2046 .13 H-F MM BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF ' Z891 ^..ZZAcrz^. /.^/ 5474 Digitized by Microsoft® limited 'to ks to;, all bor- Bicals of a gen- eral "character should ! ' 1 i be retxii-ned as soon as i~£i 5 1949 6 >?*fossible; when needed beyond two weeks a i special request should , be made. T/imited borrowers ed iive vol- (Jr two weeks, M ';*ith renewal privi- 'jfitges^rwhen a book is not ne^iBjl byr.'otJiers.' Books not , n^^d^, during recess jfieriiods ^fiould'^^retui'ned to thejibr^ry, orajir^nge- ments made for their , retjii^ii during borrow- er^abseiice, if )vanted. Books needed by ;(ator%than on$ person , ire placed on the, re- serve plist. Cornell University Library HF2046 .M13 The zollverein and British industi 3 1924 030 186 724 olin '~ Digitized by Microsoft® This book was digitized by Microsoft Corporation in cooperation with Corneii University Libraries, 2007. You may use and print this copy in iimited quantity for your personai purposes, but may not distribute or provide access to it (or modified or partiai versions of it) for revenue-generating or other commerciai purposes. Digitized by Microsoft® Cornell University Library The original of tliis bool< is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive..prg/details/cu31 9240301 86724 '^ DigitizeV by Microsoft® BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF Henrg W. Sage 1891 .AjJXU-^-8;:::.- .^^^/^/^faf 5474 Digitized by Microsoft® THE ZOLLVEREIN AND BRITISH INDUSTRY Digitized by Microsoft® Digitized by Microsoft® THE ZOLLVEEEIN ^; ^D BRITISH INDUSTRY "'*"•:„ '"■■/.■/: /;v BT J. RAMSAY MACDONALD MEMBER OF THE LONDON COUNTY COUNCIL LABOUR CANDIDATE FOR LEICESTER \ GRANT RICHARDS, 48, LEICESTER SQUARE, AND INDEPENDENT LABOUR PARTY, 10. RED LION COURT, E.G. 1903 P Digitized by Microsoft® t This book is issued with the general approval and under the auspices of the Council of the Independent Labour Party, and is an official pronouncement upon the Zollverein and Free Trade from a Socialist and Labour standpoint. Digitized by Microsoft® CONTENTS ■ Forewords. page The new unauthorized programme. — Mr. Cham- berlain. — ^Political reformer. — Land reformer. — Compensation for accidents. — Old age pensions. — Imperialist. — The demagogue. — The ZoUverein and Socialism. — The Labour party and Free Trade. — The stage after Free Trade 9 Chapter I. OUR EXPORTS AND THEIR DISTRIBUTION. The Empire as customer. — Our " leading lines." ■ — Colonial foreign imports. — A question of population. — ^In the days of preference ... 27 Chapter II. OUR home market and colonial trade. (i.) Canada — Exports. — Canada's need. — Canada's self-protection. — ^Revenue needs. — (ii.) Australia — ^Exports. — ^Australia's needs. — Australia's self-protection.— ^Eevenue needs. — (iii.) New Zealand — ^Exports.^ — ^New Zealand's needs. — New Zealand's self-protection. — (iv.) South Africa — Industry. — ^Revenue needs. — Conclusion .38 [5 ] Digitized by Microsoft® 6 CONTENTS Chapter III. THE ZOLLVIREIN AND THE WAGE-EAKNEBS. PAGE Old age pensions. — The Lancashire operative. — Wool, etc. — The foreign tit-for-tat. — The chaotic period. — Wages. — Wages and cost of living. — England. — Germany and Austria. — America. — German wages. — High wages. — American wages. — ^Wages under Protection. — The worker's share 56 Chapter IV. THE ZOLLVEBEIN AND THE EMPIRE. What is a Zollverein? — Free Trade in the Empire. — ZoUverein essentials. — Colonial defence con- tributions. — Mr. Chamberlain's " idea." — Britain and the Empire. — ^The Colonies and the Empire. — The ZoUverein and the Empire. — The ZoUverein and armaments 84 Chapter V. THE ZOLLVEREIN ALIAS PROTECTION. Fencing the " dumping-ground." — Protection and industrial problems. — Will Protection re- populate the soil? — Will it improve manu- factures ? — American . progress. — Germany's progress, — Great Britain's start. — Germany's advantage. — American enterprise.^-The facts. — Eetaliation 104 Digitized by Microsoft® CONTENTS 7 Chapter VI; the stage after free trade. PAGE The Trust — Britain's true policy : (i.) Political. — (ii.) Kent and land. — Mining rents and royalties. — (iii.) Eailway policy and British trade. — (iv.) Waste and loss.t — Industrial organization. — The Free Trader once more 137 Digitized by Microsoft® Digitized by Microsoft® FOREWORDS. As Mr. Chamberlain proceeded to unfold his idea of a fiscal arrangement between the Motherland and the Colonies, on May 28, to the Home of Commons, it must have been evident to everyone present that a new chapter in the variegated life of the member for West Birmingham had opened. In that life the chapters are many and short, and the career which they record suffers from none of the didness of consistency. To review that career hiefly is a necessary introduction to any discussion of the new chapter opened in it. It is not idle curiosity but wise caution which induces us to ask what has been the record of a statesman who proposes to revolutionize our fiscal policy, to readjust our political relations to the world, to abandon long- trusted principles^ of trade and economics, and who, whilst inviting us [9] Digitized by Microsoft® 10 FOREWORDS to take these departures^ confesses thai he has not thought out their consequences in detail, that he is not prepared with any definite proposals which the Colonies- are likely to accept, that he does not know how far into Protection his idea will lead us, and that the only thing he asks is that we should accept that idea, give him a blank cheque, and promise to accept whatever he may fill in. Half the argument for such an unusual proposal must surely depend on the career of the statesman who makes it. In 1874 Mr. Joseph Chamberlain retired from business in order to devote himself to public affairs, and that year he stood for Sheffield as an advanced Liberal. He was beaten, and two years later was returned for Birmingham. In these early days he was supposed to he tainted loith republicanism, and he was quite emphatic on two points : he declared for universal suffrage and a reform of the House of Lords. A part of his creed was realized in 1884, when Mr. Gladstone introduced his Franchise Bill; but a perusal of the debates Digitized by Microsoft® FOREWORDS 11 in Parliament by which the Bill was altered gives us the first indications of Mr. Chamber- lain^ s lack of practical ability to translate the generalizations of platform utterance into the clauses of an Act of Parliament. One is amazed to find that in the practical moulding of this Bill Mr. Chamberlain had so little influence, lohilst men at whose hesitating con- victions he had jeered left their mark upon it. At that point he dropped his enthusiasm for electoral enfranchisement, and his attempts to reform the Second Chamber have never ap- peared off the electioneering platform. He then became a