then, should it be held to tell against the abstract rightness of free trade that these countries have not yet adopted it ? The conversion of masses of men to a novel rational prin- ciple, apart from any sharp pressure of need, is in the nature of things always a slow process. What we have to consider is whether the principle of free trade, once established as a result of special pressures, is for us worth maintaining. The backwardness of other nations to follow us is beside the case. Such backwardness is to be explained in their case as it was in ours, by the play of vested interests. In Germany and in France the agrarians and the manufacturers play into each other's hands, each granting " Protection " to the other ; whereas in England in 1846 the manufacturers and the people generally, helped by a Conservative Premier with a conscience, opposed and defeated the landlords. In the United States capitalists in effect bribe the Legislature. No man now affects to doubt that the non-taxation of the nobles and the Church in France before the period of the Revolution was a monstrous political error as well as a gross injustice. Yet the most modest proposals to tax the two privileged orders were by them indignantly and successfully resisted for whole generations before either could be carried out. Self-interest may presumably operate now as it did then, in Germany as in France. PART III THE SUCCESS OF FEEE TEADE CHAPTER IX FREE TRADE IN HOLLAND All direct experience of free trade in developed States has told in favour of a continuance of that policy. One of the most surprising passages in Mr. Balfour's pamphlet is that in which he asserts that Other nations have in the past accepted the principle of Free Trade ; none have consistently adhered to it Irrespective of race, of polity, and of material circumstances, every other fiscally independent community whose civilisation is of the Western type has deliberately embraced, in theory if not in practice, the pro- tectionist system. Young countries and old countries, free countries and absolutist countries, all have been moved by the same argu- ments to adopt the same economic ideal.^ As we have seen, Mr. Chamberlain makes the same asser- tion : " All these nations . . . and every other civilised nation on the face of the earth have adopted a tariff." " The United Kingdom," he says, in another speech, "is the only country where [dumping] can be carried on successfully, because we are the only country that keeps open ports." ^ ' Economic Notes on Insula/r Free Trade, 1903, pp. 8-9. "^ Speeches, as before cited, p. 125. Cp. p. 166. 109 no THE SUCCESS OF FREE TRADE i/The statement is false in each clause. Dumping can be and A frequently is "successfully" carried on against protectionist ' ' countries by both free-trading and protectionist countries : and Great Britain is not tbe only country that keeps open ports. The ignorance that prevails among protectionists upon this subject is noteworthy. Even Professor W. J. Ashley, who is nothing if not historical, in his carefully written work on The Tariff Problem says we now have " one country completely free, and the others barred by high tariff walls." ^ In his second edition, while avowing in a belated footnote ^ that Holland is " practically a free trade country," he points ^ to the shipping of Rotterdam as having increased in tonnage by 116 per cent between 1890 and 1899 — that is, from 2'9 million tons to 6'3 million tons. Here he is again oblivious of the bearings of the case, for the increase (1) has occurred wilder free-trade conditions, and (2) it is more than twice as great as the only other increases alleged to have taken place ; and yet Professor Ashley cites it as a ground for disquiet to free-trading Britain ! Holland in point of fact levies no protective duties, imposing only a small ad valorem tariff for revenue purposes. If her success should disquiet anybody, it ought to be protectionist Germany. Professor Ashley has lost touch with his argument. It is somewhat astonishing that such a student should not have remembered the special economic need which evolved free or nearly free trade in corn alike in Holland and in Britain, and which has led to the same policy in Denmark. It is further surprising that he should speak of all other countries as " barred by high tariff walls," as if Belgian or Turkish tariffs were high. Significantly enough, the increases in foreign shipping cited by him in his second edition are solely for Rotterdam, Antwerp (low tariffed, and free for much food), and Hamburg — a "free port," albeit on the edge of a high tariffed country. Every item tells against his own cause. While Mr. Chamberlain falsely asserts that Britain is the only country which keeps open ports, his colleague, Mr. 1 The Tariff ProUem, 1903, p. 29. 2 Ed. 1904, p. 227. 3 P. 223. FREE TRADE IN HOLLAND 111 Balfour, proceeds to speak of the large proportion of the earth's surface where protective tariffs are still to all intents and purposes unknown ; going on to say that " these free trade countries consist either of countries which are protective in theory but not in practice, where the absence of manufactures makes importation an imperative but unwelcome need {e.g., the States of South America and the small non-manufacturing States of Europe) " ; or of controlled States (as Turkey and China), or dependencies of Britain. Thus Mr. Balfour flatly contradicts Mr. Chamberlain on a question of fact. And both contrive to be wrong ! Whence Mr. Balfour derives his information, and what countries he refers to as protectionist in theory but not in practice, it is impossible to guess. We can but say that his data are in keeping with the absurdity of his language. The States of South America are one and all heavily tariffed. Chile, Peru, Bolivia, Argentina, Paraguay, and Uruguay raise their revenue mainly from customs ; and Brazil puts high duties on many imports, including cotton, though those on machinery and tools are or have been low. In Europe the only free-trading or partly free-trading States besides our- selves are Denmark (as to food), Belgium (as to much food), and Holland ; and in regard to these Mr. Balfour's language is equally meaningless. He appears to reach his statistics a priori, arguing that the South American States must have free imports because we send them more than they send us ; and his theory of European trade is seemingly reached in the same way. At every point he is hopelessly wrong. Portugal, Servia, Montenegro, and Greece are small non-manufacturing States ivith tariffs; Italy, exporting few manufactures, has high tariffs; Denmark, mainly an agricultural State, has heavy tariffs on manufactures and free imports of food; Holland, a manufacturing state, has only non-protective revenue duties on certain imports ; Belgium, a manufacturing State, has low tariffs, and admits free imports of wheat, rice, tea, coffee, and some other forms of food, also of petroleum, starch, etc. The suggested cause of differentiation is thus beside the case. And if Mr. Balfour means to suggest that the people of Holland mournfully dispense with pro- 112 THE SUCCESS OF FREE TRADE tective tariffs while collectively conscious of an unsatisfied yearning for them, he is but adding a flimsy fiction to his previous denial that any civilised countries apart from Britain dispense with protective tariffs at all. Modern Holland is no more protective in theory than in practice. In point of fact, Republican Holland long preceded Britain in the free-trade experiment, to the extent of putting minimum duties on imports ; and in the seventeenth century its commercial success was so signal as to set up among other nations a common belief in a special Dutch genius for trade, and a certain hopelessness about competing with it.^ It is true that the Dutch were false to their principle when they put a needless veto upon the importation of fish (they being the great fishers of Northern Europe) and set up rigid monopolies in their trade with their eastern possessions. And, in fact, the first serious falling away of the prosperity of Holland can be shown to have been set up (1) by the resort of her capitalists to the methods of monopoly in con- nection with her East Indian Empire ; ^ and (2) by the great increase in all her industrial costs resulting from the immense additions to her debt and her taxes by her great wars with France ; ^ even the protective policy of the English Navigation Act having, as we saw, totally failed to damage her shipping trade as it was meant to do. Dutch trade, however, was further relatively distanced in the eighteenth century by the commercial growth made possible in this country by our much greater natural and colonial resources, under a much lighter burden of taxation. That this is the true explanation is now implicitly admitted by Professor Ashley. In his second edition, without correcting his former remarks on the operation of the English Navigation Act, he remarks ■* that " England in 1800 had come to occupy the position which ^ Op. Petty, Essays in Political Arithmeticlc, ed. 1699, pp. 170, 181 ; Child, New Discourse of Trade, 4th ed., pref. and pp. 23, 55, etc. ; Raleigh, "Observations touching Trade," in Works, ed. 1829, vol. viii. ; Temple, Observations upon the United Provinces of the Netherlands, 2nd ed. 1673, pp. 209, 229. 2 See M'CuUoch's note to the Wealth of Nations as to the progressive corruption of the Bank of Amsterdam by the finance of the monopolist period. ^ See note xi. to M 'Culloch's edition of the Wealth of Nations. * The Tariff Problem, 2nd ed. p. 225. FREE TRADE IN HOLLAND 113 Holland occupied in 1700." That is to say, iifty years after the passing of the Navigation Act, Holland retained her maritime supremacy. Yet further. Professor Ashley writes, following a German authority previously cited by Dr. Cunningham,^ that thus "the trade of Holland apparently went on growing until the decline of domestic industry, which began about 1730, reacted unfavourably upon export." The most important branch of that trade had been in the direction of the Baltic. Russian hemp, flax and tallow, Swedish iron, copper, and timber were distributed to the rest of the world by Dutch shipping ; until in the latter half of the eighteenth century, as the same historian tells us, " England became the chief market for all the raw products of the north, owing to the development of her manufactures.^ There could not be a more decisive admission of the utter falsity of the standing protectionist pretence that the navigation laws availed to upset the Dutch shipping trade. The British expansion of the eighteenth century occurred not because of but in spite of the navigation laws of a century before ; and Dutch trade, as we saw, was actually furthered by them. The protectionist, Joshua Gee, writing in 1729, speaks of the Dutch trade as "vast," and makes no pretence of comparing that of Britain with it as regards quantity.* Even later still the author of the Essay wpon the Causes of the Decline in Foreign Trade, writing in 1744 and 1756, treats the Dutch trade as still unquestionably much greater than the English. The marvel is, not that after the great developments of machinery in England in the last quarter of the eighteenth century, little Holland, shaken throughout by the long convulsion of the Revolutionary and the Napoleonic wars, should fail to keep pace with an England of rapidly increasing population, richly endowed with coal and iron, but that a country with no such resources should so long hold the first place in trade as against nations many times larger in population ; * that landless Amsterdam should 1 Growth of English Industry and Commerce, ii. (3rd. ed.), 213, note 3. ^ 0. Pringsheim, Seitrdge zur mrtschaftlichen Entwichelungsgeschichte der vereinigten Niederlande, 1890, pp. 11, 24. 3 The Trade and Navigation of Great Britain Considered, Sfh ed. 1760, pp. 141-4. "* '-'P- ^^^' ^^ cited, p. 143. 114 THE SUCCESS OF FREE TRADE be so long the chief European storehouse for grain ; ^ and that treeless Holland should be so long the greatest centre of the timber trade and of shipbuilding. By the admission of all inquirers, " low customs " had been a main cause. And the policy which first made her relatively great is still making her prosperous.^ Despite the check in the latter part of the eighteenth century, Holland has latterly subsisted in other- wise inexplicable prosperity ^ precisely because of her virtual free trade, which at many points — with one period of reaction — has been continuous. Only free trade could have made possible such success. And within the past generation, re- maining faithful to free trade,* she has prospered much more, ^ Professor Ashley makes tlie assertion (p. 226, note) that " likens, Holland sacrificed its corn-growing agricnlture to its foreign trade," giving as his authority Hansen's Bevolkerungstufen, p. 283. This is an extremely misleading citation. Hansen expressly says that Holland in large part turned its land from corn-growing to (1) a more intensive culture and (2) to pasturage and dairy produce, which last has always been in much demand. To speak of this as a sacrifice to foreign trade is to set up an economic myth. Already in the seventeenth century Holland could not feed its large trading population. And the process under notice in Holland is now going on in protected Germany ! Professor Cunningham, in turn (English Industry and Commerce, iii. ed. 1903, 675-6), cites two English mercantilist writers who absurdly ascribed Dutch decadence in the latter part of the eighteenth century to the substitution of exchanges and carriage for manufactures, and appears to endorse that egregious opinion. The Dutch were fishers, traders, and carriers from the start. ' Dr. Cunningham writes (as last cited) of " the complete destruction of her greatness which ensued when she was drawn by Napoleon into the Continental system," bracketing this with the alleged resort from manufactures to carriage as "these causes of the eventual fall of Holland." ^ As to the relative wealth of the Dutch in the eighteenth and nineteenth centuries, compare Smith, Wealth of Nations, b. ii. oh. v. end ; M'CuUoch, Treatises and Essays, 2nd ed. 1859, p. 363 ; Armitage-Smith, The Free- Trade Movement, 2nd ed. 1903, p. 63. It is true that in a time of shrinking industry a large annual income from foreign investments, such as was long received by Holland, is not the most wholesome form of national wealth (cp. Laing, Notes of a Traveller, 1842, p. 10), but the period of shrinking industry in Holland is now past. The remarkable thing is that her recent rapid expansion coincides with the rise of protectionism in Germany. * The compiler of the Daily Telegraph pamphlet, Imperial Reciprocity, repeatedly discusses Holland (pp. 88-89, 103) as a protectionist country, whereas it has only a tev non-protective import duties, amounting "usually to 5 per cent of the value of manufactured articles, and nihil, or only 2J per cent, if these articles are used for the industries of the country " (Statesman's Year-Booh). The Dutch protectionist party, though chronically active, has never triumphed since the period of reaction, 1815-1846. FREE TRADE IN HOLLAND 115 according to the very tests insisted on by Mr. Chamberlain and Mr. Balfour, than any protectionist country. This may be proved even if we set out from Mr. Chamberlain's test year of 1872, which was one of inflation for Holland as well as for Britain. Dutch exports and imports, fortunately, are measured not merely in terms of prices, but by actual weight ; and we can accordingly note the real progression of Dutch commerce.^ It is as follows : — Exports (In Kilogrammes). Imports. 1872 1898 1901 1905 1906 2,956,000,000 15,612,000,000 17,764,000,000 . 25,850,000,000 . 27,220,000,000 6,451,000,000 24,074,000,000 26,221,000,000 36,362,000,000 38,534,000,000 Goods in Transit. 1887 1891 1901 1905 1906 2,375,000,000 kilogrammes 3,175,000,000 5,949,000,000 6,968,000,000 „ 7,825,000,000 It must be remembered, of course, that the Dutch expansion, being measured in quantities, is not relatively so great as it seems when contrasted with the value-figures of other nations. Still, the expansion is very great. No protectionist country whatever shows such progress in trade within the period. Unaware of the fact that Holland has no protective tariff, a "tariff reform " journalist ^ calls attention to the facts that since 1854 Holland has increased her exports by 1017 per cent, France by 255 per cent, and the U.S.A. by 566 per cent, and that since 1874 Holland has increased her exports by 430 per cent, France by 20 per cent, Germany by 117 per cent, and the U.S.A. by 152 per cent. The usual infirmity of the tariflSst is here exhibited in reckoning the Dutch increase on quantities and that of the other countries ' ^ It should be noted that the Dutch figures include Dutch colonial merchandise. The bulk of the expansion, however, is clearly European. 2 The People, April 19, 1908. Article headed "Will Workman." Tariffists who happen to know that Holland is not a protectionist State dismiss the facts by calling her traders "middlemen." Tariffists would do well to agree on a common thesis in this and in many other matters. 116 THE SUCCESS OF PKEE TEADE on values. Still the increase is great enough to account for the attempt to put it to the credit of Protection. And though it is diflacult to distinguish betw;een Dutch produce and Dutch-carried produce, there is' a clear increase in the former. The statistics show that Holland exported to Britain alone, in 1891, £1,050,455 worth of iron and steel goods; in 1898, £1,133,928 ; in 1901, £1,379,815 ; and of woollen and cotton manufactures in 1891, £3,443,698 ; in 1898, £3,588,327; in 1901, £3,714,793. In the same period the number of ships which cleared Dutch ports rose from 8642 in 1891 to 12,367 in 1900, and 14,049 in 1906; and the number of Dutch vessels in the carrying trade between foreign ports from 2177 in 1890 to 2318 in 1900, and 4048 in 1 905 ; while the number of factories using steam rose from 3722 in 1891, with 4435 engines, to 4787 in 1901, with 6728 engines; and to 4936 in 1906, with 7160 engines. We can now weigh aright Mr. Chamberlain's proposition that " Holland tried, in the time of her greatest prosperity, to retain her command of the sea, her position as carrier and merchant of the world. She tried to maintain it mthout productive capacity. She tried and failed, and you, gentlemen, cannot be more successful than she was." ^ As against this confused sophism, which virtually alleges that Britain is without productive capacity, let us put the relevant facts. 1. Holland is to-day, as in the past, a carrier and merchant for Central Europe, and is constantly increasing her activity as such. 2. Holland is yearly increasing her productive capacity as measured by population, factories, and machinery. 3. In asserting that lack of " productive capacity " caused Holland to fail, Mr. Chamberlain quashes his own case. He had been arguing that she failed through free trade. All the while her carrying trade and transit trade are increasing yearly in virtue of her free imports. 4. Finally, Holland profits immensely at many points by the protectionism of her chief neighbour, Germany; several Dutch industries being enormously promoted by the German ' Speeches cited, p. 148. FREE TRADE IN HOLLAND 117 practice of selling certain raw materials cheaper in foreign than in German markets — i.e. "dumping." The Dutch tinned -goods trade is a prominent instance. Still more remarkable is the transfer from Germany to Holland of the trade of building boats for the Rhine — a result of the sale of heavy plates, by the Rhenish-Westphalian producers, cheaper to the Dutch than to the German market, i Thus the free- trading country not only prospers steadily but does so partly at the expense of the protectionist neighbour. 5. It may be added that while the Dutch area of wheat cultivation decreases, like the British, the figures for recent years being Area in Hectares 91-1900 66,329 1903 . 56,518 1904 . 54,081 1905 . 60,972 1906 . 56,796 the p'oduce of wheat per hectare has risen from 22 to 30"7 hectolitres per hectare.^ The area under rye, on the other hand, has risen from an average of 196,112 hectares in 1871- 1880 to 218,220 in 1906 ; oats, potatoes, peas, and beetroot have also increased ; and in the same period the total yield of every Dutch crop per hectare has increased. This cannot be alleged of Germany as a whole. 1 Fiscal Blue Book, Cd. 1761, 1903, p. 305, citing Sayous, La crise allemande, pp. 351-2. 2 Hectare = 24 acres ; hectolitre = 2| bushels (roughly). CHAPTEE X FREE TEADE IN BRITAIN § 1. The Cheapening of Food I HAVE said that what saved free trade in Britain as against the protectionist assault after 1846 was on one hand the plain continuance of the need for free food, and on the other the overwhelming confirmation of the free trade case in the total expansion of trade and employment. It would hardly be necessary to press the first point were it not that Professor Nicholson, without intending to disparage free trade, has made the remark that "the repeal did not enable the labourer to get a whole loaf instead of a half. If we take the average twenty years, from 1827 to 1846, it works out at 57s. 4d. a quarter, and from 1850 to 1869 the average is 52s. 6d."i It is necessary to put the facts in a clearer light. The years 1847 and 1848 were still years of Pro- tection, the arrangement being that till February 1, 1849, there should be a duty of 10s. when the price was under 48s., falling to 4s. when the price reached 53s. The actual average prices for 1847 and 1848 were 69s. 5d. and 50s. 6d., the latter being a year of fair crops. In 1849 the price fell to 44s. 3d. or, by another calculation, to 39s. 4d. ; and the average for the four years 1849-52 is 41s. or 42s. 3d. Then there is a rise to 53s. 3d. in 1853, a year of dearth, with a very large importation, followed by three terribly dear years, 1854-56, of which the average price is 72s. Id. These are ^ History of the Mnglish Corn Laws, p. 166. 118 THE CHEAPENING OF FOOD 119 the years of loss of Russian supply through the Crimean War ; and they tell heavily in Professor Nicholson's averages ; while, on the other hand, the extraordinarily abundant years 1832- 1835 lower deceptively the average for the corn law period. The period as a whole was one of desperately high prices. For the purposes of the argument as to the importance of cheap food, obviously, the question is : How would prices have gone under the old corn laws in the years 1849-56 1 Obviously, the English harvests of those years being bad or poor, the prices in those years would have been much higher ; and instead of four good years as preparation for those of dearth, the country would have passed from hardship to famine. It is important to note, however — as was rightly done by Mill, — that the mere absolute reduction in wheat prices is no true measure of the gain from the repeal of the corn laws. The first effect of a more abundant supply was an increase in demand ; the people consumed more wheat,^ thereby prevent- ing such a fall in price as would have happened at the old rate of consumption. But, secondly, the great argument of Cobden, that free trade in corn would react favourably all round, was fully verified by the results. The imported corn was paid for by English exports ; labour was paid for by bread ; and the workers were better able to buy at whatever price might come. This fundamentally important fact is some- what obscured by Professor Nicholson's handling of the problem.^ It is much more obscured by some recent attempts, on the protectionist side, to make out that prices in the "hungry forties " were low all round. Mr. Samuel Storey has lately given, from memory, a list in which bread figures at 6d. the quartern loaf, and meat, eggs, and potatoes at much lower "■ It was calculated that in 1842 one-third of the population did not eat wheaten bread at all (Villiers' Speeches, p. 256). In 1843 "many families had given up eating bread, and had taken to live solely on potatoes " (id. p. 298). In Stockport, in 1840, multitudes were known to live on oatmeal and potatoes ; while " whole families subsist, week after week, on meal gruel " (id. p. 189). The evidence is overwhelming. 2 He expressly admits, however, "We may safely say that but for the repeal the average of corn prices would have been much higher than was actually the case " (p. 55). 120 FREE TRADE IN BRITAIN prices than those oE to-day. The item as to bread suffices to remove the testimony from the field. Bread in the corn law period was so frequently at lOd. and Is., or more,^ that the former might be cited as the average price.^ Potatoes and butcher meat were relatively cheap — at least in country districts ; but there is abundant testimony to show that the peasantry hardly ever tasted the latter.^ They could buy only the food that went furthest in filling their stomachs, namely, bread, and bad bread at that. Butter, in country districts, was cheaper than to-day, precisely because most people never bought any — for the poor it was an unattainable luxury ; and cheese was hardly less so.* As regards prices in general, an actual grocer's bill of 1843 is instructive, compared with the prices of the same articles sixty years later : — 1 lb. tea 2 lbs. sugar". 1 lb. currants 1 lb. raisins . 1 lb. peel 1 lb. ground ginger 1 lb. sweets . 3 lbs. candles^ 3 lbs. moist sugar . 1843. 1904. 6s. Is. 6d. Is. 4d. iii. 8d. 3d. 8d. 4d. Is. 6d. 4d. 4s. lOd. Is. 4d. 4d. 33. lid. Is. 6d. 44d. 20s. 5s. 3d. In soap and salt the differences are similar ; indeed, the salt prices (21s. per bushel) in the forties were so high that it was commonly reckoned that it took the price of half a pig to pay for salting the other half.'^ Coal prices were from Is. 8d. to Is. 10|d. per cwt.^ The statistics of wheat prices, further, give no idea of the eflfect of the repeal of the corn laws as regards other kinds of grain. Averages of periods are not easily made ; but the ^ In T/ie Hungry Forties testimonies are given to prices as high as Is. 6d. Pp. 62, 63, 71, 99. Butter was 8d. to Is. per lb. P. 69. '^ One witness puts lOd. as a minimum price. Id. p. 66. ^ Villiers' Speeches, as cited, p. 162 ; The Hungry Forties, People's ed. pp. 14, 25, 31, 43, 65, 56, 61, 66, 69, 72. * The Hungry Forties, pp. 26, 53. '' "Vile sugar at 9d. per lb." is another account, id. p. 61. ^ Cotton and rush candles cost 8d. per lb. about 1846. ' The Hungry Forties, pp. 23, 33, 117. ^ Id. pp. 59, 133, 168. Average Price, 1847. Average Price, 1849. Difference. s. d. s, cl. s. d. 69 5 44 31 25 2 43 11 25 9 18 2 28 7 15 6 13 1 50 1 26 11 23 2 39 1 29 10 1 THE CHEAPENING OF FOOD 121 effect of repeal in the year 1849 alone, as against the last dear year, is significant : — "Wheat . Barley Oats Beans Peas Villiers ^ calculated that in the first year of Eepeal the people were saved, in expenditure on food of all kinds, a sum equal to £91,000,000, as against the expenditiu'e of 1847. Assuming this to be greatly exaggerated, and putting the sum at only £40,000,000, we have still a fund for other forms of expenditure great enough to create such a revival of trade as had never been seen before. The revival, of course, is not to be estimated by exports alone : it would be seen largely in the home markets. And Porter, when preparing the third edition of his Progress of the Nation in 1850, was able to say that " the evidences of general prosperity brought forward in the following pages are indeed as clear and conclusive in favour of a free trade policy as any of its warmest advocates could have hoped to witness." Finally, while the argument post hoc ergo propter hoc is to be handled with special caution in regard to vital statistics, in view of the difficulty of collating all the probable factors, there is a haunting significance in this table, ^ which does not seem to have been challenged at the time : — Years. Average Wheat Price. Deaths. Excess of Deaths over Year of Lowest Price. 1801 . 1804 . 1807 . 1810 . 118 3 60 1 73 3 106 2 55,965 44,794 48,108 54,864 11,171 3314 10,070 Villiers says 39s. 4d. I take the higher figure as the more probable, besides making the smaller claim for free trade. ^ Speeches, p. 557. ' Villiers' Speeches, p. 190. 122 FREE TRADE IN BRITAIN That victual statistics are vital statistics is m any case a safe thesis ; and when contemporary protectionists are found citing a lowering death-rate as part of the argument for Protection in Germany,^ the ahove figures, which neglect no such factor of rapidly improving sanitary science as comes into play in the modern period, are worth remembering. § 2. Trade Expansion in the Eighteenth Century As regards trade expansion, the facts are so clear that it is diificult to overstate the audacity of the attempt to prove the contrary. The demonstration began immediately after the ratification of Pitt's Treaty of Commerce with France in 1787,^ negotiated by Eden. This treaty sought to establish "a system of commerce on the basis of reciprocity and mutual convenience, which, by discontinuing the prohibitions and prohibitory duties which have existed for almost a century between the two nations, might procure the most solid advantages on both sides to the national productions and industry, and put an end to the contraband trade " ; and it provided for " a reciprocal and entirely perfect liberty of navigation and commerce between the subjects of each party " in Europe. It did not abolish import duties, but reduced and equalised them nearly all round. Thus the agreement was but a modest step towards free trade between two countries whose total commercial intercourse had for a century been kept within very narrow limits. Trade, indeed, had already begun to improve on the conclusion of the war with the American colonies in 1783; but the rate of its augmentation with France in particular, while the treaty lasted, is a decisive proof of the gain on both sides. The oflBcial figures ^ of our general trade from 1782 to 1792 are as follows:— ^ So Professor W. J. AsMey, in his Progress of the German Working Classes, 1904. ' Treaty signed at Versailles September 26, 1786, confirmed by Parlia- ment Marcli 8, 1787, passed by Act 27 Geo. III. c. 13, on April 25, 1787. ^ The Official Abstracts are given in Maopherson's Annals of Oommerce. See also Craik, iii. 83. TEADE EXPANSION IN EIGHTEENTH CENTURY 123 U.K. Exports. U.K. Imports. 1782 . £13,009,458 £10,341,628 1783 . 14,681,494 13,122,235 1784 . 15,101,491 15,272,877 1785 . 16,117,168 16,279,419 1786 . 16,300,730 15,786,072 1787 . 16,869,789 17,804,024 1788 . 17,472,238 18,027,170 1789 . 19,340,548 17,821,102 1790 . 20,120,121 19,130,886 1791 . 22,731,995 19,669,782 1792 . 24,905,200 19,659,3581 Thus exports were but slightly increasing, and imports even decreasing, between 1785 and 1786, whereas exports increase rapidly and continually, and imports with two slight declines, from 1787 to 1792; the total expansion of trade being 90'8 per cent. The figures for our trade with France ^ are as follows : — Exports to France. Imports from France. 1783 £98,166 £87,119 1784 495,672 141,568 1785 604,313 211,791 1786 612,619 266,121 1787 986,906 677,012 1788 . 1,259,672 452,986 1789 1,290,171 556,060 1790 872,323 605,371 1791 1,131,376 646,067 1792 1,228,165 717,634 It is thus clear that while there was a marked recovery in Anglo-French trade after the cessation of the war, the expan- sion goes forward with a bound in 1787 ; and while there is a fall in the imports in 1788-89, when France was being newly perturbed by the beginnings of the Revolution, and a consequent fall in the exports in 1790, the imports recover in 1790 j and from that point to 1792 they bear a much higher proportion to the exports than they had done before the treaty. Needless to add, the accounts between France 1 It has to be remembered that the British importers of the period commonly understated the value of their imports, by way of defrauding the revenue. But the misstatement may be assumed to have been on much the same scale in successive years. Cp. Tooke, Thmights on Prices, i. (2nd ed.), 178 9 2 Craik, iii. 92-93. 124: FREE TRADE IN BRITAIN and England would be balanced by French exports to other countries which traded with England. A characteristic attempt has been made by List to show that French manufactures were nearly ruined by the Eden Treaty, "while the French wine-growers had gained but little." 1 The foregoing figures suffice to show the worthless- ness of the assertion, which is typical of List's polemic. From the very first year of the treaty, our imports from France bear a much higher proportion to our exports thither than they had done before (saving in the transition year 1783, when trade is still very small). In 1784 they are less than a third; in 1785, little over a third; in 1786, still much less than half. In 1790 they are over two-thirds ; in 1792, though the proportion is less, the increase over 1786 is nearly threefold. If in this great increase of French exports to England the manufacturers had no share, and the wine trade little, who were the French exporters ? On the English side the exports reached high-water mark in 1789, while the French exports are at their highest in 1792. On the other hand, whereas British exports to Germany increased very slightly from 1785 to 1788, and the imports fell ofi^, the exports rose from £1,473,308 in 1788 to £2,139,110 in 1792, while the imports increased only from £448,863 to £650,436. Then Germany, without a treaty, was being " ruined " much faster than France. Much of the trade in both cases, of course, was roundabout. The value of List's reasoning may be further measured by noting his further affirmations. He asserts (1) that the results of the treaty convinced the French Government that "it is easier to ruin flourishing manufactures in a few years than to revive ruined manufactures in a whole generation." He is of course careful to suppress the fact that France actually entered into similar treaties with Holland and Russia, and that in 1791 the Constituent Assembly practi- cally ratified the principles of the Eden Treaty by drawing up a moderate general tariff. But he proceeds to assert (2) that under Napoleon, despite incessant wars and loss of most of the French maritime trade and all the French colonies, 1 Tlie National System of Political Economy, Eug. tr. ed. 1904, p. 59. TRADE EXPANSION IN EIGHTEENTH CENTURY 125 Protection not only remedied the " ruin " of the Eden Treaty but raised French manufactures to the highest prosperity they had yet enjoyed. And finally he claims for Protection (3) the credit of doubling their productive power between 1817 and 1827, in a state of absolute peace.^ A recent English disciple of List, outdoing his master, hardily affirms that the Eden Treaty caused the French Revolution, by " starving " and ruining French manufactures.^ He begins his proof by citing Arthur Young's accounts ^ of the violent opposition of French manufacturers in 1787 to the new treaty of commerce. He of course makes no allusion to Young's constant testimony to the extreme and indurated poverty of rural France after ages of Protection.* And when he does quote the later passage in which Young, after noting a depression of manufactures in 1787 and 1788, ascribes the later unemployment to the Revolution itself, our protectionist utterly misinterprets the testimony. Young writes : " The rivalry of the English fabrics, in 1787 and 1788, was strong and successful ; avd the confusions that followed in all parts of the kingdom had the effect of lessening the incomes of so many landlords, clergy, and men in public employments, and such numbers fled from the kingdom, that the general mass of the consumption of the national fabrics sank perhaps three- fourths."^ The context shows that our protectionist takes "the confusions that followed" to be the results of the " rivalry of the English fabrics " ; but the whole of Young's book shows him to have entertained no such preposterous idea.^ The "confusions that followed" (i.e. in time, not in 1 Work cited, p. 61. 2 J. W. Welsford, The Strength of Nations : An Argument from History, 1907, pp. 184, 185. 2 Travels in France, Bohn ed. 1890, pp. 8, 9. * E.g., within three lines of the first mention of the treaty : "Poverty and poor crops to Amiens: women . . . ploughing." P. 19: "The same wretched country continues to La Loge : the fields are scenes of pitiable management, as the houses are of misery." P. 21 : "The husbandry poor and the people miserable." P. 27 : "AH the country girls and women are without shoes or stockings. ... It reminded me of the misery of Ireland " ; and so on. = Welsford, p. 192 ; Young, Bohn ed. p. 328. 