lplil Cornell University Library HF 2045.B82 Fifty years of progress; and, The new f is 3 1924 013 680 925 ?IFTY YEARS OF PROGRESS; AND THE IxiW FISCAL POLICY. BY LORD BRASSEY, K.C.B., D.C.L. COMMANDEB OF THE LEGION OF HONOUR-; ADTHOR OF ' WORK AND WAGES ' ETC. ' Fifty years of ever-broadening Commerce ! Fifty years of ever-brightening Science ! Fifty years of ever- widening Empire ! ' LONGMANS, GREEN, AND CO. 39 PATERNOSTER ROW, LONDON, NEW YORK AND BOMBAY. Ip04. Price Two Shiltlags aet. HsiU Qfollcgc of Agcicultute At QIontEU IniuetBttg 3tlrara, ST. f. Htbratg FIFTY YEARS OF PROGRESS ; AND THE NEW FISCAL POLICY BY LORD BRASSEY, K.C.B., D.C.L. COMMANDER OF THE LEGION OF HONOUR ; AUTHOR OF ' WORK AND WAGES ' ETC. ' Fifty years of ever-broadening Commerce ! Fifty years of ever-brightening Science ! Fifty years of ever-widening Empire ! ' LONGMANS, GREEN, AND CO. 39 PATEBNOSTEB BOW, LONDON, NEW YOBK AND BOMBAY. 1904. All rights reserved The Jbllowing pages are a compUation Jrom Blue-booJcs, leaflets, and speeches — some delivered hy the present writer, the greater number, and, needless to say, the more valuable, by leading statesmen. — B. CONTENTS CHAPIBE TAGE I STATISTICS OF TRADE AND PROGRESS OF THE NATION . . 5 II STAPLE INDUSTRIES AND MISCELLANEOUS TRADES , . . 17 III THE NEW FISCAL POLICY : THE PROPOSALS AND THEIR FINANCIAL EFFECT ......... 26 IV DUTIES ON FOOD . . . 30 V FISCAL UNION OF THE EMPIRE . ... 35 VI RETALIATION . . . 48 VII FREE TRADE ......... 57 VIII SOCIAL AND ECONOMIC CONDITIONS AT HOME AND ABROAD : UNDER PROTECTION UNDER FREE TRADE . . . . 64 IX IMPERIJVL CO-OPERATION IN COLONIAL DEVELOPMENT . . 74 X NEGLECTED OPPORTUNITIES FOR TRADE : NEW EMPLOYMENTS FOR THE LEAST CAPABLE . . . . . . . 78 XI REDUCTION OF WAR EXPENDITURE . . . .84 XII TRADE WITH TROPICAL COUNTRIES . . . . . . 87 XIII CONCLUSIONS . . 93 XIV INQUIRY BY ROYAL COMMISSION . . ... 102 APPENDIX .......... 105 Cornell University Library The original of tiiis book 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/cu31924013680925 FIFTY TEAES OF PROGRESS; AND THE NEW FISCAL POLICY CHAPTER I STATISTICS OF TRADE AND PROGRESS OF THE NATION The progress of trade must be traced in statistics, statistical The following tables are compiled from official returns : I Exports of British and Irish Produce, excluding Ships tables. 1863-72 £189,130,000 1873-82 £220,065,000 1883-92 £234,116,000 1893-1902 £245,44,2,000 1903 £287,000,000 II Exports of Domestic Produce compared ive years' average : 1880-1884. 1896-1903 Million £ Million £ United Kingdom 234 249 France 138 150 Germany 156 192 United States 186 237 FIFTY YEARS OF PROGRESS; AND III Exports per Head of Population for the Quinquennial Periods beginning 1870-74 Exports. ■Unibed Kingdom France Germany ITuited States £ s. d. £ s. d. £ S. d. £ s. d. Average of period : 1870-74 . 7 7 3 3 15 2 16 7 2 9 11 1875-79 . 6 3 14 11 3 3 2 16 3 1880-84 . , 6 13 2 3 13 5 3 8 8 3 5 11 1885-89 . 6 3 8 3 9 3 3 5 6 2 11 10 1890-94 . 6 2 11 3 11 4 3 2 9 2 19 1895-99 . ■ . 5 19 5 3 14 8 3 7 2 2 18 4 IV Net Imports per Head of the Population for the Quinquennial Periods beginning 1870-74 Imports. United Kingdom France Germany United States £ s. d. £ S. d. £ s. d. £ s. d. Average of period : 1870-74 . 9 2 4 3 15 8 4 6 3 2 18 7 1875-79 . 9 10 4 4 6 7 4 6 1 2 2 5 1880-84 . 9 15 4 5 14 3 8 8 2 15 7 1885-89 . 8 14 2 4 6 10 3 9 5 2 8 11 1890-94 . 9 7 3 4 8 4 2 2 2 11 11 1895-99 . 9 17 2 4 4 9 4 6 10 1 19 11 United Kingdom — including value of Ships — 1900-3 Imports (net) ^11. 1*. 5d., Exports £6. 17s. Id. per head. Germany — 'Commerce Special' (including Improvement Trade) — 1900-2 Imports £4. 19*. 5d., Exports £4i. Is. Id. per head. THE NEW FISCAL POLICY 7 The population of the United Kingdom for this comparison is taken at average of 1900-3, whereas the population of Germany is taken as in 1900, thus exaggerating German trade per head. The fiscal controversy turns specially on exports of manufactures. Our relative progress for the last five years is as follows :— United Kingdom, 1897, £198,000,000 ; 1902, £227,600,000; Germany, 1896, £115,000,000; 1901, £144,600,000. In both countries the same in- crease — £29,600,000, but, as we have reason to believe, with a difference in the financial results. The trade of the United Kingdom was on a sound commercial basis. Germany — ahead perhaps in technical education, not our superior in the commercial faculty — has lately gone through a severe crisis, now, happily, passing away. With the aid of borrowed money, production had been unduly expanded. The home market had been glutted, and stocks had been dumped down in foreign markets. The heavy loss on sales abroad was in some degree covered by higher prices in the home market, under the protection of tariffs. Four times, at intervals of five years, the trade Board of position of the United Kingdom has been i-eviewed by reports. skilled and impartial observers at the Board of Trade. In his report, made in 1888, Sir Robert Giffen gave special attention to the relative progress of the United Kingdom and Germany. In Europe, Germany was running us hard in northern, France in southern countries ; yet, in general, the proportion was higher for Great Britain than for France or Germany. Out- side Europe the preponderance of the United Kingdom was beyond question, and in British possessions over- 8 FIFTY YEARS OF PROGRESS; AND whelming. A similar review of the position in 1894 and 1897 gave the same results. The report by the Board of Trade in 1902 is not less reassuring than those of former years. ' In spite of the strides made by Germany and the United States in recent years, we in the United Kingdom still pre- ponderate greatly as a country manufacturing for export. Measured per head of the population, we are far ahead of Germany or any of our competitors. The imports per head are more than double those of any other countries ; nearly five times the imports per head of the United States. And none of the countries named are gaining, Germany comes nearest to the United Kingdom. We are stiU far ahead both in the aggregate value of our trade and in the proportion of manufactured goods to our total exports.' Germany. The increasing pressure of German competition has been with many the cause of keener anxiety than the facts would seem to justify. Comparing 1880-84 with 1896-1900, our imports from Germany in- creased 4*8 per cent. ; our exports to Germany 30 per cent. Imports from Germany increased, though not considerably, in cotton, woollen, glass, and iron manufactures. In each of these articles our exports to aU countries were far in excess of our imports from Germany. In 1896-1900 our annual imports of cotton manufactures from Germany averaged £698,000; our total exports were over £58,000,000. Imports of woollens from Germany £1,048,000 ; exports to aU countries, £15,700,000. Imports of iron and steel manufactures from Germany, £890,000 ; exports to all countries, £49,000,000. As the result of a survey THE NEW FISCAL POLICY extending over the five years 1896-1900, the Board of Trade had found ' in our home markets no material displacement of our home manufactures by Germany.' With the United States we in the United Kingdom United "^ states. could not compete in magnitude of trade under any fiscal system. The progress of the United States is due to natural advantages which we do not possess, and to the demands of a home market such as the United Kingdom cannot offer. A free-trade America would be a formidable competitor in neutral markets. When we turn to the tables in the Blue-book, giving the distribution of our exports as between foreign coun- tries and British possessions, we find no appreciable change in a period of twenty years. VI Exports of British and Irish Produce Colonial and foreign trade. Foreign Countries British Possessions Amount Per cent. Amount Per cent. 1880-84 . 1895-99 . Million £ 153 157 65-5 66-0 Million £ 81 81 34'5 34-0 Our imports vastly exceed our exports. To quote Exeeaa of ■^ "^ -^ , -^ imports, from Mr. Chiozza-Money : ' We are enriched by our imports. Our exports impoverish us, unless in return we receive as good or better value in imports.' Adding to the value of our exports the returns from shipping (£90,000,000), from foreign investments (£52,500,000), and over £27,000,000 for private trade investments, the balance of trade has been fully maintained. 10 FIFTY YEARS OF PROGRESS; AND Total imports and experts. VII Value of the Total Imports and Exports of Merchandise from and TO Foreign Countries and British Possessions (including Pro- tectorates) respectively, exclusive of Foreign Merchandise transhipped under Bond at Ports in the United Kingdom, and of Bullion and Specie Imports and Exports (Total) 1898 1899 1900 1901 1902 Prom and to Foreign Countries . Prom and to British Possessions (in- cluding Protecto- rates) . 574,821,937 189,733,758 & 613,491,350 201,078,891 & 665,894,223 211,554,689 £ 651,162,396 218,692,070 £ 653,325,538 224,304,515 Total 764,558,690 814,570,241 877,448,917 869,854,466 877,630,053 Home trade. Home invest- ments. Internal trade is even more important than external. The wages of those employed in producing goods for our foreign customers do not exceed £130,000,000 ; the total wages bill of the United Kingdom has been computed at no less than from £700,000,000 to £750,000,000. The value of the goods produced for the home market is proportionate to the wages paid. The progress of our home trade is indicated roughly by the goods traffic on our railways. In 1890-94 308,000,000 tons of goods were carried on the rail- ways of the United Kingdom, or 8-08 tons per head of the population. In 1895-99, 371,000,000 tons were carried, or 9"37 tons per head. In 1902 the tons carried were no less than 437,000,000, or 10*43 tons per head. The internal trade and economic progress of the United Kingdom were discussed in The Statist in its issue of July 11. In the ten years 1881-90 we had lent to Colonies and to foreign countries a vast sum. THE NEW FISCAL POLICY 11 estimated at no less than £559,000,000. Crises and breakdowns of credit put a check on investments in foreign countries. The accumulation of capital con- tinued. It found investment at home. The tables pubhshed by the Commissioners of Inland Revenue show on how prodigious a scale : Gross Amount of Income brought under the Review of the Inland Revenue Department for the purposes op Income Tax from our Investments in Home Securities and Houses 1880-81 1890-91 1900-01 British. 1 £ £ £ Government securities 20,001,000 15,579,000 14,112,000 Railways .... 29,131,000 36,446,000 40,674,000 Mines and quarries , 7,592,000 9,741,000 13,693,000 Gasworks .... 4,505,000 5,120,000 6,362,000 Waterworks 2,653,000 3,568,000 4,676,000 Canals .... 3,196,000 3,490,000 3,426,000 Other public companies . 26,429,000 63,544,000 155,383,000 Municipal loans, &c. 4,992,000 7,167,000 9,240,000 Houses .... 117,466,000 140,584,000 178,963,000 215,965,000 285,238,000 426,529,000 All the indications point to an improving condition improved , . , condition oi the people. The population since 1872 has increased of the by 10,000,000 persons. This increase would have ^^°^^' been impossible unless our trade had improved. The gross annual value of the property and profits assessed to income tax is growing by strides rather than by steps. The amount for the five years 1890-94 averaged £703,000,000. In 1902 the amount had increased to no less than £902,000,000. For the masses of our population, no test of progress can be more con- clusive than the deposits in the Post-Office and trustee savings' banks. The average amount rose from 12 FIFTY YEARS OF PROGRESS; AND National income. £163,000,000 in 1895-99, and £187,000,000 in 1900, to £197,000,000 in 1902. The number of depositors increased from 8,787,000 in 1895-99 to 10,803,000 in 1902. The Board of Trade gives yet another statistic by which our financial progress may be measured. The registered companies carrying on business in the United Kingdom in AprU, 1892, numbered 16,173 ; total paid-up capital, £989,284,000. In 1902 the companies had increased to 33,629, and their capital to £1,805,141,000. The national income for the United Kingdom, France, and Germany was compared by Mr. Asquith in a recent speech. ' France has a national income of about £1,000,000,000 for a population of 38,000,000 ; Germany, with its huge population of 55,000,000, has a national income of £1,300,000,000 ; the United Kingdom has, for a population of only 41,500,000, against Germany's 55,000,000, a national income of no less than £1,650,000,000, against the £1,300,000,000 of Germany with its larger population.' VIII From Statistical Abstract for the United States, 1902 Prance Germany United Kingdom £ & £ Imports .... 168,650,880 258,050,820 508,041,060 Exports .... 154,899,400 210,937,000 272,545,778 Indebtedness 1,160,138,362 634,506,524 612,185,260 Population . 88,514,000 55,976,000 40,906,000 $ $ $ Per capita of imports . 28-63 24-14 62-10 Exports .... 20-88 19-89 33-31 Debt .... 150-61 56-85 74-83 Interest (rate per cent.) 6-28 2-23 2-76 THE NEW FISCAL POLICY 13 The opinion of the Commission on the Depression Commis- of Trade, as given in their final report, is as true to-day depression as in 1886. Having refen-ed to the statistics showing °^ ^^^ ^' that, exclusive of those engaged in agriculture, profits and the numbers assessed to income tax were increasing, they observe : ' There is distinct evidence that profits are becoming more widely distributed among the classes engaged in trade and industry. While the larger capitalists may be receiving a lower return than that to which they have been accustomed, the number of those who are making a profit, though possibly a small one, has largely increased. . . . ' There is no feature of the situation which we have been called upon to examine so satisfactory as the immense improvement which has taken place in the condition of the working classes during the last twenty years. The workman in this country is, when fuUy employed, in almost eveiy respect in a better position than his competitor in foreign countries, and we think that no diminution in our productive capacity has resulted from this improvement in his position.' An equally reassuring view was expressed by the Labour Labour Commission in their final report issued in 1894 : gion. ' The impression left by the evidence as a whole is that among the more settled and stable population of skilled workpeople there has during the last half-century been considerable and continuous progress in the general improvement of conditions of life, side by side with the establishment of strong trade custom adapted to the modern system and scale of industry. Experience may fairly be said to have shown that this part of the popu- lation possesses in a highly remarkable degree the power 14 FIFTY YEARS OF PROGRESS; AND of organisation, self-government, and self-help. Work- people of this class earn better wages, work fewer hours, have secured improved conditions of industrial and domestic life in other respects, and have furnished themselves through trade unions and friendly societies with means of providing against the various contin- gencies of sickness, accidents, and temporary want of employment. ' The classes who compose the lower grades of industry, regarded as a whole, have probably benefited no less than the skilled workers from the increased efficiency of production, from the advantages conferred by legislation, from the cheapening of food and clothing, and from the opening out of new fields for capital and labour. In theu' case also the improvement manifests itself in better pay and more favourable conditions of work ; but chiefly in this, that of the mass of wholly unskilled labour, part has been absorbed into higher grades, while the percentage of the total working popu- lation earning bare subsistence wages has been gi'eatly reduced. ' There is still a deplorably large residuum of the population, chiefly to be found in our large cities, who lead wretchedly poor Uves, and are seldom far removed from the level of starvation ; but it would seem that not only the relative, but perhaps even the actual numbers of this class are also diminishing.' By industry, by maritime enterprise, by our com- mand of supplies of iron and coal at a time when the mineral resources of other States were undeveloped, by an early advance in mechanical science, we have been enabled to maintain our crowded population of nearly THE NEW FISCAL POLICY 15 42,000,000 in conditions constantly improving for the greater number. Mr. Balfour, towards the conclusion Mr. of his pamphlet, gives his opinion in these words : p^mpMet. ' Judged by all available tests, 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 prosperous in appearance, but also, T believe, in reality. I can find no evidence that we are living on our capital.' May we not therefore concur with Lord Rosebery, Lord when he said : ' The burden of proof lies with those who °^^ ^'^' attack our fiscal system. Had free trade failed us in the fifty-seven years of experience we have had of it, had we found ourselves with a shrinking trade, a diminished revenue, a population on the verge of poverty, we should long ago have reversed the whole system of free trade and reconsidered it. But we find ourselves, so far as all statistics can give us a clue, at a pinnacle of wealth such as no nation of the size has ever reached in the history of the world.' At the Colonial Conference, on the occasion of the Mr.cham. Diamond Jubilee of her late lamented Majesty, Mr. ®'^*'° Chamberlain spoke as foUows : ' Sir Robert Giffen's conclusions were much more favourable to this country than the general impression which seemed to exist. His investigations showed that, in regard at aU events to the value of the trade, we were losing much less than was supposed, and what we lost in one direction was made up in another. To a certain extent that was confirmed by the general condition of things in this country. Take the present time : although there were always trades which were not doing well, there was no doubt that for the last few years the prosperity of this 16 FIFTY YEARS OF PROGRESS; AND country had been remarkable and almost universal, and yet it was the case that certain trades had left us altogether. In his opinion, that was largely because the manu- facturers engaged in them had found more profitable work to do ; it was partly because they had not taken the trouble which they ought to have taken, and they might have cause to regret this whenever trade was bad in this country again. The matter was one of very great interest ; but, having had considerable expe- rience, having been himself at the Board of Trade for five years, he had not much confidence in good resulting from inquiry.' With a population not comparable in numbers with the great nations of Continental Europe, confined within the narrow area of small islands, not surpassingly rich in natural resources, we have made our country in a large degree the workshop of the world, and its financial centre. Our success is due not only to the ability with which commerce and enterprise in all departments are conducted, but also to freedom from the restrictions of protective tariffs. THE NEW FISCAL POLICY 17 CHAPTER II STAPLE INDUSTRIES AND MISCELLANEOUS TRADES Having traced the general progress of trade, let us examine in detail the condition of those industries described by the advocates of a change in our fiscal poUcy as in a decaying condition. Iron Trade It has been alleged that ' the iron trade is going.' iron The statistics do not justify a desponding view. Exports of Iron and Steel and Manufactures thereof (Twelve Months) 1901 1902 1903 £ 25,008,757 £ 28,877,337 £ 80,453,190 Profits of the trade, returned for income tax, 1898- £2,556,392; 1902, £6,600,263. Persons employed- 1861, 129,507 ; 1891, 202,406 ; 1901, 216,022. Exports of Steam-engines and Machinery (Twelve Months) 1901 1902 1903 £ 17,812,344 £ 18,754,815 £ 20,065,916 B steam- engines 18 FIFTY YEARS OF PROGRESS; AND Average— 1878 - 1882, £9,186,627 ; 1898 - 1902, andma- £18,846,000. Pcrsons employed— 1881, 217,000 ; " "'^'^' 1891, 292,000 ; 1901, further increase not yet officially stated. Cutlery and hard ware. Exports of Cutlery, Hardware, Implements, and Instruments 1901 1902 1903 £ 4,175,441 £ 4,384,672 £ 4,634,606 Miscellaneous Trades Tin Plates Exports 1881-1890 1891-1900 65,869,180 cwts. 65,228,880 „ Tin plates. In 1902 the tin-plate industry had one of the best years since the McKinley tariff was adopted. In the three years 1900-2, the exports to the United States fell to an average of 66,300 tons, as compared with 318,000 tons in 1890. The loss was balanced by the increase of trade elsewhere from 103,600 tons in 1890 to an average of 219,000 tons in 1900-2. In 1902 our total exports, including those to the United States, were 311,869 tons — the largest since 1895. Our exports to other countries, excluding the United States, were 246,727 tons — the largest on record. The Labour Department reported 19,800 persons employed at 397 mills in 1902, compared with 16,960 persons at 319 mills in 1896. THE NEW FISCAL POLICY Galvanised Sheets. 