social reformer. He laid down wide definitions of the duty of the State to the individvM. He had previously been dabbling in educational and religious matters, but in two directions he struck out a tolerably fresh line for himself. He con- demned certain features of private ownership of land, and declared for old age pensions and compensation for injuries. His land proposals varied from time to time. Peasant proprietorship under the title of ' three acres and a cow ' received his approval, and lease- Digitized by Microsoft® 12 FOREWOEDS hold enfranchisement was blessed by him. He accepted proposals for levying improvement rates in towns and for burdening slum owners. But looking bacJr upon a quarter of a cen- tury's land legislation, Mr. Chamberlain's platform pledges and attacks need never have caused a tremor to the interests he opposed. His policy of ransom, his description of those ^^ who toil not, neither do they spin," roused enthusiasm amongst the people for the time being. He was regarded as a leader ; indeed, he executed most successfully the first task of a leader, inasmuch as he raised deep vital issues. But off the platform he was a Samson shorn of his locks. Every criticism he ever made upon the land system of this countty, every picture he ever drew of the deserted croft and the decaying village, is as true now as when he outlined it. He has been in office twelve years, and if he had never made a speech as a land reformer his record could not have been more barren. Later on he ceased to utter " leading " opinions on the land, and turned his atten- tion to other aspects of social reform. He Digitized by Microsoft® FOREWORDS 13 declared in favour of universal compensation for accidents, provided in such a way that no litigation wotdd be necessary to secure it ; he shared in the production of a Bill which wOsS far from universal in its application, which has raised more litigation than any single industrial measure that has passed through Parliament, and which was drafted with such meagre practical sagacity as to be in many respects absurd and unworkable. No Act of equal importance has had to be supplemented by so many judicial judgments tantamount to legislative decisions. Of the practical, results of Mr. Chamber- lain's contribution to the old age pensions controversy it is almost unnecessary to write. He has told us that no practical diffjculty lay in the way of granting pensions, and when in opposition he poured forth deluges of blame upon the party to which he did not then belong for neglecting to provide them. He- has both voted fm' and against the same Bill as the exigencies of opposition and of office directed. In 1896 he appointed a Commission to advise as to a scheme; in 1899 he appointed Digitized by Microsoft® 14 FOREWORDS another for the same ptirpose. In 1895 he said that he had a proposal " so simple that anyone can understand it." He was then in opposition, and angling for votes. In 1896 the subject had become " most complicated." He had in the meantime got votes, and was then in office. In 1901 he told the Friendly Societies that if they would agree upon a scheme the whole matter would he settled; a few days ago {May, 1903) he stated that there could he no old age pensions until there was an Imperial tariff. Despite all he has ever said on the " idea " that a person at sixty 'Jive should be eligible for a pension, Mr. Chamberlain apparently has no more notion how that pension is to be paid than he had when he first used his " simple pro- posal " as a political cry. So, again, with his Colonial Imperialism., His friends maintain that he has been consistent in his Imperialist visions ; he has certainly been consistent in his failure to pro- duce a practical Imperialist policy. He has had none for the development of the West Indies, and only the passion of a war has Digitized by Microsoft® FOREWORDS 15 given him an opportunity of claiming that dunng his reign at Whitehall the Mother Country and the self-governing Colonies have come closer together. His failure- to under- stand the mind of Australia, even at a tirne when he was talking most about the Umpire, nearly brought us and the Commonwealth into serioiis conflict, and he was compelled to with- draw from the position he then took up. The chief characteristic of his South African record has been its absolute want of a policy. He never understood the situation created by the Jameson Raid; he left Lord Milner complete control, even to the length of an appeal to arms; he went to South Africa, and confessed on his return that the great justification offered for the war — the treat- ment of the natives — had been mistaken, and at Bloemfontein he spoke of the ^'^ misunder- standings " which had caused the trouble. To this day he has no practical policy of South African reconstruction, and all the effective good of his visit last winter sprang from the fact that a Minister whose office commanded respect journeyed to South Africa and saw both parties. Digitized by Microsoft® 16 FOREWORDS In this matter of an Imperial fiscal arrange- ment his want of practical grasp is also ap- parent. The report of the Conference with the Colonial Premiers during the Jubilee celebra- tions shows the Colonial Secretary to have been devoid of any statesmanlike suggestions. But he talked at the banquet (as he had done before at the dinner during the Gonfereme of the Chambers of Commerce of the Empire") of this idea of a modified ZoUverein. Then, it was only an " idea." He confessed he had not thought it out in detail. To-day it is still only an " idea." It is in a form for platform use, and fw^ that alone. In this form, how- ever, it has reached full maturity so far as Mr. Chamberlain's capacity is concerned. This brief review of his career shows Mr. Chamberlain in his true light. He is a leader of masses ; he is no statesman. He can stir up popular imagination, raise popular hopes, give an apparent reality to political speeches, issue edition after edition of un- authorized programmes. That done, he can go no further. Of him it can justly be said that he is all cry and no wool. His record Digitized by Microsoft® FOBEWORDS 17 is barren of practical achievement, except in municipal work, and even that he seems desirous of obliterating by his recent atta ch on his old municipal policy. He stands in\ English politics as the politician who is always leading but never reaching any goal, who always has an idea but never carries a scheme, who is always rousing to expectationX but has never satisfied by realization. An impartial but critical study of this record may be held to relieve us of any need to pursue Mr. Chamberlain^ s ZoUverein idea any further. He wUl probably never be in a position to pi'esent practical proposals for carrying it out; but if he were in such a position, he would fail, as he has always