8 In another passage Mr. Welsford completely misunderstands Young's text. He speaks (p. 191) of the journal as quoting a " French cheapjack 126 FREE TRADE IN BRITAIN consequence) were those of the Revolution ; and the " landlords, clergy, and men in public employments " lost their incomes through the general disorder, and through the dearth and distress, not through depression in manufactures. If Young supposed such depression to be the originating cause, how came he to say nothing of the loss of artisans^ and manu- facturers' incomes ? The whole theorem is a mare's nest ; and the statement ^ that " after the [Eden] treaty was signed in 1786 there was a great influx of English goods into France, followed by want of employment and terrible distress," is rhodo- montade. The writer himself notes in a previous chapter ^ that "in 1788 the crops in France were seriously injured by drought, and a terrible hailstorm at the time of harvest destroyed the small amount there was to be gathered " ; and further, that "the winter of 1788 was the severest ex- perienced since 1709; the Seine was frozen from Paris to Havre, and naturally building ceased." Add that in June of 1789 " the want of bread was terrible," * and the theory of a ruin and a Revolution wrought by two years of lowered tariffs is seen to dissolve in air. It deserves indeed to be dismissed as beneath discussion ; but protectionist propaganda does not admit of being sifted. § 3. The Reforms of Huskisson and Sydenham The next testing-points are the effects of the modification of the Navigation Acts in 1822 and Huskisson's tariff reductions of 1825-26.* Shipowners, like the other pro- selling English goods " in favour of the treaty. The dealer in question was selling French imitations of English goods, and arguing that the quality of French goods was being improved. Young, ed. cited, p. 117. 1 Welsford, p. 215. 2 p. 195, ^ Young, p. 154. '' The importance of these may be seen by comparing them with those effected by Pitt in 1787 :— Pitt's Duties Huskisson's Articles. Tariff, in Tariff, 1787. 1819. 1825. £ s. d. £ s. d. £ s. d. Cotton Goods, per cent . 44 50 10 Woollen ,, . . Prohibited 50 15 Linen ,, . 44 60 25 EEFOEMS OF HUSKISSON AND SYDENHAM 127 tected interests, had been complaining bitterly of depression from 1815 onwards;^ and each relaxation of the Naviga- tion Laws was met on their side by agonised predictions of national ruin. The first step had been the withdrawal of the embargo on American shipping after the peace ; and it was in this connection that the gain from freedom was most convincing. The increase of shipping engaged in the foreign trade of the United States from 1821 to 1844 was from 55,188 to over 750,000 tons, or 1289 per cent, while the increase in American shipping was only 158 per cent.^ In the same period the increase in the proportion of foreign tonnage entering British ports was only from 21 to 28 per cent — a complete refutation of the alarmist prophecies of the devotees of the Navigation Act. In the same period the total British tonnage increased by 155 per cent.^ As regards the reduction of silk duties and the substitution of ad valorem duties for prohibition of silk manufactures in 1826, the result was no less convincing. The trade had uttered the usual cries of terror, predicting ruin, doubtless in all sincerity.* "Yet seven years had scarcely elapsed . . . when the weavers of Macclesfield harnessed themselves to the carriage of Mr. Huskisson, and drew him through their town in triumph. He had saved their trade. So far from his measures having proved its destruction, but for these, to quote the language of a distinguished manufacturer, 'we should have had no silk trade to talk of.' " ^ During the ten years preceding 1824 the quantity of raw and thrown silk used by our manufacturers amounted to 19,409,023 lbs., an average of 1,940,902 lbs. In the twelve years following, the Silk Goods . Prohibited Prohibited 25 to 30 % Leather ,, • Prohibited 75 30 Earthenware Goods . 45 75 15 Bar iron, per ton . 2 16 2 6 10 1 10 Olive oil, per tun . 8 8 10| 18 15 7 4 4 Sugar . 2 5 6 4 6 8 3 3 Leone Levi, Hist, of Bnt. Oomm. 1763-1870, 1872, p. 169. ^ Porter, Progress of the Nation, ed. 1815, p. 390. 2 Diinckley, The Charter of the Nations, p. 103. 3 Id. pp. 104-5. ■* Martineau, ii. 479. ' Dunckley, p. 109. 128 FKEE TRADE IN BRITAIN quantity rose to 49,973,331 lbs., an average of 4,164,444 lbs. Within a year of the change, the number of throwing mills had risen from 175 to 266, and that of spindles from 780,000 to 1,180,000.1 An immediate result of the change was thus a great improvement in machinery ; and the one district which felt distress, Coventry, was one of antiquated and inefficient machinery.^ Duties had been similarly reduced on imported wool in 1825, and exportation of raw wool permitted. The result was an importation of 40,000,000 lbs. in the year, and an exportation of only 100,000 Ibs.^ But in the case of wool there could be, under the corn laws, no adequate exportation to keep up prices, though in 1844 it had reached double the figure at which it stood in 1824.* Similar results took place in the case of glass and linen.^ It is true that sequence in time does not imply causation ; and it has been argued that the real forces expanding trade after 1846 were those of machinery and railways. But while these of course played a great part, the statistics give crucial testimony to the fact that free trade enhanced enormously their operation. Machinery had been freely in use for half a century before the repeal of the corn laws, with the results in popular life which we have seen. On the other hand, every protectionist prediction as to the fatal effect of the new policy was falsified from the start ; and it is to be noted that the " argument from steam " is an abandonment of the old protectionist position, which admitted no virtue in machinery to improve life. Yet another test of the expansive virtue of relative freedom in trade was available from the year 1831 onwards, in respect of the relaxations of tariff begun in that year by Lord Sydenham, and continued through the decade. Among the more important were the reductions upon French wines and other French produce. This was done without reciprocity. "In the meanwhile," wrote Porter in 1849, "France has made no relaxations in favour of British produce, but, on the contrary, has in the presumed interest of her flax-spinners ^ Porter, p. 255. ' Martineau, i. 480. 3 Id. p. 483. * Dunckley, pp. 117-9. = Id. pp. 114-6, 119-23. REFORMS OF HUSKISSON AND SYDENHAM 129 and linen-weavers more than doubled the duties chargeable upon linen and linen yarn. Notwithstanding this, the result has been that our greater purchases from France have com- pelled her to increase her purchases from England, and that our shipments to that country have since amounted in one year to more than three millions, or more than sevenfold their value before 1831." ^ This case alone, thoroughly understood, might have opened the eyes of protectionists both in England and France. The French increase of linen duties not only could not keep out the English goods required to pay for the French wines bought in England ; it merely crippled the French linen-weaver, who had now to pay more for his raw material, and consequently raised his prices. Thereupon not only was his home trade curtailed, but he was hopelessly distanced in the neutral markets where he had formerly competed with the linens of England and Germany. Thus the check to the English exporter of linen yarns was at once mated by the new demand for English linens, and by the further demand for English linen yarns in Germany, where export was equally stimulated by the French policy ; whereas France, having sought to help her linen industry by Protection, saw that actually dwindle, while the unprotected and (then) unprotectable wine trade flourished — all to the benefit of the English trader, and at the ultimate cost of the French consumers who bought imported English goods at artificially high prices. And, as was pertinently asked by the English free-traders, "had England put off her relaxa- tions until France could be found in a corresponding humour, how much of the increase above-mentioned would have been experienced?"^ The inferrible truth is that, limited as was the progress of English trade in the first half of the nineteenth century by reason of the central check upon all expansion set up by the corn laws, that progress would have been much less, and the total distress would have been much greater, but for the alleviations resulting from the successive reductions of tariffs and restrictions of the naviga- tion laws which preceded the total repeal of both. ^ Note to trans, of Bastiat's Sophismes Economiyues, 1849, p. 149. 2 Id. p. 150. 130 FREE TRADE IN BRITAIN § 4. The Legend of " Supremacy " under Protection It is necessary in this connection to guard against two correlative misconceptions which are constantly current on the protectionist side. It is maintained on the one hand that English manufactures had already attained "supremacy" before 1846,^ and on the other hand that not till the free trade period did English capital and labour show the way to the nations of the Continent by setting up and working there English machines. Both propositions are utterly erroneous ; and the writers cited can have made no research on the subject. As we have already seen,^ English manu- facturers long before 1846 had to complain again and again that by reason of English protectionism they were being beaten in many foreign markets by German, Swiss, and American competition. " The continent of Europe and the United States of America," writes a historian of the cotton trade in 1836, "for some time after the peace of 1814, possessed factories upon so small a scale that they could not be regarded as our rivals in the business of the world ; but now they work up nearly 750,000 bales of cotton wool, which is about three-fourths of our consumption, and have become formidable competitors to us in many markets here- tofore exclusively our own."* Thus, ten years before the repeal of the corn laws,' the free-traders of England could accurately make out against Protection just such a case of stagnation in British trade, and progress in foreign competition, as it is latterly and loosely sought by protectionists to make out against free trade. American goods in particular were ^ ' ' When we decided on a free trade policy, about sixty years ago, our supremacy in industry and commerce was beyond challenge." "We were in all or nearly all departments an easy first, and a match for the world " (Kirkup, Progress and the Fiscal Problem, 1905, pp. 8, 22-3, op. p. 28). "England was already in a position of pre-eminent advantage over all competitors in the field of trade," "with the exception of France "(Sir Vincent Caillard, Imperial Fiscal Reform, 1903, p. 47). Prance was in reality one of the manufacturing countries least feared as a rival by the English manufacturers of the protectionist period. ^ See above, ch. vi. ^ Dr. Andrew Ure, The Ootton Manufaciwre of Great Britain Systematic- ally Investigated, 1836, vol. i. p. xxvi. See the abundant statistical details giventhroughout the introduction. "SUPREMACY" UNDER PROTECTION 131 rapidly superseding English in the " neutral " markets ^ of China, India, Chile, Brazil, Manilla, Malta, Asia Minor, and the Cape of Good Hope.^ As against this, it was small consolation to be able to quote the petition of the protected cotton manufacturers of Mulhausen to the king of France in 1832 : "Our looms are wholly abandoned, and our labourers without food." ^ Free-traders have been at times accused of claiming pharisaically that the British adoption of free trade was a philanthropic step taken in the interests of mankind.* But it is a protectionist, Mr. Kirkup, who writes : — ■ In the generation which followed our adoption of free trade we sent our new machinery to foreign nations. We also sent them skilled men, who taught them our methods. Our policy of free trade was thus a real boon to the world, which came into posses- sion of the methods and appliances of the new industry at an earlier date than would have been possible if we had followed a narrower and more selfish policy.^ In point of fact, all this had been done long before the British resort to free trade. So accessible a work as the Speeches of Cobden could have informed Mr. Kirkup that in 1842 it would be impossible to visit any continental town of 10,000 inhabitants without finding "Englishmen who are earning thrice the wages the natives earn," while " yet their employers declare that they are the cheapest labourers." ^ He might further have learned from Ure that, in and before the 'thirties, Every strike in Great Britain has been the era of new factory creations abroad. The unions ship oflf their members to maintain a maximum rate of wages. During the disastrous strike in ' This ■while British goods competed with American m the protected American market. Cp. Cotden's speech of August 25, 1841. ^ Ure, as cited, pp. liii. -Iv. ^ Quoted by Sir John Bowring to the Silk Trade Committee of 1832. Ure, p. Ixiv. * Sir Vincent Caillard (Imperial Fiscal Reform, 1903, p. 147) speaks of " us " as doing this sort of thing ; bat the charge by implication lies against free-traders. ^ Progress and the Fiscal Problem, p. 26. 6 Speech of Feb. 24, 1842. 132 FREE TRADE IN BRITAIN Lancasliire and Lanarkshire of 1829, many of our spinners who were prevented from working went to France, Belgium, and the United States, and introduced improved and profitable methods previously unknown in these countries, — aU tending to subvert our cotton supremacy.! From the same source he might learn that cotton mills with machines on the newest principles, some of them superior to the best English machinery then running, could be found in 1836 in Italy, Antwerp, Switzerland, Alsace, and the United States.^ The most decisive testimony on the subject is perhaps that furnished by the Reports of the Parliamentary Com- mittees of 1824-25 and 1841 on the Exportation of Machinery. Prohibition of such exportation had been part of the pro- tectionist policy for over a century.* In 1696 a law* was passed to prohibit the exportation of Lee's stocking frames, which had been originally refused a patent in Lee's own country, and were actually made in France, where he had in person established the manufactiure. The futility of this prohibition was repeated in the Act of 1750,^ which vetoes the exportation of tools and machines used in making woollen and silk fabrics, though then, as long afterwards, the con- tinental machines for silk-making were admittedly the best. In;,1774,^ again, a veto was laid on the export of tools and utensils used in the cotton and linen manufactures, though the linen manufacture was then known to be much more advanced on the Continent than in England. Then in the years 1781, '82, and '85, came a series of Acts'^ rapidly extending the prohibitions to the tools, models, plans, and engines of all kinds used in the manufactures of wool, cotton, linen, silk, steel, and iron. The Act of 1785 was in fact so reckless that in the following year it had to be repealed by another, which permitted a long list of exemptions.* The ' Ure, as cited, p. xix., and see above, p. 85. ^ Ure, pp. xxviii., xxix., xxxii,, xxxiii., xxxvii., 1., li., lix., Ixi., Ixx., IxxL, Ixxv., Ixxvi. ' See the Report of the Committee in 1825, pp. 6-7. ^ 7 & 8 Wil. III. " 23 Geo. III. o. 13. " 14 Geo. III. c. 71. ^ 21 Geo. III. c. 87 ; 22 Geo. III. c. 60 ; 25 Geo. III. ^. 67. 8 26 Geo. III. CO. 76, 89. "SUPREMACY" UNDER PROTECTION 133 outcome was that, as new machines were being constantly invented, the customs officers had almost insuperable difficulty in deciding, after a time, what machines were prohibited and what were not ; and manufacturers could generally evade the law by so packing parts of different machines together as to make their object unrecognisable. As early as 1824, it is clear, the practice of exporting prohibited machinery was very common; and, further, machines on English models were being made on the Continent in great numbers, often in factories managed by Englishmen.^ The prohibitive laws were "very easily evaded," and there were very few seizures. The traffic was so general that the French Government had laid on an import duty, first of 15 and later of 30 per cent ad valorem. But apart from this export trade it was notorious that specifications of nearly every English machine could easily be obtained by foreign makers ; indeed the Society for the Encouragement of the Arts and Sciences published annually a volume of descriptions and drawings of new machines which could be copied by artisans anywhere.^ The only official effect of the inquiry of 1824-25 was to make the Treasury more ready to grant licences on the recommendation of the Board of Trade, and the customs officials more lax than ever in their inquisition ; but this was all that was required to make exportation virtually free, albeit largely by way of smuggling.^ Meantime, foreign engineers had become more and more capable of making machinery for themselves ; and before the Committee of 1841 one witness testified that " machine-making abroad is rapidly progressing towards perfection." * Consistently with the general futility of the prohibitive legislation, the tools and machines for making machines had all along been under no prohibition : " the law," said an official, "has never attempted such a thing." ^ It is clear, then, that English machinery, tools, plans, artisans, and managers had been actively at work even in the latter part of the eighteenth century, and much more from 1815 onwards, in setting up on the Continent 1 Report cited, pp. 6, 18, etc. ^ Id. p. 19. ' Report of Committee of 1841, p. 30. " Id. p. 71. = Id. p. 8. 134 FREE TEADE IN BRITAIN manufacturing industries wticli competed -witli our own. Of all this competition, be it noted, the free-traders of Cohden's school had no fear; it was precisely home Protection that handicapped them. When the facts are thus cleared up, it is not difficult to dispose of the arguments by which some even of the less uncritical protectionists seek to belittle, without altogether denying, the expansive effects of freedom on trade. Mr. Kirkup 1 seeks to lay a main part of the misery of the years 1839-42 on the bad seasons — of which free trade in corn would have mitigated the distress — and on the repeal of the old Poor Law in 1834. But we have seen recurrences of desperate misery in our survey of the period before 1834; and the very wording of Mr. Kirkup's arguments reveals the weak- ness of his case. First, he makes the corn laws " only one important item in a complex group of causes ; " ^ next he discovers that " free trade was merely an important condition of our industrial expansion. The real and substantial causes of our prosperity were to be found in the skill and energy of the British people, working under most favourable circum- stances." ^ Here the corn laws are " causes," and free trade " merely an important condition," not a " real cause." Schopenhauer might have taught Mr. Kirkup that conditions, properly so named, are causes. The case for free trade is precisely this, that it sets up, on the whole, the "most favourable circumstances," which make so immense a differ- ence. Mr Kirkup's further rhetoric about " the twin sisters, freedom and opportunity," is an admission to the same effect. It is true that colour is given to such reasoning as Mr. Kirkup's by the prefatory avowal of Fawcett that " we in England are much too prone to overstate the results of free trade. Scarcely a week elapses without its being said, as if it were a triumphant rejoinder to all that is urged by the American, the Continental, or the Colonial protectionist, 'English exports and imports have more than quadrupled since protection was abolished; the income of the country has more than doubled ; wages have advanced ; and popula- 1 As cited, pp. 20-21. ^ P. 21. » pp_ 23.4. "SUPREMACY" UNDER PROTECTION 135 tion has increased.' But a moment's consideration will show that other causes have been in operation besides free trade to promote this wonderful growth of prosperity" — such as rail- ways, machinery, gold discovery, etc.^ It is difficult to understand how Fawcett can have supposed this to be denied by any human being, or can have even thought that any disputant had ever failed to give the "moment's considera- tion " required to perceive it. It is in the nature of discussion that one thing should be said at a time ; and the proposition as to expansion under free trade is the relevant and adequate rejoinder to certain protectionist propositions. Further pro- positions are met by further answers — no disputant worth noticing ever put that cited as a rejoinder to "all that is urged " by foreign protectionists. In the effort to conciliate the protectionists whom he hoped to convert, Fawcett was merely disparaging at random the men on his own side — a course which seldom attains its end. § 5. Before and after Free Trade If, further, protectionists deny that trade expansion after 1850 is to be attributed to free imports, they cancel their own case, which is based on the assumption that all expansion of trade after the establishment of tariffs in any country must be ascribed to those tariffs. Now, if we take the ten-year averages of British export trade for the first thirty years of the nineteenth century, in which period, while there were some useful relaxations of tariffs by Huskisson, the corn laws were in full force, we get a result which, on the face of it, is fatal to protectionism : — AvEKAOB Annual Export op British Produce and Manufactures 1801-10 £40,737,970 1811-20 41,484,461 1821-30 36,597,623 2 In fairness, of course, we must at once note that prices in the first two decades must have been on the whole much ' Free Trade and Protection, 1878, pp. 11-12. 2 Porter, Progress of the Nation, 1838, ii. 100-102 ; ed. 1851, pp. 357-8. 136 FREE TRADE IN BRITAIN higher than in the third by reason of the state of war,i and the later progress of machinery,^ so that the contrast of the two record years 1815 exports, £51,632,971 1836 .... „ 53,368,572 does not trustworthily measure the increase in quantities. But, on the one hand, the same consideration must be kept in view when we deal with protectionist figures in regard to exports before and after 1872 — a year of greatly inflated prices — and, on the other hand, we can actually trace at once fall in prices and increase in quantity of trade after 1850. "The index number changes from 103 in 1840 to 75 in 1851, i.e. £75 in 1851 went as far as £103 in 1840, while incomes and wages had slightly increased." ^ As regards the increase in quantity of product, it cannot be disputed by those who point to " steam and railways " as explaining it. To deny it would be to turn round and say that there is nothing to explain. The clearest notion of the total expansion, and of the rates of it, may be had by consulting such diagrams as those so carefully compiled by Mr. Bowley. Taking the total of exports and imports together, we find that from 1800 (for which the total is £75,000,000) to 1820 there is no advance, though there were rises, one lasting four years (1814-18) at twenty-five millions higher, and one short fall to the same extent. From 1820 to 1824 there is no measurable advance ; from 1826 to 1834 the £100,000,000 level is maintained; then it rises to £125,000,000 in 1838, and remains there till 1842, when Peel makes his first great reductions in tariffs. By 1846 it has reached £150,000,000, and then, at a quickening gradient, it rises continuously to some £375,000,000 in 1860. Then for two years progress is slow, whereafter we have two rapid rises to 1872, divided by a fall of £25,000,000 in 1866-68. Thereafter the line becomes markedly serrated, partly through real depressions, partly through falls in prices, which at length cause new ' Cp. A. L. Bowley, England's Foreign Trade in the Nineteenth Century, 1893, p. 50 ; Tooke's History of Prices, passim. 2 In 1824 Tooke calls this " astonishing," vol. i. (2nd ed.) 170. ^ Bowley, as cited, p. 61. BEFORE AND AFTER FREE TRADE 137 expansions in total value. If instead of taking total values we reduce these to terms of index numbers, whicli give us the actual increase in production and imports, we have roughly this: a rate of rise from 1820 to 1840 which, if continued, would have led in 1900 to a total trade of £250,000,000, whereas the gradient rises so rapidly after 1842, still more after 1846, that in 1892 — with only a fall of two years from 1884 to 1886 — it has reached a iigure of £750,000,000. This general view does not exhibit minor fluctuations in values. Taking a minuter diagram, however, we find simply a more continuously serrated line, showing the same main fact of immensely quickened rise of gradient from 1842, 1846, and 1852 or 1854 (whereafter imports are valued more trust- worthily). Every intelligent free-trader recognises, of course, that forces of expansion arose independently of free trade ; for instance, the gold discoveries of 1849 and 1852 in California and Australia. On the other hand, forces of retardation arose ; for instance, the cotton famine during the American Civil War, which in the four years 1862-65 reduced our imports of raw cotton to an average of 7| million lbs. as against the 14 millions of 1860 and of 1866, prices on both sides rising proportionately to the relief afforded by the new cotton imports from India and Egypt. It is instructive to note, further, that marked depressions of total trade occur in terms of times of war, or in consequence of wars, as after the German collapse of 1873, following on the payment of the French indemnity.^ But what it is above all important to realise is that quantities produced have, on the whole, increased much more than values, by reason of the constant improvements in machinery and transport; and that, accordingly, the improvement in the main conditions of well-being for the population is much greater than the money figures of trade indicate. Take, for instance, the following table : — ' Bowley, p. 40, [Table 138 FREE TRADE IN BRITAIN ExpoKTs OF Cotton, Yarn, and Manttfacturbs Tear. Piece Goods. Yarn and Thread. Value of Cotton Exports. Percentage of British Produce. 1861 1870 1880 1890 2563 million yds. 3266 4495 5124 183 million lbs. 193 228 276 £46,872,489 71,416,345 75,564,056 74,730,749 37 35 34 28 1900 1906 6260 307 M 87,743,312 23 Even the measurement of yarn and thread by weight does not tell the whole story of the advance, for the finer threads and yarns weigh less than the coarser. Everywhere more is produced at less cost, that is, at less output of human labour, with a larger dividend of actualities for all concerned, and a larger margin of labour power for other forms of work. Of course, similar phenomena occur under Protection — with a difference. In a protectionist country with a large population and plenty of coal and iron, mechanical improve- ment will proceed as elsewhere ; and American watches, for instance, are produced at wonderfully low prices. But, in terms of the case, the lowest prices are for the goods exported : the purpose of Protection is to enable the maker to get high prices from his own people, while, to compete elsewhere, he must sell cheap. Thus the free-trading country, other things being broadly equal, will always have the largest real dividend, the largest return per head for labour, since its people are constantly pressed to spend their labour and capital in the most fruitful fashion, whereas in the protectionist country the constant effort of the tariff is to " make work " which would not otherwise be profitable, either for artisans or for cultivators. Of this extra output of labour, all, broadly speaking, must bear the burden ; and even relative advantages in the way of relatively large food supply {i.e. fruitfulness of soil), small debt, or small military burdens will be neutralised, as regards distribution of wealth, by the amount of artificial or wasted labour set up by the tariff. Capital alone can hope for a larger relative dividend, for the reason that prices always rise more easily than wages. Thus free trade is visibly the BEFORE AND AFTER FREE TRADE 139 democratic fiscal system, whether or not it is adopted by the nominally democratic communities. It is not easy to reach an accurate estimate of the real dividend.! Consumption of coal per head does not measure fruition, for new methods of fuel and power-supply increase the energy value of coal per ton ; and even consumption of grain per head does not measure nutrition, since more or less may be used to make liquor, and other foods may be consumed in differing degrees. But one very good measure of the real return to labour in the leading countries of the world was supplied to the United States Labour Department in 1903 by Mr. Carroll D. Wright, its Director. At that time Mr. Wright estimated that the food of American workers cost them only 33 per cent of their wages, as against 45 per cent in the case of English and 55 in the case of continental workers. Here we see something like the natural advantage derivable from the abundance of the American food supply. But even at that date the tariff system had so increased the friction or waste element in American labour that the natural advantage was lost in other respects. Applying the most comprehensive method of test, he sought to ascertain how much labour it costs an average workman to maintain an average family in a given country at its prevalent rates for food, rent, clothing, taxes, etc., and he reached the following results : England, 205 days' work per annum ; United States, 225; France, 231 ; Germany, 240; Russia, 286; Italy, 290. Square yards of statistics are summarised in this impartial synthesis. § 6. British versus American Shipping. If we can name any one industry which in its mere rate of expansion offers an impartial test as between free -trading and protectionist countries, it is that of shipping; and as between Britain and other leading countries that of ship- building involves no unfairness in favour of Britain, since America is better, and Germany as well, supplied with the ^ See Bowley, National Progress in Wealth and Trade, 1904, for a judicial study of the difficulties. 140 FREE TRADE IN BRITAIN raw materials. On the sea, competition is open to all, and tariffs seek to burden the shipping of all aliens. The statistics of shipping expansion are thus of crucial significance. And no less clearly in the case of Britain than in the case of old republican Holland, they testify to the enormous advantages involved in free trade.^ First let us take the tonnage figures of British shipping for the whole of the nineteenth century, remembering that in the age of the Napoleonic wars our shipping had every stimulus which Protection could give, down to a practical monopoly of the carriage of East and West Indian produce ^ : — Tear. Tons. 1801 1,970,000 1811 2,247,322 1821 2,355,853 1831 2,224,356 1841 2,935,399 1861 3,662,344 1861 4,806,826 1871 5,694,123 1881 6,691,996 1891 8,279,297 1901 9,608,420 1906 11,167,332 Of this tonnage of 11,167,332, be it observed, no less than 9,612,013 is steam ; and as one ton of average steam shipping is to-day reckoned to do the work of three tons of modern sail, and Britain has now the highest percentage of efficiency in the world, alike for steam and sail,* it is quite safe to say that, putting the tonnage of 1806 at 2,100,000, our shipping in 1906 is sixteen times that of 1806 in carrying power.^ But the significance of these figures comes out ^ "Tooke has sho'Mm,'' remarks Professor Nicholson, "that the restraints on the com trade before 1846 directly and seriously injured the shipping trade" (History of the English Com Laws, p. 127, citing Tooke, iii. 36). ^ Tooke, Thoughts on Prices, i. (2nd ed.) 174. 5 The first available figures are for 1803—1,986,076. * See the pamphlets of Mr. Russell Rea, Shipping and Free Trade (Cobden Club), pp. 16-17, and Mr. Newbiggin, Shipping and Fiscal Policy (North of England F. T. Assoc, 1905). ^ Probably " twenty times " would be well within the truth. See above, p. 30, as to the backwardness of English ship-construction in the period of monopoly. BRITISH V. AMERICAN SHIPPING 141 only when we contrast our progress with that of the United States. In the first sixty years of the nineteenth century the ship- ping of the States was increasing at a more rapid rate than British. They did their shipbuilding, for the time, under free-trade conditions j and, whereas Britain in her protectionist period put heavy duties on both timber and ropes — with a preference to the timber of Canada, which was well known to be far less suitable for shipbuilding than that of the Baltic '^ — she could not then build ships nearly so cheaply as did the builders of the Baltic ports. ^ Even so late as 1860, accordingly, the shipping of the United States was still tending to overtake ours in quantity of tonnage ; and her steam tonnage was increasing in much the larger proportion. The figures of shipping registered for oversea foreign trade, in the United States and Britain respectively in 1840, 1850, 1860, and 1906 were: — 1840. 1850. 1860. 1900. U.S. tonnage . 899,765 1,585,711 2,646,237 939,846 British ,, . 2,768,262 3,565,133 4,658,687 11,167,332 and for the ten years 1895-1904 the U.S. tonnage was under 900,000. What is the explanation 1 This, that just when the United States shipping had attained in tonnage to 54 per cent of the British (after having been only 32 per cent in 1 Cp. Tooke, Thoiights cm, Prices, i. (2nd ed.) 177, note. "The regulation of the timber duties, acting as a premium for dry rot, and yielding in impolicy and injustice to our corn laws only," multiplied bad colonial ships also. " In 1821 evidence was given before the Parliamentary Committee on Foreign Trade that the cost of building a ship of 514 tons was £9130 in England, £4342 in Norway or Sweden, and £5123 in Prussia ; which worlced out at £17 : 15 : 3, £8:8: llj, and £9 : 19 : 4 respectively. See A. M'Donnell (a defender of Protection), Free Trade, 1826, p. 272. "The articles burdened with duty are chiefly the timber and the hemp " (p. 274) ; and the main differences of cost were accordingly on the hull, woodwork, and ropes. But victualling also cost thrice as much in England as on the Baltic (p. 275). Before a Parliamentary Committee in 1820, again, a witness testified that " they build ships in Genoa at a very small charge, and they sail them at one-third of the expense at which a British ship is sailed" (Report of Commons Committee on Foreign Trade, 1820, p. 27). Compare Porter {Progress of the Nation, ed. 1851, p. 588) as to the decrease of costs between 1805 and 1836. 142 FEEE TRADE IN BEITAIN 1840) there came the American Civil "War, which was followed, as we have seen, by a system of high tariffs. From that moment the American ocean-going shipping declined. In 1870 the figures were : — U.S. ocean-going tonnage . . . 1,516,800 Britisli „ „ . . . 5,690,789 and from that year to 1900 the American figures dwindled, standing then at 826,694. A slight revival began in 1901 ; but after reaching 954,513 in 1905 the figures fell to 939,486 in 1906. Our tariff journalism, whether or not in ignorance of the facts, attempts to make a case for protectionism by present- ing 1 the following tonnage figures : — U.K. . U.S.A. Germany France 1895. Tons. 1905. Tons. Increase Per cent. . 8,988,000 10,735,000 19 . 3,798,000 5,502,000 47 . 1,502,000 2,469,000 64 887,000 1,387,000 56 386,000 1,273,000 230 776,000 1,026,000 34 Italy . The figures here given for the United States include those of the coasting, lake, and river steamers and craft, to which are given a monopoly of their work. These figures are thus no more to the purpose of the tariff debate than would be the figures of United States railway expansion ; and they merely deceive the reader. The American tonnage includes all vessels of five tons and upwards ; and of the total nearly one-fourth is sail. And concerning the coasting, lake, and river trades we have the testimony of a witness before the United States Commission on the Mercantile Marine : " These vessels mostly consist of cat-boats, sloops, small schooners, ferry-boats, dredging-machines, tow-boats, sidewheel steamers, etc. There are less than 939 American steam vessels of over 1000 tons on the lakes, the Pacific, the Gulf, and on the Atlantic."^ It will be observed, too, that in comparing 1 I quote from The People, April 19, 1908, article headed " Will Workman." ^ Commission Report, p. 401, cited by Austin Taylor, M.P., in Side Lights on Protection, 1905, p. 11. BRITISH V. AMERICAN SHIPPING 143 British with other European shipping the journalist takes no account of the proportions of sail and steam. This is quite fatal to his comparison between, for instance, French and British shipping. From 1895 to 1902, under the stimulus of an irrational system of bounties, French sailing tonnage actually increased from 407,000 to 669,000 tons, while British dropped from over 3,000,000 to under 2,000,000; and in the same period the French steam tonnage increased only from 499,000 to 549,000 tons, while the British increase was over 2,500,000.