19 Dumped raw materials have caused a large increase Gaivan- in the manufacture of galvanised sheets. Exports in sheets. 1900, 247,177 tons ; in 1903, 352,496 tons. Brass Exports— 1898, £471,234 ; 1903, £719,910. Wire Trade Exports— 1898, £772,604 ; 1903, £1,171,473. Watches 1901 1902 1903 No. of Watches Imported (Nine Months) . 2,481,329 . 2,103,115 . 1,620,609 Textiles Total Consumption of Raw Cotton in the United Kingdom Brass. Wire trade. Watches. Annual Average Million cwts. Lb. per head of population 1880-84 1890-94 1900 1901 1902 12-9 14-2 14-5 14-7 14-6 41-0 41-7 Cotton. The volume of our exports of textiles has been steadily maintained to every part of the world except to the United States. Total million yards exported — 1892, 4,873-1 ; 1902, 5,330-7. The increase in exports to India, Turkey, Egypt, China, and Java, has made good the loss in the trade with the United States. 20 FIFTY YEARS OF PROGRESS; AND Wool. Consumption of raw wool . 1890-94, 475,000,000 lb. .1898-1902, 525,600,000 „ ' Wool,' it is said, ' is threatened.' The McKinley tarifF dealt a heavy blow. The trade has been slowly recovering, even with the United States, and with other foreign countries steadily growing. Our woollen manufacturers find their chief market at home, their position in this regard differing essentially from that of manufacturers of cotton goods. Chemicals, Drugs, Dyes, and Colours Exports. Chemical trade. 1901 1902 1903 10,963,497 £ 11,539,057 £ 12,079,554 The chemical trade has been examined, with the knovv^ledge of an expert, by Mr. Haldane. ]3y the ammoniate-of-soda process the cost of making alkalis is reduced by 50 per cent. Manufacturers of chemicals by antiquated methods have been unable to compete. Our up-to-date manufacturers are prosperous. Hosiery. Hosiery - Exports Imports £ £ 1898 1,118,160 410,263 1899 1,231,789 371,428 1900 1,292,896 619,752 1901 1,313,317 707,673 1902 1,410,509 832,702 1908 1,421,453 783,268 THE NEW FISCAL POLICY 21 We have something to learn both in organisation and practical science from our German competitors. They are ahead in certain dyes. In no trade in this country has the condition of the worker been more improved. In the ' forties ' of the last century the average annual earnings of families were £45 10*. Earnings have been raised to 35*. a week by the use of machines, and by greater skill of hand. Linoleum - 1808 1900 1003 Linseed-oil exports . Cotton-seed oil Other seed oil £ 377,307 323,191 67,045 £ 588,866 428,404 98,014 e 655,082 660,695 114,116 768,143 1,115,284 1,429,893 Oil-cloth exports . Oil-cloth imports . 1,000,447 Not classified 1,312,893 119,661 1,465,849 70,946 Linoleum The German exports of linoleum are less than £50,000 annually. Profits : British Linoleum INIanu- facturing Company— 1901, £40,870; 1902, £37,000; 1903, £49,512. Greenwich Linoleum Company— 1901, £26,300 ; 1902, £30,200 ; 1903, £36,685. Glass and Earthenware Belgian glass-makers have a local advantage in the Glass and supply of a special glass-sand near at hand. In the ware.* quality of their productions British manufacturers are 22 FIFTY YEARS OF PROGRESS; AND nowhere surpassed. Less skilful as traders, they have permitted an undue depression of prices through excessive competition. There are no indications of declining trade in the Board of Trade returns. Exports. 1901 1902 1903 3,049,962 £ 2,997,529 £ 3,278,797 In 1851, 46,524 persons were employed in England and Wales. In 1901 the number rose to 92,556, a growth of 99 per cent. In the same interval the population grew from 17,900,000 to 32,600,000, or 82 per cent. Paper trade. Payer Foreign manufacturers of paper have an advantage over British makers in the supply of raw material from the forests of Germany, Scandinavia, and Austria. British exports are increasing. - 1901 1902 1903 Paper Stationery, other than paper . £ 1,668,577 1,227,019 £ 1,672,704 1,286,457 £ 1,797,861 1,415,303 Our mills pay dividends of from 5 to 12 per cent. In Germany and France the dividends average half the amount of those paid in this country. THE NEW FISCAL POLICY 23 Boots Exports (dozen pairs) — 1901, 672,543 ; 1903, Boots. 773,701. At no period were more boots and shoes made than at the present day. The introduction of machinery has for a time increased production beyond the demand. There must be ebb and flow in every trade. Our exports to the Colonies have been diminished by the Commonwealth tariff. Pearl Buttons The steam laundry has done more than tariffs to Pearl check the demand for these fragile articles. Superior qualities have taken their place. Cheap Jewellery Exports to Foreign Countries 1900 1901 1902 Increase Jewellery £50,545 £62,005 £62,382 £11,837 Exports to British Possessions 1900 1901 1902 Decrease £127,659 £123,026 £120,438 £7,221 There is no cause for despair as to the future. Quarterhj In discussing the fiscal controversy our trade position has on more than one occasion been examined by the Quarterly Reviewer. In a former number it was said, and said truly : ' The 70,000,000 of Americans and over 100,000,000 of Europeans — Germans, Frencli, Belgians, and Dutch — not only supplying then- own 24 FIFTY YEARS OF PROGRESS; AND wants over a large field of industry, which was formerly exclusively our own, but invading Colonial and other markets, and with foreigners becoming lenders to this country instead of borrowers, it is little wonder that the rate of progress in the exports of British manufactures to America and the Continental industrial nations should show a diminishing rate of progi-ess. The wonder is that it should show progress at all.' More recently — in October 1903 — the state and pro- gress of trade are once more passed under review by the same competent authority : ' Our review of the statis- tical position has shown that prices thu^ty years ago were just one-half higher, on the whole, than they are now ; and, if our present trade were measured by the values of thirty years ago, it would be seen that it had increased in volume by more than 50 per cent,, and is giving em- ployment to a correspondingly increased number of workpeople. Mr. Chamberlain says the sUk trade has gone ; but the average export of " broad stuffs " of silk or satin and silk and other materials for the last five years has been 9,500,000 yards against 7,500,000 ten years ago, 6,000,000 twenty years ago, and 4,000,000 thirty years ago. Instead of the silk trade having gone, it has more than doubled in thirty years. The wooUen and iron and steel trades, we are told, are threatened ; and cotton will go next. All trades are always being threatened ; but threatened men live long, and so do threatened trades. Our average consumption of wool during the last five years has been 526,000,000 lbs. against 344,000,000 lbs. twenty years ago, and 320,000,000 lbs. thirty years ago. Our average con- sumption of cotton for the last five years has been THE NEW FISCAL POLICY 25 15,000,000 lbs., against 11,800,000 lbs. twenty years ago, and 9,640,000 thirty years ago. Our output of pig- iron, too, and the consumption of pig-iron in the United Kingdom during the last five years, in spite of dumping from Germany and America, have been larger than in any similar period.' Whether under free trade or protection, industries must have grown in foreign countries. Great Britain could not have supplied the world's demand for manu- factures. If our competitors may sometimes show a larger increase, we, too, have been working at high pressure. Our mills have been on full time. Our makers of machinery have refused orders. If in any department we have lost gi-ound, it has been in the cheaper descriptions. In the finer qualities, in the production of which skilled labour commands the most liberal reward, we fully hold our own. 26 FIFTY YEARS OF PROGRESS; AND CHAPTER III THE NEW FISCAL POLICY : THE PROPOSALS AND THEIll FINANCIAL EFFECT Mr. In his address at Glasgow, on October 6, Mr. Chamber- ^, , , . , Iain's Chamberlain gave the outUnes of his plan, and his reasons for advocating changes which must materially affect our commerce. His proposals were : To impose — 2s. a quarter on foreign corn, except maize. A corresponding tax on flour such as ' to give a substantial preference to the miller.' 5 per cent, on foreign meat (except bacon) and dairy produce. To remit — f of the tea duty (i.e. 4^ — as 28,716 60.800 1860 66,090 6.895 61,986 16,083 62,915 124,900 1870 81.997 8,998 90,996 18,040 ■ §" ■ 91,405 182,400 1880 83.401 9,948 93,349 29.112 Ic^ 104,861 198,200 1890 88,931 12,766 101,696 60.808 32,089 34,217 127,104 228,800 1900 82,437 12,067 94,604 59,669 28,619 43,177 130,696 225,200 1902 73,763 13,309 87,062 67,906 30,873 52,436 140,638 227,600 III.— Percentage which Manufactured and partly Manufactured Articles form of Total Exports 1850 1860 1870 93 90 86 93 80 86 96 89 87 Cannot be stated 96 93 111 91 95 97 94 92 91 1880 86 84 86 96 {^S 92 89 1890 83 92 84 89 95 86 90 87 1900 72 91 74 81 85 86 85 80 1902 73 87 75 84 95 88 87 82 by a proportionate advance in prices, must damage our export trade. The home trade must also suffer. The higher the price of commodities, the fewer must be the articles which any given sum can buy. 30 FIFIY YEARS OF PROGRESS; AND CHAPTER IV DUTIES ON rOOD Duties on imports fall, as Lord Goschen has shown, on the consumer. Germany — duty on wheat 7*. 2(/., price 6*. lid. above London. France — duty 12*. 2d., price from 11*. 3^. to 13*. 7d. higher than in the United Kingdom. When the corn duties were repealed the effect was immediate. The average price of bread for the five years preceding 1849 was 55*. 5d., for the five svibsequent years 43*. 5d. Food taxes wiU fall heavily on all consumers, and most heavily on the poorest. Bread becomes the more essential in the ratio of the poverty of the consumer. Those on the verge of starvation can give up tea and sugar. They cannot give up bread. At a time when the necessity of promoting the physical vigour of the people is becoming more and more urgent, it is not statesmanship to check the consumption of wholesome food. In the words of Sir Robert Peel ; ' If there be, from any cause, a tendency to the consumption of articles of the first necessity much more rapid than the increase of population, the responsibility of undertaking to regulate the supply of food by legislative restraints, and the difiiculty of maintaining those restraints in the event of any sudden check to prosperity, or increased THE NEW FISCAL POLICY 31 price of subsistence, will be greatly augmented.' So, too, Sir John Gorst : ' A number of those who ai-e now above the poverty line would sink below it, and those already below it would sink yet lower. Free im- portation of food is vital to the physical and moral well-being of the nation, and is, therefore, at the root of true Imperialism. A great Imperial Power cannot be founded on a starved and degraded popu- lation.' To assume that wages must rise with a rise in prices is opposed to sound theory and to all experience. Never were the wages of our agricultural population so ipw as when duties were laid on corn, and bread was dear. It is sought to gain the support of the masses of the wages people, on whom the burden of duties on food will oHood!' chiefly rest, by the promise of more constant employ- ment through the expansion of trade. That promise was declared by Lord Goschen, speaking in the House of Lords, to be, in his judgment, unwarranted. ' Who will take the responsibility of saying, " Let us put a tax on food, and I will guarantee that your wages shall be raised " ? I say that is a tremendous responsibility, and one which I, for one, would be most reluctant to undertake.' Viewing our fiscal poUcy in relation to the cause Prosperity of Imperial unity, it is evident that the only duties °^°^''*^''- which would be elFective as against the foreigner would be those on imports of food or raw materials. Great Britain has to face competition abroad. At home we have our submerged tenth. Contrast their condition with the universal prosperity in Canada — a 32 FIFTY YEARS OF PROGRESS; AND young country on the crest of the wave, possessing boundless resources still undeveloped. Read the hand- bills of the Commissioner of Immigration : ' Plenty of room in Canada for the toilers ; ' ' Health and prosperity ; ' 'Free homes, and 160 acres of the best land in the world given free ; ' ' A greater available food-producing area than any other country ; ' ' Canada's trade and commerce increasing more rapidly than those of any other country ; ' ' Trade more than doubled in the past seven years ; ' ' Total imports and exports for 1895, ^224,000,000; total imports and exports for 1903, ;^467,000,000.' Exports ever increasing— of the farm, of the forest, of the mines — everything booming, as in no other country in the world to-day. It is not generous to the Mother-country to demand on behalf of this land of plenty that the food of our poorest should be taxed. impover- All the burdcns of the new policy would be borne by Mother- the people of the United Kingdom. The impoverish- ^°^'^ ""y- ment of the Mother-land would be fatal to the daughter- States. They would gain indeed by preferential duties on their agricultural produce. They would not gain as much as the Mother-country would lose. The position is fully recognised in Canada. At the Montreal banquet, in connection with the Congress of Chambers of Commerce, Mr. Fisher, Minister of Agriculture, spoke as follows : ' Let me say one more thing, and I say it to the guests from the Mother-land : the sum of agricultural success in Canada is the purchasing power of the masses in the Old Land. It is to you and to your people that we send our surplus. It is through the money received from them that we are prosperous beyond the aspiration THE NEW FISCAL POLICY 33 of our people a few years ago. Anything you do to interfere with the purchasing power of your people would be the deadliest blow at Canada that you could strike. No preference you could give us in your market for the agricultural produce of Canada could make up to us for the decrease in the purchasing power of your people.' If taxes on food were imposed, the ultimate benefit must accrue to the landlord. It is not thus that the agricultural interest should be promoted. Let us recall the warning words of Lord John Russell in his address to the electoi's of the City of London. ' I used,' he said, ' to be of opinion that corn was an exception to the general rules of political economy ; but observation and experience have convinced me that we ought to abstain from all interference with the supply of food. Neither a Government nor a Legislature can ever regulate the corn market with the beneficial effects which the entire freedom of sale and purchase is sure to produce. . . . The struggle to make bread scarce and dear, when it is clear that part at least of the additional price goes to increase rent, is a struggle deeply injurious to an aristocracy which (this quarrel once removed) is strong in property, strong in the construction of our Legislature, strong in opinion, strong in ancient associations, and in the memory of immortal services.' An impressive warning was once addressed by Mr. Mr.Cham- berlain Chamberlain to the House of Commons. On August 12, issi. 1881, he spoke as follows : ' Lastly, sir, is any one bold enough to propose that we should put a duty on food ? Well, sir, I can conceive it just possible, c 34 FIFTY YEARS OF PROGRESS; AND although it is very improbable, that under the sting of great suiFering, and deceived by misrepresentation, the working classes might be willing to try strange remedies; but one thing I am certain of — if this course is ever taken, it would be the signal for a state of things more disastrous than anything which has been since the repeal of the Corn Laws. A tax on food would mean a decUne in wages. It would mean more than this, for it would raise the price of every article produced in the United Kingdom, and it would indubitably bring about the loss of that gigantic export trade which the industry and energy of the country, working under conditions of absolute freedom, have been able to create.' Mr. Chamberlain is now the leader of a movement in support of the pohcy he once condemned with argu- ments of unanswerable force. We have examined the progress of trade in the light of the leading statistics. The increase in volume has been continuous. The pro- portion of our exports to foreign countries and to British possessions lias remained to a fraction the same. In comparison with foreign countries per head of our population we continue by a long way to lead. To go back from free trade to protection would be ' against all the signals.' THE NEW FISCAL POLICY 35 CHAPTER V FISCAL UNION OF THE EMPIRE It has been assumed in recent discussions that new fiscal advantages have been offered by the Colonies. No proposals have come, or are likely to come, through authorised channels. Fiscal policies must be deter- mined w^ith reference to the conditions with which Governments have to deal. I, Colonial Governments depend on revenue from Fiscal Customs. More than half the revenue of Canada is the -, . T p , , . Colonies. derived irom this source. II. It is the aim of every civihsed country to give variety of opportunity to every class and every aptitude. The Colonies are resolved to establish manufactures ; they judge it unwise to depend wholly on agriculture and mining. It would be in a special sense unwise on the part of Canada, where outdoor employment, except in lumbering, is suspended in winter. State aid is necessary everywhere for industries in the early stage. Bounties are less objectionable than tariffs. In Canada, under the liberal policy inaugurated in Canada. 