failed, in practical guidance. But whilst all that is true, we must recognise his extram^dinary platform powers, by _ which he can agitate, mislead, and unsettle. He can raise hopes in the Colonies f he can put the Mother Country in a difficult position, he can create a situa- tion which is bound to end in misunder- standing and bad blood between ourselves and our oversea cousins. Above all, there is a 2 Digitized by Microsoft® 18 FOREWORDS remote possibility that, owing to the political condition of Liberalism, this statesman, who has never scored a practical success and who is never at a loss for a battle-cry, may be given an opportunity to meddle with aur national trade and commerce, to experiment with its delicate mechanism, to risk ruin whilst pursuing problematical success. More- over, as Imperialism is for the time being in the air, we are sure to hear of Zollvereins, and rumours of Zollvereins, so that the~ con- sideration given to the subject in the succeeding chapters may not be altogether amiss. Moreover, there is another reason why this statement is issued. No party in the State is more gratified than the Independent Labour party that economic and industrial issues are coming to the forefront in politics. We recog- nise that the present position of British industry calls for an impartial reconsidera- tion of the basis upon which the last century left it. We admit the foreign " menace "; we know that the country is not prepared to meet the competition of America and Germany. We have been arguing for years that the main Digitized by Microsoft® FOEEWOEDS 1 9 stream of twentieth-century progress is to run in economic channels. We are convinced that as the examination of our industrial outlook proceeds, it will be seen that the mere Free Trad^ position commands but a limited view of the future, and that ultimately the Socialist constructive policy must become the alternative to the inefficiency and tim,orousness of Protection. We are certain that the mis- understandings and suspicions which retard Socialist experiment will be removed, and that the discussion will show Socialism to be the practical working idea of the twentieth as ' Liberalism ' was the practical working idea of the nineteenth century. Before entering upon an examination of the figures from which we may come to rational conclusions regarding the meaning and effect of an Imperial Customs Union, I deem it advisable to say thus definitely that the Labour party is not merely a Free Trade party. Theoretically, indeed, it lays down a very important exception to the Free Trade dogma, on the ground that, as an essential item in a Labour creed is that work 2 2 Digitized by Microsoft® 20 FOREWORDS should he done under reasonably good condi- tions, determined partly by Factory legisla- tion and partly by Trade Union agreements^ so, domestic non-sweated goods may reason- ably claim to be protected against foreign sweated articles. The Government and many public authorities, for instance, will not pur- chase lead pencils made at home unless they are manufactured 'under certain conditions as regards wages, hours of labour, and factory sanitation, but they accept pencils from aJ)road without any inquiry as to the conditions of manufacture. Tlie Labour party, how- ever, has never supplemented its demands for fair labour conditions with the advocacy of import duties' or exclusion. The time f&r such an advocacy has not come, probably never will come ; but this shows that the bald dogmas of Free Trade do not inspire the Labour party. That, however, is not the most important consideration. The Independent Labour party regards Free Trade as a mere first step in a long and fundamental social change, through which social organization must proceed from Digitized by Microsoft® FOREWORDS 21 Feudalism to Socialism. There Tias heen no Society, ethicaUy speaking, since the fabric of feudalism crumbled to ruin. There have been societies, there have been charities, there have been combining interests ; but industrial society has not yet organized itself round a binding centre like the Church or the Court, nor has it been built up in a series of har- monioits parts into an organic unity. Indus- trialism must supply a unifying idea just as militarism once did, but industrialism is as yet in its tottering infancy. Free Trade marked the time when the swaddling bands were removed, ; the beginnings of applied collectivism — tactory Acts, municipalization, fair wages clauses — showed industrialism putting its feet to the ground. The Free Trader looks round and is satisfied ; the Socialist looks round and sees need for farther effwt. To the Free Trader the industrial organization of to-day appears to be that on which production and distribution are to be conducted for all time with but slight and non-essential modifi- cations. Employer and employed, capitalist and workman, profit-seeker and consumer, Digitized by Microsoft® 22 FOREWORDS Trade Union and Masters' Federation, rivalry and competition, he thinks, are as permanent as the Egyptian thought the forced labour gang to be, the Athenian slavery, or the feudal landlord villenage. The Socialist looks beyond the beneficial results of Free Trade. Free Trade has not brought inter- national peace; Commerce, which the Free Trader regarded as the handmaiden of Amity, has become the herald of War. Free Trade has not settled industry, it has not absorbed the unemployed, it has not brought pauperism within compassable limits, it has not increased wages so substantially that old age pensions are unnecessary, it has not provided such ample margins of profit that industrial improvements can be readily made ; it has increased rather than diminished the aggregate rent and the dividends on dead capital which the producers have to bear. Fifty years after this country opened its ports, Mr. Charles Booth published his studies in industrial London, showing that over 35 per cent, lived below the poverty line, and that 1% per cent, earned, when in work, under 30s. Digitized by Microsoft® FOEEWORBS 23 per week. Ten years later still, Mr, Rown- tree wrote of York that over 51 per cent, of ^ poor are in that condition because they are earning, when in work, wages of under 21s. per week. In spite of Free Trade the population is becoming stunted in growth, and its general condition of life is such that its morale is being undermined, and its spiritual state shows even more threatening collapses than its physical. The industrial problems which we are now facing are those which arise in the generation after Free Trade has been secured. To som,e extent, by helping to supply an ampler sum to be distributed, Free Trade improved material conditions all round — as a big collection at the gates of the Fleet prison used to give the inmates a better time. But it did not pave the way for any organization of