^ All the while, the French figures include all " vessels of two tons and upwards," whereas the British exclude all vessels of fifteen tons and under employed in river or coasting trade at home or in British possessions, and vessels of thirty tons and under, not decked, employed in the North American fisheries.^ The comparison here, then, if less grossly misleading than in the case of the United States, is still deceptive at this point, and is farcical at the others. The efficient increase of the British as compared with the French mercantile marine in the period in question was as fifteen to one, and the percentages of the tariff journalist are a mere delusion. The further working of the French bounty system since 1902^ has been a tragic - comedy of errors. Even if it were not, bounty-built shipping is no measure of trade expansion. But as regards results, the record of the French bounty system is truly one of "blundering and futile extravagance," worthy of the political science of the Middle Ages. As regards the case of Japan, the misrepresentation is hardly less gross. The Japanese mercantile navy was prac- tically created between 1895 and 1900 by an act of national purchase, not of trading enterprise ; * and the figures given represent gross tonnage, including, since 1899, "sailing vessels of half-Japanese and half-foreign type," which in point of efficiency bear no kind of comparison with British steam tonnage. The case of Italy is even worse. The Italian ^ Newbiggin, Shipping and Fiscal Policy, p. 19. 2 On the whole question, cp. Prof. Smart, The Rdwn to Protection, 1904, Appendix. 3 As to which see Mr. Newbiggin's pamphlet, pp. 19-20. * Kussell Eea, as cited, p. 14. 144 FREE TRADE IN BRITAIN tonnage here given, like the French, includes " vessels of two tons and upwards " ; and the total Italian tonnage, even at that, has been sinking year by year since 1903, as it did from 1870 (when it reached 1,012,164) to 1895, the low-water mark from which our tariffist reckons his precious percentage. Further, nearly one-half of the Italian tonnage is sail, of very- inferior efficiency; and the steam tonnage is likewise far inferior on its average to the British, which as a whole is kept at the highest level of efficiency by annually selling off inferior or obsolete ships to other nations. There remains the case of Germany, which, as all men know, maintains free trade conditions for shipbuilding, and, further, reckons in its tonnage all vessels of 17| tons and upwards. Of that tonnage, nearly one-fifth is sail, as against the British proportion of less than a seventh. In the years from 1901 to 1906, the German steam tonnage had increased only by 567,600— that is, from 1,347,875 to 1,915,475,^ whereas British steam tonnage in the same period had in- creased by 2,404,403, considerably more than the total steam tonnage of Germany ! The rational reader can now form some notion of the value of percentage and period com- parisons of which the effect is to make an actually decreasing mercantile marine figure as increasing more rapidly than that of a nation which in three years adds to its most efficient tonnage more than the gross tonnage of the other. It is hard to believe that the kind of pseudo-statistical assertion here exposed is a process of deliberate fraud ; but, considered merely as a display of fallacy, it is an edifying illustration of the intellectual quality of protectionist thought. It is quite unnecessary to demonstrate that the supremacy of British shipping is a result of the policy of free imports, for this is freely admitted by the protectionists of Germany and the United States. When Bismarck reverted to Protec- tion, in 1879, he left free the imports of " scientific instruments of every kind, as also sea and river-going vessels with their machinery, furniture and utensils,"^ and that freedom is ^ Figures of the StatisHsches Jahrbuchfur das Deutsche Reich, 1907, p. 90. ^ Dawson, Protection in Germany, p. 76. BEITISH V. AMERICAN SHIPPING 145 maintained to this day as regards the materials of ship- building and furnishing, in the full knowledge that on no other basis can a protectionist country compete with a free trading one. As regards the United States, this was emphati- cally avowed by dozens of witnesses before the United States Commission on the Merchant Marine a few years ago.^ Protectionists sometimes make a stand on the fact that the United States have latterly allowed free imports of ship- building material, on the German plan, and have still failed to compete with Britain in shipbuilding. It is an odd sort of comfort that can be drawn from such an avowal ; but it may be well to supply the explanation which the protectionist cannot discern. The American coasting and river and lake trade being still a monopoly, the ships for that, the main part of the whole shipping of the States, are built under the non- economical conditions of Protection. It is practically im- possible for a shipyard run upon expensive lines on one side to produce a cheap ship on the other; the builder will not bring down his supervision and profit costs, and cannot bring down his labour costs. In Germany this deadlock does not exist, all shipbuilding there being upon the same footing. And operating is affected in the same way. The States can neither build nor run ships in competition with Britain ; so that the advocates of subsidies there "demand an operating bounty as well as a construction bounty." ^ In this connection it is interesting to note that Norway, whose trade as a whole suffers severely under Protection, has free trade in ships, Norwegians being free to buy them whole. Yet shipbuilding is one of the few flourishing industries in Norway. So wholesome is the free condition for any industry that has a natural justification. It will now be tolerably clear to any open-minded reader that the great shipping industry of Britain, which earns perhaps a hundred millions per annum, carrying over half of the sea-going trade of the whole world, is vitally dependent on free trade conditions. This, indeed, is admitted by Mr. Bonar Law, who promises, if put in power, to leave it alone. Spain, 1 See the citations in Mr. Austin Taylor's pamphlet, pp. 14, 19. ^ Taylor, as cited, p. 24. 10 146 FREE TEADE IN BRITAIN once a great maritime power, sees her marine go on declining under a system of tariffs. France blunders along with futile bounties ; the United States see nine-tenths of their foreign trade done in foreign ships. The plain lesson of it all is sought to be evaded on the protectionist side by devices such as we have examined above, and even by the thesis that the United States " lost their lead " merely through the fact of the transi- tion from wooden to iron shipbuilding having occurred while they were convulsed by the Civil War. That this is a com- plete delusion is expressly insisted upon by the latest protectionist historian of the American mercantile marine. To use his words : — There is no popular error more prevalent than the idea that the Civil War destroyed the American merchant marine ; but there is no delusion more inexcusable. The war did not destroy our merchant marine ; it found it already shrinking, and hastened its disappearance.! An examination of the economic history of the case will make the economic evolution clearer than it is made by the protec- tionist historian, since it will educe the explanation which he so resolutely suppresses. Iron shipbuilding, to begin with, dates from 1820;^ and the number of iron steamships for ocean traffic launched in Britain between 1830 and 1850 was, in the latter year, reckoned at 200. One of them, the Great Britain, 3500 tons burden, with engines of 1000 horse-power "to keep in action, as the means of propulsion, an Archimedean screw," was counted a triumph of construction.^ In 1850 iron ship- building in Britain was " fast becoming an important branch of national industry."* If, then, the United States, in the long period from 1820 to 1860, had failed to rise to the new possibilities of iron shipbuilding, to what could the failure be set down if not to the effects of Protection on the American ^ The American Merchant Marine : Its History from 1620 to 1902. By Wiuthrop L. Marvin. Loudon, 1902. P. 321. Cp. p. 240 : "It is a hasty and superficial judgment which dates the shrinkage of the American merchant marine from the Civil War of 1861-65." ^ For canal and river boats it had been tried in 1810. ^ Porter, Progress of the Nation, ed. 1851, pp.- 575-6. « Id, pp. 576-7. BRITISH V. AMERICAN SHIPPING U7 iron industry, which in the colonial period had actually been able to compete with the British 1 ^ That the American shipbuilders had not done their best in iron shipbuilding long before 1860 is incredible.^ So early as 1824, Mr. Manby, an English engineer, "had estab- lished iron steamboats on almost every river in France, with machinery exported exclusively from England." ^ So early as 1841 American engineers had actually exported locomotives to England.* Want of enterprise in those days could less be charged upon American shipbuilders than upon any other ; their originality and skill were acknowledged long before by English experts.^ In 1843 an iron warship, the Michigan, was built by the U.S. Government for cruising on the northern lakes ; ® the first iron sea-going steamer of the Republic was built in 1844;^ and the States had certainly some iron mail steamers in 1847.^ If, then, American ship- builders lagged behind British in the building of iron as compared with wooden ships, it was precisely because the Protection of the iron trade in the States made iron so much dearer. The best wooden ships in Britain about 1852 cost 97 dollars a ton to build; in the States they cost only 65 dollars a ton.® But as regards iron the state of things was ^ Cp. Gee, The Trade and Navigation of Britain Considered, 6th ed. pp. 87-89 ; and see above, ch. v. p. 59. ^ Porter (p. 577) spoke of the industry in 1850 as "one in which our mineral riches and our great mechanical skill will secure to us a virtual monopoly " ; but American inventiveness was already famous, and American mineral resources are immensely greater than British. ' First Report of 1824-25 Committee on Exportation of Machinery, p. 8. ' Report of Machinery Committee of 1841, p. 73. The locomotives do not seem to have been a success. * Charnock, History of Marine Architecture, 1801-1802, iii. 217. ^ C. B. Stuart, The Naval and Mail Steamers of the United States, 1853, p. 26. This writer points out that Pulton designed the first steam warship. Id. p. 13. ' Marvin, Tlie American Merchant Marine, 1902, p. 362. This writer does not seem to be aware of the progress previously made in England, "Hulls of ships," he writes, " were not built of iron in 1840 " (p. 225). 8 Id. p. 130. ' De Bow's Encyclopcedia of the Trade and Ooinmerce of the United States, 2nd ed. 1854, ii. 186. The compiler adds that interest in the States ruled at 6 per cent and in England at 4, which so far nullified the American advan- tage in materials. But obviously the American shipbuilder could undersell the British ; and he notoriously did. Cp. Marvin, The American Merchant Marine, pp. 221, 224. 148 FREE TRADE IN BRITAIN very different. Iron prices at New York in 1852 were enormously higher than at Liverpool, the excess being $8 '2 6 per ton for Scotch pig; $14-50 for English bar; $43-60 for sheet iron; and $35-50 for hoop iron.^ And this was recognisably due to Protection.^ American manufacturers of iron "paid last year [1852 or 1853] three and a half million dollars tax on the raw material they used," being "very slow of discovering that in order to make their wares as cheap as the English they should have raw material on more favour- able terms." ^ As it was, the American shipbuilders imported in 1840 iron "castings of vessels" to the weight of 444,388 lbs.; in 1846, 631,194 lbs.; and in 1850, 264,468 lbs.* They were thus alive to the new needs; and they claimed to be in 1848 actually ahead of Britain iu' total tonnage, putting the figures thus : — British tonnage ..... 3,397,921 U.S. tonnage ..... 3^1,981 1851 .... a, 771,439' Here we must guard against confusing the total tonnage of the U.S. with their ocean-going tonnage, which in 1860, we have seen, was reckoned in Britain at 2,546,237. This figure shows no trace of the absolute " shrinking " alleged by the protectionist historian to have taken place before the 1 De Bow, i. 397. ° The protectionist Prof. R. E. Thompson {Political Economy, 3rd ed. p. 356) represents that iu the years 1846-49 English iron, selling in New York at |40 a ton, was driving the home producer out of the market ; that under the low Dallas tariff of 1846 " one-third of the furnaces and iron mills of Pennsylvania ceased operations soon after the tariff was enacted " ; that "the rest were sorely crippled, and the amount of their production greatly diminished" ; and that "in 1851-54, when home competition was vii-tually out of the way, "the English producers charged an exorbitant price. But this Is a testimony to the bad effects of previous Protection. Under the Dallas tariff iron was still protected by a 30 per cent duty (Percy Ashley, Modem Tariff History, 1904, p. 188). And the U.S. production of iron was estimated in 1850 at 160,000,000, while the imports amounted to only $16,000,000 {Id. p. 189). ' De Bow, i. 396, 397, citing the United States Economist. * Id. i. 396. ^ Id. ii. 186. Elsewhere (p. 194) the same compilation gives for 1848 the figures :— Great Britain, 3,007,581 ; United States, 2,416,999. The Belfast Mercantile Journal about 1853 put the itonnages thus: — Great Britain, 4,144,115 ; United States, 3,535,451. BRITISH V. AMERICAN SHIPPING 149 war; but it can well be admitted that the visible failure to compete with Britain in the building of iron ships, at the iron prices which we have seen ruling in the early 'fifties under American Protection, constituted a beginning of decline. It was not in tonnage but in s^n^luilding that the shrinkage was thus far perceptible,^ the former British practice of buying wooden ships from the States having been nearly abandoned by reason of the greater cheapness and relative efficiency of British-built iron ships. The effort to evade the true conclusion is characteristic of tariffist propaganda. In an unguarded moment, the pro- tectionist American historian avows that " the change from sails to steam was less important and less harmful to our established maritime interests than the change from wood to iron." 2 This decisive admission can have only one meaning. Again, the same writer avows that "the Civil War in this country and the growth of iron steamship-building abroad are the chief causes which wiped off the register almost one-half of the American ocean fleet " ^ — following this up, as we have seen, by insisting that the fleet was " already shrinking " before the war. Again, he avows that after the war " every- where American wooden sailing-ships were being supplanted by foreign iron steamers." * Yet he has also committed him- self to the proposition that " the whole question of the sur- vival of our steam-fleet in the deep-sea trade between 1846 and 1860 was a question of national protection or the lack of it." 5 — meaning that the States did not give Protection enough, while Britain did. His argument on this head — utterly irreconcilable with his admission as to the disad- vantage on the American side in the matter of iron-shipbuild- ing — ^is that Britain fostered the Cunard and other mail lines by a handsome subsidy, which the States would not pay.® That theory will not bear the slightest investigation. The subsidy to the Cunard and other packet lines could aid only those lines. It was meant to secure special services to the * Marvin, as cited, p. 283. ^ Id. p. 237. ^ Id. p. 319. 4 Id. p. 351. ^ Id. p. 282. 8 Mr. Marvin attributes the refusal mainly to the hostility of Southern politicians before the war to the claims of the North. Cp. pp. 230, 240. 148 FREE TRADE IN BRITAIN very different. Iron prices at New York in 1852 were enormously higher than at Liverpool, the excess being $8-26 per ton for Scotch pig; $14-50 for English bar; $43-60 for sheet iron; and $35-50 for hoop iron.^ And this was recognisably due to Protection.^ American manufacturers of iron "paid last year [1852 or 1853] three and a half million dollars tax on the raw material they used," being "very slow of discovering that in order to make their wares as cheap as the English they should have raw material on more favour- able terms." ^ As it was, the American shipbuilders imported in 1840 iron "castings of vessels" to the weight of 444,388 lbs.; in 1846, 631,194 lbs.; and in 1850, 264,468 lbs.* They were thus alive to the new needs ; and they claimed to be in 1848 actually ahead of Britain in' total tonnage, putting the figures thus : — British tonnage ..... 3,397,921 U.S. tonnage .... 3.5'cil,981 „ „ 1851 .... S, 771,439 = Here we must guard against confusing the trtal tonnage of the U.S. with their ocean-going tonnage, which in 1860, we have seen, was reckoned in Britain at 2,546,237. This figure shows no trace of the absolute " shrinking " alleged by the protectionist historian to have taken place before the ' De Bow, i. 397. ^ The protectionist Prof. E. E. Thompson [Political Econmny, 3rd ed. p. 356) represents that in the years 1846-49 English iron, selling in New York at |40 a ton, was driving the home producer out of the market ; that under the low Dallas tariff of 1846 " one-third of the furnaces and iron mills of Pennsylvania ceased operations soon after the tariff was enacted " ; that ' ' the rest were sorely crippled, and the amount of their production greatly diminished" ; and that "in 1851-54, when home competition was vii-tually out of the way, " the English producers charged an exorbitant price. But this is a testimony to the bad effects of previous Protection. Under the Dallas tariff iron was still protected by a 30 per cent duty (Percy Ashley, Modern Tariff History, 1904, p. 188). And the U.S. production of iron was estimated in 1850 at $60,000,000, while the imports amounted to only 116,000,000 {Id. p. 189). ' De Bow, i. 396, 397, citing the United States Economist, « Id. i. 396. ^ Id. ii. 186. Elsewhere (p. 194) the same compilation gives for 1848 the figures :— Great Britain, 3,007,581 ; United States, 2,416,999. The Belfast Mercantile Journal about 1853 put the jtonnages thus ; — Great Britain, 4,144,115; United States, 3,536,451. BRITISH V. AMERICAN SHIPPING 149 war; but it can well be admitted that the visible failure to compete with Britain in the building of iron ships, at the iron prices which we have seen ruling in the early 'fifties under American Protection, constituted a beginning of decline. It was not in tonnage but in shi^huilding that the shrinkage was thus far perceptible,^ the former British practice of buying wooden ships from the States having been nearly abandoned by reason of the greater cheapness and relative efficiency of British-built iron ships. The effort to evade the true conclusion is characteristic of tariffist propaganda. In an unguarded moment, the pro- tectionist American historian avows that " the change from sails to steam was less important and less harmful to our established maritime interests than the change from wood to iron." ^ This decisive admission can have only one meaning. Again, the same viriter avows that "the Civil War in this country and the growth of iron steamship-building abroad are the chief causes which wiped off the register almost one-half of the American ocean fleet " ^ — following this up, as we have seen, by insisting that the fleet was "already shrinking" before the war. Again, he avows that after the war " every- where American wooden sailing-ships were being supplanted by foreign iron steamers." * Yet he has also committed him- self to the proposition that " the whole question of the sur- vival of our steam-fleet in the deep-sea trade between 1846 and 1860 was a question of national protection or the lack of it." 5 — meaning that the States did not give Protection enough, while Britain did. His argument on this head — utterly irreconcilable with his admission as to the disad- vantage on the American side in the matter of iron-shipbuild- ing — is that Britain fostered the Cunard and other mail lines by a handsome subsidy, which the States would not pay.^ That theory will not bear the slightest investigation. The subsidy to the Cunard and other packet lines could aid only those lines. It was meant to secure special services to the 1 Marvin, as cited, p. 283. 2 Id. p. 237. ^ Id- p. 319. * Id. p. 351. ^ Id. p. 282. ' Mr. Marvin attributes the refusal mainly to the hostility of Southern politicians before the war to the claims of the North. Cp. pp. 230, 240. 150 FKEE TRADE IN BRITAIN State, and did so ; but meanwhile the whole British merchant fleet, without a penny of subsidy, and partly in competition with the subsidised lines, went on expanding, while the^ American merchant fleet after 1860 went on shrinking. And the historian himself obliviously admits later ^ that this foreign preoccupation of ocean-carrying was not the whole secret of the paralysis that rested on American shipbuilding. There were other important factors. The high tariff and internal revenue taxation, especially the latter, required by the war, bore heavily upon the shipyards. American builders did not use foreign materials to any great extent and did not care to ; but the internal revenue burden upon domestic iron, steel, copper, and lead, and also upon spars, sails, paints, and cordage, was a severe handicap. Moreover, there was a special internal revenue tax of two per cent on the hulls of vessels, and of three (later of five) per cent on marine engines, which was not repealed until 1868. Here we are within sight of the truth. The American fiscal disadvantage in the building of iron ships, felt before the war, was enormously aggravated by the war tarifi's ; and hence it is that the war is usually taken as the date from which the decline began, as it was in point of fact the date from which began the decline of tonnage. And from that date, too, there operated a new factor, inasmuch as the check upon American importation of foreign products placed American ships under a new disadvantage in the matter of return freights. They went out with large freights of grain and raw material, and were relatively at a loss for return freights, where British ships often went out with freights of manu- factured goods for foreign ports, whence they carried to the States cargoes of such products as the States imported most freely, returning to Britain with American cargoes. After his decisive admission as to the effect of tariffs, the historian helplessly reverts to the suggestion that the American shipbuilders made a mistake in not rising to the emergency. Referring to the handsome wooden steamships built in 1867 and 1869, he comments that "undoubtedly these Boston merchants erred, as did the Pacific Mail Com- 1 P. 342. BEITISH V. AMERICAN SHIPPING 151 pany at the same time, in constructing such great vessels of wood instead of iron.''^ The proposition is idle. No one has insisted — not to say boasted — more than he concerning the unfailing inventiveness of American shipbuilders, who really did wonders in improving sailing rig.^ The plain fact is that they would have built iron ships freely from the first if they could have afforded to do so in competition with the builders of Britain. For years past they have been building steel ships of the most advanced type for their monopoly trade on the coast and the lakes and rivers. " The coastwise steamships of iron and steel have always been first-class vessels." " The typical lake freighter of to-day is a steel steamship. The number of these steamers is astonishing. There is actually a larger American steel steam tonnage on the lakes than on the ocean." ^ Quite so. From 1876 onwards " nearly all " of the deep-sea steamships built in the States "were of iron; wood had been almost abandoned for ocean-going steam hulls in American shipyards. Steel was gradually coming into use." * And still the shrinkage went on; and even "now that the mechanical genius of America has turned resolutely to the building of modern steel ships," ^ there is no recovery. One other plea remains to be examined in this connection. Mr. Marvin seriously affirms that what he calls "Lloyd's British insurance monopoly " deliberately drove a section of American shipping from the seas when it was beating the British. First he alleges^ that in 1849 Lloyd's "virtually nullified the Act of Parliament "by " condemning the locust treenails of our high-class vessels, thus forcing every British merchant who bought an American ship to refasten her before she could secure proper insurance." It seems hardly necessary to point out that this step could at worst only compel the American builder to build to specification for British buyers. When, further, the patriotic historian asserts, on the sole authority of Captain W. W. Bates, (1) that the "American wooden ships of 1882-86, built for the Calif ornian grain trade to Europe round Cape Horn, did the voyage on 1 p 349. 2 Work cited, pp. 345, 363-5, 370-73, 384, etc. 3 Id. pp. 390, 406. * Id. p. 389. ^ Id. p. 373. « Id. p. 259. 152 FREE TRADE IN BRITAIN an average in five days' less time than that of the British iron vessels, "met with^far fewer disasters," and "landed their grain in better order " ; and (2) that, nevertheless, " the powerful British protective Agency of Lloyd's " contrived to drive them out of the trafiSci by a discriminating rate of insurance, he merely shows how patriotism and partisanism can make historiography ridiculous. If Lloyd's could do this in 1882-86 as regards one line of American shipping, it could have done it before and since on every other line. If Lloyd's be an insurance monopoly, it could strike at the American coasting trade as well as at the ocean-going. And if Americans could independently insure their home shipping they could insure the rest. The argument is an absurdity. Finally, we have from the protectionist historian an im- plicit avowal that his arguments concerning subsidies and Lloyd's monopoly are beside the case. Concerning the ex- pired subventions to the Pacific Mail and Brazil lines, he writes that both were " examples of unwise special legislation," adding : — "Just as our tariff policy is justifiable only as it covers many industries, so a policy of marine protectionism must be applied not to two favoured lines or three, but to the whole body of our fleet, to make it sound, enduring, and effective." ^ So that the old British subsidy to one or two favoured lines could not have been " effective " as a protectionist measure ; and the American shipbuilding industry confessedly cannot compete, for ocean-going ships, with the British, when the main raw materials are iron and steel,* both of which are protected in the States, though the States could and did very successfully compete when the main raw material was wood, in the production of which they had no protection. This is finally demonstrated by bracketing the above-cited demand for universal subsidy or monopoly with Mr. Marvin's own argument that neither the "unimportant" Act of 1884, freeing 1 P. 386. = p. 391. ' As Mr. Marvin admits, this was urged in America long ago by tlie advocates of the "free ship" policy, whose argument he pronounces "not altogether honest " (p. 345). It will compare favoiu'atily with his own. BRITISH V. AMERICAN SHIPPING 153 from import duty supplies for American merchant vessels, nor the " important " provision in the McKinley tariff law of 1890, allowing free importation of plates, etc., for iron and steel vessels for the foreign trade, availed to alter the situation. "Thus, since 1890," writes Mr. Marvin, "American shipbuilding for deep-sea commerce has had the advantage of all the virtue which there may be in 'free materials.' Neither of these measures has had any appreciable effect in checking the decline of American deep- sea tonnage."^ Naturally, the "advantage" was stultified from the first by the monopoly conditions under which the bulk of American shipping is built and operated. The coasting trade was still to be closed to the ocean-going ships built under the new conditions. A shipyard building under the monopoly conditions, further, cannot run a cheap section with duty-free materials. Only where all its shipbuilding is on free-trade lines, as in Germany, can a protectionist country hope to avail itself of the advantages of those conditions. Thus the more the protectionist case is argued the more clear is the conclusion that free imports have been the de- termining condition of the vast progress of British shipping during the past sixty years, and Protection the true deter- minant of the American shrinkage. § 7. Expansion in Export Trade Needless to say, the nation which makes most progress in shipping cannot expect to make a proportional advance in all other forms of industry. Much of the modern protectionist case, however, consists in treating British exports as the main measure of productive activity, and in excluding shipping from the estimate altogether. It is to correct this sophism that the formula "invisible exports" has been framed. It may, however, be useful to point out further (1) that all production is at bottom a rendering of service, and that shipping work is easily recognisable under that category; and (2) that, again, all production is to be conceived as a process of applying motion to matter ; under which category 1 Work cited, p. 382. 154 FREE TRADE IN BRITAIN also the act of carrying is economically recognisable. To increase our shipping, then, is a process of industrial expan- sion like another, involving many other expansions, as in shipbuilding, machine-making, etc. There is thus, to begin with, a distortion of the problem in the preliminary protec- tionist attempt to estimate the -whole growth of British industry in terms of the figures — and especially of the value figures — of exported goods alone. As has been repeatedly shown, the " stagnation " in exports alleged by Mr. Chamber- lain is wholly imaginary, being made out by such devices as (1) starting from the year 1872, when prices were enormously inflated; (2) starting from the period 1870-75, which -in- cluded that and two other years of inflation ; (3) excluding from the sum of exports the capital items of coal, machinery, and ships ; and (4) ignoring the increasing work done by our shipping. At the prices of 1872, the much larger amount of exports in 1902 (excluding ships) would have figured at £418,000,000 (instead of the actual £277,000,000), as against the £256,000,000 of 1872; while the imports of 1902, at the prices of 1873, would have been valued at £792,000,000 (instead of the actual sum of £528,000,000), as against the £371,000,000 of 1873. Falling off there has indeed been in certain items, and with this we shall have to deal later ; but the protectionist argument appeals to the total figures, and by these it is rebutted, as we have seen. Yet the proposition in question runs through the whole protectionist case. In the fifth chapter of his Tariff Problem Professor Ashley starts from the misleading figures of 1872 ; and throughout the chapter he never once explains that 1871-75 were all, broadly speaking, years of inflation. He oddly argues^ that " any objection to the selection of 1872 as the year of departure will be dispelled " when it is seen that "there was a rapid upward sweep from 1869 to 1872, and another from the depression of the Cotton Famine up to 1868." Clearly, a special upward movement was begun in 1870 by the effects of the Franco-German war. What then] Professor Ashley's tables show that the value-figures of 1870 (199 millions) were not re-attained after 1876 till 1880. 1 Work cited, p. 61. EXPANSION IN EXPORT TRADE 155 Admitting that " Values alone are of course evidently mislead- ing," he can argue only that "quantities also have moved slowly since 1888." But quantities of cotton goods moved very slowly from 1872 to 1879, and values fell by twelve millions; and the 1858 quantity of cotton yarn and twist (200,000,000 lbs.) was not re-attained till 1872 — a period as long as that taken by Professor Ashley. In 1880 the export of cotton yarns and twist exceeded that of 1858 by only 15 million lbs. The case for Protection on the basis of export trade was thus as good in 1880 as to-day; and, indeed, Mr. Chamberlain and Sir Vincent Caillard have argued from the first that the notable expansion of British trade ended in 1872. As regards quantities of piece goods, of course. Professor Ashley recognises the immense expansion from 1872 to 1902 — no less than 50 per cent. But he proceeds to offer as an offset the decline in quantities of exports of cotton yarn and twist, which had fallen off equally with values. Now, save in so far as the yarns latterly exported may be of a finer quality, this decline is exactly what the protectionist theory professes to desire — a withdrawal of our producers from inferior to superior forms of production. In the days of Protection our manufacturers expressly complained that foreign demand for their yarns was on the increase, and for their piece goods on the decline. In the matter of woollen exports. Professor Ashley recog- nises that, though values have fallen since 1872, "the price of the raw material has greatly fallen also. But," he adds, "the figures of quantity also indicate a declining export trade, though, of course, in lesser proportions." ^ Now, whatever force there may have been in this assertion as at 1902, has been cancelled since by the large expansion which has taken place both in quantities and values. The figures of export of woollen (including alpaca, mohair, and other) yarn in the years 1902-7, in millions of lbs., are — 70-5, 78-8, 73-8, 70"7, 79"2, 82-7 ; while the values, in millions sterling, were — 5'1, 5-9, 5'9, 6'1, 7'6, 8'5. Of woollen tissues, again, the exports have risen, in millions of yards, from 1902 to 1907, as follows :— 47-1, 50-7, 67-1, 72-2, 79-9, 84-8; while the 1 Work cited, pp. 65-66. 