1899, a preference of 33^ per cent, has been given to Great Britain. On manufactured articles, which alone we are able to supply, the reduced duties average 25 per cent. The raw materials, di'awn from the United States, c 2 36 FIFTY YEARS OF PROGRESS; AND are admitted into Canada free of duty. The result is as under : — Imports into Canada (Percentages) From From United Kingdom United States Before preference : Average of years 1893-7 32 49 After preference : 1898 25 59 1902 25 58 1903 26 61 Memo- 'pijg policy of the Canadian Government was randum *^ •' by Cana- explained in the memorandum submitted by the dele- oian dele- -^ "^ . . gates. gates to the Conference held last year. The necessities of the country require the admission free of duty of raw materials, machinery, and tools. These articles are supplied from the United States. The textile goods which Great Britain could supply are largely manu- factured in Canada. ' Canadian manufacturers natu- rally expect a share of the home markets, and, as their establishments develop, they correspondingly expect a larger share.' The delegates claimed that ' an advantage has been given to the British manufacturer. ... If he has not availed himself of it, the fault is not that of the Canadian Government or the Canadian fiscal policy.' Sir wil- Sir Wilfrid Laurier's speech at the Congress of the haarhr. Chambers of Commerce of the Empire, lately held at Montreal, is perhaps the most important expression of Colonial opinion, as yet delivered since the reversal of our fiscal policy has been under discussion. ' As far as Canada was concerned, they were intensely desirous of having a preferential market for food products in Great Britain ; but they did not want to force their views. . . . If further concessions were to be made by Great Britain THE NEW FISCAL POLICY 37 they must be mutually profitable.' No reductions of tariff were proposed by Sir Wilfrid Laurier. He said it would take him too far into politics. We have a recent declaration of the views of Canadian manufac- Canadian manufacturers. At a banquet given at turers. Toronto, on November 19, by the Canadian Manu- facturers' Association, Mr. Drummond, president of an organisation representing fifteen hundred manu- facturers, spoke as follows : ' We favour a policy of reciprocal trade with the Empu'e by means of pre- ference against foreign States. Canada must, however, necessarily provide under all conditions that the mini- mum tariff should afford fair protection to Canadian producers, so that the high standard of wages and living may be retained on a parity with the wages paid in the United States.' In Australia Mr. Deakin supports Mr. Chamberlain's Australia. proposals. He has made no sign in the direction of a reduction of duties on British goods, and he is favour- able to bounties for the encouragement of the home industries of Australia. While in Victoria I frequently discussed the question of tariffs with Sir George Turner, then Premier of the Colony, now Finance INIinister under the Commonwealth Government. As in Canada, so in AustraUa, preference seemed only possible by increasing the duties on foreign goods. Free admission even of British goods could not be conceded. In all the self-governing Colonies, industries imperfectly organised need protection. The recent elections to the Commomvealth Parliament give no indications of a change of pohcy. The Cape and Natal have recently agreed to a 25 per Cape and 38 FIFTY YEARS OF PROGRESS; AND cent, preference to British imports. They have no manufacturing industries. blrK^^'" Mr. Chamberlain has always protested against any protest, one-sided bargain. In November 1896 he said : 'This proposal [for Imperial reciprocity] is in effect that, while the Colonies should be left absolutely free to impose what protective duties they please, both on foreign imports and upon British commerce, they should be required to make a small discrimination in favour of British trade, in return for which we are to impose duties on food and raw material. There is not the slightest chance that in any reasonable time this country, or the Parliament of this country, would adopt so one- sided an agreement. The foreign trade of this country is so large, and the foreign trade of the Colonies is com- paratively so small, that a small preference would be but a slight benefit. I do not believe that the working classes of the country would consent to a revolutionary change for an infinitesimal gain.' At the Conference last year the second over which he had presided, Mr. Cham- berlain said : ' While I cannot but gratefully acknow- ledge the intention of this proposal, and its sentimental value as a proof of goodwill and affection, yet its sub- stantial results have been altogether disappointing. . , . So long as a preferential tariff, even a munificent pre- ference, is stiU sufficiently protective to exclude us from your market, it is no satisfaction that you have imposed even greater disability upon the goods from foreign markets.' Fiscal Sir Wilfrid Laurier has consistently asserted the ence^" right and the duty of the self-governing Colonies to maintain their fiscal independence. At a farewell THE NEW FISCAL POLICY 39 banquet in Liverpool at the close of the Colonial Conference of 1897, he appropriately quoted Rudyard Kipling : ' Daughter am I in my mother's house, but mistress in my own.' Those words, he said, expressed truly the Colonial sentiment. The Colonies have the pride of British connection and Imperial unity ; they have not less the pride of local autonomy and the pride of legislative independence. In his speech at Montreal, Sir Wilfrid Laurier was equally emphatic : ' If we are to obtain concessions from Great Britain by a surrender of our political rights, I would say, Go no further. Even for the maintenance of the British Empire, it would be a most evil thing if any of the Colonies were to consent to surrender any of their legislative independence.' AU British states- men are in agi-eement with the Canadian Premier. We could not ask for the surrender of an independence too long and too fully conceded to be now recalled. No self-governing Colony would consent to put fetters on the enterprise and industry of its people. In the words of Adam Smith, ' To prohibit a great people from making all that they can of every part of their own produce, or from employing their stock and industiy in the way that they judge most advantageous to themselves, is a manifest violation of the most sacred rights of mankind.' As Canada gains in population and wealth, changes Treaty- in the relations with the Mother-country are inevitable, power. Sir Wilfrid Laurier's speech at Liverpool may again be quoted : ' At the present time, so far as I know, in the Colony which I represent we are entirely satisfied with the relation that we have. We have our local auto- 40 FIFTY YEARS OF PROGRESS; AND nomy, and that is the first thing with us. We all feel, however, that the time may come, and that the time must come — there is no use in disguising it— when the existing relations, though they may be satisfactory at the present moment, will be inadequate for the future development of the Colony.' The Alaska Boundary award may lead to a demand for more independent treaty-making powers. We are ready to concede self-government in the widest sense. We could not undertake to enforce the observance of a treaty in the negotiation of which we had not been consulted. Possible To what extent is it possible that British exports to of British the Colonics should be increased under a preferential wWh the tariff ? Let us turn to the Blue-book. It contains the self- governing Colonies. following memorandum on Colonial trade : The year chosen for examination is 1900, the latest year for which full details for each Colony have been published by the Board of Trade. The general result of the analysis for all the self-governing Colonies is as follows : The value of the imports of merchandise from all sources into the self-governing Colonies in 1900 was 113 million pounds, of which 55 millions were imported from the United Kingdom, 47 millions from foreign countries, and 1 1 millions from other British possessions. Of the total imports from foreign countries, nearly two-thirds (29 millions) are accounted for by Canada, and nearly a quarter (11 J millions) by Australia, leaving about 6| millions for the Cape, Natal, and New Zealand. About 9f millions' worth of the imports from foreign countries are of a class not produced in the United Kingdom, and about 8 1 millions' worth consist of articles which, though produced in the United Kingdom, we cannot expect to export to the Colonies in com- petition with similar foreign and Colonial goods (e.g. wheat, meat, timber, butter, &c.). After deducting the above, there remain imports from foreign countries to the value of about 28 1 millions. Of this amount about THE NEW FISCAL POLICY 41 16 millions are accounted for by Canada, 8 millions by Australia, and 2 millions by the Cape. Adding 3| millions for foreign goods imported into the Colonies through the United Kingdom, we arrive at a final total of about 32 millions sterling for the goods imported into the Colonies, in the supply of which the United Kingdom might possibly take a larger part. The two tables below — both dealing with the year Board of Trade 1901 — have been issued by the Board of Trade. tables. I Imports of the Self-governing Colonies, 1901 Libernl estimtite Goods imported of goods imported Colouy Total imports Irom foreign from foreign coau tries coiiutries xrldch we might su2>ply £ £ £ Australia .... 41,502,000 12,436,000 9,000,000 New Zealand . 11,363,000 2,018,000 1,500,000 Natal .... 9,550,000 1,554,000 750,000 Cape of Good Hope . 21,416,000 4,867,000 2,000,000 Canada .... 38,414,000 28,821,000 10,000,000 Newfoundland . 1,513,000 473,000 200,000 123,754,000 49,669,000 23,450,000 II Imports of Food , Raw Materials, and Manufactures Food and driuk Raw materials Manufactured articles Totals India .... Australasia South Africa . Canada .' . . . Newfoundland Priueipal Crown Colonies £ 3,270.000 2,628,000 2,535,000 7,263,000 268,000 6,614,000 £ 1,310,000 968,000 627,000 7,503,000 20,000 4,677,000 £ 9,851,000 10,858,000 2,859,000 14,065,000 185,000 4,242,000 £ 14,431,000 14.454,000 5,921,000 28,821,000 473,000 15,533,000 22,568,000 15,005,000 42,060,000 79,633,000 42 FIFTY YEARS OF PROGRESS; AND In Canada the United States has the advantage. In all other Colonies the Mother-country has the lion's share. Holding, as we do, so commanding a position in the Colonial markets, it is evidently impossible by any changes of tarifF largely to increase our exports of manufactured articles ; and the interests of the Mother- land and the self-governing Colonies in matters of trade are necessarily conflicting. Lord The difficulties of fiscal union with the Colonies were on tariffs, plainly stated by Lord SaUsbury in reply to a deputa- tion from the United Empire Trade League. ' If,' he said, ' you give preferential treatment to your Colonies, it must be that you tax the similar goods from the rest of the world, and that the Colonies are to command a better price for their goods than they would obtain under unrestricted competition. A better price for the vendor means a more disagreeable price for the con- sumer, and we have to receive proof that the people of this country are in favour of a poUcy of preferential taxes on wheat, on corn, and on wood.' A bargain, on mutually satisfactory conditions, is impossible between a country seeking to increase her exports of manufac- tures and a country chiefly concerned to protect her industries. Nor is it possible to set up an imperial customs union on terms which would be just and equal to aU. India, Australasia, South Africa, Canada, and the United Kingdom differ essentially in climate, in soU, in products, in population. The difficulties experienced by the Australian Commonwealth in framing a common protective tariff" for the six States should be a warning against any attempt for the Empire. THE NEW FISCAL POLICY 43 A common tariff for the British Empire is, as we have said, impossible. That truth was recognised long ago by Turgot, a statesman of far-seeing wisdom — wiser than the age in which he lived : ' Je crois fermement que toutes les mdtropoles seront forcdes d'abandonner tout empu-e sur leurs colonies, de leur laisser une enti^re liberty de commerce avec toutes les nations, de se contenter de partager avec les autres cette liberty, et de conserver avec leurs colonies les liens de I'amitie et de la fraternite. Si c'est un mal, je crois qu'il n'existe aucun moyen de I'empecher ; que le seul parti a prendre sera de se soumettre k la ndcessitd absolue et de sen consoler.' The Colonies cannot complain that their present Advan- position is disadvantageous. To all her Colonies Great enfoyedby Britain is, beyond comparison, their best customer. In ° °"'^^' 1902 we took £107,000,000 of imports from British possessions, and the amount imported annually is ever increasing. Of Canada's total exports of her produce Great Britain purchases 55-7 per cent., the United States 34 per cent., Germany only 7 per cent., and other countries 9 6 per cent. The exports to the Mother-country provide the means of paying for the excess of imports in the trade with the United States. The self-governing Colonies put high duties on imports from the Mother- country. We admit their exports duty free. The Colonies have one-fifth of the commerce of the Empu-e, one-fourth of the population, and much more than one-half of the revenues of the Mother-country. We spend between £60,000,000 and £70,000,000 annually on Imperial defence. To naval expenditure 44 FIFTY YEARS OF PROGRESS; AND we receive no contribution from Canada — a small sum only fi'om the other Colonies in comparison with the total amount. The military expenditure of the Colonies is not one-tenth of that incurred by Great Britain. IfP^^, Let us not insist further on preferential tariffs. Ooscnen. _ ^ In his speech in the House of Lords in June last, it was finely said by Lord Goschen : ' Is it fair to put the mandate before the people — No preference ; no empire ? I think that would be unjust to the people of this country and to the people of the Colonies. . . . Surely it is not to depend simply upon a commercial bargain with the Colonies. Without commercial bargains the Colonies have lavished their blood in South Africa, and we have lavished our milhons in the protection of the Empire, asking but little in return. Under these circumstances I am not to be told that if we cannot accept this plan we are to accept the fate of a dying Empire. The resources of statesmanship are not, I hope, exhausted.' Sir George When all that is possible has been done to advance material mterests m a time oi national stress and strain they are as nothing beside the racial sympathies. In the words of Sir George Bowen, a former Governor of Victoria : ' The people of the Mother-land and the self- governing Colonies are one great homogeneous people, one in blood, in language, religion, and laws — dispersed, indeed, over a boundless space, and yet held together by strong moral ties.' In the present age, with the increased and increasing facilities of communication, even poUtical unions may exist on a vaster scale than were possible in former days. Diamond There was no fear of separation during my residence THE NEW FISCAL POLICY 45 of five years — five happy years — in Australia. No- where could we look for more loyal demonstrations than were made on the occasion of the Diamond Jubilee of her late Majesty. The Irishmen were con- spicuous with their green scarves in every procession. I was serving in Australia when the first contingents were despatched to South Africa. I was an eye-witness of those moving scenes. There was the same disinterested patriotism, the same loyalty to the old flag, in free- trade Sydney as in protectionist Victoria. These senti- ments did not spring from tariffs. When the reverses came in South Africa, and the Empire needed help from all her sons, with one heart and one voice they responded to the call. They were moved by no sordid considerations — Amor patrice ratione valentior. The people had carried into their new homes beneath the Southern Cross an undying love for the old home. They were inspired by the same feelings which, in an early age of the world, were kindled in the Greek Colonies by the sacred fire, brought from the parent State and kept for ever burning. The benefits of their British citizenship to distant Colonial ^ _ Confer- Colonies were acknowledged in fitting terms in an enoe,i887. address presented to the late Queen by the delegates to the first Colonial Conference in 1887 : ' Your Majesty's reign has, under Divine Providence, endured for half a century ; and, amidst revolutions and changes of d5ntiasty and of systems of government in other countries, the principles of the laws of your pre- decessors for a thousand years still offer your subjects that safety and prosperity, and the Empu'e that stability, which claim the admiration of the Avorld.' 46 FIFTY YEARS OF PROGRESS; AND The delegates concluded their address with the prayer that the Queen's throne might remain established in the land injustice and righteousness for generations to come. Our lamented and venerated Queen has been called to her rest, and her son now reigns in her stead. The King is rendering signal services to the Empire, and chiefly in the cause of peace abroad and loyal content- ment at home. His recent visits to Portugal, Italy, and to the French Republic have had a magical effect. No Minister could have accomplished what the King has done. He could not have spoken as the King speaks — in the undivided name of aU his people. Nor should the auspicious journey of the Prince and Princess of Wales be forgotten in this connection. It will long hve in the memory of our feUow-subjects beyond the seas. Melbourne The bonds which unite us do not depend on personal *^^*'*" associations. A leading journal — the Melbourne Argus- has described in glowing language Australian senti- ment : ' The words and deeds of the young Australians who have grown up out of sight and touch of the Mother-country behe the notion that disruption has any place in their thoughts. Never a breath of trouble stu-s in the old land but the pulses of Australians beat faster and the resolute pride of race mounts higher. Talk of contemplated severance can only be treated as idle vapoirring.' Ottawa Four out of fivc of the people of Canada are ence*"^ nativc-bom. We have the testimony of my valued friend Dr. Parkin that the fact has not weakened in the slightest degree the closeness of sympathy with Great Britain and the Empire. At the opening of the Ottawa Conference, Canadian THE NEW FISCAL POLICY 47 sentiment was eloquently expressed by the Premier, Sir John Thompson, a statesman whose loss was deeply felt in Canada and in England. ' On this happy occasion,' he said, ' these delegates assemble after long years of self-government in their several countries — years of greater progress and development than the colonies of any empire have yet seen in the past. We have met not to consider the prospect of separation from the Mother-country, but to plight our faith anew to each other as brethren, and to plight anew with the Mother-land that faith which has never yet been broken and tarnished.' Britain's myriad voices call. Sons, be welded, each and all, Into one Imperial whole. One life, one flag, one fleet, one throne, Britons, hold your own. The bonds of race are not restricted by the boundaries Beiations of States. All English-speaking men should be a band united of brothers. The co-operation of the two great com- munities of English-speaking men would bring together not merely the people of these small islands and of our Colonial fellow-subjects. It would bring together the two great branches of the English-speaking race. The attainment of such an ideal must be the work of time. It should never be absent from the minds of British statesmen. 