society which would secure just distribution and economical management of industry. Whilst the economic problem which the nation had to solve was mainly that of how to prodme wealth in a country dependent on the world for raw materials, Free Trade was an ample guide ; Digitized by Microsoft® 24 FORKWORDS but SO soon as the dijfficulties of distribution came to disturb our satisfaction with our amassed riches, it could be seen quite plainly that Free Trade carried us but a very short way. ''^ If you ask me," said Mr. Morley, at Newcastle, on April 18 last, ^^ for distinct proposals for the amelioration of labour, my answer is that in urging peace, in pressing for economy, in resisting every inno- vation upon the great policy of Free Trade, I am doing the best, according to my most humble abilities, that I can for the cause of Labour." Mr. Morley might as well feed a man by laying empty soup-plates in front of him, and regale him with eloquent descriptions of how the policemen give facilities to the grocer round the cmmer to take in plenty of stock from the railway-vans. Mr. Morley s lack of vision in social questions is phenomenal. Peace, Economy, Free Trade, are admirable. The Labour party favours them all, and has championed them, even when Mr. Morley's political associates were dumb or were heretical with regard to them; but neither Peace, Economy, nor Free Trade contributes Digitized by Microsoft® FOREWORDS 25 one hint as to how British industry is to be conducted, how labour can be paid equitably, how distribution can be more just. Peace, Economy, and Free Trade accumulate the pile; Landlordism, Capitalism, and Labour fight for its possession. Nay, more. The days when Peace, Economy, and Free Trade were alone sufficient for accumulating purposes have gone by. England has rivals on every market. The country must put itself on a business footing. The three Liberal guardians of the public purse must now call to their aid Skill and Organisation. These considerations mark off the Socialist who supports Free Trade from the Cobdenite of the stamp of Mr. Morley and front the ordinary Free Trade politician. Digitized by Microsoft® Digitized by Microsoft® THE Z0LL7EREIN AND BRITISH mDUSTRY CHAPTER I OUE EXPORTS AND THEIR DISTRIBUTION The Empire as customer. — Our "leading lines." — Colonial foreign imports. — A question of popula- tion. — In the days of preference. A STUDY of British trade is a neces- sary preliminary to an understanding of Mr. Chamberlain's new enthusiasm. First o£ all, how much of our exported products goes to places within the Empire ? The following table shows the destination of some of our chief exports : [ 27] Digitized by Microsoft® 28 TIJE ZOLLVEREIN AND BRITISH TRADE Average tor Three Years ending 1901 (Stat. Abstract, 1902). Total Export. Export •within Empire. Cotton manufactures* . Linen* .... Machinery . Iron and steel "Woollen and worsted 64,000,000 15,000,000 17,500,000 28,000,000 15,000,000 £ 28,000,000 1,000,000 5,000,000 11,000,000 5,000,000 Total 139,500,000 50,000,000 * Exclusive of yam and twist. It will thus be seen that, taking these staple industries — industries in which, according to the last census, 1,500,000 breadwinners in England and Wales alone were directly engaged — our Empire does not consume half of the home exports. On the average of trade shown in the above table a system of Imperial Protection would jeopardize nearly £90,000,000 of trade, whilst it would leave uninfluenced only about £50,000,000. Digitized by Microsoft® OUR EXPORTS AND THEIR DISTRIBUTION 29 The point is further elucidated by the following table, showing in more detail the markets we supply : Exports to various Countries from the United Kingdom. 1898. 1899. 1900. 1901. 1902. Cotton : 3,600,000 3,600,000 3,700,000 3,700,000 3,800,000 France . . 420,000 450,000 560,000 656,000 660,000 United States. 2,000,000 2,700,000 2,900,000 2,600,000 3,300,000 -' Australia 2,600,000 2,500,000 3,000,000 2,700,000 2,700,000 Canada . 800,000 900,000 1,000,000 1,100,000 1,300,000 Cape Colony . 800,000 600,000 700,000 900,000* 1,300,000' Machinery : Germany 2,000,000 2,200,000 2,000,000 1,600,000 1,400,000 France • . 1,300,000 1,300,000 1,700,000 1,400,000 1,400,000 United States. 359,000 463,000 802,000 565,000 690,000 Australia 900,000 700,000 1,000,000 1,400,000 1,400,000 Canada . 105,000 180,000 199,000 130,000 135,000 Cape Colony . 650,000 640,000 400,000 620,000* 1,000,000* Iron — wrought and unwrought : Germany 1,800,000 2,700,000 3,000,000 1,200,000 1,000,000 France . 606,000 1,000,000 1,300,000 749,000 634,000 United States. 1,300,000 1,600,000 1,700,000 1,900,000 3,700,000 Australia 2,000,000 2,600,000 3,400,000 3,000,000 2,900,000 Canada . 460,000 960,000 860,000 1,000,000 1,870,000 Cape Colony . 1,000,000 818,000 900,000 1,000,000* 1,700,000* Woollen and worsted : Germany 930,000 970,000 880,000 850,000 940,000 France . 1,300,000 1,400,000 1,600,000 1,300,000 1,500,000 United States. 2,000,000 1,300,000 1,300,000 1,100,000 1,600,000 Australia 1,600,000 1,700,000 2,000,000 1,800,000 1,600,000 Canada . 1,200,000 1,300,000 1,400,000 1,500,000 1,800,000 Cape Colony . 600,000 430,000 460,000 630,000* 960,000* * Abnormal war exports. The next point is, What proportion of colonial imports is of home origin ? Some of the statements of the friends of an Imperial Customs Union assume that a Digitized by Microsoft® 30 THE ZOLLVBEEIN AND BRITISH TEADE very considerable part of the Empire's trade is passing our doors, and some facts on this point may be enlightening. Let us ta,ke a few of the chief imports into our Colonies and see their origin. The following table is taken from Cape Colony imports for 1900 : Total Imports from Imports, Home. : £ £ Cotton . 1,035,311 954,318 Iron 391,000 375,000 Linen 92,952 85,601 Machinery 537,496 367,861 Kailway and tram plant . 973,800 653,297 Steel . 30,435 29,131 "Woollens 312,456 297,105 Or take New South Wales (1900) : Total Imports from Imports. Home. £ £ Wearing apparel 1,261,256 985,289 Hardware 298,864 184,309 Railway and tram plant . 200,091 16,779 Plate and sheet iron 93,896 69,009 Engines . 70,943 40,720 Matches . 80,656 47,827 Rails 160,487 136,563 Woollens 746,000 661,000 Digitized by Microsoft® OUR EXPORTS AND THEIR DISTRIBUTION 31 Canada is a little less satisfactory, per- haps, but the following table shows how little a preferential tariff can do to remedy matters. It will be remembered that since 1897 goods coming to- Canada from the Mother Country and from certain Colonies have been receiving preferential treatment to the extent of from 12J per cent, to 33^ per cent. The articles enumerated in the follow- ing table are those which are imported from home under that preferential treatment, and from the United States on the ordinary high duty : Canadun Imports, 1900-1901. Imports from United States. Imports from Great Britain. 