156 FEEE TRADE IN BRITAIN values are respectively, in millions sterling, 5'5, 5'8, 7'4, 9-1, 9-7, 10-3. Finally, the total values of exported woollen and worsted yarns and manufactures, despite a shrinkage in quantities of mixed worsted stuffs, for the years 1903-7 run as follows, in millions sterling :— 21-8, 23-9, 257, 28-2, 30-7.1 In the linen trade, again, after all the lamentations that were heard in regard to that industry a few years ago, we find a more marked expansion going on in Britain than has been recorded in the case of almost any foreign country. The imports are merely stationary, the figures for the years 1903-7 being, in millions sterling — 1'8, 1'5, 1'5, 1'S, r6; while the exports for the same years run — 6'3, 6'6, 7'2, 8, 8'5. In the French table of exports lingerie is included in "Apparel," and in that item we have the following progression, in millions of francs: — 1899, 142 millions; 1901, 127 millions; 1903, 102 millions; 1905, 145 millions. Here we seem to have a really ''stagnant" export trade. In the British abstract of German exports linen does not appear, so small is the trade ; while in those of Austria-Hungary we have the progression, in millions of kronen — 1900, 17"9; 1901, 15'2; 1903, 20-1; 1904, 19; 1905, 19-3. Belgium, with her low tariff, has progressed more steadily from 1901 to 1905, rising from 141 to 17'4 millions of francs. Thus Britain heads the list. For the years 1903-7 the British export of cotton goods has increased still more markedly, though here the energetic rivalry of Germany and the United States comes into play. Taking quantities of piece goods, we have the following pro- gression, in millions of yards: — 5157, 5591, 6196, 6260, 6298 ; while the values run, in millions sterling — 55'2, 64'0, 70'8, 75'3, 81 -O. Even the output of grey yarn and twist has increased as follows, in millions of lbs. : — 116, 134, 164, 168, 209; and in millions sterling— 5-6, 7-3, 8-2, 9-7, 13-2. The total values finally run thus, in millions sterling : — 73'6, 83-8, 92, 99-5, 110-4. Hardware, again, has risen in quantity in the years 1 I find discrepancies between the figures of the Statistical Abstract and those of the Annual Statement of Trade here followed ; but the progressions correspond. EXPANSION IN EXPORT TRADE 157 1902-7 from 311,000 to 966,743 cwts., and in values from 1'5 to 2'5 millions sterling; chemicals from 12'7 to 17 millions; leather and its manufactures from 4 "4 to 6 '6 millions; iron and steel manufactures from 2 8 '8 to 4 6 '6 millions ; and the total export of machinery in the same period from 18 '7 to 31 '7 millions. Finally, "miscellaneous" exports have risen thus, in millions sterling — 21'1, 21'7, 22'6, 25"1, 29'6, 33"3. Thus from the very moment of the first undertaking to prove, by selected figures and selected indus- tries, that our export trade was becoming "stagnant," the whole process of trade has confounded the attempt. And whereas it has been alleged latterly that the increases in 1907 were mainly in values and not in quantities, it will be found on examination that not only in textiles and the other great staples, but in nearly every other item, there has been a clear increase in quantities. We have seen, in short, under free trade the greatest of all recorded expansions in exports. When, in the face of such an experience, the protectionist movement goes on exactly as it might have done had there been no expansion whatever, we can readily estimate the con- scientiousness of its inspiration. But it is important that free-traders should not stake their case even on the figures which so signally confute their opponents. In the later years, imports have expanded less than exports ; and this circumstance, which is specially con- founding to the protectionist, with his mercantilist doctrine of exports, is not to the free-trader a matter for satisfaction, save in so far as it shows that we are not being beaten in our own markets. It suggests, either that we have been latterly exporting goods to pay interest on foreign capital invested here, or that in the form of exports we have been making new loans, which may or may not be profitable. The full proof of our prosperity will be reached, not by maintaining the increase of exports, but in a revival of the upward move- ment in imports, which so much better indicate the national dividend. If the reader has any difficulty in following the deductive argument to that effect, he has but to note the unquestioned fact that while our exports increase at a given rate, the mass 158 FREE TRADE IN BRITAIN of incomes wMch pay tax, and the total wages of the workers, increase at a considerably greater rate ; and the volume of banking transactions at a greater rate still. In 1871 the total business done in the Clearing-House was £4,826,000,000 ; in 1902 it was £10,029,000,000; in 1906, £12,711,000,000. The total incomes within the survey of the Inland Revenue have at the same time increased from £445,000,000 in 1871 to £867,000,000 in 1901, and to £925,000,000 in 1906.1 In no way can this increase be accounted for save by recogni- tion of a proportionally increased volume of home trade ; and as our primary resources do not noticeably increase save by the increased output of coal and iron, the increase in the total agricultural yield being relatively small, it is impossible to explain the increase in home trade save through the increase in imports and the consequent multiplication of manufactures. ' See Appendix as to the garbling of this fact in tarifflst propaganda. CHAPTEE XI FREE TRADE IN NEW SOUTH WALES A VERY fair test of the relative efficacy of free and protective conditions for industry is supplied by the contrasted cases of New South Wales and Victoria. Since 1866, Victoria has been protectionist, and New South Wales, down to the Act of Australian Federation, which imposed on her a protective tariff, practically free-trading. A revenue tax, in 1891 of 8J per cent, in 1898 of 5 per cent, was levied on the total value of imports in New South Wales. In Victoria there was all along a heavy tariff on the most important imports, excepting wool for re-export. Under these conditions both colonies were broadly prosperous ; there was no question of " ruin " on either side. A detailed and scientific analysis of the natural conditions and opportunities in the two regions is of course difficult to make, and is not really necessary for the purposes of the fiscal argument. It suffices to inquire what has been the relative progress of the two colonies, under their different fiscal systems : and the following figures tell the story ; Victoria. New South Wales Population in J) 1866 . 1901 . 636,982 1,200,914 431,412 1,359,943 Revenue in it 1866 . 1901 . £3,079,160 £7,460,855 £2,012,079 £10,794,233 Imports in J) 1866 . 1900 . £14,771,000 £18,301,811 £9,403,000 £27,561,071 Exports in 'J 1866 . 1900 . £12,889,000 £17,422,552 159 £9,913,000 £28,164,616 160 THE SUCCESS OF FREE TRADE As the trade figures here given include the inter-colonial trade, it may be well to add those of the net foreign trade in 1900. Victoria. New South Wales. Imports Exports . £11,937,644 . £12,165,364 £17,396,991 £18,185,302 Here we find exactly the kind of results that the theoretic free-trader would anticipate. The protectionist colony is not " ruined," but its total trade increases only by about a third in thirty-five years ; its population is barely doubled ; and its revenue little more than doubled ; while the free-trading colony increases nearly threefold both its exports and its imports, and more than trebles its population. Further, the free-trading colony, which in 1866 had practically no industry, as against the 869 manufactories then established in Victoria, latterly does its much larger trade with 3077 factories and 60,779 workers, as against the 3097 and 64,207 workers of Victoria, the reason being that it has adopted much better machinery and resorted much less to female and juvenile labour, its workers' wages being in consequence higher, and the capital invested in manufactures greater. And, whatever be the explanation, the imports of Victoria fell from £24,402,760 in 1889 to £18,301,811 in 1901 ; while its exports in 1889 were rather lower than in 1866. Even of those exports, much consisted of wool raised in New South Wales. Gold-mining in Victoria has played a large part in the total exports ; but for many years the much more valuable yield of wool has in New South Wales greatly exceeded that of Victoria. Gold and "Wool.— Total Pkoduotion, 1866-85. Victoria. New South Wale.s. Gold raised . . £85,819,216 £15,763,365 Wool produced . £67,891,880 £110,536,782 According to Whittaker's Almanack, Victoria " owes its very rapid progress" to its gold-production; and that is undoubtedly a condition of rapid expansion in most if not in all cases ; yet the expansion of New South Wales, with less FREE TRADE IN NEW SOUTH WALES 161 than a fifth of the Victorian gold output, has been much greater. To what, then, can that expansion be ascribed save to free trade ? The point has of course been keenly contested between free-traders and protectionists in Australia. The growth of population has been ascribed to State-aided immigration ; but this is found to account for only 59,000 out of a total increase of 690,000.^ On the other hand, it is found that in 1881 of the population of the free trade colony 28'22 per cent were of the most efficient age — between 25 and 45 — as against 2 2 per cent in Victoria ; and that in the period between 1871 and 1881 the New South Wales population of that age increased by 32,716, while that of Victoria fell off by 35,916.^ Further, the difference is largely if not wholly accounted for by the migration of Victorians to New South Wales. Thus Protection has meant a depression of the labour market in the protected "colony as compared with the other. In Victoria, further, it is the protected trades that have fared worst in the matter of wages. During the years 1878-88, wages remained unchanged in 58 out of 121 Victorian industries, while in the remaining 63 they varied as follows : — Increase. Decrease. Protected trades . .13 26 Unprotected trades ... 16 9 By the favourite protectionist test of manufactured exports, finally, Victorian Protection stands condemned. In the years from 1883 to 1889, the export of articles manu- factured in Victoria fell from £1,790,300 to £819,685. Under Federation, as it happens, New South Wales easily maintains her lead, her total exports, excluding inter-State trade, having risen to £27,640,710 for 1906, as against £16,838,563 for Victoria. It should be added that the expansion of New South Wales cannot be attributed, as protectionists have contended, to a greater use of borrowed capital by the State. It was only after 1880 — when Victoria was ahead by six millions — ' B. E. Wise, Industrial Freedom, 1891, p. 351. ^ Id. p. 363 ; Hayter, Pulsford and Hirscli as there cited. 11 162 THE SUCCESS OF FEEE TRADE that New South Wales began to increase her debt beyond the amount of that of Victoria ; and the expansion had already been marked. If, further, State-borrowing could economically be made a means of expansion, Victoria was equally free to borrow. PAKT IV THE MODEEN FAILUEE OF PEOTECTIONISM CHAPTEE XII THE GENERAL FAILURE How utterly Protection failed to promote prosperity in Great Britain in the past has been shown in our historic retrospect. Has it succeeded any better elsewhere 1 It is noteworthy that the claims made for Protection are for the most part supported solely, or mainly, by the instances of two protec- tionist countries — the United States and Germany. Mr. Chamberlain added Sweden ; but he was at once so flatly gainsaid by Swedes that his claim has not been pushed by his coadjutors. Closed factories, low wages, and heavy emigration told the tale of Swedish Protection, which has broadly failed to further the export of manufactures. Germany and the United States, accordingly, are the favourite examples. This limitation of the claim is in effect a confession of its theoretic falsity. If Protection as such be the source of prosperity, in the form of increased exports of manufactured goods, why are not Eussia, France, Spain, Italy, and Austria equally to be cited in proof ? Mr. Chamberlain, it is true, alleges that "these 99 out of the 100 — those other countries, our German competitors, our French competitors, our Italian competitors, our Eussian 163 164 MODERN FAILURE OF PROTECTIONISM competitors, our Swedish competitors — are all doing very- well."! But better-informed people are aware that Italy, Russia, Sweden, and France are not seriously "our com- petitors " in the markets of the world, save inasmuch as Sweden exports ore and pig iron, which we are very glad to buy, also some machinery ; and France, some machinery, iron manufac- tures, woollen textiles and cottons. Russia, always exporting much more than she imports, and heavily tariffed, yet sends out very little manufactures ; Italy little more. " Name to me," cries Mr. Chamberlain, " one single protectionist country which at the same time that it has built up its own markets has not been able to increase its foreign exports 1"^ I name him ten — France, Italy, Greece, Russia, Austria, Norway, Sweden, Switzerland, Portugal, and Spain — which have either not steadily increased their exports of manufactures at all or have increased them much more slowly than Britain has done. As we shall see more fully later, a restraint of imports tends to increase exports of a certain kind to a certain extent ; but it will not secure the sentimental gain of triumph in the way of manufacturing competition. The increased exports are loss, which is mostly paid in raw material. If any country could gain in trade by Protection, France might be expected to do so, with her high level of intelli- gence and taste. As a matter of fact, she has increased her total exports of home produce from 1896 to 1905 by only £58,500,000 (from 136 millions to 194|) as against nearly £90,000,000 of increase for Britain. Of the French increase, nearly £5,000,000 may be set down to advance in cotton exports; £2,000,000 to apparel, including Zm3'«n«; £1,000,000 to machinery; and £2,500,000 to iron and steel manufactures; but the export of leather wares has fallen from 82 to 64 million francs ; wool manufactures, from 323 million francs (£13,000,000) in 1895 to 193 millions (£7,750,000) in 1905; cloths and cashmeres have fallen from £6,000,000 to £2,700,000; dress stuffs of pure and mixed wool, from £6,000,000 in 1895, and £4,500,000 in 1896, to £4,000,000 in 1905; while silk manufactures were in 1905 almost ^ Speeches as cited, p. 160. ^ Id. p. 147. THE GENERAL FAILURE 165 exactly at the figure (£10,800,000) at which they stood in 1895. Exports of boots, shoes, and gloves have all fallen. The chief increases have been in chemical products, fruit, hides, raw and thrown silk, raw sugar, and raw wool. What- ever may be said on the subject by British protectionists, and whatever may be the state of the home trade in France, no Frenchman speaks with complacency of the French export trade in manufactures after a generation of renewed Protection. And as regards agriculture, so heavily protected in France, it is clear that there, as in Italy, and probably in Germany, only a small minority of land- owners benefit by a tariff which lays an annual burden of 400 million francs on the mass of consumers, since the vast majority of peasant proprietors either grow only wheat enough for their own consumption or do not grow wheat at all. Greece we need not discuss. Beyond ores, raw material, fruit, and food-stufis, she exports only some small amounts of soap, cement, and gunpowder; and from 1895 to 1905 her whole exports have increased only by £460,000. Italy is a more interesting case. From 1896 to 1905 her total exports have increased by £29,000,000, the chief rises being made in 1899 and 1905. Like Spain, she has fallen ofi' in export of wine ; but she has increased in butter and cheese, raw cotton, eggs, almonds, marble, poultry, rice, zinc ore, and raw and thrown silk, the latter items alone accounting for nearly half the entire expansion of exports. Thus she remains substantially a producer of food and raw or partly manufac- tured material. From 1895 to 1899 her exported silk manufactures increased by over £1,200,000; from 1899 to 1905, by only £800,000. Tariff wars played a main part in keeping this progress so small. Cotton manufactures, constantly and greatly fluctuating by reason of tariff wars and. short supply, have increased from 1896 to 1905 by £2,300,000 ; and no other manufacture is worth reckoning. Thus the Protection of Italian manufactures has been a palpable failure. In the period from 1896 to 1905 the population, despite immense emigration, has increased from 31,706,000 to 33,441,000 — a number sufficient to make 166 MODERN FAILURE OF PROTECTIONISM possible a far greater increase in manufactured exports if Protection were favourable to such increase. The one industry which has greatly progressed in Italy is that which gets and calls for no Protection— that of silk raising and throwing. For 1906, the estimated production of raw silk was between 5-3 and 5-5 million kilogrammes; and the estimated amount from imported cocoons about 800,000 kilogrammes; of which total of from 6'1 to 6 "3 million kilogrammes only from 1 to 1 '2 millions were absorbed by the protected silk manufadwre of Italy, the rest being exported as raw or thrown silk.^ Of these items the total export value has risen from over £10,000,000 in 1893 to over £15,000,000 in 1905.^ And what progress has been made in the manufacture is evidently not due to Protec- tion, since the amount imported grows rather than falls, being on an average 20 million lire in the years 1891-95, and nearly 25 million lire in 1901-5; while the average of exports has risen in the same period from 21 to 74 millions 3— i.e. from over £800,000 to nearly £3,000,000. In comparison with this, and still more with the produc- tion of raw and thrown silk, the increase in the export of waste silk, the making of which is elaborately protected, is unimportant. Austria-Hungary, always protectionist, exported consider- ably less of manufactured woollen goods, by value, in 1891 than in 1883. Her total imports, 613'5 million florins in 1880, did not return to that figure till 1891, in which period her total exports increased only from 676 to 787'6 million florins = from 5 6 "3 to 6 5 '6 millions sterling. From 1896 to 1905 her total exports increased by £29,000,000, some of the chief increases being in animals, eggs, raw hides, hops, bounty- fed sugar, and unmanufactured wood. Of increases in manu- factured exports in those ten years, the chief were : — Woollen manufactures, 26 million kronen, a little over £1,000,000 ; half -manufactured wood, 57 million kronen = £2,376,000 ; cotton manufactures, nearly 23 million kronen = £950,000 ; iron and steel wares, nearly 20 million kronen = £827,000. ^ Edoardo Giretti, art. " Uue Industrie mal prot%ee " in the Journal des JSconomistes, Feb. 1907. " Id. 3 2a_ THE GENEEAL FAILURE 167 Jewellery and fancy wares increased by £750,000; ready- made clothing, by £600,000; paper, by £500,000 ; glasswares, by £450,000 ; linen manufactures, much less ; silk manufac- tures, hardly at all. Leather manufactures, on the other hand, fell off by over £1,000,000. That is a fair conspectus of the progress of Austria-Hungary in manufactured and other exports in a period in which the total exports of Britain increased by nearly £90,000,000, and her manufac- tured exports by £63,000,000. The increase in British exports of cotton yarns and manufactures alone, in the ten years in question, was nearly £23,000,000, nearly double the whole increase in Austrian manufactured exports of every kind. In 1905, finally, the latter were only 44 6 per cent of the whole exports, whereas in 1895 they were 45'5. And in every intervening year they were below 44 per cent — in 1899 as low as 41. If such figures could be cited for Britain under free trade, what would Mr. Chamberlain have said ? No country in Europe has in modern times made a more strenuous effort to wall itself in with protective tariffs than has been made by Eussia. As usual, the object — after revenue — is to " develop manufactures " ; and the average ad valorem import duty in Eussia is 131 per cent. Yet Eussia, with her immense population, and with all her tariffs, has increased her total exports only from an average of 675 million paper roubles in 1886-90 (faUing to 628 millions in 1891-95) to a total of 732 millions in 1898, 716 millions in 1900, and 1077 millions in 1905. The increase is almost wholly in foods and raw materials. The exports of manufac- tured goods to Europe in 1887-89 stood at nearly 18 millions of roubles; in 1896, only at 12 millions, even with the Cau- casian trade on the Black Sea frontier and that of Finland added; in 1898, only at 21 millions, with all these thrown in; in 1899, at 17 millions; in 1901, at 22 millions; in 1905, at 24 millions. On the Asiatic frontier the progress is no greater. The main increase of Eussian exports is in corn, butter, wool, poultry, wood, naphtha, and eggs. Of the total increase of 388 million roubles (say £40,000,000) in Eussian export values from 1896 to 1905, 246 millions (say 168 MODERN FAILURE OF PROTECTIONISM £25,000,000) is for grain and flour alone ! And we are asked to think of Russia as making great progress in manu- factured exports. Switzerland indeed has done better. In 1887 she had a total export of 660 millions of francs; in 1897, a total of 682 millions — a total increase in ten years of only 22 mil- lions of francs = £880,000. Latterly the amount has been much greater — 818 millions in 1900 and 1901 and 1007 millions in 1905 ( = £40,313,000). But as to special manufactures, her output of cottons fell off in value from 1891 to 1898 by 18| millions; and in 1901 had advanced on 1891 by only 5 millions (£200,000). From 1901 to 1905 the increase in exports of cotton piece goods was £400,000 ; and though those of cotton ribbons and em- broidery rose in 1905 by £600,000, they had fallen in 1904 by nearly £400,000. Silk manufactures increased from 1901 to 1905 by only £320,000, with a fall in 1903-4. Woollen manufactures fell off from 1891 to 1898 by 1 million francs; and in 1901 had recovered by only half a million (£20,000); and from 1901 to 1905 they increased by only £148,000. Chemicals fell off from 1891 to 1898 by 7^ millions, of which only 4 millions had been recovered in 1901, the balance being regained only in 1905. Quantities, of course, may tell a different tale from values ; but I cite the only figures at hand ; and it is by values that our protec- tionists always count. And while Switzerland's exports of machinery from 1891 to 1898 increased considerably, the imports of machinery increased in exactly the same propor- tion. From 1901 to 1905 machinery exports increased only by £400,000, while the imports increased by nearly £500,000. Even the staple Swiss export — clocks and watches — rose only from 100|^ million francs in 1891 to 103f millions in 1897, 109 millions in 1898, 122 millions in 1900, and 130 millions in 1901 — an increase of £1,200,000 in eleven years. From 1901 it had fallen by £250,000 in 1905, with a heavier fall in 1902-3. The whole progress is incomparably less than that of free -trading Holland ; less even than that of Belgium, whose tariffs are much less. Swedish exports of cotton manufactures in 1905 were THE GENEEAL FAILURE 169 only 590,000 kroner i against 3| millions in 1896. Exports of metal goods and machinery stood at lOJ millions in 1890, at nearly 20 millions in 1897, and at 25 millions in 1900; but the imports of these articles stood at 35 millions in 1890, at 74 millions in 1899, and at 65 millions in 1900. Taking machinery separately we find that the exports from 1900 to 1905 increased from 11-5 to 15-4 million kroner, while the imports, with fluctuations between, stand in both years at 23 millions. Here it is that, with her mineral resources, Sweden might be supposed to compete most seriously with Britain ; yet while British exports to Sweden rose from £2,768,369 in 1889 to £4,456,959 in 1901 and £5,584,996 in 1906, Swedish exports to Britain (mostly timber and iron) fell from £9,207,047 in 1889 to £8,330,000 in 1894,^ and reached only £10, 731, 582 in 1906. The Swedish expan- sion has been mainly on the side of minerals, timber, and wood products, the chief increases being in wood-pulp, paper, and iron and steel ; the attempt to develop manufactures by Protection has utterly failed. In the case of Norway there is still less to tell. Of a total increase of exports amounting to 51 million kroner (£2,842,000) from 1896 to 1905, the bulk is accounted for by wood-pulp, salted fish, and sulphur ; while cotton manu- factures have fallen from 2 million kroner in 1896 to 445,000 iu 1905; and wool manufactures, from 3 million kroner in 1895 to 80,000 in 1905. Whatever may be the state of the home trade, exports of textile manufactures are nil ; and the only rising industries are wood-paper making and shipbuilding, of which the latter is unprotected and the former insusceptible of protection. Denmark, unlike Norway and Sweden, is a free trade country as regards the main food imports,^ though it is itself mainly food-producing. Contrasting its export trade with 1 I 18 kroner = £l. ^ After a fall on both sides from 1900. Our exports to Sweden in 1900 were more than double the amounts of 1887 ; while Swedish exports to Britain had increased only about 20 per cent. ^ Wheat, flour, and butter are admitted free, as in Holland. The only other countries, besides Britain, with free imports of wheat and flour are Belgium, China, and Persia. Portugal prohibits both, save in times of distress, 170 MODERN FAILURE OF PROTECTIONISM that of Sweden and Norway, we find that the respective increases, from 1896 to 1905, are : — Denmark £13,871,000 Sweden £6,107,000 Norway £3,900,000 while the populations are: Denmark, 2,600,000; Sweden, 5,316,000; Norway, 2,311,000. As regards manufactures, Denmark has not the natural advantages of Sweden and Norway, and claims to be chiefly pastoral ; yet her exports of iron and steel manufactures rose from l| million kroner in 1896 to 5 millions in 1905 — a much greater percentage increase than was reached in Norway and Sweden. It seems unnecessary to point the moral. Spain and Portugal have the worst tale to tell. Here are the figures of the total Spanish exports in the years 1895- 1 905, including bullion : — Million Pesetas.i Million Pesetas. 1895 . 804 1901 . . 790 1896 . 1023 1902 . 850 1897 . 1074 1903 . . 945 1898 . 918 1904 . . 956 1899 864 1905 . . 993 1900 . 836 The figures of 1896-97 have never been recovered; and the year 1895, again, was below 1887. Much of this is due to the greatly lessened export of wine ; but even in the staple articles of stone and minerals there has been no great total rise from 1899 to 1905. The exports of boots and shoes fell from 25 millions in 1895 and 23 millions in 1897 to 9 millions in 1898, and have never since recovered the old level. Cotton exports rose somewhat from 1891 to 1897, but have since fallen nearly to the level of 1896, and have been often far below it. The chief increases of quantity (not of value) are in oranges and salt. Raw wool has risen, but silk has fallen heavily. Portugal, raising nearly half her revenue by customs ' 25 pesetas = £1. I give the Board of Trade figures, which differ from those of the Statesman's Year-Book, used by me before. The latter, however, show the same progression. THE GENERAL FAILURE 171 duties, attains expansion on the side of foreign trade no more than does Spain, as appears from the following figures of her total exports (merchandise only) : — Million Milreis.i Million Milreis 1887 . . 28 1898 . 31 1888 . 32 1899 28 1889 . . 32 1900 . 30 1890 . . 32 1901 28 1891 . . 31 1902 . 28 1894 . 27 1903 . 30 1895 . 26 1904 . 30 1896 . 26 1905 29 1897 . 27 Portuguese exports, finally, are mainly of foods (in- cluding wine), animals, and t&w, materials ; her small export of " various manufactures" ranging from 1| millions in 1897 and If in 1898 to 2^ and If in 1900 and 1901. Cotton manufactures have never recovered the levels of 1898-1900, but there has been a rise latterly in cork stoppers. Iron manufactures, always small, have fallen in 1902-5 below the levels of 1895-1901. Broadly speaking, Spain and Portugal remain non- manufacturing countries ; and their whole trade, relatively to their natural resources, is insignificant. All along this Une, then, Mr. Chamberlain's claim breaks down. Roughly speaking, two out of three of the protected States of Europe show no noteworthy commercial progress — some of them none ; and three out of the five mentioned by Mr. Chamberlain are certainly not "doing very well" as regards external trade in manufactures. Obviously, then, there must be special causes at work in Germany and the United States, and on analysis these causes are found to be (1) possession, on a greater scale, of coal and iron resources such as have built up the wealth of Britain, and (2) forces of the nature of freedom in trade. German expansion in the last generation is most notable, because (1) since the memor- able collapse created by capitalistic over-production after the receipt of the war indemnity, the advantages of the free trade newly set up as between the constituent States of the new ^ Milrei=4s. 5Jrl. 172 MODEEN FAILURE OF PROTECTIONISM Empire have told in favour of industry on all hands ; just as the freedom of trade throughout England and Scotland in the eighteenth century promoted our industry in comparison with that of France, where the burden of customs between districts at last aroused a " free trade " movement. Other influences, such as technical education, have come into play in Germany ; but above all is the great gain from the modern exploitation of formerly unworkable kinds of iron. The United States, in turn, have latterly derived special industrial advantages (1) from the free trade within their immense area, now that that is becoming populous enough for proper exploitation ; (2) from the substitution of free for slave labour in the Southern States since the Civil War ; and (3) from their relatively slight burden of taxation since the war debt was reduced by one-half and the population doubled. Finally, as will be shown later, import duties to a certain degree actually force exports, but mainly of raw material or of a kind produced mechanically in great quantity, and at a loss instead of a profit. The measure of a nation's well-being must always be internal distribution, never mere exportation, which, so far as it goes, is simply a removal of wealth. And as regards this, the final test, the relative failure of Protection in Germany and the United States to secure general industrial well-being, is as flagrant as it was in the Britain of seventy or a hundred years ago, with her much smaller population, power of exploitation, and scientific experience. This we shall see in a separate inquiry ; but here let it be noted once for all that the instant shrinkage of the protectionist case, on challenge, to the instances of Germany and the United States, is decisive as to its theoretic nullity. Whatever measure of prosperity may have been there attained, the cause cannot be Protection, for that has demonstrably failed to induce any similar expansion of trade elsewhere. And it is no part of the free-trader's case to deny that abundant possession of coal and iron by protectionist countries where the standards of education and energy are high, will set up commercial expansion. Even the small amount of iron-making, with wood for fuel, in England in the THE GENEEAL FAILURE 173 eighteenth, century — when already the trade was importing ore from Sweden and imperialists hoped to import more from the American colonies — gave English producers advantage over European competitors. For Protection cannot create coal and iron. For the rest, the great extension of free trade area in the two countries mentioned is a free trade factor. Once more, if Protection were really a means of increasing wealth pro- duction, the principle ought obviously to be set up as between State and State within the German Empire and the United States. The fact that neither the individual States nor the aggregates dream of so setting it up, is a sufficient proof that the practice roots either in an irrational instinct which is not brought into intelligent relation with general practice, or in the mere predominance of certain powerful interests in the central legislatures of the two countries, or in both factors. Both are in the ordinary way of human unwisdom ; and to cite the mere practice as a certificate of its own fitness is only to give one more illustration of the same fatality. CHAPTER XIII UNEMPLOYMENT AND EMIGRATION It is well to deal separately with tlie points of emigration and unemployment, which have latterly borne the main stress of the protectionist argument in this country. As emigration is the simpler problem, it may usefully be taken first. The ordinary tactic of the tariffist is to compare recent British with German emigration, saying nothing of any other case, and to conclude that the lower rate of emigration proves the greater prosperity. Such a thesis will not bear a moment's examination. As regards life conditions, Russia is probably the poorest country in Europe, yet her emigration was till recently insignificant. Denmark is indisputably one of the most prosperous, yet her rate of emigration is increasing. The following table will be found instructive : — Emigration for Three Rate per Countries. Years. High Consecutive Years 1000 of Average per Annum. Population. Great Britain . . 1903-5 264,464 6-1 Norway . 1902-4 27,214 11-9 Sweden . „ 29,473 5-6 Denmark . ') 8,024 3 '2 Holland ') 49,777 9-1 Portugal . >) 24,365 47 Italy . 1904-6 668,499 20 Spain tj 113,376 5-9 Austria-Hungary »» 259,626 5-5 The comparison of the emigration statistics of Germany alone with those of Britain is thus shown to be thoroughly misleading as to the general connection of emigration with 174 UNEMPLOYMENT AND EMIGEATION 175 fiscal systems. Holland and Britain have rather high emigration rates with free trade ; Denmark has a lower rate with free trade in grain ; Norway, Sweden, Spain, and Portugal have rather high rates with Protection ; Italy, with Protection, has an enormously high rate ; Germany and Russia alike have low rates with Protection, though they represent nearly the extremes of prosperity and poverty among protectionist countries. Concerning Germany, further, we have statistics only of oversea emigration. As regards Austria-Hungary, Britain, Holland, the Scandinavian States, and Italy, these are the main statistics ; as regards Germany they may or may not be. From Italy 264,883 persons emigrated in 1906 to other European countries, as against 509,348 to America, North and South. At present con- siderably over half-a-million Germans in Europe are ofiScially reckoned as " belonging" to Germany though residing abroad, apart from another hundred thousand, of whom the majority are in Britain. But the essential facts to be noted are (1) that emigration has fluctuated greatly in Germany in protectionist periods ; (2) that the German land system gives Germany an advantage over Britain as regards retention of people on the soil ; (3) that the rapid opening-up of the German iron- fields since the discovery, about 1880, of the Thomas-Gilchrist method of working hematite iron has supplied a means of employment irrespective of Protection ; (4) that emigration from Germany to the United States — the chief resort of German emigrants — is naturally governed by the conditions of labour and wages there ; (5) that Protection in regard to food supply does tend to keep on the land some population which would otherwise tend to emigrate ; and (6) that German workmen are latterly much more attached to the Fatherland by their political hopes, in respect both of trade-unionism and of socialism, than they were a generation ago. Let us deal with these considerations in detail. 1. The first notable effect of the return to Protection in Germany, in 1879, was an immense wave of unem- ployment. In 1880, 400,000 workers were thrown idle,^ and emigration rose at a bound from 33,227 in 1879 ' Dawson, Protection in Qer'many,t,^. 82. 176 MODERN FAILURE OF PROTECTIONISM to 106,190 in 1880 and 210,574 in 1881. During the five years 1881-85 the total emigration was 817,763, as against 214,068 in the years 1876-80 and 381,085 in the years 1871-75.1 Here was a change of rates that would serve to condemn Protection if any emigration figures could. After a fall from 1887 to 1889, according to German figures, the number rose again in 1891 to 120,089 and 116,339 in 1892 ;« whereafter, under the lowered tarifi's created by Caprivi's policy of commercial treaties, it rapidly fell, reaching 22,073 in 1901, since which it has again risen somewhat, though still remaining relatively low. The German figures, indeed, are inconclusive, for while they put the total emigration for the years 1903-6 at 36,310, 27,984, 28,075, and 31,074, the United States tale of German immigrants for the same years is; 40,086, 46,380, 40,574, and 37,564. Still, even that makes a low percentage. 2. The German land system, apart from Protection, tends to keep a maximum number of people on the soil, as com- pared with the British, which needs drastic reform in the public interest. The turning of land to the purposes of sport is not a realisation of the principle of free trade, though reversion from tillage to pasture may be. Sporting land, as distinguished from public playground, is a symptom of socio- political disease. Free-traders had need look to land policy. 3. Labour in the German coal and iron mines, while there has been a large expansion of the field of employment, is much worse paid and has much longer hours than British labour of the same class. This keeping of masses of men at low standards of life is part of the price paid for Protection. Of course the high German birth-rate worsens those conditions as compared with those of France. 4. As life conditions in the United States grow steadily harder, in respect of uncertainty of employment and cost of living, Germans now stay at home who might otherwise have emigrated. 1 Dawson, Protection in Germany, p. 180, citing Karl Strauss in Peter- mann's Mitteilungen, 1886. * I here follow the Statistisches Jabrbuch fur das deuische Reich, 1907, p. 23. UNEMPLOYMENT AND EMIGEATION 177 5. Beyond question, however, a duty on grain and meat imports tends at present to keep a certain number on the land in Germany who might otherwise be moved to leave it. It is not true that this would happen in England at present, or that it did happen under the corn laws. " Between 1821 and 1831 there was an absolute decrease in the number of families in agriculture, in spite of an increase of about 1 9 per cent in the aggregate number of families in Great Britain. . . . Again ... if we compare 1831 with 1841, with an absolute increase in population of over two million, there was an absolute decrease in the number of adult males employed in agriculture." ^ Thus the pretence that the corn laws in England meant "keeping the people on the land" is quite false. There was really going on .a reduction of agricultural population under Protection by reason of the steady improve- ment in agriculture on the one hand, and the chronic embarrassment of the farmers on the other. But with a peasant proprietary the latter factor does not operate ; and the former does not operate so rapidly. In so far, then, as the German land system means fair chances of life for small cultivators whose product feeds themselves, even if they do not raise grain enough for their needs, it tends to avert unemployment and to moderate emigration. In actual fact, however, the life conditions of large numbers of German peasants, who do not own their land, is one of extreme toil and extreme poverty ; because, as we saw in the case of England, high food prices always mean lower and not higher wages on the land.