48 FIFTY YEARS OF PROGRESS; AND CHAPTER VI RETALIATION Sir Retaliation is a policy of the last resort, to which Grey. recourse should be had only under conditions such as were recently laid down by Sir Edward Grey: 'He could imagine a case in which some foreign country might mete out to us treatment that was so obviously hostile and unfair that it would be impossible for us to sit still under it ; but before he resorted to retaliation he would ask to have five things proved to him clearly. The first was that there was such a case of hostile treat- ment on the part of a foreign country ; the second was that all the resources of ordinary diplomatic negotiation had been exhausted ; the third, that com- mercial reprisals would not hurt us more than they would hurt the other country ; the fourth, that they were likely to be effective ; and the fifth, that there was no other or better way of bringing pressure to bear to obtain our ends.' As Mr. Arthur ElUot, not the least able of the Ministers who have lately resigned, has shown, we are free to consider every case on its merits. Mr. The policy of the British Government was explained Balfour. ^^ j^j. Balfour at Sheffield. It is no new pohcy. If a country does us grievous injustice we are bound to consider our own interests. Free trade is not altruistic. THE NEW FISCAL POLICY 49 It is enlightened self-interest. Mr. Balfour was careful to explain that retaliation must be applied with discre- tion. We must do no injury to ourselves. We may recall a passage from Adam Smith : ' There may be Adam ^ ° , , • , Smith on good policy in retaliations when there is a probability retaiia- that they will secure a repeal of duties. To judge whether such an effect is likely to be produced belongs to that insidious and crafty animal, the statesman or politician. When there is no probability of securing a repeal of duties, it seems a bad method of compensating some classes to do injury ourselves to other classes.' In a former speech at Sheffield, in November 1896, Mr. Bai- Mr. Balfour met the demands of the fair traders with a lucid explanation of the course of trade. *A great foreign export trade carries with it as a mathe- matical consequence a corresponding import trade. If it be desired that the export trade should be a great trade, there must be an import trade to pay for it. We must be paid in goods — we can be paid in nothing else ; and we must not only be paid in goods for what we export, but we must be paid in goods for the interest on the capital which we have invested abroad. It would be unreasonable to be alarmed at the growth of manufactures by foreign countries. That growth is inevitable. Like it or disUke it, let us not gi-umble at what is reaUy the result of inevitable laws.' The new fiscal poHcy has been commended to the Protection working man, even by officials in positions of responsi- raise bility, on the assumption that the less we import from ^^*°*^' the foreigner the more constant must employment be at home, and the higher the rates of wages. The answers to such fallacies should be made plain to every D 50 FIFIY YEARS OF PROGRESS; AND elector. Trade is exchange. We do not pay in silver and gold. We pay in goods and services. International trade is on the basis of exchange of commodities. The movements are obscured to the ordinary observer in the vast volume and extent of the transactions. Retaliation cuts both ways. No other country compares with the United Kingdom as an exporter of manufactured goods. No other country is equally concerned in keeping the door open. Bussia. A flying survey of our trade will show that, under present conditions, England must be loser in a war of tariffs. We should begin with the countries which levy the heaviest duties. In Russia the duties on imports of British goods are no less than 131 per cent. Here, if anjrwhere, retahation is justified by the treatment we receive. Would it help us ? Let us compare the imports of manufactures on both sides for the year 1902. Our imports from Russia were valued at £26,000,000, consisting, according to a classification by Mr. Sydney Buxton, of the following items : Foodstuffs £13,500,000 Raw materials 10,000,000 ManufacUires (chiefly paper) . . . 290,000 Semi-manufactures ..... 110,000 All other articles 1,770,000 £25,670,000 Our exports of manufactures to Russia in 1902 were £6,209,000. Our imports of the same class were £400,000. In a war of tariffs we should be more vulnerable than Russia. United Turn to the United States. Duties of no less than 73 per cent, are levied on some British goods. Our THE NEW FISCAL POLICY 51 imports in 1902 were £127,000,000 — a vast excess over exports. Was the trade unprofitable ? Would retalia- tion help us ? Of manufactures we imported to the value of £9,300,000, of semi-manufactures — chiefly leather — £3,900,000. Even the machinery we im- port — to a hmited extent — from America is an aid to British labour. It makes it more efficient. The great bulk of our imports consisted of food and raw material. We could not exist without these cheap and abundant supphes. And how is the balance of trade adjusted ? Not in gold and silver. In the four years 1899-1902 we imported of the precious metals from the United States to the aggregate value of over £46,000,000. We sent to the United States the insignificant sum of £125,000. The excess of our imports was represented by payments for freights to British shipowners, by dividends on investments, by importations of tropical products supplied by British merchants. British exports of manufactures to the United States are increasing : 1901, £15,275,000 ; 1902, £19,468,000. Exports of manufactures from the United Kingdom to the United States being largely in excess of imports, is it policy to enter upon a tariff war ? In America the opinion gi-ows that the McKinley tariff is too protec- tionist. It has favoured over-capitalised trusts and combines. Individuals have amassed portentous wealth. Trades, highly protected, have enjoyed an excessive but ephemeral prosperity. The consumer has been heavily burdened. If wages are high, the cost of living is excessive. It would be wise to take no action on our part which might check the movement in favour of more freedom for trade. In a war of tai'iffs we should b2 62 FIFTY YEARS OF PROGRESS; AND be the greater sufferers. In the vast trade with the United States every transaction is for our advantage. We shall injure ourselves if we throw impediments in the way. France. Let US turn to our nearest neighbour. In France, the duties levied on British imports are 30 per cent. Our dh-ect imports much exceed our exports. How is the balance adjusted ? Our most important import from France is silk ; value in 1902, £9,560,000. Our exports of silks to France are about £400,000. The course of trade is less disadvantageous to England than at first sight appears. We export manufactures to India, China, and tropical countries. We take in exchange jute, raw sUk, indigo, coffee, rice — in short, all that varied tropical produce, the consumption of which, in France as in all highly civilised countries, is ever in- creasing, the demand being largely met by consignments through British merchants. Our trade with France is an exchange of manufactures for manufactures by a triangular route. The exclusion of French silks would diminish the quantity of English goods now sent, directly or indirectly, to France. We pay for all that we take from the foreign producer in something to which we can apply our capital and labour to more advantage. It may be said, ' The money now spent on imported silks would be spent on something else, on which English labour and capital would be employed.' Yes, but less profitably employed. The French beat us as manufacturers of silk. We do better in other lines. We might not have consented to aU the conditions of the treaty negotiated by JMr. Cobden if we had fore- THE NEW FISCAL POLICY 53 seen that there would be no reciprocity. To recall what has been done is more difficult. Retaliation and exclusion are not a new policy with foreign nations. In the same decade of the last centuiy in which Sir Robert Peel was engaged in inaugurating the free-trade system under which our country has so greatly prospered, my father was constructing the first lines of railway made in France — those connecting Paris with Rouen, Havre, and Dieppe. So prohibitory were the French tariffs that the duty on rails imported from England exceeded the first cost. There were no mechanical works in France capable of turning out a locomotive engine ; yet the import duties were so high that it was necessary to create a new establishment at Sotteville, near Rouen, where all locomotives and rolhng- stock for the railways were made by English and Scotch mechanics, some 600 of whom were employed. As formerly in France the pioneers of railways set up industrial establishments — to avoid the payment of oppressive duties of Customs — so now in Russia factories are estabhshed with British capital to escape duties on cotton goods on a prohibitory scale. Let us examine the probable effects of retaliation Germany. on our trade with Germany. Twenty-five per cent, duties are levied on British manufactures. If the scale is lower than in the case of Russia, the United States, and France, Germany stands less in need of protection. As the largest manufacturer of the cheap goods in demand in the Colonies and the neutral markets of the tropics, and as the chief exporter of manufactured and half-manufactured articles into our home markets, Germany is everywhere our most serious competitor. 64 FIFTY YEARS OF PROGRESS; AND Great and Greater Britain are, however, the best customers for German goods. We have therefore in hand at all times the power to bring pressure to bear. The Colonial Premiers who took part in the Con- ference of last year knew well that they had in their hands ' a revolver ' quite as formidable as that with which the United Kingdom is armed. The report of the proceedings gives their views as follows : ' In con- nection with the discussion of preferential trade^ the Conference considered the point raised by the Common- wealth Government as to the possibility of the Colonies losing " most favoured nation " treatment in foreign countries in the event of their giving a tariff preference to British goods. As, however, the exports from the Colonies to foreign countries are almost exclusively articles of food or raw materials for various industries, the possibility of discrimination against them in foreign markets was not regarded as serious ; and as the ex- ports from foreign countries to the Colonies are mainly manufactured articles, it was recognised that, if such discrimination did take place, the Colonies had an effec- tive remedy in their own hands.' By hostile tariffs we may exclude German goods. Our part in the supply of the home demand in Ger- many can never be large. It is vital to the people to manufacture for themselves. The increase in the urban population — depending entirely upon industrial occu- pations — is more rapid than with us. Germany has not yet found an outlet for her products, such as we have in the neutral markets of India, the tropics, and the Colonies. It is agreed that the raw materials of our industries THE NEW FISCAL POLICY 55 must be admitted free. The steel billets supplied at a price below cost, and of which it was estimated that we might take not less than one million tons in 1903, are the raw material for metal wares, tools, and machinery. As Lord George Hamilton has shown, the tendency grows to import into this country manufactures in the less advanced stage, and to work them up into articles in the production of which more highly skilled and better paid labour is employed. This is not a trade that we should desire to check. Putting out goods abroad at prices below those charged at home is unpopular among the working classes. In Germany it has produced strong comments in the Diet, and is now the subject of parliamentary inquiry. In the United States a similar inquiry has been held. It was shown that foreign customers were supphed with American goods at prices 20 per cent, lower than in the home market. Such a state of things cannot long be suffered to continue. Consumers will resent the selfishness of protected interests. Let us leave these influences to their natural course. It will help us more than a poUcy of retaliation. Dumped goods are objectionable, because a trade which is unremunerative cannot be permanent. Sooner or later such supphes must cease. Meanwhile, it may be policy to take advantage even of precarious re- sources. If we reject the cheap raw materials which Germany is ready to give, they may be used to our disadvantage in Belgium and other countries with which we compete. The Select Committee on Tariffs, of 1840, were Select opposed to protective duties in any form. ' They mittee on 56 FIFTY YEARS OF PROGRESS; AND impose upon the consumer a tax equal to the amount of the duties levied upon the foreign article, whilst they also increase the price of all the competing home- produced articles to the same amount as the duty, but that increased price goes, not to the Treasury, but to the protected manufacturer. It is obvious that high protective duties check importation and consequently are unproductive to the revenue, and experience shows that the profit to the trader, the benefit to the con- sumer, and the fiscal interests of the country, are all sacrificed when heavy import duties impede the inter- change of commodities with other nations.' While holding strongly to free trade, as the best poUcy for all nations, and in a special sense for the United Kingdom, it is not contended that the power we possess, as the best foreign customer of every indus- trial country, should never be used. There may be cases where we should gain on the whole by refusing to buy at prices below the fair cost of production. It is weU that our rivals should see that we are watchful over our own interests. It is evident that our recent discussions on fiscal policy have been followed with anxiety. We hear nothing more of the exclusion of British self-governing Colonies from the privileges of the most favoured nation. THE NEW FISCAL POLICY 57 CHAPTER VII FREE TRADE The general arguments in favour of free trade were sir Robert presented to Parliament by Sir Robert Peel in his Free Trade great speech of January 1846 in the House of Commons. He had no guarantee, he said, that other countries would follow our example. ' Wearied with long and unavailing efforts to enter into satisfactory commercial treaties with other nations, they had resolved at length to consult their own interests, and not to punish those other countries for the wrong they were doing us in continuing their high duties by imposing high duties ourselves. It might be asked, what is this superfluous liberality ? It was true that foreign countries which had benefited by our relaxation had not followed our example — nay, had applied to the importation of British goods higher duties. What had been the result ? Our export trade had greatly increased. And why ? Because these very precautions against the ingress of our commodities were a burden, and the taxation, increasing the cost of production, disqualified the foreigner from competing with you. By the remission of your duties upon raw material, by inciting your skill and industry, by competition with foreign goods, you have defied your competitors in foreign markets, and you have even been able to exclude them.' 58 FIFTY YEARS OF PROGRESS; AND Special Looking back to the beginning of last century, we conditions • xu i i n i • t . with which see m the early years a dull and unprogressive condition. rnd"have Siuce the adoption of a free-trade policy England has to deal. ^,ggjj -j^ ^]^g ^^^ j£ ^g make a retrograde step the protectionist movement everywhere will be stimulated. The flow of commerce will be arrested. A bond of union between nations will be weakened. Political consequences may follow which the whole civilised world may have reason to deplore. We must never forget the special economic condi- tions with which we have to deal. I. We have buUt up on the system of free imports a gigantic and complicated industrial fabric, on a scale never yet reached in any other country. II. We are compelled to import by far the greatest proportion of our foodstuffs and raw materials. A nation whose industrial fabric has gradually adjusted itself to protection may add to or manipulate its tariffs without serious risks of disturbance. Our population has multiplied in dependence on cheap supphes. We cannot return to protection, nor by tariffs raise the price of our imports from our Colonies, without a dangerous disturbance of all the adjustments. Free-trade has not enabled the United Kingdom to manufacture for all the world. It has secured supphes of food and raw materials at the lowest prices, and made the United Kingdom the pivot of commerce and finance. Mr. Mr. Felix Schuster, Governor of the Union of London and Smith's Bank, in his speech at the half- yearly meeting on July 29, 1903, dealt with the fiscal policy from the standpoint of the merchant and the THE NEW FISCAL POLICY 59 banker. ' London,' he said, ' was admittedly the bank- ing and financial centre. Go where they would, a bill of exchange was the one medium of exchange which always had a ready market. A bill on London was created in every part of the globe. There was always a seller because goods were shipped here ; there was always a buyer because goods were obtained from here, because our ports were free, because our doors were open to the trade of the whole world. It was through being the centre of the world's commerce that we had become the world's clearing-house, that our money market had been the cheapest in the world ; this in its turn had enabled us to find for our Colonies and for foreign nations cheap capital for the development of theu" industries. Second only in importance to our supremacy as international bankers, another interest which must be most carefuUy safeguarded was our position as the carriers of the world. The whole economic condition of this country depended on the supremacy and maintenance of our shipping industry — a supremacy which appeared to have been attained only through our trade relations with all parts of the world.' In aU countries which have adopted protection, its Bfteota of influences on Parliament have been deteriorating. Mr. in pro- Winston Churchill has described the new party which countries. would arise, rich, materialist, and secular. In and out of Parliament every monopohst would be eager to push his special trade. Every producer would clamour for a better price. Prices could be raised by tariffs, and pres- sure would be used. Few will be sufficiently far-sighted to see that the higher the price the less must be the demand ; and that a larger business with small profits 60 FIFTY YEARS OF PROGRESS; AND Undue reliance on tariffs Over-pro duction. may be more profitable than fewer sales at a higher profit. Nor could retaliation, once adopted, be abandoned. In- terests depending on protection would have been created, and we could not do them injury without compensation. Protection tends to turn the employers and the workers from the legitimate means and som-ces of prosperity. Technical instruction, inventive skill, effec- tive labour with the hands, and careful administration, will be neglected. Protection leads surely to over-production. If we exclude foreign iron and steel, the price of British iron and steel wUl rise, profits will advance, the home production will be artificially stimulated, the markets wiU be glutted. We shall experience the troubles which have, on a colossal scale, befallen the Steel Combine of the United States. Retahation will not relieve our merchants and manufacturers of the pressure of competition. The most severe is that of their fellow-countrymen. The home competition is more intense than that of the foreigner. In no branch of enterprise is our ascendency more undisputed than in shipping. In none is the Shipping, competition so keen and returns so uncertain. Some outward coal freights from Cardiff may be quoted : Home competi' tion. 1903 1902 1901 1300 1898 To— s. d. S. d. S. d. S. d. «. d. Alexandria . 