190O. 1901. 1900. 1901. BootB Cotton fabrics . General machinery . Pig-iron .... Wool — all fabrics com- posed wholly or partly of wool . . . . Dollars. 22,417 3,118,958 2,799,758 577,124 44,970 Dollars. 42,003 3,400,113 3,032,253 433,486 44,273 Dollars. 3,285 781,403 063,103 233,745 2,562,062 Dollars. 6,310 722,432 609,682 114,060 2,379,158 Evidently a preferential tariff is not such a great gain. People buy what they want, but colonists abroad, if everything else be Digitized by Microsoft® 32 THE ZOLLVEREIN AND BRITISH TRADE equal, will be inclined , to patronize home manufacture. This point is made with still more con- clusiveness when the figures of colonial imports from foreign countries are analyzed. It is then seen that a very considerable proportion of these imports are of materials which the Home Country does not produce, and never can produce. Of the £23,000,000 worth of imports which Canada takes from the United States, practically one-half is for goods like ores, raw cotton, oils, and bread- stuffs, which we ourselves must always import. Of the £12,000,000 which Aus- tralia takes from beyond the Empire, again one- half is for material which the Empire, cannot yield, and so on with the other Colonies. At least one-half of colonial imports from foreign countries consists o£ materials which the Empire does not pro- duce, and if it did produce them, it would find, without any rearrangement of Imperial tariffs, a ready market for them. I should be the last to insist that popula- tion alone ought to be considered when dis- Digitized by Microsoft® OUR EXPORTS AND THEIK DISTRIBUTION 33 cussing this problem. But population is of great importance, and a comparison between the number of people in our Colonies and in our own cities will serve, at any rate, to cor- rect the wild imagination of some Imperialist rhetoricians. Greater London, with its popu- lation of 6,000,000, offers a richer market than all Canada with its population of 5,600,000 ; Greater Manchester, with 1,000,000 people, than New Zealand and Tasmania put together with 970,000 j Leicester, with 213,000, than Western Australia with 194,000 ; Lancashire, with 4,437,518, than the whole of Australia with 3,832,837 ; the West Eiding of York, with 2,766,471, than Cape Colony and Natal put together with 2,500,000.* Leaving sentiment and political consideration out of account, these comparisons of population come as a cold douche upon our Imperialistic enthusiasm when it blazes up into Zollverein schemes. They remind us that, if we are to * These colonial figures include native populations. For instance, whilst 2,500,000 are put down to Cape Colony and Natal, only about 330,000 are whites. 3 Digitized by Microsoft® 34 THE ZOLLVEREIN AND BRITISH TRADE talk of business, we must begin by calcula- ting market possibilities. Thus it will be seen that if our Empire agreed to impose prohibitory duties on foreign goods which can be procured from home, it would increase immediately the volume of demand for these home products only by an insignificant fraction of our present export trade.* Of course, there is the possibility of ex- pansion of colonial imports. The table on the next ' page, showing the increase of population in our Colonies and certain States which are good customers of ours, has a bearing upon this point. It shows that, so far as an increasing population is con- cerned, Germany, Russia, and the United States offer us practically as good markets as our own Colonies. * Sir Swire Smith, speaking at Keighley on June 9 last, put the case as it aJFected his locality in these words : " The German tariff on Keighley yarn is about 1 per cent. ; the Canadian tariff under the present preference is 13 J per cent. . . . Keighley would probably do more trade with Canada than now, but half the mills would have to close if we lost our trade with Germany." Digitized by Microsoft® OITK EXPORTS AND THEIR DISTRIBUTION 35 Population of Colonies and Certain States IN 1901. Colonies and States. Population. Per cent. Increase in 10 years. British Empire: Canada . : Australia New Zealand Cape Colony . Natal . Total . United Kingdom Germany . France Bussia, including Asia United States . 5,371,000 3,774,000 845,000 2,433,000 925,118 11-1 18-5 20-2 50 61 13,348,118 41,456,000 56,500,000 38,961,000 129,211,000 76,356,000 9-87 14 1-6 18-7 19-5 The figures set out in this chapter show conclusively that we are now doing with our Colonies as great a volume of trade as is economical either for us or for them. They also give encouragement to the idea that our colonial trade is worth nourishing. Of course it is, and it is to be hoped that our manufacturers will never forget that the self-governing Colonies, being sentimentally British, offer special facilities 3—2 Digitized by Microsoft® 36 THE ZOLLVEREIN AND BRITISH INDUSTRY for the sale of British goods; but no one can rise from a study of these figures without banishing from his mind the erroneous impressions conveyed by Imperialist talk, and without feeling how important it is that our ordinary foreign trade should be zealously nursed. Those who now advocate preferential duties as though they were the discovery of yesterday do not know, apparently, that preferential duties between the Mother Country and her Colonies were in existence up to the beginning of 1849. The first year of their removal showed an increase in British exports to the Colonies of 21 per cent., and, except 1852, every year showed steady increases over and above the propor- tionate increase due to population. Nor is that all. 'Providence seems to have designed that the ZoUverein argument should be so weak that in every aspect it should be met with overwhelming contradictions. Whilst a preferential tariff existed, our exports to our Colonies were actually declining in relation to our aggregate export trade. Digitized by Microsoft® OUR EXPORTS AND THEIR DISTRIBUTION 37 In 1841, 12-83 per cent, of our exports went to our Colonies ; in 1842, 12*71 ; in 1843, 11-55 ; in 1844, 11-44 ; in 1845, 11-31; in 1846, 10-87; in 1847, 10-36; in 1848, 8-6 ; in 1849, 8-3 ; in 1850 (after the preference was abolished), 9-5 ; in 1851, 9-21 ; in 1852, 9-61 ; in 1853, 15-03 ; in 1854, 14-0. A generation of experi- ence is worth an eternity of " ideas " which struck a politician holiday-making on the " illimitable veldt." England's policy is to foster the colonial market without sacrificing the foreign one. But before discussing how that is to be done, we shall have to examine colonial trade, as we have done home exports, to see what Mr. Chamberlain's " idea " means to the Colonies. Digitized by Microsoft® CHAPTER II OUR HOME MARKET AND COLONIAL TRADE (i.) Canada — Exports. — Canada's need. — Canada's self-protection. — Revenue needs. — (ii.) Australia — Exports. — Australia's needs. — Australia's self-pro- tection. — Revenue needs. — (iii.) New Zealand — Exports. — New Zealand's needs. — New Zealand's self-protection. — (iv.) South Africa — Industry. — Revenue needs. — Conclusion. MR. CHAMBERLAIN'S proposals affect our export trade only so far as pur self - governing Colonies are concerned. Egypt is not yet diplomatically within the Empire, and at present we can control the fiscal policy of our Crown Colonies and India. Moreover, as Professor Flux-pointed out in a paper read to the Statistical Society, " the great source of the growth of Britain's colonial trade is very clearly shown to be the growth of trade with the Colonies to [ 38 ] Digitized by Microsoft® HOME MAKKET AND COLONIAL TRADE 39 which self-government has been granted.