^ As to this we shall inquire later. 6. Psychic factors tell on emigration, though not on un- employment. Workmen who have learned to combine with their fellows for political and other purposes, and who count on reconstructing society, are likely to stay on under hard conditions where, but for their hopes, they would emigrate. So much for emigration. As regards unemployment we have already seen the weakness of the protectionist case, in respect of the immense distress caused by the resort to ' Prof. Nicholson, History of the English Corn Laws, p. 119, following Porter's Progress of the Nation. — 2 Cp. Dawson, Protection in Germany,'^. 225. 13 178 MODERN FAILURE OF PROTECTIONISM protection in Germany in 1879. But unemployment has since been at least as constant a phenomenon there as in Britain. Concerning British unemployment the facts are constantly distorted by protectionist propaganda. The official figures are based on returns relating (now) to over 600,000 members of trade unions ; and, though they do not tell the total unemployment, they fairly measure fluctuations. The assumption often made, that they understate the general unemployment, is probably erroneous. They do not, it is true, include unskilled labour, but they include the skilled trades in which employment is most precarious — notably the building trades. In any case, they are the only statistics we have ; and all our arguments must proceed upon them. If then we take it by periods of eleven years from 1860 to 1903, we find that on the average of each period it has varied only by a few decimal points over one per cent, being always between 3"7 and 5"0.i The average for the ten years 1897-1906, again, was 4'1 ; and the mean monthly per- centage for 1907 was 4 '2 ; which, excepting 1906, was lower than in any year since 1901. In 1904 it was 6'5.^ In the opening months of the present year the rate rose to 6 per cent ; but it had previously risen far more in the United States, and it now rose more rapidly in Germany. German statistics of unemployment, it has been repeatedly pointed out, are not strictly comparable with British, because the conditions of registration of unemployed among the German unions differ. But, taking them as we find them, we have the record of these percentages of unemployment among some 1,300,000 trade-union workers in the four quarters of 1907 :— 6-4, 6-1, 6-8, 7-2; and in 1906 :— 6-5, 6-0, 5-9, 6-0. In 1905 the percentages were 8-8, 7-2, 7-3, 6"8.^ Thus the German unemployment tends to be higher than the British even in good years ; and when the industrial collapse in the United States in the past winter began to affect Europe, causing shiploads of European workmen to return, it rapidly set up in Berlin an abnormal distress. 1 See the Second Fiscal Blue Book, 1904, Cd. 2337, p. 83. ^ Board of Trade, Labour Gazette, Jan. 1908, p. 3. ^ Statistisches Jahrbuch, as cited, 1908, pp. 340-41 ; 1907, pp. 322-3. UNEMPLOYMENT AND EMIGRATION 179 Official figures early in January put the genuine unemployed for the city at 30,000; and the Socialists added 30,000 more for the suburbs.^ According to the ofiicial Labour Gazette for February, "the sick funds which report to the Imperial Statistical Office showed a decline of 73,700 persons employed as against 5000 in the corresponding month last year." " From the report of the Central Labour Bureau for Berlin ... as compared with January 1907, the demand for labour fell off by 40 per cent, and it also showed a decline on the previous month." ^ " Ber Deutsche, a Nationalist periodical, says that ... it is quite a normal condition when the un- employed in the German Empire number 300,000 in the summer and 500,000 in winter." ^ It is hardly necessary to add that, as in Britain, certain trades suffer specially from unemployment. The chief of these are the building trades, which are among the most distressed in the past year. Turning to the German figures we find of the membership of the union of Bildhauer Deutschlands, Berlin, the percentages of unemployment in the four quarters of 1905 were 52-1, 44-0, 47-0, 48-0; in 1906, 450, 42-4, 423, 50-2 ; and in 1907, 48-0, 44-5, 54-3, 55 '0. Turning to Switzerland we find similar state of things to be normal. A number of experiments have been made there in recent years by way of insuring workmen against unemployment, but all have failed substantially for the reason given in the case of the system tried at Berne : — The most striking fact in the experiment is the very large proportion of the subscribers who come upon the fund, over 63 per cent in 1901. The great majority of the subscribers belong to the building trades, most of them being builders' labourers.* Protection, in short, cannot even pretend to protect such trades as those of building ; and cannot in the least secure them employment. It can only make life-conditions harder ' Berlin Correspondent, Morning Post, Feb. 15, 1908. 2 Berlin Correspondent, Daily Telegraph, Feb. 24, 1908. ' Morniiig Post, as above cited. ' 7%e Swiss DeTiwcracy, by Henry Demarest Lloyd, edited by John A. Hobson, 1908, p. 144. 180 MODERN FAILURE OF PROTECTIONISM for the members when they are unemployed, and when they are employed. The most decisive proof, however, of the failure of employ- ment to secure steadiness in industry comes from the United States. With the largest area of fruitful and unoccupied land, the highest cultivation of inventive skill, and the largest mineral resources, that country exhibits at all times a scene of grinding toil for those in employment, and periodically the most general collapse of industry. The present collapse, though possibly the worst, is only one of a series. It invariably happens that when British protectionists revive the pretence of "making" work for the unemployed, the state of things in the United States suffices to reveal the nullity of their case. Fawcett, in 1878, was able to demonstrate, as against the then current assertion of the champions of "reciprocity" and "retaliation" to the effect that "the depression from which English industry is now suffering is due to free trade," a far worse depression in the United States, then the most highly protected country in the world : — This depression has fallen far more heavily upon the United States, where protectionist principles are carried out in their most extreme form. Nothing can more conclusively show this than the fact to which reference has already been made, that the advantages which were once offered to labour by the United States, compared with the advantages offered by England, have now so entirely ceased that the number of English labourers who settle in the United States scarcely exceeds the number of those who leave the United States for England. In 1877 the number of persons of British origin who emigrated to the United States was 45,481, and in the same year the number of persons of British origin who emigrated from the United States to England was 44,878.^ However great, therefore, may be the depression of trade in England, it must be relatively much greater in the United States.^ A similar refutation lay to the hand of Lord Farrer in the 'eighties, when a revived protectionism energised under ' Board of Trade's Statistical Tables relating to Emigration and Immigra- tion, 1878. 2 Free Trade and Protection, 1878, pp. 124-5. UNEMPLOYMENT AND EMIGRATION 181 the banner of "Fair Trade." In the winter of 1884, Mr. W. B. Forwood of Liverpool, pronounced by Lord Farrer a most competent witness, wrote of the States as follows :^ — It is not merely that the depression is intense ; there are towns where not a single factory has worked for months past, and tens of thousands of men are literally starving ; but there is no hope that things can be better — their only customers are their own people ; the tariff practically prohibits exports, and it is said that there are sufficient cotton and woollen factories and ironworks to produce in six what they can consume in twelve months. For the same period the Secretary to the United States Treasury testified in his report for 1884 that "some manu- facturing companies have been forced into bankruptcy ; others have closed their mills to escape it; few mills are running on full time, and, as a consequence, a very large number of operatives are either deprived of employment or are working for wages hardly sufficient to enable them to live comfortably, or even decently."^ The U.S. exports for 1884 fell to 725 millions of dollars, from the 804 millions of 1883/ and nearly forty railway companies, with an aggregate length of 11,000 miles, and £143,000,000 of capital and debt, went into the hands of receivers.^ The number of bankruptcies for the years 1884 and 1885 were the largest ever known in the United States — 11,620 and 11,116 respectively, with average assets of 54 and 46 per cent respectively.* In December 1884 Bradstreet's Journal set up an investigation of unemployment, which revealed that 350,000 fewer workers were then employed than in 1882, or about 14 per cent of the whole industrial army. But this seems to have been an under-estimate. The later British Eeport of the Commission on the Depression of Trade summed up that 430,000 men employed on the construction of railways, and 250,000 employed in factories, were thrown out of work ; that ' Letter to the Standard, Dec. 16, 1884, cited by Lord Farrer, Free Trade versus Fair Trade, ed. 1886, p. 201. 2 Farrer, p. 202. ' Id. p. 203, citing the Economist, Jan. 17 and May 16, 1885. * Id. p. 205, citing Bradstreet's Jownal. 182 MODERN FAILURE OF PROTECTIONISM cotton manufacture in Philadelphia was suspended ; that the india- rubber manufacture was discontinued ; that the sugar -refining industry was reduced to 60 per cent of its previous value ; and that some of the most important iron furnaces and roUing mills were closed. Further, that the industries which chiefly suffered were iron, steel, and textile trades, all of them highly protected ; that the demand for iron and steel feU off by 700,000 tons, causing in its turn on the part of the men employed in them a failure of demand for textiles and other things.^ Perhaps the most significant fact in the whole situation was that "six highly protected industries, iron and steel (also foundries and machine shops, etc.), clothing, cotton, woollen, tobacco, and glass manufactures, which employed 34 per cent of all industrial workers (as reported in 1880), had thrown out one-half of the total number of workers since 1882, 177,000 in number." ^ On the other hand, among the unprotected carpenters and builders, tanners, compositors, flour-millers, bakers, and lumbermen there was hardly any reduction of wages.^ And the first and best resource of the men thrown idle was agriculture, unprotected in the United States because insusceptible of protection. As we shall see in another connection, in a later chapter,* the collapse of 1893-5 was even worse than that above contemplated, being described by President McKinley in 1896 as "three years of dreadful experience." Vast pro- cessions of unemployed paced the streets of New York in 1894; and the bankruptcies of 1896 outwent all previous figures. McKinley's claim was that the trouble was due to " free trade " — his description of the mere modification of his own tariff by the Wilson Tariff of 1894; but the collapse had actually begun under his own tariff in 1893; and the Wilson Tariff greatly checked the heavy fall of revenue which then began. No one pretends, finally, that the collapse of 1907-8, in which half a million of men are said to have been thrown idle in a few weeks, can be traced to any slackening of Protection ; on the contrary, it has set 1 Farrer, p. 213. ^ Id. p. 211, a.'(,va% BradstruV s, Dec. 1884. 3 Id. pp. 212-13. 4 ch. xxii. UNEMPLOYMENT AND EMIGRATION 183 up among many a new conviction that Protection must be slackened. It is unnecessary to go elaborately into the figures of a depression so vast and so near ; but it may be well to keep in view the record that at the end of December 1907, out of 66,120 members of 92 labour organisations in New York, 22,627, or 34'2 per cent, were out of work, as compared with percentages of 17 '8, 6 "7, and 12 '8 in the previous three years ; ^ while in Philadelphia, a month or two later, over 30,000 factory workers were still idle.^ And " on a conservative estimate, taking the countiy throughout, from one-quarter to one-third of those usually employed in all industries" were unemployed in February 1908.^ If it be urged, on the protectionist side, that the last American collapse was primarily one of currency, and not of commerce, the answer is that the whole financial situation was the product of protectionism. Protection has fostered the Trusts ; and the Trusts were responsible for the unsound finance which brought the banks to a standstill. " Out of a total number of 183 Industrial Combinations registered in the 1900 Census Eeturns, no fewer than 120 came into being after the introduction of the Dingley Tariff." And " since the last Census, combination in restraint of com- petition has gone much further, especially in the metal trade, by the formation of the gigantic United States Steel Corporation." * But it is above all important to remember that extensive unemployment in the United States is a normal phenomenon. Apart from the severe distress of the periods of depression there is endemic unemployment on a scale not to be met with in any other country. The ofiicial figures of the 1900 Census show that there were unemployed at some time during the year 6,468,964 persons, or 22"3 per cent of all the workers over ten years of age ; ^ and that of the male workers unemployed no fewer than 2,069,546, or 39 per cent, 1 New York Labour Bulletin, Deo. 1907. 2 Morning Post, Feb. 19, 1908. 3 Times N.Y. Corresp., Feb. 10, 1908. ■* The Fruits of American Protection, by J. A. Hobson, 1907, pp. 47-8. ' U.S. Genms of 1900, p. coxxvi. See Trade Report 3433, by the British Consul at San Francisco, for 1904, p. 25. 184 MODERN FAILURE OF PROTECTIONISM were idle from four to six months of the year; while in manufactures alone the unemployment affected 27-2 per cent of the whole workers.^ In this connection Mr. Robert Hunter, in his notable work on American poverty, declares that he has not the slightest doubt, and gives his reasons for believing, that " in fairly prosperous times no less than ten million persons in the United States are underfed, underclothed, and poorly housed"^ — that is, are below the "poverty line"; adding, "but I am largely guessing, and there may be as many as fifteen or twenty millions." Upon this the Tariff Reform League quote the last passage without the words I have italicised, giving a number of other passages in which Mr. Hunter, with a candour which the League will never imitate, admits the difficulty of stating precisely the total facts of American poverty. They then sum up that "Mr. Hunter's figures of poverty and unemployment in America, so frequently quoted by our free-traders, are utterly untrustworthy, since they are based, not on facts, but on guess-work. On Mr. Hunter's own admission, ' the extent of poverty in the United States is absolutely unknown.' " ^ The misrepresenta- tion here is gross. Mr. Hunter's position is that there must be at least ten millions in poverty ; and he knows not how many more. His main figures, as to unemployment and rates of wages, are perfectly authenticated ; and his remarks as to the extent of poverty make no deduction whatever from the force of those figures. Let us see then what some of the figures are. Whereas Mulhall's Dictionary of Statistics shows that London " has lost in pauper population fifteen times as fast as she has gained in general population,* the American Census of 1890 shows, from the returns of almhouses, that the number of paupers increased almost as fast as population in the decade 1880-90; while "in Hartford, Connecticut, the number of paupers increased about 50 per cent during the ^ U.S. Oenms of 1900, pp. ccxxxv. 2 Poverty, by Robert Hunter, 1905, pref. p. v. and pp. 11, 60, 61. ^ Speakers' Handbook, ed. 1907, pp. 248-9. * Ed. pp. 439, 444. UNEMPLOYMENT AND EMIGRATION 185 same decade." ^ Taking the figures of the New York State Board of Charities for the years 1897-9, and those of the Boston City Statistician for 1903, as correct, we find the numbers in distress "would equal proportionately the number of those in poverty in London." ^ As regards the figures of unemployment, our tariffists cavil as to their including the sick, the injured, and the members of season- trades, and, they at times add, many negroes who are unemployed by their own will. But further figures make short work of the last pretence. " The Massachusetts census for 1895 showed that 8339 workmen were unemployed continuously during that year, and that 252,456 persons were irregularly employed. This means that over 27 per cent of all persons covered by the inquiry were idle some portion of the year, while for 1885 over 29 per cent in the same State were irregularly employed." * And the coloured workers in Massachusetts are a negligible quantity. "Still another investigation, made in 1897 in Massachusetts, showed that there were over 100,000 workers (about 30 per cent of the maximum number) in that State who found employment when the factories were most active, but who were unemployed when the factories were least active." * The " season " trades, be it noted, include the clothing trade, in which, in New York, "during the first seven months of the year 1903 there were never less than one-fifth of the men unemployed, and at times between one- third and one-fourth of all the workmen were without employment." ^ Again, as regards the unskilled Italians of Chicago, an official inquiry shows that " of the 2663 employed . . . 1517, or 56'97 per cent, were unemployed some part of the year . . . and the average time unemployed for those ' Hunter; p. 21, citing Hartford Report of Special Oommiitee on Oitt-doer Alms, p. 9. 2 Hunter, p. 24. ' Id. p. 29, citing the census of Massachusetts, 1895, p. 105. ■* Prof. E. Mayo Smith, Statistics and Economics, p. 97, cited' by Hunter, p. 30. 5 Bulletin of N.Y. Dept. of Labour, Septemher 1903, p. 260, cited by Hunter, p. 31. 186 MODERN FAILURE OF PROTECTIONISM 1517 persons was . . . over seven months.^ It matters not how much of this unemployment be set down to sickness : only intense misery could produce sickness so widespread as to constitute any large part of the total causes of unemployment. According to the census of 1900, "44'3 per cent of the unskilled workers were unemployed some part of the year." ^ But still more precise figures are available. In 1904 the Massachusetts Bureau of Labour set up an inquiry as to the amount and causation of the unemployment in a large number of trades, from which were reached the following conclusions : — The total time worked was 37,765f hours, or 78"08 per cent of full time. The total time lost was 10,601f hours, or 21 '9 2 per cent. Of this lost time 2'54 per cent was due to sickness; 5'15 per cent to bad weather ; 2 '70 to the lack of stock ; and the 11 '5 3 per cent to lack of work.^ In this case there can be no pretence that the voluntary idleness of negroes enters into the statistic. And, be it observed, the idleness from bad weather and lack of stock would in our English trade union statistics figure as simple unemployment. Thus the Massachusetts unemployment for 1904 is some three times worse than that of England for the ame year. Yet another investigation yields a similar result. The Labour Bureau of Pennsylvania made an inquiry into the employment in 350 businesses, employing 132,092 work- people, in the period 1892-1901. The year 1900 being taken as the standard with a measure of 100, we find this reached only in 1892 and 1898; and exceeded only twice, in 1899 and 1901, with figures of 112 and 114; while in the years 1893-97 the figures were : 89, 79, 93, 86, 88.* All this consists, of course, with the notorious facts of the ' Ninth Report of Federal Bureau of Labour, p. 29, cited by Hunter, p. 33. ^ Census cited, p. 232 ; Hunter, p. 34. ' Hobson, The Fruits of Ainerican Protection, p. 28, citing Massachusetts Report of the Statistics of Labour, 1904, p. 10. * Hobson, as cited, p. 29. UNEMPLOYMENT AND EMIGEATION 187 depression which began in 1893, under the McKinley Tariff. Taken with those of the previous depressions of the 'seventies and 'eighties, and of that of 1907-8, they are conclusive for any candid inquirer. It is specially significant that even in the city of San Francisco, not yet rebuilt, the beginning of the financial panic in 1907 was the beginning of unemploy- ment. "After thousands had gone away," says a consular report,^ "the number of unemployed is estimated at from 20,000 to 25,000 ; and it is certain that so much distress has not existed in San Francisco since 1894." It shoidd be noted, finally, that emigration statistics are an extremely imperfect clue to the life-conditions of labour in different countries. Emigration may even be a result of prosperity in some instances ; men being able in good times to save up money for the purpose. When many more people leave the United States than enter them, as has happened in the past year, it may be taken as certain that unemployment is the cause. But when the number of emigrants from Italy increases, it does not follow that the condition of the people is worsening. The fact seems to be otherwise. Multitudes of the Italian emigrants to America return home after a time with saved money ; and the example of their success leads new multitudes to imitate them. As regards the people of Britain, finally, it is certain that they have been an emigrating race for centuries, and that in their case the simple desire for travel, ministered to by the attractions of so many lands of English speech, counts for much. The true measure of unemployment, as of poverty, is to be found in statistics of more direct bearing. ' Cd. 3727, No. 3998. Trade of the Consular District of San Francisco for 1907, p. 28. CHAPTEE XIV WAGES AND COST OF LIVING The pretence that Protection raises wages is not quite so common as the claim that it makes " •work for all " : indeed some tariffists are careful to disavow it ; but it was advanced with his usual confidence by Mr. Chamberlain, and it plays its due part in a propaganda in which everybody is free to romance on his own account. Everything in British experience in the Protection period is against belief in such a possibility as the advance of real wages by means of raised prices. English wages were, it is true, reputed high in that period ; but the lower money wages of France were also paid under a system of Protection ; and the phenomenon stood simply for that higher "standard of comfort " or rate of expenditure which, by reason of defective management, still subsists in England without a proportional command of real comfort.^ It is quite certain that wages never rose with corn prices,^ but the reverse ; and the index prices show that, under free trade, money wages actually began to rise while nearly all prices had fallen.^ That this process continued in the latter part of the century, not even protectionists deny. The argument even of Mr. Chamberlain is not so much that Protection raises real wages as that, when Protection raises prices, money wages will rise also. ^ Cf. Ernst Diiokerslioff, ITow the English Worhnan Lives, 1899, pp. 37, 40, 47 ; M'Donnell, as cited above, p. 96 ; Ricardo, Principles of Pol. Econ,, cb. V. ; and Dawson, Protection in Germany, p. 187. ^ See above, p. 97 ; and cp. Nicholson, History of the English Corn Laws, p. 53. 3 gee above, p. 136. 188 WAGES AND COST OF LIVING 189 And the elaborate argument of Professor Ashley, in his work on the proletariate of Germany, will not do more than claim that " Protection has not been inconsistent with — has, if you like, not prevented — a great advance " ^ in conditions of well-being. But for the use of the word " great," which is not justified by the evidence presented, this proposition might be at once acquiesced in, and put aside as irrelevant to the issue. Professor Ashley himself avows that "the wise attitude to take up is that of a man like Von Beilepsch " ; and he him- self cites as fully expressive of that publicist's views the following passage from a speech delivered in 1890 : — I am very well aware that the condition of industrial wage- earners has, on the whole, become better in the course of recent decades, and that with some industries and classes of workmen the improvement has been quite considerable. Absolute, permanent poverty {Elend) has considerably diminished ; indeed, it has practically retreated to certain branches of " home work." ^ Here the claim is quite modest, and the improvement claimed is asserted to have gone on in the free-trade period as well as in the protectionist. Professor Ashley does not really allege that the rate since 1890 has quickened; so that his "great "is an overstatement, if adjectives are to mean anything. He goes on to avow : " That there should remain very much that is saddening and alarming in the outlook there, as in Great Britain — who can expect otherwise ? " On that basis there might well be agreement. But Professor Ashley is allied with a party of whose majority the last concern is to reach scientific views or state critically the truth on anything ; and by them the case for German working-class conditions is put in a very different fashion from his. And even he has been more concerned to supply his friends with plausible answers to free-traders' criticisms than to make a really scientific statement. The too true circumstance that continental workers generally make better use of their wages than British is by him used to suggest that the Britisher is not really better rewarded. The unsupported assertions of individuals as to rates of German wages he puts to the front, ^ The Progress of the German Working Classes, 1904, pref. p. 6. Cp. p. 53. ^ Work cited, preface, pp. 9-10. 190 MODERN FAILURE OF PROTECTIONISM as against the tables of wages framed by the Board of Trade officials ; and he speaks of the latter as " adroitly " evading " either accepting or rejecting " an unsupported and improbable assertion by "leaving the figures as they stand on the record to speak for themselves." To abstain from characterising a baseless assertion as worthless seems to be, in Professor Ashley's opinion, to "evade either accepting or denying it." I shall not be here guilty, then, of such evasion ; but will simply say that if it be true, as he partly implies,^ that wages in German iron-works are higher than in English, he ought to have been able to prove it by citing the figures,^ and that the vague allegations on which he founds can have no value as against tested and precise results. He does not affect to deny the truth of the comparison in the Board of Trade Fiscal Blue Book of 1903 between average rates of wages in thirteen skilled trades in other than the capital towns in Britain and Germany :^ — United Kingdom. Germany. s. cL. s. d. Masons . 39 2i 27 6 Carpenters and joiners . 38 3 21 74 Plasterers . 39 3 27 6 Turners . 35 20 Fitters. . 35 20 Smiths .... . 36 21 7 Patternmakers . 37 21 Brass-moulders . 36 19 11 Compositors 32 3 23 1 Lithographers . 34 23 7 Cabinetmakers . 35 6 22 6 Upholsterers . 36 27 11 Coopers . 36 22 74 36 22 6 Checking one inquiry by another, let us take a comparative table * independently compiled three years ago, in which the 1 Work cited, pp. 10-12. ^ He names Prof. Hasbach as guardedly suggesting such a state of things. But Hasbach gives figures which put English wages for iron- workers in 1902 higher than German. See them below. ^ Blue Book on British and Fcfreign Trade and Industry, Cd. 1761, 1903, pp. 291-2. In the capital towns the averages were : United Kingdom, 42s. ; Germany, 243. * Given by Mr. E. F. G. Hatch in his pamphlet, In Support of Free Trade : M. Reswml of some of the Main Arguments, popular ed. 1966, p. 17. WAGES AND COST OF LIVING 191 rates of wages prevalent at Gorton, Manctester, in fourteen trades, are contrasted with those current in Germany : — Trades. Patternmakers Brass-moulders Fitters Smiths (average) Lithographic printers Cabinetmakers Upholsterers . Carpenters Railwaymen — Foremen shunters Second man Signalmen (maximum) ,, (minimum) Ticket collectors (maximum) ,, (minimum) Porters (maximum) . Permanent-waymen . Yet another test is supplied in the comparative table com- piled in 1902 by a trained German economist ^ after a personal study of English industrial life ; — Gorton, Manchester. Sermany. s. d. s. d. . 40 a week 21 Oa week . 36 „ 26 }} . 36 „ 22 6 jj 38 „ 21 )* 35 „ 27 )) 36 ,, 22 6 ]] 40 „ 23 )j 10 an hour 25 30 a week \ „„ 26 „ / 2° )j 30 „ 1 22 „ j ^*' 6 J, ) 26 „ 1 ,, 22 ,, / ^° 9 )) 21 ,, 17 ,, 27 „ 15 ,, fio United Board of Trade \3&iiuauy. Kingdc m. Blue Book. £ s. d. £ 3. d. £ s. d. £ s. d. Coal-miners .... 1 1 13 11 1 12 tol 19 fo 18 3 4 6 Iron- workers to to [2 1 2 10 Turners .... 6 13 15 to 1 18 Machine makers and fitters . 4 6 13 15 Oto 1 18 Smiths .... 7 5 13 16 Otol 18 Patternmakers . 4 9 18 17 Oto 2 2 Shipwrights 5 10 14 Coppersmiths 3 5 6 16' Masons .... 1 7 13 9 19 2 to 2 3 9 Carpenters and joiners 2 4 12 9 18 3 to 2 3 9 Wood turners 18 5 10 Pottery workers . 2 7 7 Woollen weavers and spinners 7 ?) Cotton spinners . 16 6 Cotton weavers . 12 6 18 Shoemakers . 18 1 15 Compositors 1 8 5 15 1 12' 3 to 1 18 Seamen .... 12 9 15 5 15 Otol 2 6 1 Prof. W. Hashach, 2ur Gharakieristik der englischen Industrie, in Schmoller's Jahrbuch, 1903 ; cited by Dawson, Protection in p. 189. There is clearly an error in the figures for woollen weavers. 192 MODERN FAILURE OF PROTECTIONISM It will be observed that the German investigator's results differ to some extent from those of the Fiscal Blue Book — a result, apparently, of his having studied the wages of particular districts instead of taking an average of the whole country. But the figures broadly agree, especially as to the much higher rates of English than of German wages ; and when a German inquiry thus substantially coincides with an English one, the result maybe held as trustworthy. The "personal equation" may be taken to be eliminated. Now, if these figures be true (and Professor Ashley in effect grants the general superiority of English wages),^ no argumentation as to the slacker rate of work in the longer German hours of labour (an obviously likely thing),^ and no comparison between German glass-works in forest country and English glass-works in towns,^ can have any rebutting effect. Beyond question we may learn many things from Germany : the question here at issue is solely as to whether we can learn anything from her in the matter of fiscal policy. If the foregoing rates of wages be correctly stated, nothing save a proof that German costs of living are low correspond- ingly to wages will avail to give any colour to the protectionist thesis. On this head it is not too much to say that Professor Ashley " evades " the problem by talking of the low costs of potatoes and vegetables, " in some districts at any rate," and by dwelling on the prices of eggs and milk, and suggesting that when the German housewife "does purchase beef, which is seldom, she gets that too a trifle more cheaply." * The question which an economist should have set himself to solve is whether German costs of living under Protection have or have not risen (1) proportionally to wages, and (2) propor- tionally to incomes in general. This Professor Ashley " evades '' doing. Occupying himself with rents, he does not show that even there the Germans have the best of it. And he cites the statistics as to the higher longevity of the population in Prussia than in England, without suggesting the obvious explanation that the English proportion of town- dwellers is the larger. But even if it were not, the figures 1 Work cited, p. 10. ^ 7^, p_ 13. 2 Id. pp. 15, 25. , ■> Id. pp. 23-5. WAGES AND COST OF LIVING 193 are irrelevant. German industrial life has grown up on its present scale much later than English ; and if new English manufacturing towns are sure to be more healthy than the older, the same may well be the case in Germany, even under Protection. These matters are controlled by other factors. But even in this connection we are met by the testimony of the student Paul Gohre, who, working for three months in a large machine-making establishment at Chemnitz, testified to the multiplication of workmen's houses " hastily and poorly built " ; to the existence of many " which lacked no element of wretchedness in construction, arrangement, or surrounding " ; and to a desperate amount of overcrowding. The same observer stated that among the body of workmen in question, " one of the most prosperous and most favourably circum- stanced of the whole body of working men in Saxony," the average monthly wage was £4, and a pay of about 4d. an hour (with eleven hours' work per day) was "considered highly satisfactory." ^ A German miner, again, testifies that English miners are better fed, stronger, and less hard-worked than German.^ According to official returns cited by Mr. Dawson, the average yearly wages paid in the collieries of Prussia in 1901 and 1902 were: — District. Upper Silesia .... Lowei- Silesia . Dortmund Saarbriioken .... Aix-la-ChapeUe While the wages in the iron ore mines were : — District. Mansfeld .... Upper Harz .... Siegen-Nassau .... Other districts right of the Rhine Other districts left of the Rhine 1 Gohre, Three Months in a Workshop, Eng. trans. 1895, pp. 15, 19-26. 2 Sow the English Workman Lives, by E. DiickerahofF, 1899, p. 18. 13 1901. 1902. £ s. d. £ s. d. 43 12 41 43 11 39 19 61 4 56 11 52 2 52 13 58 2 56 19 les were : — 1902. £ .-. d. £ ». d. 50 1 43 5 33 18 34 3 45 4 39 6 40 13 39 3 36 2 34 194 MODEEN FAILURE OF PROTECTIONISM Thus the workers of Germany suffered from the depression of 1901-2 to a lamentable extent in those very industries of which the expansion has been the source or basis of the general expansion of German manufactures. The case was thus put by the Secretary of the Association for the Advance- ment of the Interests of the Chemical Industry in Berlin in September 1903 i^ — The standard of life of the workers has considerably worsened. The place of nutritious bread has to a large extent been taken by cheap potatoes ; the consumption of meat, which has become dearer, has greatly decreased ; and that of the most indispensable luxuries, as sugar, coffee, beer, tobacco, etc., has also diminished. The consumption of rye fell between 1901 and 1902 from 147 to 137 kilo, per head of the population ; that of wheat, from 91 to 85 kilo.; that of sugar, from 12-3 to 11-6 kilo.; that of coffee, from 3 '01 to 2 '9 5 kilo.; while simultaneously the consump- tion of potatoes increased from 604 to 732 kilo. ; and that of herrings, from 3'59 to 4'06 kilo. So, too, the consumption of meat decreased. During the first half of 1902 there were slaughtered at abattoirs 197,000 fewer pigs than in 1901, while in eleven towns the consumption of horse-flesh increased from 35 to 200 per cent. It is important to note that this followed upon with some cheapening of food. The first Fiscal Blue Book showed that while the decline in cost of food for German workmen from 1877 to 1901 had been less than for British workmen, a decline had taken place. The figures were, taking the period 1897-1901 as the standard, at lOQ-O : — Period. Germany. Britain 1877-1881 . 112 140 1882-1886 . 101 125 1887-1891 . 103 106 1892-1896 . 99 98 1897-1901 . 100 100 While the British workman could buy for 100 shillings in 1897-1901 what cost him 140 shillings in 1877-1881, the German workman had similarly benefited to the extent of 12 shillings. ^ Cited by Dawson, Protection m Germany, p. 196. WAGES AND COST OF LIVING 195 Latterly, however, many had been driven to a lower level of nutrition, even with reduced prices. With the subject of the food use of horse-flesh. Professor Ashley deprecatingly deals in an Appendix, wherein he gives a table to show that while 2055 horses were eaten in Munich in 1901 as against 778 in 1881, the population in the period has risen from 233,600 to 503,000, so that the "number of population to one horse" has fallen from 380 to 245. It would positively appear that Professor Ashley, in preparing this surprising table, supposed that a consumption of one horse per 245 persons is a less consumption of horse-flesh than occurs at the rate of one horse to 380 persons. No other inference can be drawn from the preceding sentence : — " But we have to ask how many [horses] had been killed in earlier years, and in what pro- portion they stood to the population." ^ In reality his figures show that in 1883-84 the consumption of horse-flesh suddenly increased ; that, after a reduction in 1886-88 it increased again in the period 1889-94; and that matters have been pretty bad since 1898, notably in the depression of 1901. In the whole period, while the population of Munich increased by 110 per cent, the consumption of butcher-meat in general increased only by 81 '33 per cent, the decrease per head being from 94*8 to 81 '8 kilogrammes.