4 6 5 4 7 8- 12 2 10 Barcelona . 5 9 6 9 7 11 11 8 10 lOi Genoa 4 5 5 6 9 10 4 8 9 Malta . 3 6 4 4 5 9 9 4 8 4 /• /• /• /• /• Marseilles . 5-50 C-64 7-97 1214 11-0 s. d. s. d. s. d. 8. d. 8. d. Port Said . 4 6 5 4 7 4 12 1 9 3 THE NEW FISCAL POLICY 61 We have an experience of the management of ships such as no nation possesses, yet depression recurs again and again. The fluctuations in the business of the shipbuilder are due to recldess over-building. In 1881- 1883 the tonnage built in the United Kingdom rose from 608,878 to 892,216. In 1886 and 1887 the tonnage built fell to 331,528 and 377,198. With less tonnage on the berth, freights improved. Inflation rapidly followed. The tonnage built for 1889-1892 exceeded 800,000 annually. A decline followed. The boom in shipping caused by the South African war led to a renewed excess in building, and for 1899-1902 the tonnage built averaged 956,700 tons. A coUapsein freights was inevitable. It was not due to foreign competition. Protection has not assured uninterrupted prosperity in Germany. In his speech at the Queen's Hall, Lord Goschen referred to shipping and maritime enterprise. The dividends of the chief companies showed a reduc- tion all along the line — in the case of the Hamburg- American Line from 10 per cent, in 1900 to 4^ per cent, in 1902 ; for the North-German Lloyd 8i per cent, in 1900 ; no dividend in 1902. Tariff wars never succeed. Witness the recent Tariff experiences in Russia, Germany, France, and Italy. From 1888 to 1898 a war of tariffs was waged between France and Italy. The trade between the two countries feU during the struggle from over £19,000,000 to £10,500,000 a year. The conclusion of peace brought some mutual concessions, shared, however, by Great Britain, as entitled by treaty to the privileges of the most favoured nation. The Russo-German war of tariffs continued from 1892 to 1895. The trade of com merce. 62 FIFTY YEARS OF PROGRESS; AND between the two countries fell from £35,200,000 to £26,770,000 a year. The concessions agreed to were un- important, and England, under the most favoured clause, shared the benefit. The Franco-Swiss tariff war lasted from 1891 to 1895. The exchange of trade had averaged £12,680,000. It fell during the contest to £9,390,000. No advantage was gained on either side. With these ex- periences in view, we may agi-ee with Lord George Hamil- ton that retaUation is a weapon to be used with caution, and only with the express authority of Parliament. Benefits The discussion in which we are at the present time engaged should carry our thoughts beyond the rivalries of trade and the circumstances of the hour. What is our ideal for the future ? How best shall the material and moral welfare of our people and the national greatness be sustained ? The powerful statesman who has set us all thinking has described in eloquent language the ideal he has in view. It is that of an Empire, self-centred, self-contained, politically, industrially, and commercially. All our supplies are to be drawn from our own depen- dencies, and in those dependencies chiefly we are to find a market for the products of British industry. This ideal is to be attained by means of preferential tariffs, very onerous to the people of this country, and without the hope of compensation by any reciprocal advantage. The flow of trade may be compared to a mighty stream. How soon its waters become angry and troubled when any obstruction impedes their course ! To the worker let the fullest liberty be given to sell his labour in the dearest, and to purchase his food and everything necessary in the cheapest market. The Government should give help where it can. It should never impede THE NEW FISCAL POLICY 63 the movement of trade. To confine our commerce within the limits of the Empire would be a fatal policy — a policy in restraint of trade. The commerce of the British Empire should extend to every land. The wider its scope the more fruitful it will be of blessings, beyond the immediate getting of gain. ' Commerce,' it Lord was once eloquently said by Lord Avebury, President of the Chamber of Commerce of the United Kingdom, ' commerce is, after all, the great peacemaker of the world. As a peacemaker, commerce has done even more than religion. Differences of rehgion sometimes separate nations. Commerce is never mihtant. It binds us all together in links of gold, Uke marriage-rings.' The objections to protection have been urged by Mr. none with greater force than by Mr. Chamberlain him- lain!" ^''' self Speaking at Birmingham in 1885, he said : ' Do not suffer yourselves to be turned aside at the next election ; do not be diverted. The owners of property, those who are interested in the existing state of things, the men who have privileges to maintain, would be glad to entrap you from the right path by raising the cry of fair trade, under which they cover their demand for protection, and in connection with which they would tax the food of the people in order to raise the rents of the landlord. Protection very Ukely might, it probably would, have these results: It would increase the incomes of the owners of great estates ; it would swell the profits of the capitalists who were fortunate enough to engage in the best protected industries ; but it would lessen the total production of the country ; it would diminish the rate of wages ; and it would raise the prices of every necessary of life.' 6i FIFTY YEiVRS OF PROGRESS; AND CHAPTER VIII SOCIAL AND ECONOMIC CONDITIONS AT HOME AND ABROAD : UNDER PROTECTION — UNDER FREE TRADE Wages We have seen the development of trade as measured repeal of by the Statistics. The condition of the worker shows aws. g^gg^^y ii^provement. Our country in former days was highly protectionist. Did trade flourish ? Was the reward of labour liberal? The agricultural interest had long held a commanding influence in Parliament. With what result ? ' No fewer than Ave times, in the short interval between 1820 and 1837, ParHamentary inquiries were held on the subject of agricultural dis- tress. It was shown that the farmer was crushed by exorbitant rents, while the labourer earned the miserable wage of 7*. to 8^. a w^eek. In other trades these were the weekly wages : Shoemakers, 10s. ; miners, 18*. ; ironworkers, 10*. ; carpenters, masons, 11*. ; tailors, 11*. Corn was dear, and bread double the price of to-day. ' Nothing,' says Sir Spencer Walpole in his history of the period, ' could exceed the wretchedness which com- menced in 1837 and continued to 1842.' The popula- tion of England and Wales was about 16,000,000. No fewer than 1,420,000 persons were in receipt of relief. One in eleven was a pauper. The misery in the United Kingdom was intense. It was far exceeded by the misery in Ireland. The potato, the chief food of the THE NEW FISCAL POLICY 65 people, had failed. The country was desolated by- famine. In three years the population diminished by 650,000 souls. The condition of the country before free trade has been described by Mr. Chamberlain. Speak- ing at Ipswich on January 14, 1885, he said : ' The condition of the farmer was never so hopeless, and the state of the labourers was never so abject, as when corn was kept up at a high value by a prohibitive protective duty, when it was 64*. or even rose to 120*. per quarter.' Later in the same year, at Birmingham, he said : ' I wonder whether in this vast audience there are any people who have any conception of the state of things which existed forty or fifty years ago ? At that time the whole of the labourers in the agricultural districts were on the verge of starvation. The poor-rates in some districts were 20*. in the pound At the time of which I am speaking, the large towns were described by eye-witnesses as bearing the appearance of beleaguered cities, so dreadful were the destitution and the misery which prevailed in them. People walked in the sti'eets like gaunt shadows and not like human beings. There were bread riots in almost every town. There were rick-burnings on aU the countrysides.' The time at last came for a reconsideration of a fiscal system under which sufferings so cruel had been endured. Two orators of rai-e gifts arose to plead the cause of the people. The glowing rhetoric of John Bright, the convincing arguments of Cobden, carried constituency after constituency. The work they had begun out of doors was completed in Parliament, to his own enduring honour, by Sir Robert Peel. Rising superior to the trammels of party, and convinced of the necessity, that E 66 FIFTY YEARS OF PROGRESS; AND illustrious and wise statesman proposed and carried the repeal of the Corn Laws. Progress ^^Q have the experience of nearly sixty years of free free trade, trade. It has proved of immeasurable value to the British working man of every class. His wages have increased. The cost of food has been constantly diminishing. With improving material conditions discontent has ceased. Populous London is hardly conscious of grievances remediable by legislation. The metropolitan representatives are by an overwhelming majority Conservative. The Liberal party has laboured in the cause of reform. The party which has opposed reform has profited. Wages in Our Working people may with advantage compare a^d *° their present earnings, not only with those of their own ermany. ^Q^j^^f^jy [^ g^ p^g^ generation, but with those paid in Germany. Mean weekly wages in fifteen sldlled trades : London, 42^. ; Berlin, 24^. Other towns — England, 36*. ; Germany, 22*. 6d. a week. Staple industries — industries in most cases giving employment to several members of a family : Cotton trade, average annual family income — United Kingdom, £115 17*.; Germany, £62 19*. WooUen trade — United Kingdom, £107 9*. ; Germany, £57 10*. Steel trade— United Kingdom, £122 15*. ; Germany, £52 2*. The average level of industrial wages is for Germany two-thirds and for France three- fourths of that prevailing in the United Kingdom. Of the 4,000,000 workers in Germany, two-thu*ds of the number earn less than 15*. per week ; 65 per cent, less than £40 per annum ; and 85 per cent. £l per week. 'Did these facts,' asked Mr. John Morley in his speech at Nottingham, ' show Germany THE NEW FISCAL POLICY 67 to be a paradise ? So far from being a paradise, it was not even purgatory, but a lower stage. All this was apart from the exhausting hours worked in Germany, PoHtical discontent had greatly increased there since 1830, when food duties began to be imposed.' With one solitary exception, every representative of Berlin is a SociaHst — as such, pledged to reverse the pohcy of exclusion and protection of privileged interests, cartels, and trusts, which is certain sooner or later to lead to misery. As in wages, so in the hours of labour, the position of our working people is advantageous. Comparing Germany, France, the United States, and our own country, the hours are longest in Germany and shortest in the United Kingdom. The difference has been computed at twenty -nine days more in the year for the German than for the British worker. Workers in Germany have no advantage in regularity Trade of employment. The Franco-German War had a great in effect in stimulating the trade of Germany. The increase *™^°y' in production and in exports was on a vast scale, but not on a sound basis. Production far outstripped the legitimate demand. A financial crisis followed. The economic condition of Germany after the war is thus described by the United States Labour Commissioner, Mr. CarroU : ' Five milliards of francs had been received from France. Money became too abundant. The field of industiy was yielding enormous profits. The whole country swallowed the deceptive bait and entered vigor- ously into great industrial and financial undertakings. Manufacturers, instead of laying by their enormous profits, employed them to enlarge their facilities for b2 68 FIFTY YEARS OF PROGRESS; AND production. Almost everybody was engaged in some sort of speculation. It is impossible to estimate the enormous sums lost through joint-stock enterprise.' In recent years Germany has once more been passing through a severe crisis. As the Commission on the Depression of Trade observed, the tide of commerce ebbs and flows in all industrial countries. There is a constant tendency to increase the capacity for produc- tion, perhaps at a time when the demand is not suffi- ciently brisk to maintain remunerative prices and give adequate return to capital. The depression due to over-production has been especially marked in the case of Germany. The Report by Consul-General Schwabach on the trade of Germany for 1902 gives a gloomy picture. The depression in trade and industry experienced in Germany during 1901 continued to make itself felt, though in a less degree, during 1902. Industries unduly expanded with borrowed money were shut down everywhere. Want of employment and the lowering of wages crippled the purchasing-power of the mass of the population, and worked unfavourably. The managers of industrial undertakings, finding no home market for their output, forced the export trade to the utmost. It was in many cases unremunerative. The home iron industry was excessively dull. The electrical industry had not yet recovered from the blow received in 1900 and 1901. The jute industiy worked unsatisfactorily. AU branches of the paper trade were depressed. The leather trade suffered from over- production, and profits were small. In every centre of industry numbers were out of work. The ready-made THE NEW FISCAL POLICY 69 clothing industry was at a standstill, the population of workers being too poor to buy. The year 1902 showed a depression and a diminution of profits even more marked than in 1901. In his speech at the Queen's Hall meeting, Lord Unem- Goschen referred to the large numbers out of work in Germany. Germany at the present time. ' In Berlin and the district the metal workers amounted to about 72,000, of whom the greater part worked short time. Compared with October 1900, from 18,000 to 19,000 fewer were employed. In Magdeburg, of 15,000 metal workers the larger number were on short time. Discharges were continually reported, and in January the number of unemployed amounted to 2,000. Town after town is represented in this way. In Barmen and Elberfeld 1,800 out of 4,000 work reduced hours. Altogether 400 to 500 were without employment.' In its practical results cheap Uving is hardly less Cost of important than the scale of wages. Our working people under a free-trade policy have a conspicuous advantage. In the last quarter of the last century, the cost of living was reduced in the United Kingdom by 45 per cent., in Germany by 18 per cent. In the last five years a German workman has been able to purchase for 100 marks as much food of the kind to which he is accustomed as twenty years previously for 112 marks. The English workman has been able to make 100^. go as far in purchasing food as 140*. twenty years ago. The improvement in the relative position has been con- tinuous. In the ten years 1890-1900 the price of food shows a fall of 6 9 points for the United Kingdom, as against one point for Germany. The food of the 70 FIFTY YEARS OF PROGRESS; AND German workers consists of bread, potatoes, herrings, and coffee. The tax levied under the tariff on this meagre dietary is estimated at from 60^. to 70*. a year. In Germany the consumption of horseflesh as an article of food is increasing. It is not the food of a pro- sperous people. Deficit in The public finances of Germany are not flourishing. Germany. ■' o Baron Thielmann, in moving the Imperial estimates for 1903, spoke as foUows : ' The advance which charac- terised the last years of the past century has not only become slower, but a depression has taken its place, which has been accompanied by the collapse of impor- tant banking institutions and other undertakings. For 1902 the finances are about £3,250,000 short of the average increase. The estimates of 1902 close with a deficit of about £1,750,000.' Russia. Let US turn to the economic conditions in Russia, as described by Bjoernsen, the Norwegian writer. The load of taxation has become intolerable. Expenditure is steadily increasing. Receipts can no longer keep pace with increasing charges. A part of the railway system is not paying working expenses. Taxation has reached its ultimate limit. The Government has been propped up by foreign loans. ' No centralised power, even the best, is for any length of time capable of governing so many and varied peoples. No hand, no matter how powerful, can stretch over such an enormous territory, presenting such variety of chmate, and inhabited by populations with such marked racial and religious differences. But what the best government, what the most powerful hand, cannot perform, becomes chaos and misery under a feeble autocratic power, or