* In the commercial development of these self- governing Colonies lies whatever advantage there may be in an Imperial fiscal scheme, and the political relation of these Colonies to the Mother Country contains whatever Imperial problems may arise out of such a scheme. These Colonies alone are there- fore discussed in this chapter. How will a Zollverein affect their trade ? What Colonial exports will be touched by it ? For which of its products will each Colony claim pro- tection on our markets ? Finally, what will be the effect upon home consumers ? The total value of Canadian exports (excluding Newfoundland) for 1901 was £40,374,171, and of these £19,854,585 worth came into the Mother Country. Of the £40,000,000, over £6,000,000 was for wood, about £5,800,000 for grain and flour, nearly £5,000,000 for cheese and butter, and about £1,500,000 for live stock, whilst over £5,000,000 was for gold. Canadian export * Journal of the Boyal Statistical Society, September 1899, p. 498. Digitized by Microsoft® 40 THE ZOLLVEREIN AND BRITISH INDUSTRY is therefore mainly lumber and agricultural produce. Evidently what Canada needs, if the Mother Country is to help her commerce, is that we tax our imports of agricultural produce from foreign countries. Our imports of corn, grain, andflour in 1902 were £63,000,000, of which £10,000,000 came from within the Empire, £4,500,000 being Canada's share. Thus, this item of import is seen to be Canada's chief interest,* and an Imperial fiscal, scheme is bound to take cognisance of that fact. If Canada is to share in the advantage of a Zollverein, we must tax foreign imports of grain, and that means that in order to benefit the importers of about £5,000,000 worth we shall have to tax the consumers of £69,000,000.'j" Canada may reasonably be asked to allow her wood exports to take their chance, but as she has a great desire * The £10,000,000 includes nearly £1,500,000 for rice from the Indies. + This does not include the 300,000,000 bushels of home-grown corn which would also be raised in price by an import duty. Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 41 I to develop her dairy and fruit trade, she may well beg us to give her special privileges in this respect also. But then, if there is anything in the argument* that open ports mean the dump- ing down of cheap produce from abroad, Canada surely needs protection against British iron, steel, and machinery, of which we sent in 1902 £1,314,350 worth— a sum which equals one- sixth of our total exports to the colony. In fact, the Do- minion is at the present moment engaged in dealing with this matter. In 1899 the Laurier Government decided to grant a bounty on Canadian iron. This had the usual effect of stimulating ineffective work- ing, and the company which was to produce pig-iron at 6 dollars a ton ignominiously failed to do so. Now an attempt is being made to raise the import duty, and the Opposition is committed to that policy. In the debate which took place in Ottawa on June 9, Mr. Tarte, Sir Wilfrid Laurier's * Mr. Chamberlain, May 28, 1903, in the House of Commons. Digitized by Microsoft® 42 THE ZOLLVEREIN AND BRITISH INDUSTRY late Minister for Public Works, declared that the 1897 tariff was too low, and Sir Wilfrid Laurier, who could only feel sure of defeating the amendment by making the question one of confidence in the Govern- ment, did not actually oppose but only temporized. He complained that the Grovernment had had no information show- ing why the Dominion Iron and Steel Com- pany was unable to produce iron so cheaply as it had anticipated in 1899. " We asked the gentleman who came to us " [to nego- tiate the increased tariff], he said, " to give us a statement in black and white which we could look into and study before we made up our minds whether or not we were to make any changes in our fiscal policy, or allow it to remain as it is." No informa- tion was given, and, only on that ground, Sir Wilfrid did not see his way to increase the tariff. I shall return to this point when dealing with Australia. Further, Canada will very probably take the view that, whilst she is willing to show her patriotism by differentiating her dues Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 43 in favour of the Mother Country, she cannot sacrifice the revenue she derives from import duties. The Canadian Consolidated Fund account, which contains practically the whole income and expenditure connected with the ordinary work of the Government, showed receipts in 1901 of $52,514,701, and of that sum no less than $28,425,284 was raised from Customs, and $10,318,266 from Excise duties. The remaining $13,000,000 was derived from the sale of lands, public • works' revenues, and the Post-Office. Canada is not to sacrifice her Customs income in order to meet patriotic sentiment. This method of raising national revenue is a principle in the Dominion, and it will not be abandoned now, for the very simple reason that no Canadian statesman could suggest any other practical way of raising $30,000,000 annually. As there are no Commonwealth figures yet published, the Australian States must be taken severally. The following table shows at a glance the chief articles of export from these Colonies : Digitized by Microsoft® 44 THE ZOLLVEREIN AND BEITISH INDUSTRY 00 00 00 t~ •* OS J-H o I-H CO ■d lO to I-H_ i:~ !-<_ "o =rt CO 00* t-T os" -*" CJ to OS OS -* o o (M p-1 t- (N ■^ >*!