^ Finally, the latest official statistics available exhibit a notable increase from 1904 to 1905 in the amount of horse- flesh consumed in thirteen German towns, including Berlin, Hamburg, Leipzig, and Munich. In not one case is there a decrease; while the increase varies between over 2500 horses in Berlin (from 11,192 to 13,752) and 74 in Stuttgart. In seven other towns in which the per capita consumption is given, an increase is noted in three cases, and a maintenance of the rate in four.^ And now prices all round are rising more rapidly than wages. Taking the question as a whole, we find that while the average rises in wages in the German engineering trades between October 1905 and March 1908 have been from 6 '7 to 9 '2 per cent, and in the building ^ Work cited, p. 158. ' Dawson, Protection in, O&rmany, p. 197. ' Board of Trade Report on Qost of Ijwing in German Towns, Cd. 4032, 1908, p. xxiii. 196 MODERN FAILURE OF PROTECTIONISM trades from 4-6 to 9-1 per cent, the average increase in the price of rye bread — the main bread of the people — in the same period has been 23 per cent — the figure in Berlin being as high as 32 per cent.i In Magdeburg the per capita con- sumption of meat fell from 1903 to 1905 by 10 lbs. ; in Mannheim, by 8 lbs.; in Konigsberg, from 1905 to 1906, 31 Ibs.^ The only measurable gain is in respect of some small reductions of working hours.^ All this consists perfectly with the general free trade argument. Protection raises prices all round, and cannot raise wages in the same proportion, though a policy of forced production, by increasing some forms of output, may imperfectly balance the burden. Since Professor Ashley wrote, matters in Germany have gone from bad to worse as regards meat- famine, horse-flesh-eating, and rise in the other costs of living. In 1902 (for which, writing in 1904, he does not give us the horse-flesh figures of Munich) the following newspaper report * of September 1 2 told of the state of things in Berlin : — No fewer than seventeen meetings were held simultaneously in Berlin yesterday, to protest against the high prices of meat. All the meetings were crowded, and in most instances the police had to close the doors to prevent dangerous crushing. Each hall was surrounded by crowds of people who were unable to gain admittance. The prices have gone so high that for the workman's family meat has become almost impossible, and in the poorer districts in the provinces the consumption of meat has become nil, and in consequence sickness is said to be rife in many places. The cause of the high prices is considered to be the strict frontier regulations as regards the import of foreign meat and the Inspection of Meat Law of June 1900. Under the pretext of preventing the importation of diseased cattle and meat, the agrarian cattle breeders' petition for the almost total closing of the frontiers to foreign meat by making the conditions stricter was granted. By the new Inspection of Meat Act the importation of fresh and pickled pork is prohibited ; and as the supply of German-bred cattle is iiisufficient, the result is scarcity, coupled with high prices. ' Board of Trade Report on Cost of lAving in German Towns, Cd. 4032, 1908, pp. xxxvL-xxxvii. ^ Id. pp. 285, 324-5, 347. ' Id. p. xxxix. * Copied by Dawson, Protection in Germany, p. 194. WAGES AND COST OF LIVING 197 After 1902 there was some relief; but in the spring, summer, and autumn of 1905 matters were as bad as ever. A glance into an old newspaper recalls the fact that in September of that year the municipality of the town of Solingen bought 5000 kilogrammes of fish to sell again to the people at cost price, by way of "fighting the meat- famine," and that the elders of the Chamber of Commerce in Berlin planned to take some means to resist the "pressing danger to trade and industry" which the meat -famine involved, inasmuch as it was lowering the productive power of German workmen, as well as their power to purchase other articles than food. Demands were made that the import duties on the Danish frontier should be lightened ; and a conference of the burgomasters of Baden was held to formulate and further the appeal.^ In 1906 there was no improve- ment. At a time when the coal mines of North Germany were said to be suflFering from lack of labour through the attractions held out to it by good wages in agriculture, the mass of the people were suffering from the high costs of food set up by the artificial protection of the agricultural interest. Sir William Ward, the British Consul-General at Hamburg, reports as follows : ^ — The rise in the prices of meat, which has during the last two or three years been an increasing source of dissatisfaction both in this and other parts of Germany, became even more acute in the year 1906. The cause of these high prices is considered here to have been partly the introduction of the new German customs tariff, and partly the higher cost of many other necessaries of life. ... In its annual report the Hamburg Chamber of Commerce remarks, with reference to this subject : "The representations both of the Senate of Hamburg and also of many German municipal bodies and Chambers of Commerce have, so far, met with no response on the part of the Imperial Government. On the contrary, the measures connected with the system of inspection of imported meat have been rendered even more severe, and the opinion consequently obtains that agriculture is favoured to the 1 Kolnische Zeitwng, Sept. 22, 1905, p. 2. 2 Consular Report, No. 3889, on Trade of Hamburg for 1906. Cd. 3823- 150, 1907, pp. 48-9. 198 MODERN FAILURE OF PROTECTIONISM prejudice of other economic interests, in this country." It is admitted that the German Government is alive to the existence of the high price of meat, but that, beyond introducing certain reductions in the rates of carriage by rail for meat, and repealing the law prohibiting the importation of fresh pork from Scandinavian countries, it only contemplates a revision of the rates charged for the inspection of meat, and it relies mainly upon the future development of cattle-breeding in Germany. Thus goes it with the people of Germany under Protection. All round, life is made harder by the determination to " keep up prices " in the interest of producers. The artisan is driven to eat horse-flesh by the attempt to keep up agrarian profits on cattle-breeding ; and meanvirhile the peasant, called upon to pay higher prices for vi^ares in order to keep up the profits of the manufacturers, buys less or buys worse articles. Each burdens himself in burdening the other. If duties were removed, more exports would be required to pay for the imported food ; wages would rise ; total demand for food would increase, and prices of rural produce would recover without causing distress. But the " interests " cannot see it ; and so they continue to revolve in a vicious circle of mutual injury. The costs of living have so increased in Germany within the past few years that in the present year Imperial and Bavarian Ministers have alike admitted the pressing need of raising the salaries of the whole civil service of the Empire. On the present salaries, most cannot make ends meet. But for Prussia alone the extra cost is estimated at £15,000,000; and how is the money to be raised save by taxing more heavily the already overburdened citizens ? To cite, as does the Tariff Reform League, the higher wages of 1906-7 without telling of the proportionally higher costs, is to deceive British readers. Let it be readily granted that the amount of organised voluntary effort for the alleviation of the hardships of in- dustrial life is higher in Germany than in Britain. We may usefully copy many German institutions, some of old and some of recent standing, which aim at helping the unemployed to find work, at helping them to live while out of work, and at giving actual employment to vagrants on the land, as in WAGES AND COST OF LIVING 199 the labour colonies. ^ In these directions, and as regards the great problem of securing access to the land, Britain has certainly lessons to learn from her " rival." But the very- existence of all that machinery is a proof that mere Protection has utterly failed to dispose of poverty and distress to the extent alleged by protectionists in this country. Whatever British tariflBsts may say, the mass of the German workmen are uuder no doubt as to the injuriousness of Protection in regard to them : " Down with a ruinous protectionist policy which injures the vital interests of many millions of people : down with a protectionist policy which oppresses the poor and favours the rich ; . . . which has pillaged the pockets of the workers." So ran the Vbrwarts' election manifesto of 1903. Rechenberg and Mombert have testified to the under-consumption of food among the German workers in general ; Dr. Adolph Braun, in his Summary of the Enquiry made by the Berlin Sanitary Committee in 1893, writes that "the majority of the people can pay their house rent only on the supposition that portions of their dwellings are regularly let to lodgers, and that their wives and children are able to contribute to the costs of the house- hold " ; and in his account of the results of an inquiry into industrial life conditions at Nuremberg in 1900 he sums up that "it is only in exceptional cases possible for married workmen to maintain a family with their own wages." While protected town labour is at this pass, protected rural labour fares no better. For, despite the comparative merits of the German land system as regards the distribution of holdings, it is not true that the condition of the German peasant is generally good. Professor Ashley presents merely the picture of the peasant-proprietor living on his land, giving no particulars. All the while, just as in England generations ago, the German agriculturist chronically declares that his position is desperate, though his industry takes from his countrymen a tax of from thirty to forty millions a year. Of the small holders, many have been indifferent or opposed 1 On these and all the other machinery, national, municipal, and private, for helping the workers of Germany, see Mr. Dawson's interesting and in- structive hook. The German Workman (King, 1906). 200 MODERN FAILURE OF PROTECTIONISM to Protection/ having nothing to gain from it, and something to lose, as they hardly ever have corn to sell.^ And, as regards the many labourers who own no land, it is clear that they have benefited no more by Protection than did those of England in the corn law period. While rural wages run as high as 10s. to 13s. a week on the Rhine and in Alsace, in Pomerania and Eastern Prussia they run from 6d. to 9d. a day. "Upon many estates of East Prussia at the present time the entire income of a labourer and his family, inclusive of all payments in kind, does not exceed £20, that being the basis adopted by the insurance authorities in their accident calculations." ^ Hours of work, finally, remain much higher in Germany. In the building trades, in most towns, the working week is 59 or 60 hours; in the engineering trades, mostly 60 hours. In England, the hours are, for the building trades, often under 50, rarely over 56 ; for the engineering trades, mostly 53, hardly ever over 54.* On this as on other lines of inquiry, then, we find that Protection yields no provable gain to the workers, inasmuch as its real burdens always outgo its nominal benefits. And when we examine the life conditions of the workers of the United States, the proof is clinched yet again. We have seen how they suffer from unemployment. It remains to take account of their loss through perpetually increasing costs of living and inadequate wage. To begin with, there is a strong consensus of testimony to the effect that the " poverty line " of income, which in English towns is between £50 and £65 a year for the average family of five, is in New York (with very high rents) between £110 and £125. The New York Bureau of Labour considers £108 "inadequate for city workmen"; and a leading charity organiser thinks £130 is necessary. Putting the line in other northern cities and towns at £95, and at £62 in the South, Mr. Hunter thinks " it is hardly to be doubted that the mass of the workers in ^ Dawson, p. 215. "^ Prof. Ashley's statements on this head should be checked by the testi- monies collected by Mr. Dawson, pp. 216-19. ^ Id. p. 228. <* Board of Trade Bapcyrt on Cost of Living, Cd. 4032, 1908, p. Ivi. WAGES AND COST OF LIVING 201 the North receive less than $460 (£95), or that the same class of labourers in the South receive less than $300 ^ " (£62). The New York Labour Bureau shows no wage above $414 among 100,000 of the sweated tailoring trades, and many as low as $210; while the census of 1900 shows percentages of unskilled labour earning below $310 in the woollen and cotton mills and bakeries, varying from 13 "4 to 90 '5. The smallest proportion of earners of less than $6 a week is found among the cotton-spinners of the New England States ; the highest among the best skilled woollen-mill hands of the Middle States. But even in the New England States, among the latter class the proportion is as high as 68'9 per cent.^ In the South, " Mr. Elsas, of the Georgia Cotton Mills, con- fessed that the average wage paid his employees [of both sexes] was $234 a year. Even men were given only from 75 to 90 cents [i.e. from 3s. l^d.] a day for twelve hours' work." ^ And " since the census was taken there have been two wage reductions in the cotton mills, one of 10 per cent in 1903, and a later one of 12J per cent in 1904."* To which we have to add that on May 29, 1908, the wages of 30,000 Fall River operatives were reduced by over 17 per cent. Perhaps the plainest of all symptoms of industrial poverty is child-labour ; and " in the worst days of cotton-milling in England the conditions were hardly worse than those now existing in the South " of the United States.^ " The twelve- hour day is almost universal in the South ; and about 25,000 children are now employed on twelve-hour shifts in the mills of the various southern States."^ Many children work all night in an atmosphere of vapour and cotton-fluff. Mr. Hunter saw one child of six "working twelve hours a day, in a country which has established in many industries an eight- hour day for men." In the anthracite districts of Pennsylvania the boys take it as a matter of course that they do not go to school, but " work in the breakers." ' In the mines, mills, forges, and 1 Poverty, as cited, pp. 51-4. ' Id. Appendix C. ' Id. p. 64, citing Rep. of Indust, Comm., vol. iv. p. 674. < Id. p. 54, note. ^ Id. p. 232. « Id. ib. ' Id. p. 236. 202 MODERN FAILURE OF PROTECTIONISM factories of Pennsylvania 120,000 children were working in the year 1900 ; many of them under twelve. Girls of eleven worked from 6.30 in the evening till 6.30 in the morning.^ " An appeal for State protection of the little ones, made public a short time ago, asserted that," in New Jersey, " children of six years of age were employed in the glass factories. Great numbers of children worked all night. One factory alone, it was said, had 280 workers, mostly children between ten and fourteen years of age." ^ All this goes on, be it remembered, in protected industries. As to this we may cite the general testimony, penned in 1886, of Henry George : ^ — It is a matter of common knowledge that those to whom we have given power to tax the American people " for the protection of American industry," pay their employees as little as they can, and make no scruple of importing the very foreign labor against whose products the tariff is maintained. It is notorious that wages in the protected industries are, if anything, lower than iu the unprotected industries ; and that, though the protected industries do not employ more than a twentieth of the working population of the United States, there occur in them more strikes, more lock-outs, more attempt to reduce wages, than in all other industries. In the highly protected industries of Massachusetts, official reports declare that the operative cannot get a living without the work of wife and children. In the highly protected industries of New Jersey, many of the "protected" laborers are children whose parents are driven by their necessities to find employment for them by so misrepresenting their age as to evade the State law. In the highly protected industries of Pennsylvania, laborers, for whose sake we are told this high protection is imposed, are working for sixty-five cents a day, and half-clad women are feeding furnace fires. "Pluck-me stores," company tenements and boarding-bouses, Pinkerton detectives and mer- cenaries, and all the forms and evidences of the oppression and degradation of labor, are, throughout the country, characteristic of the protected industries. To the eye of the poorly paid Hungarian and Italian labourer — though no longer, it would seem, to that of the ' PmeHy, as cited, p. 230. " Id. p. 237. ' Protection and Free Trade, ed. 1903, pp. 229-30. WAGES AND COST OF LIVING 203 instructed artisan of Germany — the high money wages of some American workmen are irresistibly alluring ; but as fast as the nominal reward rises the advance is nullified by the rise in prices. The figures of recent years are startling even to the free-trader. In 1890-91 the U.S. Commissioners of Labour made an analysis of expenditures in the cases of varying numbers of families in the States, Britain, Germany, and France, representing an average income of 33s. lOJd. per week in 455 British families ; 46s. 4fd. per week in 2541 families in the States; 25s. 5^d. in 150 French; and 19s. llfd. in 42 German families. The relative expenditures on food, rent, clothes, fuel, and light worked out at 26s. 2d., 33s. 4jd., 18s. 11 id., and 15s. 7d. The test is not a very searching one ; but it indicates for the States, at the time in question, an advantage in that the higher costs did not absorb the superiority in wages. But there can be no such advantage to-day. Taking as a standard year 1896, that preceding the establishment of the high Dingley Tariff in the States, we find the following comparative Changes in Wages and Wholesale Food Prices since 1896 ' U.K. Wages. U.K. Food Prices. U.S. Wages. U.S. Pood Prices. 1896 . 100-0 100-0 100-0 100-0 1897 . 100-9 104-4 99-9 104-6 1898 103-8 109-6 100-4 112-6 1899 106-5 105-1 101-7 117-2 1900 112-0 107-2 104-6 124-3 1901 110-4 107-6 106-4 126-3 1902 . 108-6 109-0 109-6 132-8 1903 . 107-7 108-0 112-8 127-8 1904 . 107-0 108-0 112-7 127-9 1905 . 107-5 108-5 114-5 129-7 1906 . 109-3 107-7 119-1 134-3 The "100-0 "in the case of the States stands of course for higher figures than in that of Britain ; but the upshot is that while wages in the States increased in ten years by 19-1, as compared with a 9-3 rise in Britain, wholesale food prices 1 Compiled from the Board of Trade's 11th Abstract of Labour Statistics and the 71st Bviletin of the U.S. Bureau of Labour for the Free Trade Union. 204 MODERN FAILURE OF PROTECTIONISM there increased by 34-3 per cent, against an increase of only 7 "7 per cent here. When we compare with the above figures the special statistics of New York State we reach very similar results. Between 1877 and 1906, says the 24th Report of the Labour Bureau of that State, the wholesale prices of food increased 28 "4 per cent, and the wholesale prices of all commodities increased 36 -5 per cent. . . . Rents, especially in the large cities, have increased enormously in the past few years, following increases of 30, 50, and even 100 per cent in the price of lumber, hardware, and other building materials. The consequence is that rent, which in a normal family of the working class should account for only 1 8 per cent of the expenses, now absorbs 25, 30, and even 40 per cent of their income. . . . The evidence tends to show an advance in the cost of living of 30 or 35 per cent since 1897, varying with the income and style of living of different families, and also with local rents. And while the wages of hand-workers kept pace with the rise in food prices, though not with the rise in rents, between 1900 and 1905, "the average income of salaried officials, clerks, etc., increased less than 1 per cent in the same period." For the year 1907 the records are worse still. Continued rise in the costs of nearly all commodities went on up to the moment of general collapse. The most remarkable feature in the whole process, perhaps, is the dearness of bread in a country that exports wheat. Loaves in the States vary both in size and price ; but the general fact stands out that in 1903 the price of 4 lbs. of bread in New York was lOd.,^ and that "between 1904 and 1906, the average price of bread per lb. in the States was considerably higher than at any time during the previous fifteen years, being highest in 1905." Thus is abundance itself turned to the semblance of dearth by the heightening of all the prices of " protected " articles. In sum, once more, the American workman had need have double the wages of the British, to meet his costs. And he has not.^ 1 Fiscal Blue Book, 1903, Cd. 1761, p. 221. ^ The Speaker's Handbook of the Tariff Reform League (4th ed. p. 195) persistently repeats the figures of the ' ' delegates " who went (in a year not WAGES AND COST OF LIVING 205 One of the American economists who champion Protec- tion, Professor E. E. Thompson, has consoled his countrymen for the loss of their mercantile marine — which he accounts for by saying that they "have absolute free trade in the matter " — on the score that the work of sailors, " while the most difficult, dangerous, and severe of human employments, is also the most unproductive, the most useless." " Bentham thought the worst possible use that could be made of a man was to hang him ; a worse still is to make a common sailor of him." 1 The grapes, no doubt, are very sour ! But it must be a hardy optimism that can maintain this note in the United States before the spectacles of pallid children toiling in the factories twelve hours a day — or twelve hours a night ; of the weary adults, worn to inanition before middle age through the murderous pace of the machine, or driven by it to that absolute loathing of work which makes the indurated tramp ; of the reduplication in republican cities of every industrial evil that ever stained the life of age-worn Europe ; of families forced to work the woman and the child in forge and mine, to make ends meet in producing a material that sells at a protected price. mentioned) to the United States with Mr. Mosely. They indicate a general doubling of English wages ; hut they appear to have regard chiefly to New York, and to take no account of the enormous rents there. 1 R. E. Thompson, Elements of PoUtioal Economy, 3rd ed. pp. 216, 364. It is not to he supposed that American protectionists in general subscribe to these views. After all (p. 364), Prof. Thompson demands subsidies to revive the sailoring business in the States. PART V THE PEOTECTIONIST CASE CHAPTEE XV PROTECTIONIST HALLUCINATIONS Coming anew to the question of principles, we have first to deal with the inveterate protectionist delusion as to excess of imports over exports. It is relatively as ancient in economics as the geocentric illusion in astronomy. All the mercantilist literature of the seventeenth and eighteenth centuries is pene- trated with the conviction that a nation which imports more goods than it exports is being ruined in the process. The diflference in market values, it is taken for granted, can be paid for only in bullion, and that, from the bullionist's point of view, means destruction. There are few more depressing aspects of the evolution of culture and science than the pro- tracted reign of this primeval error. To this day it holds its ground, and much of the polemic of present-day protectionists is unintelligible save as proceeding upon it. Many, including even public men, such as the late Mr. Seddon, ostensibly hold the absurd belief that an excess of imports is paid for annually in gold at the rate of " 160 millions of golden sovereigns." ^ ' The American protectionist economist, Professor E. E. Thompson, similarly asserts that American payments to other countries in the period of low protection were chiefly made in gold (Political Mconomy, 3rd ed. p. 356). 206 PROTECTIONIST HALLUCINATIONS 207 One such payment would strip Britain of sorereigns once for all. Professor W. J. Ashley ^ imprudently suggests that " there is some little excuse even for the much ridiculed recent remark of a Colonial Premier : circumstances might really arise in which England paid (for a time) for her surplus of imports with ' golden sovereigns.' But," he adds, " there is very good reason for believing that England has not yet done so ; and this is the same reason as convinced Hume, viz., that the excess of imports has been incomparably greater than the whole coinage of the country." How there here arises any excuse, however little, for the assertion that 160 millions of golden sovereigns are paid away annually it is impossible to discover. Professor Ashley's "for a time "may mean any- thing or nothing ; and he may be defied to reduce his proposi- tion to precision without leaving it insignificant. While Professor Ashley thus sets up a possible mystification, the average protectionist appears to cling to the old delusion. As is remarked by Mr. L. L. Price : " It is scarcely possible to read a protectionist pamphlet, however able and well informed, without finding the old mistakes about money making their reappearance in some cunning disguise." ^ If the earnest beginner in economic science is concerned to cross this its pons asinorum, he may do so by aid of the bald facts of bullion imports and exports. A reference to the official figures of exports and imports of gold and silver will reveal the fact that they fluctuate by a few millions, the import generally exceeding the export. Gold is, in fact, imported or exported according as bank rates make either course profitable to the money-dealers. But the subject ought to be understood in terms of the actual sequences of commerce, and it may be at once noted that the figures of exports and imports of goods are somewhat misleading, prima facie. Exports are entered at their value "free on board" (f.o.b.), whereas their selling value in the receiving country will include not only the cost of freight and insurance, but the intermediate traders' profits on their hand- ling. Those profits and costs will be represented in the 1 The Tariff Problem, p. 23. 2 Eoorumdc Science and Practice, 1896, p. 293. 208 THE PROTECTIONIST CASE returning imports, which are entered with their freight and insurance cost added. Yet further, ships built for foreigners were not included in the figures of exports before 1899, and are accordingly often excluded still in comparisons of subse- quent with previous years. Above all, the figures of our total imports include much that comes for re-exportation ; whereas the re-exported goods figure in separate returns. When, therefore, we appear as exporting in 1902 £277,000,000 and importing £528,000,000, we have to remember that the excess includes 1. Value of ships built in Britain for foreigners (5| millions) ; 2. Profit of traders on f.o.b. prices ; 3. Payment for freights both ways in respect of work done by British ships. 4. Cost of insurance both ways when it is undertaken in Britain. Further, as all payments between nations are substantially made in goods, we receive in imports, 5. Interest on British investments abroad ; 6. Profits from British commercial establishments abroad ; and 7. Pensions due to retired Anglo-Indians from India. Finally, we have to add to our exports £66,000,000 of re-exported goods, making our total exports (with ships) £348,000,000, or else to deduct £66,000,000 from our total of imports. The " excess " is thus much reduced. But all forms of "excess," however arising, are in the nature of pure gain or surplus to the nation at large, inas- much as they mean increased supply and lowered prices of imported goods and foods. If, indeed, the receiving country has no mineral resources, and the economic rent in town and country is not taxed by the State, or the proceeds produc- tively employed, the result may be for a time an increase alike of millionaires and of paupers. In such a case the true remedy would be, not Protection, which would only make matters worse, but a system of sound taxation and munici- pally-promoted building. But apart from such a state of misgovernment as that last described, the only case in which PEOTECTIONIST TTALLUCINATIONS 209 an excess of imports can in any way tend to a nation's dis- advantage is that in which imports represent foreign capital entering for investment. If the investments pay, the result will be increase of exports, with a relative decline in imports. In such a case protectionists would infer improvement in trade, whereas there would really be beginning a process of virtual tribute-paying. Such a process may conceivably have begun in respect of American investments in Britain, though for this there is no evidence whatever.^ In that case protec- tionists may be gratified ere long by an increase of British exports to America, and a fall in our imports thence. They will, however, be rejoicing over a process in which their own country is the loser, inasmuch as the lessened imports of food will mean raised prices (with or without tariffs), while the increased exports will relatively decline in value. The thing they profess to dread would produce the very results they avowedly desire, so little do they understand their problem. Hitherto the United States has in large measure been enrich ing other countries out of her great natural resources, waste- fully exploited through protectionism.^ Britain can much less afford such a drain. The protectionist hallucination has gone so far in some quarters that the imports which represent interest on our foreign investments are objected to ^ as " giving no work in this country." A little reflection will show (1) that they are economically equivalent to a spontaneous yield of new fruits, foods, and goods, by our own soil ; and (2) that they never- theless do employ labour from the moment they are set in motion. On the protectionist principle, the manna said to 1 An assertion to this effect was made by the protectionists of twenty years ago (Farrer, Free Trade and Fair Trade, ed. 1886, pp. 11, 81), and in that case it was certainly mistaken. And Mr. Balfour rejects it now. ^ Mr. Ewing Matheson, in his valuable pamphlet on Foreign Exclmnge in the tariff connection (Spon, 4th ed., 1905), meets the fallacy of Mr. Bonar Law by stating that "profit, and not bankruptcy," accrues to America as well as to England (p. 40). Elsewhere, however, he rightly notes (pp. 38, 44) that we, and not the protectionist countries, make a net gala ; that the United States prosper by natural resources, and not by exchanges ; and that Germany, in so far as her exports have exceeded her imports, has been " living on her own vitals." 8 M-g., by Mr. Samuel Storey. 14 210 THE PKOTECTIONIST CASE have been bestowed on the children of Israel in the wilder- ness would have been deleterious to industry. "Were such a saleable supernatural food, however, to fall on any given area to-day, that area would promptly rise in value, and the pro- duce would speedily be owned by a syndicate, which would employ labour (1) to collect, store, and transport it; and (2) to build barns for storage ; while (3) other labour would be stimulated by the raised demand of the labourers thus advantaged. That the same principle holds in respect of all imports may easily be seen by noting what would happen if an individual Briton who has invested £5000 abroad should receive his annual interest in the shape of a shipload of oranges. For orangeless Britain, that is so much " manna." The recipient, however, must employ labour to unload his oranges, to store them, and to transport them to the shops, where labour is employed in selling them. Supposing the whole procedure to be carried out by way of barter, the dockers and carters would be paid in oranges, and the shopkeepers would pay for the oranges with other goods ; or the individual buyers would pay either to the consignee of the cargo or to the shop- keepers in boots, hats, clothes, and so forth. By the inter- mediation of money, equivalent exchanges do take place all round. At every step labour is evoked and paid for. This is indeed not the ideal way of promoting a nation's industry, inasmuch as it conserves a large idle class ; but when the only proposed alternative is Protection, it is relatively benefi- cent, inasmuch as it actually does create employment. The only limit to perpetual employment on these lines is the normal need to check consumption by saving money for investment. But this di'awback in turn (which is little realised by politicians) is not in the slightest degree lessened by Protection, which would only hasten the arrest of demand. On the protectionist principle, the strictly logical course would be to throw the foreign oranges into the sea and encourage home capitalists to grow oranges under glass, thereby employing some labour in the most uneconomical way in order to spite the foreigner, and checking the easy employment of much more labour on the line of spontaneous PROTECTIONIST HALLUCINATIONS 211 exchange. On this line the protectionist case ends in the conclusion that a good harvest is a calamity, inasmuch as more food is produced than in a bad year, with no greater expenditure of labour. On the protectionist principle, again, any country which exports more than it imports must be for that reason pros- perous, since labour is needed to work up the exports, and the balance is on that side. Two notable countries are in this position, India and the United States, one nearly the poorest country in the world, the other perhaps ^the richest. Obviously the excess of exports over imports cannot be the cause of both the poverty and the wealth. The simple solution is that India, the physically poor country, is further impoverished by the annual British drain on her fiscal resources, while the rich United States, exporting chiefly from its great annual surplus of food and raw material, has a great home industry, and remains relatively rich while paying away as interest on foreign investments, and as a result of Protection, great masses of real wealth which are annually reproduced. In fine, if mere exports, and not imports, be the measure of national wealth, the proper course is not to check imports but to pay bounties on all exports. It would really be the cheaper course, from the consumer's point of view. Until it is realised that exports are to be desired only for what they bring in, and that imports are the real measure of gain, all reasoning on trade is but a series of fallacies ; and very few tariffists do realise it. Another inveterate protectionist hallucination is the belief that our exports to any nation represent the total trade we do as against our imports from it. Most of the writers on the protectionist side appear to be unaware of the elementary fact that international trade is to a large extent roundabout, the difierences as between nation and nation being balanced by circular exchanges, settled by an international circulation of bills of exchange. From free-trading Holland, for instance, in the years 1894-98, we imported on an average about £28,000,000, exporting to her in return on an average only £8,000,000 ; so that even when we make freight allowances the excess of imports is very great. With Belgium, which 212 THE PROTECTIONIST CASE has low tariffs, our trade is in similar case, the excess of imports being, however, somewhat less. But in both of these cases, as in others, the excess must in the nature of things be balanced by (a) remittances of interest made to us through those countries, and (b) British exports to other countries which directly or mediately trade with them. It is for such reasons that we export to India, China, Brazil, Italy, Turkey, Japan, Java, Foreign West and East Africa, Austria, Uruguay, Mexico, Venezuela, Persia, and other countries more than we import thence. When this is recognised, it will be seen that the main plea of Chamberlainite protectionism proceeds on a vast miscon- ception. It is constantly assumed that our exports to India and our colonies are the direct return for our imports thence, whereas they are to an indefinite extent equivalents for imports from other countries which trade with India and our colonies. What Mr. Chamberlain takes for inter-imperial trade is in large part international trade. What is more, much of our export to the colonies stands for capital, a good deal of it destined to be lost, much of it to remain colonial. Yet even so qualified a controversialist as Professor Ashley in effect recognises neither export of capital nor circular trade. Referring to the small number of whites in our "pos- sessions," he claims to turn the tables on those who had stressed this, by saying, " The surprising thing is that so few should have bought from us so much."