THE NEW FISCAL POLICY 71 a bureaucratic institution that is mercenary and men- dacious, unstable and oppressive.' With trade depressed and poUtical aspirations unsatisfied, a general um-est prevails among the artisans of Russia. Socialistic ideas are diffused by ardent and fearless revolutionaries ; strikes are incessant. Demands are pressed for higher wages, and even more for reduction of the weary hours of daily toil. In the United States, protection has been from the united beginning the settled policy. It has been associated with sound principles on many subjects. It has stood for the honest payment of national debts, for free labour as against slave labour, for high wages for American labourers. In the United States protection has not given to the workers all the advantages which might have been expected. More than 29,000,000 persons are occupied for gain ; less than 1,000,000 benefit by protec- tion. Wages are high in the manufacturing industries, because all can find employment on the land. The rates, however, are declining, while the cost of hving is continually increasing. The census returns of 1890 show that in thirty-three States there were 1,004,500 wage-earners, receiving an average wage of 1.39 doUar a day. By 1900 the wage-earners had increased to 1,463,365, while the wage had declined to 1.29 dollar a day — an average reduction of six per cent. In the same period the cost of living had risen six per cent., largely through the operations of trusts fostered by the tariff. The report of Mr. Bell, British Commercial Agent in the United States, describes the anxieties of the situa- tion : ' Within the last five years hving expenses have increased more in the United States than in the 72 FIFTY YEARS OF PROGRESS; AND previous twenty years. These conditions, of course, cannot last, and can eventually only result in profound disturbance of social conditions. As long as the work- men continue to receive high wages, they do not inquire too closely into the reasons for the increased cost of the necessaries of hfe. AVhen, however, the reaction comes, more will be heard of the questions of trusts and tariffs. Financial authorities in the meantime are advising caution on the part of commercial as well as financial interests. Though the country is still extraordinarily busy and prosperous, after five years of almost continuous growth the chances of reaction are much increased.' Protection in the United States has not given regularity of employment to the workers, nor immu- nity to staple industries from over-production and the consequent fall in prices, profits, and quotations for securities in Wall Street. On the collapse of the Steel Trust the correspondent of the Economist reported as follows : ' When the great Steel Company decided to shut down a number of its miUs, the last straw was placed on the back of the business camel. Railways are buying fewer cars and less bridge-work. Building in New York, Chicago, and other cities is suspended because of labour troubles. In Colorado the entu-e State militia are in the field in an attempt to keep the peace between the Cripple Creek miners and their employers. A spirit of unrest prevails among the soft- coal miners of IMaryland. The great woollen-goods strike in Pemisylvania has proved a failure. Four thousand workers had to own themselves beaten, and the effect on the textile industry was far from happy. One-twelfth of the cotton spindles in the United States THE NEW FISCAL POLICY 73 stand idle. There is a slackening of demand for retail goods all over the country.' We admu-e the energy, the enterprise, and the skUl of the American people. Large profits have been realised and vast expansion .has taken place. The benefits have not been fully shared by the mass of the people. The rate of increase of the population has considerably diminished. Returning to our own country, aU the indications commis. point to an improvement in the condition of the people, labour. not indeed embracing all classes so fuUy as we might wish, yet comparing favourably with the progress in, any other country in the New or the Old World. The report of the Commission on Labour, issued in 1894, which has been quoted in an earlier chapter (p. 13), bears testimony to the benefits we have reaped from the adoption of a system of free trade. 74 FIFTY YEARS OF PROGRESS; AND CHAPTER IX IMPEUIAI. CO-OPERATION IN COLONIAL DEVELOPMENT We desire to advance the development of our Colonies. There are means less burdensome to ourselves and more helpful to our feUow subjects beyond the seas than taxation of food-supplies. Co-operation is possible between the Imperial and Colonial Governments in public works, in the construction of trunk lines of rail- way, in subsidies to steamships. Swift communication is a bond of empire. It was the policy of Su- Robert Peel to give aid to the Colonies by subsidies rather than by tariffs. The time seems opportune for suggestions. Canadian I. In Canada it is proposed to establish a fast mail service across the Pacific, connecting Vancouver with Australia. The subject was before the Congress of Commerce lately held at Montreal. In such an assembly attention was naturally directed mainly to the rapid conveyance of maUs, and the facilities for trade. A former Secretary to the Admiralty may look to the possible advantages to the Navy. Vessels which can act as the eyes of the Fleet are necessary. We have lately buUt cruisers, equal in dimensions and cost to the most powerful battleships. The sea performances have in many instances left much to be desu-ed. In the greyhounds of the Atlantic, carrying the mails at 20-knot speeds and over, in all weathers, breakdowns of mail service THE NEW FISCAL POLICY 75 machinery are rare. Practical instruction in engine-room and stokehold duties for newly entered men in the Royal Navy was formerly obtained in the transport service. It may be given, and with greater efficiency, by the establishment of a fast mail service to Canada, aided by a Uberal subsidy from Imperial funds. The engine- rooms should be manned from the Royal Navy. Such a service has been long desired in Canada. It would foster trade relations, and tend to unite the Empire. II. It is in contemplation to make a new trans- Trans- , , conti- continental railway north of the Canadian-Pacific, nentai The undertaking is formidable for the Dominion. An Imperial guarantee on some portion of the capital required would be generous on the part of the Mother- land. It would be a bond of unity. British commerce would share in the benefits from the opening up of a vast extent of fertile country. III. We have recently experienced a shortage in Supply of the supply of cotton. Our resources might be largely increased if the native populations under our rule in West Africa and elsewhere received instruction in the cultivation and the preparation of the staple for the market. The question has lately been brought forward at the meeting of the Cotton Supply Association at Manchester. Prompt and vigorous action should be taken by the Government. IV. A comprehensive scheme of water storage and South irrigation has been recommended by Sir W. WUlcocks irrigation. for South Africa, at an estimated cost of £30,000,000. The work must be long delayed unless the Mother-land can co-operate. 76 FIFTY YEARS OF PROGRESS; AND tiOT^*' ^^" ^^^ countries need population. Let us give State aid, where necessary, to emigration ; let us send of our best. South Africa offers a wide field for State- aided settlement. It is hardly to be desired that these small islands should become in an ever-increasing sense the workshops of the world. They will lose their beauty and charm. Expansion in the Colonies is the true remedy for overcrowding at home. A°"elr* VI. The Home-land and the Colonies may be more closely united by the estabhshment of an Imperial Court of Appeal. As Mr. Haldane has truly said, the ad- ministration of the supreme forms of justice by the best intelligences of the Empire would be for the common advantage of all the subjects of the British Crown. toperiai VII. Imperial federation is far off— perhaps unat- Defenee. tainable. Meanwhile the conferences already held between the Secretary of State and the Premiers of the several Colonies have produced the happiest results. It may be possible to constitute a per- manent Imperial Council similar to that proposed by the Committee of the Imperial Federation League, and including Ministers of Cabinet rank, representatives of the Colonies and India, and mihtary and naval advisers. The Council would begin with Imperial defence. Australian VIII. Let US reheve Australasia of contributions thms" o" to the cost of the Navy. AU such arrangements with ^^^' self-governing Colonies are to be deprecated. They lead to debates which it is well to avoid. Local re- sources should be concentrated on local forces. They will be ready to help us in the hour of need. The THE NEW FISCAL POLICY 77 opinions of the Ministers of past days were weighty on this point. Lord Grey and Sir Comewall Lewis con- curred in opposing such demands as are now being pressed in certain quarters. They held that the Colonies would have done their part if they reheved the JNIother-country of responsibility for their local defence. The protection of the Colonies does not materially add to our expenditure. In framing Navy estimates, we look rather to the progress of other navies. Our shipbuilding programme depends on theirs. IX. The salaries of Governors appointed by the Salaries o£ Gov6rnors. Crown should be paid from Imperial funds. Causes of contention would be removed. This enumeration is not exhaustive. Nor is it necessary to anticipate the many services which the Mother-country, in a generous temper of mind, may render from time to time in the development of the daughter-States. In this connection let us not speak lightly of the cricket field, Scores are watched with the same absorbing interest and with mutual admira- tion on both sides of the Equator. 78 FIFl^Y YEARS OF PROGRESS; AND CHAPTER X NEGLECTED OPPORTUNITIES FOR TRADE : NEW EMPLOYMENTS FOR THE LEAST CAPABLE Neglect We do Well in the staple trades — in our textile and our humbler metallurgical industries. The genius of the British wares. i • n • ■, t i people IS tor serious and sohd work. We excel where excellence of quaUty is demanded. With us the trend of trade is more and more to the supply of the world's demand for that which is of the best. We have neg- lected the humbler wares. Yet the humbler wares are needed. In the tropics, in India, even in our British self-governing Colonies, the affluent, whose demand is only for the best, are the few. Inferior wares, which we have regarded with contempt, find ready purchasers Montreal : where the best qualities find no sale. At the Montreal dent of Congress of the Chambers of Commerce of the Empire, turers' wise couuscl was addressed to British manufacturers tion°''"' by the late President of the Canadian Manufac- turers' Association. While insisting on the retention of full protective duties for Canadian interests, Mr. EUis gave a long list of goods imported into Canada fi'om the United States in lines in which no attempt is made by British manufacturers to compete. 'Last year,' he said, ' we had a balance of trade in our favour with Great Britain of 51,000,000 doUars. We had a balance of trade against us with the United THE NEW FISCAL POLICY 79 States of 46,000,000 dollars. In other words— of the 51,000,000 dollars received from Great Britain, 46,000,000 dollars were handed over to the United States in pay- ment for goods which British manufacturers, had they been alive to their own interests, could have furnished. Great Britain supplies of watch movements ;^3,360 out of a total import of ^672,003 ; of lamps and chandeliers ;^5,000 out of a total import of ^262,000; of guns ^24,000 out of ^250,000 ; brass goods ^89,000 out of 1^500,000. And yet these goods had to pay 50 per cent, more duty than the British goods have to pay.' These remarks deserve our careful consideration. There are other products of industrial skill in which we leave the field entirely to other nations. We import cheap pianos from Germany to the value of £700,000. Australia is also a large importer ; yet British makers are scarcely known to Australian purchasers. We may give more liberal grants in aid of technical Technical education. Mr. Haldane has shown how urgent is the need. It is galling to see any trade passing out of our hands which might remain with us if we were up to date in applied science. In the chemical trades, in electrical machinery and fittings, we have allowed business to slip through our fingers. We are recovering ground which should never have been lost. Let the State do all it can to help the workers and the captains of industry. We shall enter on a fatal course if we begin once more to lean on protection and a paternal government, in place of individual energy, enterprise, and skill. Our country has prospered, as no other country has prospered, in open competition. It has braced our energies. It has stimulated all our faculties. 80 FIFTY YEARS OF PROGRESS; AND It has created that noble spirit of independence which has made our British race sturdy, vigorous, and manly, and our Empu-e a glory to ourselves and the wonder and admiration of the world. de"potuia. Proposals for putting a duty on corn commend tion. themselves to some as a means of bringing population back to the land. They deplore the disproportionate growth of an urban population under poor physical conditions. Such considerations appeal to all. Ill fares the land to hastening ills a prey. Where wealth accumulates and men decay. Princes and lords may flourish or may fade, A breath can make them as a breath has made ; But a bold peasantry, their country's pride. When once destroyed can never be supplied. To effect the object in view by fiscal changes, it will be necessary to put a heavy charge on the poorest classes. Such a policy is impossible. By adopting the methods of cultivation still practised in Belgium and France larger numbers might be employed. Their earnings would be lower than under the modern system. With extended use of machinery two hands now pro- duce as much as three hands fifty years ago. In aU countries there is a similar increase in the urban as compared with the rural population. It is seen in France, where the numbers are almost stationary ; in the United States, where large tracts are still only partially settled ; and in Germany, where the growing number of the dwellers in cities and towns, who must find in manufacturing industries the means of hving, is a principal cause of the severe competition we have to meet. Let us endeavour to bring the people back to the land by better methods than the levying of duties THE NEW FISCAL POLICY 81 on wheat. Let us build garden cities in pleasant places, where the workers in industries may live under clearer skies, and sometimes hear 'the live murmur of a summer's day.' These country joys, sung by the poet, are little shared by those whose lot it is to labour. If our country is flom-ishing — if not only individuals, Employ- but large classes, are prosperous beyond the dreams of unskilled avarice — if even among the least fortunate there are "^"^ ^'^^' signs of progress— let us not rest content. And surely for the poorest, the submerged tenth, the millions with whom life is a hard struggle, some remedial measures are possible. We shaU not improve their condition, nor help the traders and manufacturers of this country in the severe competition they have to face both at home and abroad, by returning to protection, which would make everything dearer, without increasing the reward of labour. Let us think of methods with more promise of yieldiog a good result. For the unemployed, for those whose employment is least certain and least remunerated, the trouble is that they are unemployable. The tens of thousands whose condition has been described by Mr. Booth and Mr. Rowntree, or with distressful sympathy by the author of ' The People of the Abyss,' are incapable of earning a living in the staple industries. In the textUe, in the metallurgical industries, in the building trade, even in the fields, they could not find employinent. They have neither skiU nor physical strength. How shall we put the submerged tenth — those that have gone under and are lying helpless — in the way of earning a livelihood ? The gloomy refuge of the workhouse, charitable doles in miserable homes, are a paUiative,not a permanent remedy. F 82 FIFTY YEARS OF PROGRESS; AND The aim should be to help people to help themselves. Teach the least capable some easy industry. They are not employable where highly skilled labour is necessary. There are some articles in extensive demand, and im- ported in ever increasing quantities, which the poorest and least efficient should be able, with some instruction, to produce. Imports of Toys and Musical Instruments prom Germany, 1902 Toys Musical Instruments Imported direct . . . £727,537 £738,316 Fi^ Belgium .... 205,185 54,400 Fid Holland .... 