■ -* eo ■* IM eo P3 r^ -a F3 . o CO l:~ o 00 m t-l a h o CO OS m . |e =tj m" os" os" j>r I-l OS m t- £^ o t- os_ i o 00 os to 00 r 1 1 1 J3 1 < 1 § 1 Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 45 Thus we see that, leaving gold out of account, the bulk of Australian exports is wool, and that when frozen meat, corn, and dairy produce are added, the limit of Australia's export trade is reached. Indeed, the estimated value o£ Australian production is, that agricultural and pastoral products amount to £60,500,000, whilst manufactures total £27,191,000, over a third of which stands to the credit of New South Wales. It must also be noted that some proportion of those figures consists of inter- State trade. Evidently the Australian side of a Zoll- verein bargain can only be met by special facilities, in the shape of a differential tariff, being given on the home market to Australian wool and meat imports. This would steady the price of the one, and protect the other against Argentine com- petition. Australian farming has suffered greatly by reduction in prices. " The first check to this prosperous state of affairs," says Mr. Coghlan in the official " Account of the Seven Colonies of Australasia, 1901- 1902" (p. 414), "was brought about by Digitized by Microsoft® 46 THE ZOLLVEREIN AND BRITISH INDUSTRY the fall in prices. High prices for all classes of local produce obtained in 1875, but from that year to 1877 there was a reduction equal to about 14 per cent. . . . In 1886 the country began to feel the effects of price reduction, . . . During the nine- teen years 1875 to 1894 the total decline was equivalent to 49 per cent., and affected all descriptions of pastoral products, and as there was no corresponding reduction in the cost of production, and little in the cost of transport, the reduced prices proved a very severe blow to the staple industry of the country." Australia will therefore naturally ask us to steady her prices by Protection on our Imperial markets. The total import of raw wool into the United Kingdom is (1901) 740,000,000 pounds, valued at £23,800,000, and of these totals 475,000,000 pounds, valued at £13,497,871 (out of a total Australasian wool export of £18,920,000), come from the Australasian Colonies, including New Zealand. As regards her own industries, Australia Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 47 is well protected already. But she is deter- mined to nourish her own trade still more, and the duties she levies are not likely to be materially reduced in view of her declared protective policy — a policy which stood in the way of federation because the constituent States of the Commonwealth were not pre- pared even for inter- State Free Trade. Par- ticularly may she claim the right to nourish her own clothing trades, by keeping up a tariff against ours, and no Imperialist senti- ment will induce her to allow her iron trade possibilities to lie dormant when she is strongly convinced that a protective tariff wiU develop them. A few days ago newspaper readers must have noticed with some amusement that whilst we were discussing preferential tariffs in order to show our goodwill to our Colonies, our two leading Colonies were proposing to build their tariff walls higher against us. On the same day as the tariff debate at Ottawa, to which I have referred, was reported in England, the news- papers published extracts from a speech that Digitized by Microsoft® 48 THE ZOLLVEREIN AND BRITISH INDUSTEY had just been delivered by the Australian Commonwealtb Minister of Customs, Mr. C. C. Kingston. In that speech he declared that the Commonwealth Government pro- posed to copy the Canadian iron bonus " to secure the establishment of the industry of manufacturing iron from the ores in Aus- tralia." The Government is therefore to give a bonus to the Australian ironmaster of about 20 per cent, of the value of the manu- factured article in addition to levying pro- tective tariffs against British iron. This point is of the utmost importance, and those who favour the Zollverein are doing their best to obscure it to the English manufacturer and workman by Imperialist gush. But fortunately, in the case of Canada, Mr. Chamberlain himself has uttered his warning. The Canadian preferential tariff applies only to manufactured goods, as we have no raw materials to export to the Dominion. It is, however, not low enough for us to compete with Canadian manufac- turers, though it is just high enough to have arrested temporarily certain lines of Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 49 foreign imports. Speaking on the results, Mr. Chamberlain said to the Colonial Premiers in July, 1 902 : " The total increase of the trade of Canada during the period named (the preferential tariff period) was 69 per cent., whilst the total increase of trade with Britain was only 48 per cent." He then pleaded for terms of "greater equality" — greater equality, not with the foreigner be it noted, but with the Canadian producer. Those terms will never be granted either by Canada or Australia until years hence, when they have established their own industries so securely that they need not fear open ports. This, then, is the situation we have to face. Mr. Chamberlain advises us to tax our food in order to provide a market for colonial produce, but whilst the advice is being given the leading Colonies are taking steps to secure their own markets against our staple exports. Our self-imposed taxa- tion, therefore, will only hasten our ruin by directing our trading energies to the culti- vation of markets protected not only by 4 Digitized by Microsoft® 50 THE ZOLLVEBEIN AND BRITISH INDTJSTBY tariffs, but by bounties, and supplied by an increasing volume of colonial production. Australia has also to impose tariffs for revenue purposes. Last year, out of a total of £38,500,000 imports, only £10,257,000 was received free of duty, and it has been estimated that the loss to the State treasuries on account of, the internal Free Trade established by the Commonwealth Act was £810,237.* As a consequence. State finances are giving a great deal of trouble, and it is impossible to conceive of Australia making any fresh departure in- volving further financial sacrifices. Besides, there is a decided tendency in Australia — in spite of the New South Wales good example — ^to increase the income from Custom duties. In 1891 the Customs raised averaged £2 6 s. 5d. per head of the popula- tion ; in 1893, £1 18s. 5d. ; in 1895, £2 Os. 8d. ; in 1897, £1 18s. Id. ; in 1898, * This, of course, does not include Western Australia, which has been allowed to levy Customs duties from goods imported from the Federated States. £256,000 per annum goes into its treasury from this source. Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 51 £1 19s. 2d.; in 1899, £2; in 1901 (half year), £1 2s. ; in 1901-1902, £2 6s. 6d. The trade of New Zealand has most features in common with that of Australia. The total exports amount to £12,881,424 (1901), and of that sum £3,699,103 is for wool, and £2,300,000 for meat, whilst gold exports account for another £1,753,000. The Australian and New Zealand exports of wool and meat to the Home Country are £13,500,000 and £4,500,000 respectively, or nine-fourteenths and a little over one- third of our total imports of these products. The New Zealand interest is therefore the same as the Australian interest, except that New Zealand is much more concerned with beef and mutton. In any Imperial tariff scheme the interests of both colonies would be opposed to the home consumer of meat and to the textile operative. On the other hand. New Zealand is con- vinced that "the factories engaged in the woollen, printing, clothing, iron and steel, tanning, boot, furniture, brewing, jam- making, and brick and tile making indus- 4—2 Digitized by Microsoft® 52 THE ZOLLVEREIN AND BRITISH INDUSTRY tries owe their existence in the main to the [Customs] duties.