^ The "so much" (£105,000,000) includes £35,000,000 sent to British India, with its population of 294,000,000. That export, as against an import of £27,000,000, might have made obvious to an economist, or even to an imperialist, if he could but remember the existence of India, the element of extra-imperial exchange involved ; and might have suggested similar and other ele- ments in the export to the colonies. But even in noting that "during the last forty years the export of British products, to foreign countries on the one hand and to British colonies and possessions on the other, has grown in much the same proportion," Professor Ashley draws all inferences save the right one. When we have exported to Natal goods worth ' Tariff Problem, p. 141. PEOTECTIONIST HALLUCINATIONS 213 £8,284,691, and get back only goods worth £530,138, he not only supposes the eight millions' worth of goods to have been " purchased " by the Natal population ^ — when in reality most of it was either war material or capital for Johannes- burg, or else provision for restocking the Transvaal, — but treats the imaginary transaction as a profitable one in itself, apart from any roundabout compensation. There can come no sound prescription for imperial trade from imperialists who thus misconceive alike trade and empire. The breakdown of the protectionist argument thus far forces some comparatively candid disputants to another theory — namely, that our " excess of imports " is being annu- ally paid for by an export of capital securities (stocks, bonds, etc.), which do not appear in the trade statistics. This is the contention of Mr. Gr. Byng,^ from whom Mr. Chamberlain appears to have taken the majority of his ideas, albeit he destroys one of Mr. Byng's central theses by an inconsiderate allegation of his own. The sole difficulty in dealing with Mr. Byng's doctrine as to exports of scrip is to gather at what time he asserts the drain to have begun. As he shows, our imports of goods have exceeded our exports in an almost continuously increasing degree ever since free trade began, the surplus being all along described by him as an " adverse trade balance." At the outset of his treatise, however, Mr. Byng represents that we had nothing but advantage from free trade from 1846 to 1875; and an exact balance of advantage and disadvantage from 1876 to 1900; since which year we are reaping unalloyed disadvantage, with the pre- dicted result of a total cessation of trade about 1912 in the event of our not adopting Protection. It is in some aspects a pleasingly symmetrical thesis ; but inasmuch as it implies a continuous export of our securities since 1846 at least, while Mr. Byng explicitly alleges (and this on the bare authority of an unnamed "old-established stockbroker") only an export beginning within the past twenty years, the symmetry is confined to the surface. In ^ Tariff ProUem, p. 144. The second edition makes no change. ^ Protection: the Views of a Manufacturer, Eyre and Spottiswoode, 1901, p. 94 sq. See above, p. 209, note, and below, p. 215. 214 THE PROTECTIONIST CASE any case, it suffices to ask Mr. Byng how, when all our securities are going abroad, and we thus stand bound to receive much less interest from abroad than formerly, and to pay increasing sums in interest every year, we can possibly go on importing an ever-increasing mass of goods, without exporting goods in return 1 At what point, if ever, are our imports going to decline ? When all our securities are gone, and we can buy no imports, must we not perforce export more and more goods to pay the interest we owe ? In which case, will not his ideal of multiplication of exports and cessation of imports be happily realised ? Where then, for him, is the harm 1 CHAPTER XVI THE ARGUMENT FOR RETALIATION Unfortunately protectionists are able, now as in the past, to trade upon blind passions; and they are content, after every one of their economic arguments has been answered, to repeat the mere angry cry of retaliation. "Hit back," "don't take it lying down," "treat them as they treat us" — such are the watchwords with which tariffists spread the gospel of Imperial Unity, not reflecting that the very colonies to which they ask us to give a preference " hit " us all the time. It lies on the face of the case that such appeals are made because it is felt that no others will avail. To tell a man that you are proposing to him a highly profitable course of action, as against one which is ruining him, and in the same breath to seek to put him in a rage, is to exhibit a partial consciousness that the first proposition is false. Resentment is not needed to make a business man choose a gainful policy as against a losing one. Mr. Balfour, avowing that the policy of protectionist countries is " doubtless costly to them," is content to appeal rather to fear than to anger — fear of a possible decline of prosperity in the future after half a century of gainful free trade — while admitting that " both the total wealth and the diffused well-being of the country are greater than they have ever been. We are not only rich and pros- perous in appearance, but also, I believe, in reality. I can find no evidence that we are ' living on our capital.' " ^ As ' Economic Notes, p. 28. 215 216 THE PROTECTIONIST CASE against alike the appeal to resentment and the appeal to fear, it is the business of rational men to weigh the proposed policy on its merits, economical, political, and even sentimental. To extract any coherent argument from Mr. Balfour's reasoning is impossible. He admits that even a country with vast natural resources " would no doubt suffer some economic loss " from diminution of exports ; and he goes on to say that such a country as our own, "if it found itself confronted with a universal system of augmenting tariffs," would be not only "incomparably worse off" but "worse off than it would have been had it never adopted the free trade policy " ; and this because, " while large imports are a vital necessity, the exports required to pay for them are not of a kind which other nations — all, by hypothesis, protectionist — are obliged to take." 1 Now, as Mr. Balfour calls for Protection, he is pro- posing a course which (save in one contingency) must on his own showing lessen exports, inasmuch as it will in his opinion lessen imports to begin with. The one conceivable cause to the contrary would be a decision of the protectionist countries to lower their tariffs when we put one on. But Mr. Balfour goes on to argue that though it would be obviously against the interests of foreign protectionist countries to cut down their own export trade by lessening our buying power, they would not see it ! " However sound be the economic doctrine, ... it is not one which will easily appeal to protectionists. They would not be protectionists if it did." ^ And again : " If argument failed before powerful vested interests were created, it is hardly likely to be effective now." ^ Then from Mr. Balfour's point of view there is little or no hope that the foreigners will lower their tariffs. It is true that all the while an alleged decline in our exports is the very reason he gives for turning protectionist himself — the very reason that is urged by his fellow- protectionists for their policy. But it is not our business to find a reconciliation between Mr. Balfour's self - contradictions. What we have here to note is that while he thus avowedly does not expect foreign protec- tionists to lower their tariffs when we import less from them, because the argument "is not one which easily appeals to ^ Economic Notes, pp. 12-13. " Id. p. 14. * Id. p. 30. THE AEGUMENT FOE EETALIATION 217 them," he finally tells us that this very argument is an induce- ment " which ihey thoroughly understand," ^ and that therefore we are to check their exports to us by putting on retaliatory duties ! In the gift of self-contradiction, Mr. Balfour must be admitted to be Mr. Chamberlain's equal, perhaps his superior. Probably no other modern statesman, certainly none with Mr. Balfour's repute for intelligence, ever put forward in justification of a policy such a series of self -stultifications as we have been considering. Having taken note of the confusion, we can but put it aside for what it is, and go on to ask whether there are any grounds on which we may expect foreign protectionists to lower their tariffs if we put one on. On the widest survey, there is none. As Mr. Balfour and Mr. Chamberlain both avow, they are proposing " to do to foreign nations what they always do to each other." In other words, foreign nations (the protectionist nations, that is) simply go on retaliating, go on raising their tariffs against each other ; and we are to join in the process. On this view the case is hopeless. It is true that there are growing movements for free trade in many if not in all protectionist countries. The German Socialists, in particular, are for the most part determined free-traders ; and ere long they may carry their point. But in the meantime there is not the least reason to suppose that our resort to a tarifi would help them : on the contrary, it would be cited by the German protectionists as a proof that all trading countries now realise the Tightness of Protection. While Mr. Balfour thus actually gives reasons why protec- tionist countries should not be expected to lower their tariffs in the event of our setting up one against them, he and his followers are alike committed to the pretence that a tariff is a means of bringing down other tariffs. They proceed on the simple assumption that it ought to be, in disregard of all experience. "A means of negotiation" is the common ex- pression. Now, a tariff might be such an instrument as between two Governments both of which at heart desired free trade, as Mr. Balfour and Mr. Chamberlain profess to do, 1 Economic Notes, p. 30. 218 THE PROTECTIONIST CASE but both of which were hampered by their protectionists in the legislature. Huskisson, as we saw, used the retaliatory action of the Prussian Government in 1822 as a pretext for modifying in 1825 the Navigation Act and lessening the duties against Prussia. But Huskisson, we know, was a free- trader ; and according to the Anglo-German economic historian Prince Smith,i ^jjg British Government actually suggested to the Prussian Ministry the retaliatory action which the latter, being also inclined to free trade, was loth to take. Whether or not this is true, it is clear that both Governments were disposed towards free trade, and the success of the retaliation in that particular case is the kind of apparent exception which, being explained, leaves the rule intact. All experience goes to show that, where a strong disposi- tion to protectionism exists, retaliatory duties only in the case of a few articles ever have any remedial effect. It was this that happened in 1697-1700, when Flanders retaliated on the English prohibition of Flemish lace by excluding English woollens ; and in that case the woollen trade simply overrode the claim of the English lace industry in a fashion which to-day would arouse a storm in any protectionist country. Strong interests do not yield their prey; but in England to-day one protected trade would hardly dare in this fashion to sacrifice others which had been in alliance with them. The historic rule is, obstinacy in evil. Peel, after his tariff reduc- tions of 1842, strove for years — Gladstone being his Minister — to induce the protectionist Governments of his day to come to terms, but had to admit a total failure. It was this failure that convinced him of the futility of tariffs as " instruments of negotiation." He had left on the duties on wine and brandy for that express purpose, and he could gain nothing by them. "Wearied with our long and unavailing efforts to enter into satisfactory commercial treaties with other countries," he declared in 1846, "we have resolved at length to consult our own interests, and not to punish other countries, for the wrong they do us in continuing their high tariffs upon the importation of our products and manufactures, by con- tinuing high duties ourselves." "The best way to fight ' Cited by Prof. H. Dietzel, Retaliatory Duties, Eng. trans. 1906, pp. 29-30. THE ARGUMENT FOR RETALIATION 219 hostile tariffs is with free imports." He actually established free trade in Britain in the midst of a war of tariffs through- out Europe ■^ ; and the only countries which at the same time moved in a free trade direction were Holland and the United States, moved not by pressure but by goodwill. The falsity of the theory of retaliation is further demon- strated by the simple fact of the prevalence of protectionism. Tariffists tell us in one breath that all the world has seen good reason to turn protectionist, and in the next that another tariff will tend to make them turn to free trade. If ninety- nine mutually opposing tariffs have no reciprocally repressive effect, why should a hundredth alter the situation ? By which proposition will the tarifiist stand ? Do the other countries want free trade, or do they not ? If they do, why do they fight each other with tariffs, generation after genera- tion ? If they do not, how should our tariff coerce them all, any more than they have coerced each other ? As we have seen, tariffs have been generally resorted to in the outset not by way of resentment against and effort to beat down other tariffs, but primarily for revenue purposes ; and they have been maintained and heightened by the sinister interests which they generate and strengthen. Even a fresh resort to free trade by hitherto protectionist countries would not induce others to follow which were ruled by protectionists, no matter how loudly the latter might have declared that their tariffs were merely retaliations. The trade interests in the United States have never scrupled to turn their backs on their own pledges when there was any talk of taking off a duty which had been expressly granted as a temporary aid. As Dietzel remarks: "The good example set in 1879 by England, Holland, and Denmark — that is, by a number of countries of the highest importance for our [i.e. German] foreign commerce — did not cause our legislative authorities to remain faithful to the ' rigime Delbriick ' : as little likelihood is there that a future adoption of the free trade principle by Russia and the United States would induce it to pursue the same course." ^ 1 "France, Belgium, and Germany," he wrote to Croker in 1842, "are closing their doors against us." — Groker's Correspondence, 1884, ii. 383. 2 Work cited, p. 13. 220 THE PROTECTIONIST CASE Caprivi, who understood the principles of free trade, did succeed in introducing, from 1891 onwards, a system of low- tariff commercial treaties, being convinced that the heighten- ing tariff policy which had been pursued in Germany from 1879 had injured German trade. The reason of his success in conciliating some other continental Powers was that Russia and the United States had greatly raised their tariffs, and the other States were disposed to recoil from a similar policy. He was actually coming down from a high tariff to a lower, not forcing anybody to lower theirs first. In this case a potential free-trader negotiated with States inclined to lower tariffs. In the case of Russia, however, there ensued a tarifif war, and only after it had caused vast losses did the two countries come to terms. Even in this case the solution was due to the circumstance that Germany specially needed Russian rye and flax, and that Russia specially needed the German market for those articles.^ Apart from cases in which such wasteful tarifif wars end in agreements which might have been come to at the outset, there is hardly an instance on record in modern times in which a single retaliation, or the threat of it, has had a salutary efifect. In the case of Brazil's threat to tax German manufactures because of a raised German duty on coffee, Germany yielded because the tax on coffee was not protective, and was besides unwelcome to German consumers in general. Certainly the tariff wars are far more numerous than the prompt pacifications. And those wars are in themselves the most emphatic condemnation of protectionism. That which was waged between France and Italy from 1889 to 1898 is estimated to have caused to the two countries a total loss of £120,000,000. In the ten years French imports of Italian goods fell off by 57| per cent, and Italian imports of French goods by 50 per cent ; and though there was a recovery in 1899 it has not since been maintained. Each country has permanently injured its trade with the other. In the years 1893-95, again, France and Switzerland waged a similar war; and here again there has been a permanent loss, besides the ' Dietzel, ch. i. THE AEGUMENT FOR RETALIATION 221 fall of 45 per cent in exports on the French side, and 35 on the Swiss side, while the struggle lasted.^ All the while, Britain is on the " most favoured nation " footing with all Powers save Portugal, whose wines she now taxes rather heavily. To sacrifice this immense advantage on the alleged chance of a gain from " retaliation " which has never been seen to accrue in human experience, would be the extremity of national folly, and only individual self-interest could ever propose it. If, finally, the game of retaliation is to be played with even a semblance of thoroughness, the taxation of imported raw materials is inevitable ; and this our tarifiists stUl protest their determination not to attempt. Their theory, then, at this as at so many other points, is divided against itself, and the practical dilemma is in itself sufficient to confound them. To retaliate against the United States we should have to tax cotton, which would ruin our cotton industry; and tobacco, the duty upon which Mr. Chamberlain has promised to lighten — it being indeed heavy enough already. To punish Russia we should have to raise the price of kerosene ; and to press Italy we should have to burden our importers of raw and thrown silk. The thesis thrown out in passion will not bear an hour's cool scrutiny. Before leaving this theme it may be well to notice the use made in recent tariffist propaganda of an ill-considered passage in which J. S. Mill, discussing the effect of tariffs, seems to suggest " retaliation," albeit with a totally different meaning from that of the protectionists who make use of some of his words. In one protectionist ^ pamphlet the proposition that we cannot get reductions of tariff from foreign nations " for nothing," is supported by this simple footnote : — A country cannot be expected to renounce the power of taxing foreigners, unless foreigners will in return practise towards itself the same forbearance. The only mode in which a country can save itself from being a loser by the revenue duties imposed by other countries on its commodities, is to impose corresponding revenue duties on theirs. — J. S. Mill. " Board of Trade Reports on Tariff Wars between certain European States (Cd. 1938), 1904. 2 C. A. Vince, Mr. Ghawierlain' s Proposals, 1903, p. 62, 222 THE PROTECTIONIST CASE Here the only possible inference for an uninformed reader is that Mill believed import duties fell upon the foreign producers of the taxed articles. Now, Mill held exactly the opposite view. Mr. Vince, like Mr. Chamberlain, selects his quotations (and in this case it can hardly have been by over- sight) in entire disregard of the context. After the passage he quotes comes this : — Only it must take care that those duties be not so high as to exceed all that remains of the advantage of the trade, and put an end to importation altogether, causing the article to he either produced at home or imported from another and a dearer market. To catise the article to be produced at home is precisely the aim of most protectionists. Mill's position is to be understood from his previous reasoning. A few paragraphs before that quoted from, he sums up an exposition thus : — Those are therefore in the right who maintain that taxes on imports are partly paid by foreigners, but they are mistaken when they say that it is by the foreign producer. It is not on the person from whom we buy, but on all those who buy from us, that a portion of our custom duties spontaneously falls. It is (he foreign consumer of our exported commodities who is obliged to pay a higher price for them because we maintain revenue duties on foreign goods} That is to say, our import duties would cause the foreigner to pay more for what he buys from us. In this opinion Mill was, I think, demonstrably wrong. The truth lies neither in his view nor in that of the pro- tectionists. Mill worked out his argument in terms of pure a priori reasoning as to the effect of limitation of import (by raising prices) on reciprocal export. He argues, that is, that if Germany by reason of tariffs imports less from us, she will owe us less, and will consequently send us less, and we shall have to pay more for what she does send us. And vice versa. This argument takes no account of Germany's continued wish to sell to us, which, as the protectionist so often and so bitterly complains, leads her at times to "dump" upon us below cost ' B. v", eh. iv. § 6, near end. People's ed. p. 515. THE ARGUMENT FOR RETALIATION 223 price. It further ignores the operation of the exchanges, by reason of which, while German drawers of bills on London would have to pay a higher discount because of our lessened sales to Germany, and so get less for their 'exports, our exporters will get a premium for their bills on Germany, and so, without raising their prices, get more for their exports, thus being newly advantaged against the German tariff. But whether Mill was right or wrong,i it is mere deception to quote him in a sense flatly opposed to his real meaning. Mr. Vince is all the while arguing that increase of exports is the grand desideratum. Mill's argument was that we should take a course which would further diminish our exports as well as our imports. It is safe to say that such a counsel, once under- stood, will never be followed by either tarifRsts or free-traders. The argument that " the foreign producer " can be made to pay the tax undergoes yet other manipulations. In the " Speakers' Handbook " of the Tariff Reform League ^ there occurs this oracular citation : — Prof. Seniob A part of the taxes received by the Government of one country is often paid by the inhabitants of another. — Outlines of Political Economy, p. 184. This use of Senior is, if possible, even more misleading than the before-noted use of Mill. The sentence quoted is the first in a paragraph in which Senior argues that when England puts a heavy import duty on tea, " a portion of our duty on tea is, in fact, paid by the inhabitants of the tea- ^ It will he observed that in the section cited Mill is reproducing parts of his early essay on International Commerce, and that in it he ostensibly contra- dicts another of his dicta. There he asserts that "a tax on imported commodities, when it really operates as a tax, and not as a prohibition either total or partial, almost always falls in part upon the foreigners who consume our goods." In the second section of the same chapter he affirms that " there are few cases in which " a tax on imports does not raise the value and price of a commodity by "more than" the amount of the tax. The passages are to be reconciled only by realising that in the one reprinted from his early essay he is driving at another point than that of the effect of an import duty on prices. 2 4 Short Handbook for Sjpeakers, etc., 4th ed. 1907, p. 157. 224 THE PROTECTIONIST CASE growing districts of China," inasmuch as, if we did not put a duty, the increased demand would cause a rise of price in China which would "have a tendency to raise the rent of land and the wages of labour in the tea-growing districts." In passing, it may be remarked that the effect upon wages would depend upon whether new soil was taken into cultiva- tion, or whether other crops were given up in favour of tea- growing. In the latter case wages might even fall if tea-growing required less labour than the other culture, as sometimes happens where pasture supersedes grain-growing. But taking Senior's proposition to be true, the only " retalia- tion " it can be made to justify would be one deliberately planned to impoverish foreign landlords and foreign workmen on the score that their Government had impoverished our manufacturers and workmen by lessening the possible demand for their products. On the question whether such retaliation could do us any good, Senior would, of course, reply in the negative, save in so far as he might conceivably believe in the power of retaliation to force the foreign Government to reduce his duties. But in the case of its refusal to do so, his whole line of argument commits him to the recognition of the fact that by impoverishing the foreigner we should merely restrict his power to buy from us even what he wanted to buy. This is recognised by Professor Sidgwick, who in turn is exploited by the Tariff Reform League no more ingenuously than they have handled Senior. The " Handbook " cites him thus (italics mine) : — Peop. Hbney Sidgwick Unless foreign products are completely excluded by import duties, such duties will partly have the effect of levying a tribute on foreign producers, the amount and duration of which may in certain cases be considerable." — Principles of Political Economy, p. 49.3. Sidgwick 's argument is, in brief, that a 5 per cent duty on foreign silks may "after a certain interval" cause half the silks consumed by a nation to be produced by native industry, while the price of the whole may rise only 2i per cent. Then the imported half will yield the State 5 per cent, THE ARGUMENT FOR RETALIATION 225 while the tax on consumers is only 2 J per cent, " so that the nation in the aggregate is at this time losing nothing by protection except the cost of collecting the tax, while a loss equivalent to the whole tax falls on the foreigner." That is to say, what the consumer loses in the extra price which he pays qua consumer, he gains qua taxpayer. To say nothing of the fact that those who do not buy silk get the gain with- out bearing any of the counterbalancing loss, this argument overlooks the fact that the rise in price tends (1) to check consumption, and (2) unduly to enrich the silk-manufacturer, until extra capital enters into the trade, when the tendency will be to over-produce for a time, with the result of depress- ing prices, and so on. But, further, Sidgwick himself admits (3), on the next page, that "the protection given by [nation] A to one branch of her industry may very likely have the secondary effect of inflicting a blow upon another branch.'' This fatal corollary is of course not quoted by the Tariff Reform League. Sidg wick's very characteristic handling of the subject of Protection is a warning as to the confusion that may be wrought by what may be termed the non-committal handling of a scientific issue. It is a good instance of the species of academic problem in mechanics in which " the weight of the elephant may be neglected." Beginning in his anxiously detached fashion to discuss the practical issue, he writes (italics mine) : — " I hold . . . that when the matter is considered from the point of view of abstract theory it is easy to show that protection, under certain not improhahle circumstances, would yield a direct gain to the protecting country ; but that from the difficulty of securing in any actual government suffixAent wisdom, strength, and singleness of aim to introduce protection only so far as it is advantageous to the community and withdraw it inexorably so soon as the public interest requires its withdrawal, it is practically best" to tax for revenue only.^ That is to say, "under certain not improbable circum- stances" there would concur other inevitable circumstances ^ Principles of Political Economy, pp. 485-6. 15 226 THE PROTECTIONIST CASE which would make the totality of the required circumstances improbable in the highest degree ! It is " practically best " to adhere to free trade principles because no government can be found wise and good and strong enough to apply protec- tion with that perfect wisdom, goodness, and strength which alone can enable us to raise the price of silk and the profits of our own silkmakers, and at the same time to lower the profits of the foreign silkmaker, without causing loss to " the nation in the aggregate," whatever may be the extra burden on the consumer of silk. And, all the while, even the most perfect wisdom, goodness, and strength in protecting the silk trade would not preclude injury to other trades ! Solmmtur tabulae ! CHAPTEE XVII THE ARGUMENT FROM "DUMPING" Eecoiling from systematic protectionism, and from the theory of secret export of securities (in which, all the while, there may be some grain of truth, though Mr. Byng cannot draw the proper inference), tariflSsts fall back on the inviting general principle that Protection is required merely to save us from "dumping" — the selling of foreign goods in our markets nearly at or under cost price ^ by protected foreigners who (while ruining their own home customers by charging them too much) ruin our producers by charging our consumers too little. As it happens, Mr. Byng puts that thesis also ; and whereas he asserts a constant or normal practice among foreign producers of dumping goods below cost price in England, Mr. Chamberlain expressly declares that "'dumping' only takes place seriously when the country that has recourse to it is in a state of depression." ^ Then if foreign dumping be now constant or normal, as Mr. Byng alleges, the protected foreign industries {which, he says, alone dump) are in a constant or normal state of depression. Thus do protectionists corroborate each other — and themselves. Mr. Chamberlain says that the fact he states " is a curious thing which Mr. Asquith does not seem to appreciate— a curious thing to him, but not to us." It is to be feared that Mr. Chamberlain has ceased 1 There is, of course, no precise definition of ' ' dumping. " Some traders apply the term to every act of competition which lowers their profits. ^ Speeches, as cited, p. 126. 227 228 THE PROTECTIONIST CASE to " appreciate " either facts or fables ; for after upsetting Mr. Byng he reverts to Mr. Byng's theory. He has himself re- peatedly asserted that protectionist countries have " prospered enormously," and that their trade goes on expanding while ours is " stagnating." How, then, can they have been so habitually depressed that their dumping, as he alleges, is a serious injury to us 1 According to his own further exposition, the Germans have " seriously injured " the glass-bottle trade and the wire trade, and " aimihilated " the plate-glass trade,^ they doing all or nearly all the business. That is to say, in virtue of their own continual depression they are continually prosperous ! It seems unnecessary to demonstrate that the facts cannot be as Mr. Chamberlain states, and that a statesman who thus flatly contradicts himself on the most serious commercial issues is unqualified to frame a commercial policy. Having contra- dicted himself once, Mr. Chamberlain finds his sole solution in contradicting himself yet again. After having declared, as above, that "dumping only takes place seriously when the country that has recourse to it is in a state of depression," he . elaborates a fresh argument to the effect that protected coun- tries " can afford to dump because it does not cost them any- thing. . . . Dumping is not a loss to those foreign countries."^ Then they will practise it habitually and ad libitum. With this argument we shall deal later. Meantime we have to note how the protectionist case, as put by its leading champion, ' Speeches, as cited, pp. 157-8. The facts are that exports in plate glass had fallen from £190,000 in 1890 to £108,112 in 1902 ; and in flint glass from £261,000 to £248,000 ; while the export of glass bottles and common glass had risen from £433,000 {in 1894, £301,000) to £471,000 ; and that of "other sorts" from £180,000 to £270,000. Since 1902 the value of the total exports of glass (quantities being in proportion) has risen from £1,097,930 to £1,400,000 in 1907. Plate-glass exports have risen from £108,112 in 1902 to £252,574 in 1907 ; and other branches have similarly- prospered. To "save " such a trade we are invited to burden the population at large. Our total imports of glass wares of all kinds have actually fallen from £3,727,362 in 1903 to £3,048,791 in 1907 ; and in the first three months of 1908 they have fallen to £921,195, from £1,071,090 in 1906. In one branch of glass manufacture the imports have fallen from £578,000 in 1903 to £16,475 in 1907. '' Speech at Cardiif on November 21, 1903. Daili/ News report, November 23. THE ARGUMENT FEOM "DUMPING" 229 varied from day to day and from week to week. Converts to such pleading are certainly not procured by argument. Argument, no doubt, there is from other quarters. Pro- fessor Ashley deals at some length with the subject of dumping ; and as he is an economist, capable of conducting an argument, he is worth attending to on this as on other topics. But Professor Ashley, who admits freely that dump- ing is not an American but a British invention, wholly fails to show how Mr. Chamberlain's proposals can bring about what he wants. While bringing some very insufficient evidence to show that American steel and iron producers make it a habit to dump here in order to keep their works going with a large output,^ he also adduces evidence to show that those producers are able, or ere long will be, to undersell us in ordinary business. He cites^ from Mr. Guthrie, President of the American Steel Hoop Company, the avowals (1) that the American aim is to dump "not especially in Germany and England, but in their colonies," and (2) that the great advantage is the raw material. England's coal price is $4-50 and coke $5-50 ; our coal price is $1-50 at Pittsburg, our ore costs less, and transportation rates on the lakes are lower than anywhere else in the world. These figures, certainly, were far from accurate for the date at which they were given; but supposing them to be even approximately so, it is tolerably clear that our iron-producers would be at a disadvantage should the American home demand so far slacken as to let the American producers get far ahead of it. Talk of "dumping" is thus beside the question. Nothing short of an enormously high tariiF could avail against a combination of such natural advantage with a policy of under-selling ; and what is more, it would be visibly impossible for British producers to compete with the American oii ordinary lines in other markets, even those of 1 It is certain that most American talk of this kind is "bluff," such proclamations having of late years been speedily followed by a wholesale restriction of production. See The Iron Age, July 14, 1904. Of 359 furnaces, 171 were blown out. '^ Tariff Problem,, pp. 94-5. (The figures seem to be misprints.) 