109,539 79,830 £1,042,261 £872,546 Goods of this humble description should be made at home. Doctor As president of Dr. Barnardo's homes, I have seen what can be done by effiDrts unaided by the State to turn the most helpless into honest and capable workers, whether at home or in the far-off prabies of Canada. In the many institutions maintained under the administration of Dr. Barnardo the door is ever open to destitute children. They are admitted at all ages — even in infancy. They are allowed to remain until they are able to earn an honest living. The training for boys embraces many trades. The training for the girls fits them for domestic service. Taken by the hand at a tender age and kept under training and discipline in the days of their youth, the most miserable and degraded can be lifted up into sturdy and capable citizens. It is not going too far to say that Dr. Barnardo has worked with a success which has never been attained before in his particular line. THE NEW FISCAL POLICY 83 Reform for those that have gone under is difficult in proportion to the advance of years. In the labour colonies in Australia — in the workshops established by- General Booth — distress may be relieved by the State or by the philanthropist. The cases are rare where character is changed and the incapable are made efficient for any description of work. It is not necessaiy to reproduce the wonderful statistics of Dr. Barnardo's work. The annual income, raised by voluntary subscriptions, and not from the wealthier classes, has gradually advanced from £224 to nearly £200,000 a year. Tens of thousands of children have passed through the homes. No less than 14,000 have been sent out to Canada. There has been scarce a failure. The majority are most successful. The sailing master of the Sunbeam, when in Australian waters, was a Barnardo boy. He was proud of it, and justly so. This truly noble and humane work, thus briefly described, should be taken in hand by the State on a national scale. There is no reason for despair. If we hear more of poverty it is because we know more than did our forefathers of aU that is going on around us. The numbers of our poor are not increasing. In the words of Lord Macaulay, ' the evils are with scarcely an exception old. That which is new is the inteUigence which discerns, and the humanity which remedies them.' 84 FIFTY YEARS OF PROGRESS; AND CHAPTER XI REDUCTION OF WAR EXPENDITURE Trade would be promoted by economy in the public expenditure. Lord E,osebery, in a recent speech, insisted strongly on this urgent and long-neglected topic. ' Your pubUc expenditure in 1883-84 was £86,000,000 a year. Your expenditure in 1893-94, ten years after- wards, was £92,000,000 ; your expenditure in the current year (1903-04) is £144,250,000, or, putting in the expenditure which is put down to capital, £150,000,000. In the last ten years the total ordinary expenditure of your Government has gone up about 62 per cent., whereas in the previous ten years it only went up 7 per cent.' Increase In the last ten years we have raised the public debt debt" '" to the total of £798,349,000 ; the charge for interest and repayment is £27,000,000 a year. Our debt is now as heavy as forty years ago. We see the result in the depreciation in Consols and gilt-edged securities. Our expenditure in 1903-04 on war preparations wUl be no less than £68,957,000, an increase of £33,788,000 on the expenditure of 1895. Repeating the words of Lord George Hamilton, long at the head of the Admu*alty, ' there are financial hmits beyond which you cannot go without ruin to the Mother-land.' Navy. Even in our administration of the Navy thei*e is THE NEW FISCAL POLICY 85 room for economy. It would be folly to disarm. We may cut down where we are spending wastefuUy. The growing expenditure on manning should be checked. The Admiralty has relied too much on permanent men. The vote for naval works has been for many years excessive. Payment having been made by loans, the vigilance of Parliament has been relaxed. The Naval Works Act of 1895 provided for an expenditure of £8,800,000. In the Act of 1901 the amount had in- creased to £27,500,000. Many works now in course of construction are necessary. Some are not necessaiy. The new works in Simon's Bay are estimated to cost £3,500,000. Capetown, the base for the mercantile marine, which we are bound at all costs to defend, is close at hand. In this connection reference may fittingly be made to the recent cordial reception of the British Parlia- mentary delegation in France. It had its oi-igin in the King's auspicious visit to Paris, followed by the visits of President Loubet and the French Parhamentary dele- gation to this country. The representatives of the British Parliament received an enthusiastic welcome. France sincerely desires an entente cordiale, and the cessation of a costly rivalry in naval preparations. In the happier phase in which we have entered, we see some prospect of relief for our burdened taxpayers. If other Powers are prepared to cut down expenditure, we are ready to foUow. After long delay, we have taken in hand the reform Army. of Army administration. The need is urgent. Avoid- ing details, a permanent force at home of 100,000 men, and a citizen army of 300,000 men, on the Swiss model. 86 FIFTY YEARS OF PROGRESS; AND should be sufficient, if all were fit to take the field. Expenditure should be reduced. The Army votes before the war were under £20,000,000. That amount should stUl suffice — if we keep down the numbers of the per- manent men, relying for home defence on an efficient citizen army. THE NEW FISCAJ. POLICY 87 CHAPTER XII TRADE WITH TROPICAL COUNTRIES In recent years we have suffered some loss of trade with protectionist countries. We have gained in the un- protected countries — chiefly within the tropics, in India, South Africa, China. The tables recently presented show the trend of our foreign trade. Exports of Manufactured and Partly Manufactured Articles Protected couotries and Colonies All other countries Foreign countries Canada and Victoria Total 1850 . . 1902 . . Increase . Million £ 34,842 73,753 38,911 MiUion £ 8,243 13,309 10,066 Million £ 28,715 140,538 111,823 Million £ 66,800 227,600 160,800 With all unprotected countries progress has gone forward for more than half a century without a check. Trade between the temperate zone and the tropics is, in the fullest sense, for the mutual advantage. The industrial populations of temperate countries are highly skilled, and capable of sustained effort. Supplies of fuel are abundant. The moist cUmate is favourable for textile industries. The tropics give, in exchange for manufactures, coffee, tea, cocoa, tropical fruits, fibres, india-rubber, and other raw materials. These products 88 FIFTY YEARS OF PROGRESS; AND of fertile soils and a burning sun form each year a larger share of the importations into the temperate-zone countries. By the expansion of trade in aU our tropical pos- sessions, and the free opening of our ports to the merchants of every country, Great Britain has rendered a service to the world. Travelling eastward, along the route of the Suez Canal, every port under the British flag, or under British protectorate, is a busy entrepot of trade. Commerce is active at Gibraltar and Malta. What we have accomphshed in Egypt has been recorded in Lord Cromer's annual reports and by Lord MUner. Aden — a huge and ban-en cinder on the sandy shore of Arabia — has attracted all the trade formerly centred in JNIocha. Many hundred laden camels enter the gates every morning. Kurrachee has become the port of North- West India. Bombay, with its magnificent har- bour, is at once the Manchester and Livei-pool of the East. The capacious harbour of Colombo has been made secure by a noble breakwater. As a port of call it is one of the busiest in the world. At Calcutta we see the same combination as in Bombay of industrial activity and a vast movement of shipping. The jute factories of Calcutta are the creation of British enter- prise and capital. For the trade of the further East I may refer to an American authority. United The Bluc-book relating to Colonial administration, Blue- lately compiled at AVashington, deals specially with tropical Colonies. We are reminded that the Colonies of the world are chiefly located in the tropics, while the governing countries are in the temperate zone. Of the 140 Colonies, dependencies, and protectorates of the THE NEW FISCAL POLICY 89 world, more than a hundred are in the tropics ; and of the 500,000,000 people governed by races other than that of the immediate territory which they occupy, fully 450,000,000 are in the tropics. Practically all the people within the tropics, except those on the American continent, are governed by temperate-zone nations. The more advanced Colonies, lying in the temperate zone, and peopled by natives of the Mother- country or their descendants, have already developed to a great extent their commerce and commercial relations with the world and with the Mother-country.' It is to the tropical Colonies chiefly that we should look for expan- sion. The tropical imports into the United Kingdom con- Balance of siderably exceed £60,000,000. They include caout- chouc, tea, jute, coffee and cocoa, fruits and oils, chemical drugs, dyes, and cabinet woods. The im- portation into the United States already exceeds our own large totals. The average value is over £200,000 a day. Our vast trade to the tropical countries is a prime factor in adjusting the balance of our indebted- ness in the direct trade with the protected countries. The excess of our imports from France and the United States represents dividends on British investments, payments for freights, remittances to cover the ex- penses of European travel, and, to a large extent, importations of tropical produce supplied by British merchants, and exchanged by the producer against British manufactured goods. These operations of commerce have made London the chief centre of finance and trade. The amounts cleared at the London Bankers' Clearing House increased 90 FIFTY YEARS OF PROGRESS; AND from £6,789,000,000 in 1890-94 to £10,029,000,000 in 1902. India. The Anglo-Saxon genius for the development and administration of Colonies has found in India a wide field. In 1901, 25,373 mUes of railway had been constructed, the capital having been raised with the aid of the State. No less than 30,000,000 acres of land have been made fertile by irrigation. Jute-mills, cotton-mills, and many other flourishing industries have been established by British capital and enterprise in every part of India. The external trade of India has expanded with the growing prosperity and power of production, and the lion's share has fallen to the United Kingdom. It has been well, not only for the prosperity of the United Kingdom, but for the general trade of the world, that India has not been in the hands of a protectionist Power. The ports would have been closed to every foreign flag. The revenue of India exceeds £100,000,000. Not more than five per cent, is contributed from Customs. Busy ports, such as Hong Kong and Singa- pore, are free. The pohcy of Great Britain is not exclusive. Java. Java offers another example of the results which may be achieved in the development of a tropical country under European administration. The exports of Java in 1870 amounted to 61,000,000 guilders. In 1898 they had risen to 203,000,000 guilders— an increase of 230 per cent. In 1870 the imports of merchandise amounted to 44,000,000, and in 1898 to 160,000,000 guilders — an increase of 250 per cent. Hong The value to commerce of the estabhshment of dis- SiTgapore. tributing centres is seen conspicuously in the trade of THE NEW FISCAL POLICY 91 Hong Kong and Singapore. Hong Kong was ceded to Great Britain in 1841, and the Straits Settlements in 1824 in exchange for Sumatra. Hong Kong has become a distributing centre for British goods in transit to China, Japan, and the PhiUppines ; Singapore has become the centre for Siam, Burma, Indo-China, the Malayan Peninsula, and the East Indian Islands. The trade from these central points of distribution is described in the American Blue-book : ' The value of the markets of the great semicircle of countries and islands to which Hongkong, Singapore, and Manila may form convenient distributing points is more than a billion dollars annually, or, to be more nearly exact, about 1,200,000,000 dollars annually, an average of 200,000,000 dollars per month. The annual importations of Japan, Korea, Asiatic Russia, China, Indo-China, Siam, the Malayan Peninsula, India, the East Indian Islands, and AustraHa, which aggregate the enormous sum above named, are chiefly of the classes produced only in the temperate zone. BreadstufFs, provisions, and manufac- tures of aU kinds form the large bulk of this great importation, and it is in these articles, especially manu- factures, that the United Kingdom has built up her commerce with the countries adjacent to her great distributing centres in the Orient from £2,000,000 in 1840 to twelve times that sum in 1900.' The South African Colonies give promise of a rapid South Africa. development. Trade was disorganised during the war. Since the return of peace the value of British exports to the South African Colonies is inferior only to the trade with India. The present rate of expansion can be maintained. South Africa may become the first among 92 FIFTY YEARS OF PROGRESS; AND Expan- sion of trade with tropics. British possessions as a market for the products of the Mother-country. British Produce to South Africa - - India United States Germany Australia 1900 1901 1902 ifims. 13-5 17-8 25-7 £m3. 82-3 301 £ ms. 28-7 £ ms. 22-8 £ ms. 21-3 19-5 In seeking new outlets for our trade with our own possessions, we should look not only to the self-govern- ing Colonies, where we compete with protected local industries, certain to become in time as efficient as our own, but rather to those vast regions of the globe where the conditions are not favourable to manufacturing industries, and where the combined advantages of skilled labour and untaxed food and raw materials have enabled our manufacturers to hold thus far a command- ing position. The observations in a preceding chapter on the policy of Imperial subsidies in aid of Colonial development apply in a special sense to those tropical possessions where the local resources are necessarily inadequate in an early stage. THE NEW FISCAL POLICY 93 CHAPTER XIII CONCLUSIONS In concludinff an imperfect examination of our trade Mr. 1 T 11 • r. 1 1- •. Chamber- position and the proposed change m our fiscal poucy, it lain. is obvious, in the first place, that a question of the highest importance has been raised with great sudden- ness. The prosperity of the country, the unlooked-for manifestation of loyalty on the part of the Colonies in sending their contingents to South Africa, had given to the vrorld the proof of the unlooked-for elasticity of our imperial resources. And now, with no previous word of warning, Mr. Chamberlain has sounded the note of alarm at the prospects of trade. At home he sees the markets invaded by goods dumped down by the foreigner, liberally subsidised, and thus enabled to sell his produc- tions abroad at prices below then* cost. He sees the doors, once open, now closing against us everywhere. And there are the political considerations. This Policy of noble Empire, this proud and splendid heritage from our tion."* forefathers — aU this is crumbling to decay. Disruption is imminent. What are the remedies for these evils ? Against foreign competitors we are to wage a war of tariffs. They bar us out. Shall we lie down and be trampled on ? No. We will rise up. We will expel the foreigner from the land. We will trade only with our brethren — our brethren across the sea. They are 94 FIFTY YEARS OF PROGRESS; AND few to-day. They will multiply under the stimulus of prosperity, great abeady — to be made greater still by preferential tariffs. They wiU supply aU our food. They will take all our manufactures. Their allegiance, now wavering, wiU be restored by giving them the monopoly of our markets. Suppor- In Lord Rosebery's opening words at Sheffield, pro^te°o- ' what do you think of it ? ' We know what many *'°"' think of it. They are spellbound by the magic of skilful advocacy. There is no advocate more skilled than Mr. Chamberlain. He is the more persuasive for others because so fuUy persuaded in his own mind. Like the advocate in a court of law, he sees only one thing at a time. He knows his own point of view. He has a policy and a plan. He is sure that he is right — sure of his arguments. He does not • gi-eatly care for facts.' We must not forget that Mr. Chamberlain has long been Secretary of State for the Colonies. As he himself told us, when meditating on things on the lonely veldt, Colonial interests seemed everything and the interests of the United Kingdom scarcely more than parochial. Concentration on his own department has warped his judgment. The new movement is helped forward not only by the magnetic personality of the leader, but by the com- bination of many influences. Among the industrials and the merchants, how few are as prosperous as they would wish! Many think they would do better if the foreigner were out of the way. There are those interested in the land, who sigh for a return to protection. Rents have declined. It is hoped that they would increase with higher prices for THE NEW FISCAL POLICY 95 produce. And then there are the workers. They are the many, and the many govern. Speakers on both sides appeal to the workers. They dwell on the num- bers of the unemployed who would be in employment if foreign goods were kept out of our home markets. From the other side the workers hear of the cruel burden of taxes on food, with no possible compensation in higher wages or more work to do. How few of those who most enthusiastically applaud Mr. Chamberlain's oratoiy and read his persuasive speeches have examined, or could examine and collate, the facts for themselves ! The reports of long speeches are repugnant. How much more repugnant are hundreds of pages of statistics ! Never has a question been before the public of which it would be more true to say, using the words of Mr. Burke, ' there are but veiy few who are capable of comparing and digesting what passes before their eyes at different times and occasions, so as to be able to form the whole into a distinct system.' During my residence in AustraUa I mixed with all classes ; I visited every State within the Commonwealth. I never heard a word of disruption. I was there when, in obedience to a popular sentiment, deeply and univer- sally felt, the resolve was taken to send contingents to Australian South Africa. There was no obligation. The people were moved by racial sympathy, by love for the old land, by loyalty, and by patriotism. They did not think of tariffs. They felt as deeply in the protectionist city of Melbourne as in the free-trade city of Sydney. I have recently visited Canada. At the Congress of Canada. Chambers of Commerce of the Empire, the sentiment generous. 98 FIFTY YEARS OF PROGRESS; AND was intensely loyal. We sang 'God save the King' four times a day, as only our Colonial fellow-subjects can sing it. Our Why, indeed, should our self-governing Colonies policy desii-e to sever their imperial ties ? We treat them with generous confidence. We import aU their products duty- free, and ours is their best market. We give unhmited powers of self-government, and aU the privileges of British citizenship. We stand ready to shed the last drop of blood in their defence. Such being the terms — the generous terms — on which the unity of the Empire is maintained, it can hardly be claimed that we, in this old land, burdened with manifold responsibilities, should lay upon ourselves taxes on food and taxes on raw materials, unless some effective reciprocal advantages are offered. It is for Canada, for Australia — practically no other of our vast British possessions is in question — to say whether they are ready for free trade. Their industries are in an early stage of development, and need protection. The preference we have thus far received is not an effective preference. If we ourselves are barred out by a tariff sufficiently protective to exclude our goods, a still more prohibitory tariff against foreign countries does not help us. We have as yet no indication of a change in Colonial fiscal policy. In Australia the labour party is the ruling force. Its representatives favour protection and bounties to local industries. Canada has been even more protectionist than Australia. In trade with Canada the United States have a geographical advan- tage over the United Kingdom, not only for the supply of those raw materials which we cannot produce, but for the supply of manufactured articles to meet colonial THE NEW FISCAL POLICY 97 requirements. In every dependency of the Empire, except in Canada, the United Kingdom has, under existing conditions, the hon's share of their import trade in all articles which we are able to produce. As between the JNIother-country, which desires Difficulty to increase her exports, and a Colony which desires to union. protect young industries in the home market, any bargain must be difficult. The representatives of the Canadian industries at the Montreal Congress did not conceal their views. Their spokesman was Mr. EUis, a former President of the Canadian JNIanufacturers' Association. He said : ' I want to be perfectly frank. I do not think anything is to be gained by hiding back the situation which we accept ; and I wish to say that, as far as Canadian manufacturers are concerned, we believe we have gone far enough. We will oppose strenuously any reduction in the present duties.' While the self-governing Colonies continue protectionist, a fiscal union is impossible. The new fiscal policy is advocated as a bond of Imperial unity. A preferential tariff on conditions very onerous to the Mother-country, and not conferring any sensible advantage on the Colonies, is a feeble link in comparison with the ties of racial sympathy. If these Avere weak, it were vain to look for a rally round the old flag in the hour of national peril. The true links of Empire are the racial sympathies — the language and literature, the history which we all share, the consti- tution under which we all live, the religion we all profess. The bonds of such a union are silken bonds ; but they are strong as adamant, and they give a power- ful moral support to the Mother-land. G 98 FIFTY YEARS OF PROGRESS; AND Betalia- tion and statistics of pro- gress. Let us do what in us lies to promote the material progress and prosperity of the Colonies. There are more effective and less burdensome expedients than the laying of duties on food and raw materials. Let us be liberal — more Uberal than heretofore — ^in subsidies to well-considered projects for all Imperial objects. The arguments for retaliation are plausible. They are less conclusive on closer examination. Let us once more pass in review the leading facts and figures in the Blue-book lately issued. Exports of Manufactured Goods TJnifced Kingdom Germany France Million £ 1898 . . . 