230 THE PEOTECTIONIST CASE our own colonies. A preference of 33 per cent in the latter would not avail. As against such competition, the Professor proposes to have the Government tax dumped imports at its discretion — that is, withhold cheap goods from twenty industries to help one The scheme is ill-considered at best ; but in the case put it is futile. To be effective for its purpose, the Chamberlain tariff would require to be protectionist pure and simple, not a mere check to dumping ; and it would wholly fail to promote exports. At the time at which the question was raised, Canada herself was paying bounties on exports of iron, which were largely dumped in Britain — a circumstance not noted by Mr. Ashley. He, however, fully admits that " if there are any Englishmen so foolish as to suppose that an arrangement can be made whereby all English manufacturers will be able to find a market in the colonies, the sooner they are disabused of that notion the better " ; ^ and while he holds out a significantly faint hope that the colonies may " consent to a certain slackening in their manufacturing development," ^ he does not suggest that they will slacken in developing their output of iron and steel. He even becomes so incoherent as to suggest that the colonies may hold their hand because the manufacturing countries, protectionist and free trading alike, " have not been so brilliantly successful in the social results of their policy as to encourage unlimited imita- tion " — this when Canada was actually outgoing all other countries in forcing her iron export by means of bounties. The entire argument has thus collapsed. Professor Ashley's argument was penned nearly five years ago. What has since happened in the way of American 1 P. 157. ^ This is all that is now left of the confident expectation which was at first expressed by Mr. Chamberlain (following Sir Vincent Caillard), and which he afterwards denied having ever held out. It will be found in the original reports of his Glasgow speech of October 6, 1903. His words were : " There are many things which yon [the colonies] do not now make. . . Leave them to us, as you have left them hitherto." This futile appeal was made after Mr. Chamberlain had derided Cobden as having predicted that the United States would "abandon their premature manufactures " if we adopted free trade — a thing Cobden never did. See Appendix. THE ARGUMENT FROM "DUMPING" 231 dumping to justify his forecasts? In the winter of 1907-8 we have seen the United States undergoing the most disastrous collapse of industry that even their population have witnessed within the past twenty years. Has their distressed iron industry relieved itself by dumping upon Britain? No such process having taken place, what is the value of the tariffist vaticinations on the subject ? Let us now come to the final issue. Either American iron-makers will in future dump system- atically all round or they will not. If they do not, the argument from dumping is irrelevant, and that part of the case for British Protection is gone. If they do, it is clear that they must undersell us in foreign markets ; and that to keep them out of ours we must impose tariffs which will immensely raise the cost of iron. This would infallibly burden our manufactures all round, and so, instead of help- ing our export trade, doubly restrict it. Thus, whatever happens, Protection cannot help us ; and Professor Ashley, while arguing that there are dangers ahead, makes no attempt to show that it can, save in putting that faint hypothesis of help from colonial markets. The sufficient answer on that head is that the colonies all round will certainly not agree either to pay double prices for their iron, or to restrict their own iron output, for such a trifle as a preference of 2s. per quarter on wheat ^ — a small boon to a single colonial industry. Professor Ashley's exposition has hardly the semblance of relevance to Mr. Chamberlain's policy. Should such competition arise as he fears, British in- dustry must simply undergo further adjustments, taking advantage, as in the past, of cheap imports to gain in other forms of production. And while Professor Ashley, here diverging widely from Mr. Balfour, asserts an increase of unskilled labour, he entirely omits to note that large con- tinuous imports of cheap iron would mean a transition from less skilled to more skilled labour if they were to be utilised at all. He too, in short, fails wholly to erect the argument from dumping into a tenable defence for Protection; and 1 Roughly about 7 or 8 per cent. 232 THE PEOTECTIONIST CASE while he escapes the utter self-contradiction of the platform protectionists, he has produced no coherent theory that can bear the test of practice. On further analysis, the protectionist case again breaks down. Though we hear much of foreign dumping upon Britain, we hear very little of the amount of British dumping upon the protected foreigner, or of protectionists dumping upon each other. Yet the process is as common in any of these directions as in the first. Protected Belgium, for instance, enormously increased her imports of wrought iron and steel in 1900 and 1901, the explanation being that they were dumped by German producers who in a time of depression sought to avert total financial collapse by producing largely and selling at cost prices.^ The Belgian trade was thus distressed at points, but instead of seeking to raise the tariff it dumped in turn. "The iron and steel industries suflfered, not only from local over-production, but from that in the neighbouring countries. A market, however, was found for a large quantity in the United States. The crisis was thus averted, and the end of the year saw a general improvement." ^ Thus Germanj"^ jumped the low tariff of Belgium, and Belgium in turn the high tariff of the United States ; whose producers, in turn, undertake when necessary to jump all European tariffs as easily as they invade " defenceless " Britain. Meanwhile, that long-suffering State is not passive. Long after the dumpers had built up high tariffs against her, she dumped upon them precisely as often as the exigencies of trade impelled her producers to that course. A few years ago they were dumping on Canada ; and a Canadian woollen manufacturer declared that "the outlook is gloomy. Canadian manufacturers are menaced by conditions " [i.e. those of " preference "] " that make it profitable for the British woollen manufacturers to dump their goods in Canada at prices which the home industry simply cannot meet. ' Cp. Prof. Smart, The Return to Protection, p. 165, and Dawson, Protection in Oermany, p. 175. ^ Consular Report, No. 3104, on Belgian Trade in 1902, cited by Prof. Smart. THE ARGUMENT FROM "DUMPING" 233 Canada is being used as a slaughter-market." ^ But Canada had her turn. "In 1901-2 Germany, Holland, and Belgium together landed 78,615 tons of pig-iron on our [i.e. Britain's] shores. The United States landed 45,973 tons. Canada, under a direct bounty, landed no less than 103,262 tons."^ Obviously, somebody must benefit by these purchases. In the case of pig-iron they simply mean cheap raw material for iron -working industries. Irritated home producers denounce the import as "unfair competition," though it is only an international instance of the common practice of home-traders in competition with each other. In the latter case, however much one side may be annoyed, it does not ask for protective legislation. It is only when "the foreigner " is the source of irritation that infirmity of temper and of understanding combined produce a cry for a tariff. Yet the politicians who trade upon these infirmities assure us (some of them) that they will " never tax raw material." In point of fact it is mainly raw material that is ever dumped upon us. If pig-iron be technically defined as manufactured goods and put under a tariff, the foreign producer could just as well proceed to send us iron ore, even as we send him coals. And when the ore happened to be sold rather cheap, the cry of unfair competition would be raised as of yore, and a tariff demanded as against the foreigner who was displacing British labour. It would be difficult to indicate a rawer material than hops ; yet in March 1 908 it was seriouslj'^, indeed solemnly, demanded in the British House of Commons that an " emergency " duty should be put upon some particular cargo of hops, fabulous in quantity, that had just been dumped, it was said (in the language of romance), " on the shores of the Thames " ; and in May a demonstration was engineered by tariff reformers in London for the purpose of repudiating what had been professedly one of the first principles of ' their movement. The tariffist view appears to be that every imported cargo of a raw material producible in Britain should be politically scrutinised with a view to an "emergency" tariff — that is, for the maintenance of prices. The party which 1 Cited by Smart, p. 168. ' Id. p. 169. 234 THE PROTECTIONIST CASE most indignantly denies " the right to labour '' has united in affirming the right to profit. All the while, the very argument based upon dumping includes an avowal which is the deadliest condemnation of Protection. The protected producer, we are told, is able to sell to us at a very low price because he makes such a high profit in his home market. Quite so. "The American extorts rack-prices from his fellow-countrymen, and so can afford to dump upon us. Let us then set up a tariff which shall enable our producers to extort rack-prices from us, whereupon they will be able to dump upon America or any- body else." Thus dumping is to be met by dumping, and each country will have the wholesome regimen of a concurrence of the highest and lowest prices ! — unless each in turn puts on an " emergency " tariff with prohibition clauses. Meanwhile, on the simple question of fact, we learn from the United States, on the very day of a carefully planned (and paid) " hoppers' " demonstration in London, that in the United States the hop industry is hopelessly depressed through over-production, and that a reduction of area, there as in England, is absolutely necessary to save it. Incidentally it is interesting to note that, according to British protectionists, the American hop industry is run on " coolie " and other imported and sweated labour. Such are the profits of Protection ! It might comfort the patriotic tariffist to reflect that, after all, it is probably easier for a free trade country to dump on a protectionist than vice versa. The argument has been put thus. A, a free trade country, sells certain goods at the price 10 Ox. B, a rival country, decides that its producers cannot afford to sell at that price, and puts on a tariff of 25 per cent. Then the price 125a; only fairly remunerates capital and labour in country B. But A need only sell to B at the price (say) of 97a! (losing 3 per cent) in order to get under the tariff, while the producer in B, to undersell the producer in A, must lower his prices from 125 to 97, losing 22 per cent. If he is not losing to that extent, he is swindling his country- men. Q.E.D. On yet another point, further, the terrified protectionist may find comfort if he will but think out his problem. He has THE AEGUMENT FEOM "DUMPING" 235 latterly been taught that large protected countries, in virtue of their size and their command of their own market, have an advantage against which it is hopeless to compete — that, namely, of "large-scale production." Let us take a protectionist's statements of the theorem : — "As a result of the great size and enormous resources of America, all her industries can be conducted on a gigantic scale. In modern mechanical industry this is a vital point, quantity or size being of the very essence of success." " Skill and size . . . are really complements of each other. The greatest skill and the largest size are combined to produce the highest efficiency and the utmost possible cheapness. The large scale, cheapness, and success go together in modern industry." ^ The logical conclusion of such reasoning appears to be, not merely that Protection is better than free trade, but that the largest protected country can always beat all the others, and that Protection could not save Great Britain, much less Belgium, from industrial ruin at the hands of larger nations. Scale of production being in proportion to population, the United States can produce more cheaply than Germany ; and Russia, when she will, more cheaply than either; in which case she will be able to dump them out of the ring. A little reflection will show, however, that the whole thesis is a hallucination. Unless each country is to amalgamate all its productive concerns of any one kind into one, scale of pro- duction cannot be in the ratio of population. In Germany there are over 1600 iron foundries. If, then, Sweden should reduce her iron foundries to three or four, she could set up iron production on a larger scale than that of any German foundry ! In point of fact, of course, this kind of thing is impossible everywhere, alike for geographical and for business reasons. Foundries and factories cannot be amalgamated irrespective of the conditions of convenient supply and economical manage- ment. The large country will have large numbers of produc- ing centres, and its concerns will vary endlessly in size. But experience has also abundantly shown that there is a certain ' Kirkup, Progress and the Fiscal Prohlem, pp. 49, 57. 236 THE PROTECTIONIST CASE variable limit, dependent on the personal factor, beyond which extension of size in industrial concerns means not increasing cheapness but increasing waste. The best organiser and supervisor can only up to a certain point overcome the obstacles of size and complexity ; and the large business at a certain point finds it advisable to practise fission. Thus, once more, the protectionist is the victim of his own nightmare. Even under Socialism each country will have more than one cotton factory. Meantime, he seeks to scare his countrymen with a picture of "capital leaving the country," based on the fact that a certain number of British houses have set up branch establish- ments in protected countries in order to get inside their tariffs. The Tariff Reform League publish ^ a list of fifteen British concerns which have set up factories in Germany, America, or Russia ; and they ask, " What do you think of a trade policy which compels our manufacturers to give employ- ment and wages to foreign workpeople which would otherwise go to British labour ? " Here there is a wilful suppression of the fact that a far greater influx of foreign capital into Britain has taken place precisely in order to gain the advantage of free trade conditions of production. Whoso will may read in a Cobden Club leaflet ^ a list of the " imported " businesses in question ; and the slightest inquiry will show that protectionist countries are in an increasing degree resorting to this policy of " planting out," not only in this country but in those of their protectionist rivals. Mr. S. N. D. North, Director of the American Census, thus describes the evolution in the United States : ^ — A constantly increasing number of our great manufacturing corporations are constructing vast plants abroad to supply their foreign customers, and, of course, they would not do this unless experience proved there was an advantage in it. I have before me a long list of these establishments. It indicates that more than 40,000,000 dollars of American money is now invested in ' Speakers' Handbook, 4th ed. p. 203. = Leaflet No. 179. " Annals of the American Academy of Political and Social Science, Jan. 1900. THE ARGUMENT FROM "DUMPING" 237 European plants devoted to the manufacture of various American specialties, including all descriptions of electric apparatus, sewing machines, belting radiators, shoe machinery, coal -conveying apparatus, steel chains, machine tools, hoisting machinery, boilers, pumps, blowing engines, mining machinery, printing machinery, elevators, match-making machinery, pneumatic tools, and photo- graphic apparatus. The Western Electric Company of Chicago, 111., is interested in extensive factories in London, Paris, Antwerp, and Berlin, not all of them carried under the name of that company, but all of them established and controlled by its capital. The General Electric Company has three or four such establishments, and has recently constructed a huge new factory in Rugby, England. The Westinghouse Company has just finished, at Trailord Park, in England, one of the largest electric factories in Europe, employing two or three thousand men, and it has other factories in Havre, France, and St. Petersburg, Russia. The Singer Sewing Machine Company has three large plants in Europe, under its direct control. The Chicago American Tool Company is building a plant at Fraserburgh, near Aberdeen. The Hoe printing-presses are made in London, as is also the American linotype machinery. The Draper Company has recently completed its new factory in Lancashire, to supply the greatest cotton manufacturing district in the world with American fast-running Northrup looms. This list might be extended indefinitely. As Mr. Russell Rea points out, "it is the very best firms who feel most strongly the attractive force of the free-trade country. It is the largest maker of electric machinery in the world which has come from America to establish itself at Rugby ; it is the largest maker of mining machinery in the world which has come from Chicago and San Francisco to start near London; it is the largest sewing-machine maker in the world who has established his immense works at Glasgow. " 1 But the matter does not end there. Protected Germany sends her factories into protected Austria and Russia. A recognised authority upon the iron industry. Dr. Eugen Moritz shows in his work, Eisenindustrie, ZolUariff, und Aussen- Insular Free Trade, 1908, p. 62. 238 THE PROTECTIONIST CASE ■.I, how, owing to the severe protective measures adopted by other countries in imitation of Germany, industry after industry has been compelled to establish branches abroad. He enumerates seven large iron works which have in this way established as many branches in foreign countries ; sixteen machine works which have established twenty-six branches ; seven electrical companies which have established twenty branches ; seven textile companies which have established ten branches ; nine chemical works which have established sixteen branches ; and six glass, cement, and other companies which have established nine branches. Tracing, in particular, the effect of foreign Protection upon one large German firm, which has for many years been engaged in the construction of iron and steel rails, he points out how it was compelled to build factories first in Austria-Hungary, and then in Russia, since German material could not be imported into those countries owing to the heavy duties. The result has been that this large firm has had to use a constantly decreasing amount of German material in the execution of its contracts abroad. Up to 1890 only from 5 to 10 per cent of the material it employed was purchased abroad. In 1898 the proportion had grown to 38 per cent, in 1899 to 45 per cent, in 1900 to 50 per cent, and in 1901 to nearly 60 per cent of the firm's entire sales. Protection has, therefore, had the effect of depriving German workpeople, and to a large extent German capital, from producing this material. Thus far more specialised capital flows from the protected countries to their rivals than has passed from Britain to any of them ; and none of them can singly show (apart from loans) such an influx as has taken place in the land of free trade. On the other hand, the " security '' argument, to have any validity, requires the assumption that in the protected country each protected industry will be combined in a trust, since in no other way can any one producer hope to exclude irksome competition at home. Protection thus stimulates trust -formation by taking for granted the impossibility of free competition ; and the " security " of the given producer is maintained by alternately bleeding the consumer and ruining, by underselling, the rival producer in his own country. Such a commercial paradise we in Britain are now invited to build up. CHAPTER XVIII THE ARGUMENT FROM UNEMPLOYMENT Our survey of actual experience in protectionist Britain and in the protectionist countries of to-day has shown clearly enough the falsity of the pretence that tariffs mean " work for all." So patently false is it, indeed, that the more intelligent tariffists repudiate it, both in Parliament and out- side. None the less, a tariffist journal in London daily flaunts the falsehood : " Tariff Reform means work for all." And since emigration is pointed to as a proof of industrial failure, it follows that a tariff is to find work not only for the present unemployed but for those who are now emigrating. On votes won by such means the bulk of the tariff party seem to rely. It may be well, then, to add to the historic inquiry an examination of the plea on its economic merits, though this means only exposing afresh the central protectionist fallacy in terms of this particular issue. The Free Trade principle is that freedom involves the maximum yield to labour, by reason of its economic direction on the most advantageous lines — most advantageous, that is, as to economy in production. It is arguable, of course, that it might be "advantageous" for a rich pastoral and agricultural country to bear special taxation in order to develop variety of handicraft among its population. The free trader's answer is that, given the premiss, by far the better course would be to pay directly for the encouragement of the crafts in question, seeing that protection by import duties invariably (1) , develops political corruption, and (2) keeps the protected I 239 240 THE PEOTECTIONIST CASE industries in a position of desperate dependence on the tariff, which almost no later exertion can shake off. But we are not here concerned with the problems of "new countries," since such no longer exist. We have to consider our own case. The question is, seeing that taxes on food or manufactured imports, or both, will tend to raise prices, how can the demand for labour thereby permanently increase 1 In the United States and in Germany there has gone on, under Protection, an exploitation of their large reserve of natural resources. Apart from coal, what resources have we to exploit to any such extent 1 The protectionist answer is that many articles now imported will under Protection be made at home, native labour being thus employed where formerly it was not. But the excluded articles must be either (a) goods now sent hither in payment of British services or as interest on British in- vestments, or (6) goods now paid for by exports. In the former case the services or loans in question must, in terms of the argument, go partly unpaid ; and the labour formerly em- ployed in distributing and in earning the imported articles now excluded will go unemployed. In the latter case the labour formerly employed in making the goods which used to be exported in payment for the imports will cease. The protectionist replies that it will make the same goods as before in order to pay for the goods now made at home in place of those excluded by import duties. But he here makes the plainly false assumption that the makers of the new goods for home consumption will demand the same goods as were formerly exported to pay for the goods then imported. Obvi- ously they will not. They will demand food and clothing ; and the labour thrown out of employment must take to producing these if it is to be employed at all. And how can it ? Finally, as the articles now to be made at home will in the terms of the case be dearer than formerly, the demand for them will tend to be less, and thus the whole volume of industry will shrink. How, then, can there be an increased employment for labour ? And what of the exporl of our goods, whether to other producing countries or to " neutral markets " t Forgetting his pretence that labour in protectionist countries THE ARGUMENT FKOM UNEMPLOYMENT 241 is well paid, Mr. Chamberlain tells us that we import sweated goods, with which our better-paid labour cannot compete. If, then, our wages and costs rise still further, how can we, save by an increase in efficiency relatively to foreign producers, compete as before in neutral markets 1 Now, increase in our exports has been all along insisted on by the tariffists as essential to a healthy condition of our trade. Mr. Chamberlain and Mr. Balfour, however, seem alike unable to make up their minds as to whether increase of exports is the supremely desirable thing, though both speak in that sense. Mr. Chamberlain condemns the buying of tram-rails from abroad, on the score that the making of them, even if more costly, would have employed British labour^ But British labour has actually been employed to make the goods which go to pay for the imported rails ; and those exported goods figure as exports ; whereas, had the rails been made at home, our exports would have been so much less ; and Mr. Chamberlain would have continued to argue that, the less our exports, the worse is our industrial condition. What would he finally have 1 This insoluble dilemma is the demonstration of the irrationality of the protectionist case. It is a perpetual oscillation between irreconcilable conceptions. The pro- tectionist argues with Mr. Chamberlain that as population increases we must increase our exports, which presumably means further increase of shipping. Then what imports are we to take in payment of the extra exports and the freights 1 "Eaw material," is the reply. But if the term "raw" is to be defined as strictly as possible, how, in the name of reason, can we hope to import mere raw material in payment for an ever-increasing export of manufactures when the manufactures are worth over twice the raw material, quantity for quantity ? If, after importing fifty-five millions' worth of raw cotton and consuming a large quantity we export a hundred millions' worth of finished cotton goods, are we thereafter t from France (1782-1792), 123-4 ; from colonies and abroad, 255-6 ; from Holland, 211 ; excess of, over ex- ports, 206-8, 212-13 ; for re- exportation, 208 ; in Austria - Hungary, 167 ; in Denmark, 169 ; in France, 164-5 ; in Italy, 166 ; in New South Wales, 159 ; in Russia, 167-8 ; in Sweden, 169 India, poverty of, 211 ; trade with, 255-7 Intercursus Magnus, 37, 39 Ireland, early trade relations with England, 53 sq. Iron, Protection of American trade, 59 ; reduction of German duty on, 103 ; British imports of, from Holland, 116 ; expansion of export trade in, 157 ; trade in Austria- Hungary, 166 ; trade in Prance, 164 ; trade in Norway, 170 ; and coal, cause of German and American industrial expansion, 172-3, 175 ; unemployment in American trade, 182 ; trade wages in German mines, 193 ; dumping of, in Britain, 230- 31, 233 Italy, trade laws of, in Middle Ages, 19 ; trade policy of, 111 ; shipping in, 142-4 ; condition of trade in 165-6 ; effects of Protection in, 165-6 ; increase of population in, 165 ; silk industry in, 166 ; emi- gration from, 174 sq. ; sugar manu- facture in, 274-5 James I, monopolies under, 40-42 Japan, shipping trade in, 143 Jenkins, Sir J., on tinplate trade, 270 Kirkup, T. , acceptance of Protection by, 13, 291, 292 ; on British ex- port of machinery, 131 ; on distress under Protection, 134 ; on " large scale production," 235 ; on " State systems," 292-3 Knighton, cited, 17, 23 Labour, comparative efficiency of British and foreign, 286 Lace, free trade in, 44 Law, Bonar, on free trade in ship- building, 12, 145 ; on Patents Act, 1907, 321-2 Lee, William, invention of stocking frame by, 42 ; resort of, to Prance, 42 n. ; prohibition of exiJOrt of his machines, 132 Lethbridge, Sir R., on effects of "Preference," 257 Lette, 102 Linen, development of manufacture of, in Ireland, 56-7 ; duties on, reduced, 128 ; trade in France, 129, 156 List, Friedrich, doctrine of Protection, 12, 13 ; promotes protectionist reaction in Germany, 100 ; on English industrial evolution, 49, 70 ; on the Eden Treaty, 124 Living, comparative costs of, in Britain, 139, 192, 194, 200; in France, 139, 203 ; in Germany, 139, 192 sq. ; in Italy, 139 ; in United States; 139, 200-204; in Russia, 139 328 TEADE AND TARIFFS London, staple at, 22 ; pauperism in, 184-5 Long, Walter, on unemployment, 2 Macaulay, Lord, on distress in England, 87 ; on corn laws, 308 M'Donnell, on corn laws, 96 Machinery, British export of, 187 ; British export prohibited, 132, 1 33 ; manufactured abroad, 133 ; Swiss export of, 168 Marks, Alfred, on smuggling, 63-4 Marvin, on American shipping, 152-3 Mercantilism, 41, 68 Michaelis, 102 Middleburg, staple at, 22 Mill, J. S., on Protection, 104 ; on corn laws, 119 ; on retaliation, 221-2 Mongredien, on corn laws, 317 Monopolies, early, 40 sq. ; in silk manufacture, 46 ; in Holland, 112 Moritz, Dr. E., on Protection in Germany, 237-8 Morley, on effects of corn laws, 315 Navigation laws, 23 sq. ; Smith (Adam) on, 27 ; effect of, on colonial trade, 58 ; effect of, on foreign trade, 28-9, 112-13 ; effect of, on Irish trade, 55 ; effect of, on shipbuilding, 29 ; modification of, in 1822, 1825, 79, 99, 126 New South Wales, exports and im- ports of, 159 sq. ; free trade in, 159 sq. ; population of, 159 ; revenue of, 159 ; gold output of, 160-61 Nicholson, Prof. J. S., on com laws, 75 n, ; on corn prices, 118-19 ; on ethics of corn laws, 303, 305 North, Christopher, on Anti-Corn- Law League, 307 North, Sir Dudley, on free trade, 66 North, S. N. D., on industrial evolu- tion in United States, 236-7 Norway, free trade in shipbuilding in, 145 ; condition of trade in, 169 ; emigration in, 174 sq. Owenite movement, 95 Palmerston, Lord, in favour of corn laws, 95 Paris, Peace of, effect on industry, 81 Parnell, Sir H., on Protection, 73 Patents Act, 1907, alleged protec- tionist effect of, 320 Peel, on state of trade, 90 ; reduction of tariffs by, 94-5, 136, 218, 304 ; establishment of free trade by, 218-19 ; on high wages, 306 Percentage fallacy, the, vi, 144 Petty, Sir W., on Protection, 66 Piokford, 102 Pitt, on free trade, 71 ; and Eden Treaty, 122, 124-5 ; tariff under, 126 TO. Porter, on prosperity under free trade, 121 Portugal, condition of trade in, 170 ; emigration from, 174 ; veto of corn imports in, 169 n. ' ' Poverty line " in England and America, 200 Production, increase of, in free trade countries, 138 ; on large scale, fallacy as to, 235 Prosperity, how affected by fiscal policy, 7, 121 Protection, alleged benefits of, 3-4, 9-10 ; Adam Smith's extreme case of, 11 ; fundamental fallacies of, 11, 12 ; in Austria-Hungary, 166- 7 ; in Denmark, 169 ; in England in Middle Ages, 14, 24-6, 29, 33, 34 sj.; alleged development of national power under, 41; in Prance, 164- 5; in Germany, 100, 189 sq., 237-8 ; in Greece, 165 ; in Ireland, 54 sq. ; in Italy, 165-6, 274-5 ; in Norway, 169 ; in Russia, 167-8 ; in Sweden, 163 ; in Spain and Portugal, 170-71 ; in Switzerland, 168; in United States, 100-101, 284; in Victoria, 160-61; in roads, 43 Protection, effect of, on corn-growing, 50-51 ; effect of, on cotton trade, 72, 181, 315 ; effect of, on food prices, 261 sq. ; effect of, on iron trade in America, 59 ; effect of, on linen trade, 129 ; effect of, on shipping, 30, 139 sq., 148, 281-2 ; INDEX 329 effect of, on silk trade, 43 sq. effect of, on woollen trade, 42 sq. George III and, 61 ; distress and unemployment under, 71-90, 106, 108, 119 m., 175, 179, 242, 277 agriculture under, 74, 78 ; agri culture under, in Canada, 274 agriculture under, in United States. 273-4 ; chUd labour under, 78, 201 ; wages under, 78-83, 188 influence on emigration, 106, 163, 180 ; cause of, in France, 104-5 cause of, in Germany, 105 - 6 cause of, in United States, 107 alleged British supremacy under, 130 sq. ; expansion of trade under, 138, 171 ; failure of, 163 sq., 276 sq. ; dumping under, 231 ; delusions of, 206 sq., 249 ; and revenue, 249 sq. ; parasitism of, 269 sq. ; "recip- rocal rascality " under, 269 ; ethics imder, 288 sq. ; and trade unionism, 310 sq. ; trusts fostered by, 183 Raw material, no definition of, 11 ; fall in prices of, 155 ; most fre- quently dumped, 233 ; possible import of, 241 ; various forms of, 243 Eea, Russell, on foreign concerns in England, 237 " Reciprocity," 9, 99 ; French treaty to establish, 122 Retaliation, 9 ; movement in Germany, 106 ; arguments for, 215 sq. ; iu- efficaoy of, 218-19 ; Mill on, 221-2 Revenue, effect of smuggling on, 64 n. ; Mr. Balfour on, 250-51 ; from cus- toms, 252 Ricardo, on wages and prices, 96 n. ; J. Chamberlain on, 279 Richard I, veto on corn exports by, 15 Richard II, veto on corn exports by, 15 ; shipping conditions under, 24 Richard III, wool trade under, 24 ; protective measures under, 32, 34, 37 Roads, protectionism in, 43, 302 Roman Empire, ruin of, 9 Russia, condition of trade in, 167 Salt, English duty on, in fifteenth century, 18 ; monopoly of, 40 ; high prices of in 'forties,' 120 Savings banks, deposits in, of various countries, 318-19 Sohulze-Delitzsch, 102 Seddon, on payment for imports, 206-7 Senior, Prof., misrepresented by Tariff Reform League, 224 Shipbuilding, free trade in, 12, 144 ; effect of navigation laws on, 29, 127 ; preference on Canadian tim- ber for, 141 ; British increase of, 143 ; of iron, 147 ; shrinkage of, in United States, 149 ; aided by dumping, 243 Shipping, condition of, in Middle Ages, 24-7 ; effect of Protection on, 30 ; increase of, from 1821- 1844, 127 ; proportion of sail to steam, 143-4 ; reduction of load- line limit in British, 289 ; in France, 142-3 ; in Holland, 116 ; in Japan, 142-3 ; in United States, 140-41, 281-2 Sidgwiok, Prof., on protective duties, 224-6 ; doctrine of, garbled by Tariff Reform League, 224-5 Silk, history of trade, 45 ; protection of trade, 45 ; reduction of duties in 1826, 127-8 ; manufacture of, in France, 165 ; manufacture of, in Italy, 165 ; manufacture of, in Switzerland, 168 ; trade in Spain, 170 " Sisyphist " theory, 42 Smith, Adam, on Protection, 10 sq. ; on navigation laws, 27 ; on free trade, 93 ; imperialism of, 291 ; on spirit of monopoly, 301-2 Smith, J. Prince, influence in Germany, 101-2 ; on retaliation, 218 Smuggling, Acts against, 36-7, 63 ; due to Protection, 60-61, 133 ; de- moralisation caused by, 62 sq. ; effect of, on agriculture, 62 ; effect of, on revenue, 64 Spain, decadence of, due to fiscal vice, 6 ; bullion laws in, 30 ; colonial trade with, 60 ; trade condition of, 170 ; emigration from, 174 330 TEADE AND TAEIFFS Spenoe, W., defence of com laws by, 301 Staple, movemeuts of, 17, 21-3, 32 Storey, S., on food prices under Pro- tection, 119-20 Subsidies, 32 Sugar Convention, 250, 275 Sweden, effects of Protection in, 163 ; condition of trade in, 167 - 8 ; emigration from, 174 sq. Switzerland, low tariffs in, 84 ; con- dition of trade in, 168 ; unemploy- ment in, 179 Sydenham, reduction of tariffs by, 94, 128 Tariffs, early, 34 sq. ; Dallas (U.S.), 101, 148 n. ; MoKinley (U.S.), 182, 246, 270-73, 282-3 ; Wilson (U.S.), 182 ; Dingley (U.S.), 272 ; South American, 111 ; Australian, 258 ; how usually instituted, 219 ; wars, 220-21, 277. See Duties and Pro- tection "Tariff Reform," 11, 302 ; and un- employment, 239 Tariff Reform League, misstatements by, 184, 221, 223-5, 236; pro- posals to tax food by, 267-8 Taylor, James, 96 Thompson, R. E., on American ship- ping, 205 Tinplate industry, injured by Pro- tection, 270-73 ; in Wales, 272 Tobacco, proposed reduction of duty on, 267 Tolls, effects of local, 7 ; in Florence, 20 Trade unionism and Protection, 310 sq. Trusts, fostered by Protection, 183 Turkey, fiscal vice in, 6 Unemployment, in Austria-Hungary, 174-6; in Britain, 174-8; in Denmark, 174 ; in Germany, 2, 106, 178 sq. ; in Holland, 174 in Italy, 174 ; in Lanarkshire, 80 in Norway, 174 ; in Portugal, 174 in Spain, 174 ; in Sweden, 174 ; in United States, 2, 180 sq. ; Protec- tion to cure, 1, 242, 288 ; in silk trade, 48 ; in cotton trade, 72 ; under corn laws, 72-3, 76-7 ; problem of, 174 sq. United States, alleged benefits of Protection in, 5 n. ; unemployment in, 2, 180 sq. ; British dumping in, 100 ; free trade movement in, 101, 219 ; Protection in, 104, 107, 211, 281-4 ; Civil War in, effect on trade and shipping, 137, 142, 146 ; shipbuilding and shipping in, 139 sq., 149-50, 283-4 ; causes of prosperity in, 171-2 ; internal free trade in, 172 ; Dallas Tariff in, 101, 148«..; McKinleyTariffin,182,246, 270-73, 282-3 ; Wilson Tariff in, 182 ; Dingley Tariff in, 272 ; com- mercial collapse in (1907-1908), 183, 231 ; paupers in, 184 ; poverty in, 184 ; child labour in, 201-2 ; homes of labour in, 201-2 ; wages in, 201-2 ; business establishments of, abroad, 236-7 ; coal of, 287 Utrecht, Treaty of, 46 Venice, wool trade with, 24 Victoria, effect of Protection in, 159 sq. ; exports and imports, 159 52. ; prosperity of, dne to gold- mining, 160 ; wages in, 161 Villiers, on distress in England under Protection, 84, 86 ; on food and expenditure, 121 Vince, C. A., misrepresentations by, 221-2, 318 ; on American export trade, 282-3 Wages, in England, 96, 188, 190 ; in Germany, 176, 190, 199, 200 ; in United States, 200, 201-3 ; in Victoria, 161 ; and high prices, 96, 306 ; and cost of living, 188 sq. ; under Protection, 78-83, 188, 251 Walker, Prof. C. S., on condition of American farmers, 284 Walker, R. J., on free trade in America, 101 War, effect of, on trade, 137 Ward, Sir W., on scarcity of meat in Germany, 197 Wars of the Roses, effect of, on corn INDEX 331 and wool production, 16 ; effect on trade, 34 Weaving, rise of, in England, 17 Welsford, on "free imports," 6 m.; on cause of French Revolution, 125 Wirth, 102 Wise, B. E., 296 Witt, De, advocacy of free trade policy by, 66 Wool, English export of, 14, 17, 55 ; English export prohibited by Henry III, 16 ; conditions of sale under Edward II, 21-2 ; staples, 22 ; early trade regulations, 36, 42-3 ; trade under Protection, 42 sq. ; trade with Venice, 24 ; trade in France, 165 ; trade in New South Wales and Victoria, 160 ; trade in Norway, 169 ; trade in Kussia, 167 ; trade in Spain and Portugal, 170 ; trade in Switzerland, 168 ; repres- sion of Irish trade in, 56 ; imports of, from Holland, 116 ; tariffs on, 126 m. ; reduction of duties on, in 1826, 128 ; distress among workers, 181 ; home consumption of, 247 Young, Arthur, on English wool trade under Protection, 45 ; on French trade, 125 THE END Printed by R. & K. Clark, Limited, Edinburgh. 1-' -^ Lf \ 3 tn.L:Ucu>vi^a/'^^'^' li '^ 7L V, •) i