198-0 1902 . . . 227-6 + 29-6 1897 1901 Million £ . 115-2 . 144-6 + 29-4 1897 1901 Million £ . 77-3 . 90-0 + 12-7 Exports per Head of Population TJnited Kingdom 1898 1902 £ 8. d. 6 15 7 6 15 1 Population, 41,000,000 (Germany 1890-94 1895-99 £ s. d. 3 2 9 3 7 2 Population, 56,000,000 1890-94 1895-99 £ 8. d. 3 11 4 3 14 8 Population, 38,514,000 British Trade to Foreign Countries and British Possessions Foreign Countries British Fosseeslons 1880-84 , 1895-99 , per cent. 65-5 66-0 per cent. 34-5 84 THE NEW FISCAL POLICY 99 The table below is from the Board of Trade memo- randum of 1902. Imports into Neutral Markets from the United Kingdom, Germany, France, and the United States, respectively. Average for 1898-1900 Proportion per cent, from Total imports (MUUons Bterling) TTnited Kingdom Germany France United States £ Egi'pt ... 13 38 3 9 2 Argentine Kepublic . 23 36 12 10 12 Uruguay . 5 27 11 9 8 ChUi .... 8 37 27 6 9 Mexico 10 18 11 12 49 China. 36 17 * >;- 8 Japan 26 21 8 2 15 British India 90 64 2-2 1-4 1-5 Straits Settlements . 28 11 2-1 0-5 0-5 Ceylon 7 28 1-9 0-6 0-3 Mauritius . 3 24 0-4 0-7 2-5 Australasia 74 38 3-2 0-3 6-9 Natal. 6 67 3-1 8-9 9-0 Cape of G-ood Hope . 19 68 3-7 0-4 10-9 British N. America . 33 25 4-4 2-5 59-3 British W. Indies 7 40 1-0 1-3 34-8 British Guiana . 1 53 0-1 0-5 28-3 • Not distinguished. General Statistics of Progress Gross value of Property assessed to Income Tax : Average 1890-94 £703,000,000 1902 £902,000,000 Deposits in Post-Office Savings Banks : Average 1895-99 £163,000,000 1902 £197,000,000 Depositors in Post-Office Savings Banks : Average 1895-99 8,787,000 1902 10,803,000 100 FIFTY. YEARS OF PROGRESS ; AND Our countiy has greatly prospered. It is for the advocates of change to give proof of its necessity. Under protection we shall lose all the advantages of a free-trade country in competition with hampered and hindered industries. Let us pause before we reverse the policy of fifty prosperous years. Weight of Economists and statesmen are by a strong maiority authority. . j o J J in favour of free trade. The Liberal party is united on the fiscal question, and it is strongly reinforced from the other side. The Cabinet was divided, and the Prime Minister found it difficult to fill vacancies. The leaders of the Unionist party have mustered in theu' strength under the Duke of Devonshire, stiU ready to obey the caU of duty after long years of service in the highest offices of State. And who were they who were seen in imposing array at the memorable meeting in the Queen's HaU ? They were able members of the Conservative Ministry — Lord James of Hereford, Lord George Hamilton, Sir Michael Hicks-Beach, Mr. Ritchie, Lord Balfour of Burleigh, and, among the younger men, Mr. Arthur EUiot, Secretary to the Treasury, Mr. Winston Churchill, and Lord Hugh Cecil. Those specially called upon to consider fiscal questions have been unanimous — three Viceroys of India — the Earl of Northbrook, the Earl of Elgin, and the Marquis of Ripon ; four Chancellors of the Ex- chequer — Lord Goschen, Sir Michael Hicks-Beach, Sir William Harcourt, and Mr. Ritchie. In all our long Parhamentary history, never has the weight of authority on any issue been so commanding as to-day in favour of free trade. Demands for protection are insatiable. The clamour THE NEW FISCAL POLICY 101 becomes more urgent with every concession. Con- vinced free-traders should be up and doing. ' Omne malum nascens facile opprimitur : inveteratum fit robustius.' If unjustly treated by any nation, we shall be in fuU accord with free-trade principles in looking to our own interests, and adopting such measures as may from time to time seem best. To return to protection would be disastrous. 102 FIFTY YEARS OF PROGRESS; AND CHAPTER XIV INQUIRY BY EOYAL COMMISSION When proposals are made by a powerful Minister in the responsible position of Secretary of State for the Colonies, having for their aim an object which we all approve, they claim attention. Let us not say that inquhy is unnecessary. We may insist that it should be thorough and impartial. Some weighty words once used by Lord Sahsbury should be remembered at the present juncture. In his reply to a deputation from the Imperial Federation League, in 1891, he spoke as follows : ' The solution of this problem does not he on the face of it. It will require the labour of many able minds before a satisfactory solution is arrived at. To make a united empire, such as you have in Germany, and such as, in the largest sense of the word, you have in the United States — to make that out of the scattered elements of the Queen's Empire, you have two diffi- culties : you have to found a union for war and a union with respect to Customs policy. Your difficulties with respect to a Customs policy you know. A Kriegsverein means some control of foreign policy. It means a balance or appraisement of the voting value of the different elements of which the empire is composed. The matter is not one for vague sentiment ; it is one for hard thinking and the utmost effort that the strongest intellect of our time can give.' THE NEW FISCAL POLICY 103 And now, how shall we end a controversy of which we are growing weary ? If Mr, Chamberlain prevails, what will he do ? He has said, ' Give me a mandate, and I will negotiate.' He would go to the Colonies and say, ' I am ready to propose to the British ParUament a fiscal pohcy for your advantage. Can you reciprocate ? ' If he heard in reply all that was urged by the Canadian delegates last year at the Colonial Conference ; if he heard the speeches dehvered at the Montreal Congress by Sir Wilfrid Laurier and his colleagues — well, we know what Mr. Chamberlain would say. He would say : ' 1 am disappointed. I was willing to make very generous proposals on your behalf. They would have entailed to the people of the Mother-land a heavy sacrifice for your benefit. I cannot make such pro- posals, unless for the mutual advantage.' Preferential tariffs, of which we have been hearing so much of late, would drop out, as the scheme once so eloquently propounded for universal pensions to the aged poor has dropped out, from the programme of the Government. It would be the same with the policy of retaliation. Mr. Chamberlain, in a position of responsibility, would doubtless endeavour to deal cautiously with a policy of retaliation. As the leader in a new movement, he is appealing with unrivalled art for popular support. He appeals not only to the reason but to the prejudices of his audience. Mr. Chamberlain has said what he would do if he received a mandate from the country. He would call together a committee of experts in every branch of trade ; he would ascertain their views. When we descend from vague denunciations of foreign commerce to a practical scheme — to a specification of the goods to 104 THE NEW FISCAL POLICY be taxed, and a schedule of duties — it will be as the casting of the apple of discord into the garden of the Hesperides. The producers of commodities which will be raised in price will receive a boon, perhaps in silent gratitude. Every consumer will remonstrate ; and the consumers are the many. As with preferential tariffs, so with retahation for the benefit of our home indus- tries — it will be found in the end that Uttle can be done. Meanwhile, Mr. Chamberlain has called to his assistance a committee in sympathy with his own views. A scheme will be formulated. The new policy will be presented in a concrete form. An examination by a representative and responsible body must follow. It is impossible for the constituencies — nay, impossible for ParUament — fuUy to investigate the facts and their bearing on fiscal policy. A Royal Commission is best fitted for the task. The issues which Mr. Chamberlain has raised are of momentous import. They should be examined by capable and impartial men. The able officials in high posts in the public service should be consulted. Their advice is the more valuable because they have the know- ledge of experts and are disinterested. Guided by such advice the British people, with unfaihng common sense, will come to a wise decision. They will find other and better means than the obstniction of trade for main- taining the noblest Empire which the world has seen. APPENDIX Reprinted from the ' Free Trader ' BRITISH AND FOREIGN TRADE IN 1903 The monthly Accounts relating to Trade and Navigation for December last, just issued by the Board of Trade, contain a summary of the figures for the whole year 1903, in comparison with the two preceding years. The figures give no kind of sup- port whatever to those who are proclaiming the evil state on which British industries have fallen. In every respect 1903 has been a record year. We set out first the figures of imports and exports for the last three years : — Year Imports c.i.f. Exports f.o.l). (including bnllioa aud specict £ £ 1901 521,990,198 347,864,268 1902 528,391,274 349,238,779 1903 542,906,325 360,457,316 The total of the year's trade is then over £903,000,000, or £25,000,000 more than any previous year. As compared with the preceding years, imports show an in- crease of £14,500,000 over 1902 and £20,000,000 over 1901. When these increases are examined in detail they are found to be almost entirely in food and raw materials. The increase in imports of 1903 over those of the previous year is made up as follows : — Food, drink, and tobacco £8,102,099 Raw materials and articles mainly immanufactured £4,5 1 2,240 Articles wholly or mainly manufactured... ... £2,179,215 (The group called miscellaneous has declined to £278,503.) In regard to the first group, it is noteworthy that tobacco has fallen by £1,600,000, and dutiable articles of drink by £1,560,000 ; whilst grain and flour have risen by £3,750,000 ; meat, including articles intended for food, by £2,500,000 ; and non-dutiable articles 106 APPENDIX of drink by £2,175,000. Last year we imported articles of food and drink to the value in all of £228,000,000. The total outlay upon meat, both live and dead, was £50,398,000, or more than £2,250,000 more than in 1902. Of fresh beef more than two-thirds came from the United States, and nearly all the remaining one-third from Argentina. Of fresh mutton rather more than one-half came from New Zealand and one-third from Argentina. Of bacon, the total import last year was £13,600,000. It is interesting to notice that £7,370,000 worth came from the United States, £4,294,000 from Denmark, and £1,691,000 from Canada. We spent £1,500,000 upon fresh pork, chiefly from Holland, the United States, and Belgium ; £245,000 on salted beef, mostly from the United States ; £319,000 on salt pork, also chiefly from the United States ; and £724,000 upon rabbits, chiefly from Australasia and Belgium. Eggs established a record. They rose to £6,617,000, or £1,000,000 in excess of the figure of 1901. It is curious that the largest source of supply is Russia (which sent £1,866,000 worth), followed closely by Denmark. Our imports of butter also reached the maximum hitherto attained, being only a little less than £21,000,000 in value. Nearly half of this, or £9,500,000, came from Denmark (New Zealand sent £1,250,000). Canada heads the list in the supply of cheese with £4,820,000 out of £7,054,000. . The wheat supply from abroad continues to increase. Last yearns amount rose from 81,000,000 cwt. in 1902 to 88,000,000 cwt., and the value increased from £27,000,000 to nearly £30,000,000 sterling. The supply from the United States declined somewhat ; it was 24,000,000 cwt., as against 43,000,000 cwt. in the preceding year. On the other hand, the supplies from Russia were more than double, and rose from 6,540,000 cwt. to over 17,000,000 cwt., and the quantities received from Argentina increased from 4,000,000 to 14,000,000 cwt. The British East Indies also came to the rescue, and sent us over 17,000,000 cwt., as against 9,000,000 cwt. in the previous twelve months. Canada, on the other hand, only increased from 9,500,000 to 10,800,000. In the case of flour £7,500,000 worth out of £9,750,000 came from the United States. The wheat figures illustrate the extreme importance of doing nothing what- APPENDIX 107 ever which would tend in any way to hmit the area of supply on which we can draw, in the event of a diminution of the quantities obtainable from any one particular country. In the second group of imports of articles, mainly unmanufac- tui-ed, the increase was chiefly in cotton, which rose by £3,750,000, and wool and timber, which rose by nearly £2,000,000. Wool advanced £600,000, and metallic ores, not iron, £500,000, and the miscellaneous class £843,000. On the other hand, there was a fall in iron ore, in oil, seeds and nuts, and in hides and skins, and a very large fall (of £1,500,000) in the gi'oup made up of such textile materials as flax, hemp, jute, and silk. In the third group articles wholly or mainly manufactured, iron and steel and the manufactures thereof, increased £750,000. Cotton yarns and textiles increased £1,368,000, and miscellaneous £1,500,000. On the other hand, there was a fall in cutlery and hardware, in machinery, in chemicals, and in metals and manufac- tures not of iron and steel. A word of warning is necessary to those who use only the summary tables. They appear to show an enormous increase of nearly £3,000,000 in the import of apparel. But a reference to the subsequent detailed tables shows that this large increase is only apparent, and is the result of a new classifi- cation made for the first time only in 1903. When we turn to the export tables it is necessary first to dis- tinguish between the two groups of exports, the British and Irish produce and the foreign and Colonial produce. We give the figures for the last three years : — British and Irish Foreigo and Colonial Tear exports exports £ £ 1901 280,022,376 67,841,892 1^02 283,423,966 65,814,813 1903 290,890,281 69,557,035 So that between 1901 and 1903 British exports increased £10,868,000. Mr. Balfour objects to including machinery and new ships in our exports. If we take these out, in 1901 and 1903, the result is still more favourable, for our other exports have increased £13,500,000. Of the increase between 1902 and 1903 in the exports of British and Irish produce of £7,466,315, practically the whole is in articles entirely or mainly manufac- tured. The export of articles of food, drink, and tobacco has 108 APPENDIX decreased £750,000 ; and the export of raw materials and articles mainly unmanufactured has increased by rather more than a corre- sponding amount. But the export of manufactured goods has risen by £7,354,420, and it is remarkable that this improvement is not confined to one particular branch of industry. All the sixteen groups into which the Board of Trade divides our exports of manufactured goods show an increase with one exception, and that exception is telegraphic cables and apparatus — an industry whose exports are sure to fluctuate very considerably from time to time. We give below the figures for a number of industries : — Iron and Steel Manufactures 1901 £25-0 millions 1902 28-8 „ 1903 30-4 „ Macldnery and Mill Work 1901 £17-8 millions 1902 18-7 „ 1903 20-0 „ Cutlery and Hardware 1901 £4,175,000 1902 4,384,000 1903 4,636,000 Cotton, Yarn, and Textiles 1901 £73,685,000 1902 72,458,000 1903 73,626,000 (These figures are remarkable in view of the great difficulties which the cotton industry has encountered in the past year, owing to the shortage of raw material.) Glass Manufactures 1901 £1,051,000 1902 1,098,000 1903 1,102,000 Chemicals 1901 £10,963,000 1902 11,559,000 1903 12,079,000 APPENDIX 109 Befined Sugar and Candy 1901 £350,000 1902 399,000 1903 615,000 So much has been said about the decline of the woollen industry that the figures deserve careful attention. The exports were £21,691,000 in 1901 ; £23,308,000 in 1902 ; £25,387,000 in 1903, and this progress is not due to the increase in the price of raw material. The advance in the exports has been both in value and in quantity. The following are the figures for manufactured goods : — Woollen tissues in million yards Worsted tissues in million yards Carpets in million yards Blankets in thousand pairs Plushes, wool, and mohair, in 1,000 yds. Flannel in million yards Woollen yarns in million yards Worsted yarn in million lbs. . . . In woollen manufactures thei-e is a marked increase to the United States, and this in spite of the tariffs. The export of woollen tissue to that country has advanced from 1 •4) million yards in 1901 to 18 million yards in 1903; worsted tissues from 21,000,000 yards in 1901 to 26,000,000 yards in 1903 ; and carpets from 198,000 yards in 1901 to 352,000 yards last year. We have never agreed with those people who regard export trade as the sole test of a nation's industrial prosperity. In the statistics of British trade of last year there is no evidence of any kind of decay. But, on the other hand, there is abundant evidence that we are maintaining and improving our position in spite of all the difficulties with which we are surrounded, and it is perfectly clear that we are quite capable of facing and overcoming these difficulties so long as we are not hampered. 1901 1002 1903 , 44-8 47-1 50-7 . 93-9 102-6 106-4 . 7-5 7-6 8-7 . 779 785 790 3. 94-5 62-8 115-9 . 9-7 8-5 8-7 1 1 1-3 2-0 . 47-3 51-4 57-8 SpotlUmoie & Co. Ltd., Printers, Neie-street Siuare, London.