* Nor is there any evidence that New Zealand will ever abandon its policy of Protection. Mr. Seddon's latest display of patriotism puts that colony in a painfully gross and selfish position, and justifies us in assuming that the present New Zealand Government only looks upon the homeland as a milch cow. Whatever changes in her tariff New Zea- land makes will be with an eye upon the interests of her internal trade, so that the British producer who sees opportunities in the New Zealand market had better make up his mind that he is not going to get there except upon such terms as will enable the colonial producer to compete with him with deadly advantage. South Afi-ica is at present in the melting- pot, and what its future is to be no man can tell. Its gold and its diamonds will continue for some time to be placed on the market; but gold and diamonds are not * See Mr. Reeves' admirable book on New Zealand, "The Long White Cloud," p. 352. Digitized by Microsoft® HOME MARKET AND COLONIAL TRADE 53 wealth. In the future, as in the past, South Africa will be mainly agricultural and pastoral. Before the war Cape Colony was exporting wool approaching £2,000,000 in value and well over 70,000,000 pounds in weight, but the quantity had not increased for about ten years, and the value was about the same as it was twenty years before. Leaving the problematic development of shadowy industries — created in imagina- tion for war purposes — out of account, we may assume that a trade in iron and coal will spring up in South Africa, and that tariffs will be imposed at the ports to pro- tect the beginnings of a metal and mining industry. A Zollverein consequently can bring no large benefits to South Africa, or to the home exporter dealing with that country. We have no means of knowing what the settled fiscal policy of South Africa is to be, but there is no reason to believe that it will be different from that of our other Colonies — viz., that revenue ought to be raised chiefly by Customs. Cape Colony, Digitized by Microsoft® 54 THE ZOLLVEREIN AND BRITISH INDUSTRY for instance, raised £1,788,392 at its entrance gates in 1900, and though that may seem a coifeparatively small proportion of its £6,236,000 revenue, it must be remembered that nearly £3,000,000 was raised by rail- way income. Surveying the whole question, we have therefore to come to two main conclusibns : 1. That we cannot help the Colonies except by taxing our food and raw mat^als ; but as Mr. Chamberlain contends that'^such taxes would be paid by the foreign im- porters, and would not be borne by the price of import, foreign produce would be as cheap on our markets as Colonial produce. It is therefore difficult to see how a Zoll- verein can help the Colonies at all. 2. It also appears, however, from the figures given in this chapter, that the United Kingdom is already taking from the Colonies by far and away the greater part of their produce, and that whatever colonial trade may suffer from, it is not from a restricted British market. In 1901 Australasia (including New Zealand) ex- Digitized by Microsoft® HOME MARKET AlSt) COLOUlAt TRADE 55 ported £59,144,177 worth of produce, and of that only £13,170,000 went to foreign ports ; in 1891 the figures were : Total exports, £43,243,000, of which £8,372,000 went abroad. If we take Cape Colony's 1898 export as a mark to which the colony may be expected to return, we find that of £25,318,701 worth of produce (including diamonds) sent out, the United Kingdom took £24,844,741. The Canadian figures do not wear such a pleasing Imperial aspect, but even they show that of a total value of exports amounting to £196,487,632 (1901) the United Kingdom took £105,328,956. Canada, in spite of a Zollverein or anything else, will always do a large trade over the border with the United States. The Colonies as exporters have therefore only a comparatively small amount to gain by any expedient which may be devised for giving them a monopoly on the British market. Digitized by Microsoft® CHAPTER III THE ZOLLVEEEIN AND THE WAGE-EAENEES Old age pensions. — The Lancashire operative. — Wool, etc. — The foreign tit-for-tat. — The chaotic period. — Wages. — Wages and cost of living. — England. — Germany and Austria. — America. — German Wages. — High wages. — American wages. — Wages under Protection. — The worker's share. MR. CHAMBERLAIN has informed us that he is to make a special appeal to the workman, and that he is to bait his hook by promises of high wages and old age pensions. No part of his ill-digested speech was more crude than these demagogic sen- tences. The reference to old age pensions was particularly reckles s. For what is the funda- mental idea of this fiscal scheme ? Surely it is that as speedily as possible the Empire shall be self-contained and the foreign imports be reduced to a minimum. But [ 56 ] Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EARNEKS 57 foreign imports alone are to pay revenue, so that just in so far as Mr. Chamberlain's purposes are realized, the fund from which old age pensions are to be drawn is to disappear. Or, I may state the position in another way. Mr. Chamberlain proposes to tax food and raw material. He admits that this may raise the cost of living, but contends that the tax will benefit colonial farmers, mine-owners, and capitalists, first of all, British agriculturists and landlords in the second place, and the British workmen in the third place. The benefits to the colonists and the British landlords are to be permanent, immediate, and secure, but the benefits to the workmen are to depend, in the first place, on their power to force up wages, and, in the second, on the existence of a considerable revenue from foreign imports. But the workman's power to force up wages diminishes as the cost of living increases, and it is Mr. Chamber- lain's aim to speedily withdraw from foreign produce that patronage upon which the existence of the old age pensions fund Digitized by Microsoft® 58 THE ZOLLVEEEIN AND BRITISH INDXISTEY depends. Such is the workers' side of the bargain. The old age pensions' pledge is, how- ever, a mere bait, thrown out with un- scrupulous disregard of responsibility. In a previous chapter I have sketched Mr. Chamberlain's rapid transformation of atti- tudes upon this subject, but the position which he now occupies is more detestably callous than any which he has held hitherto. Only 5 per cent, of the working classes reach the age of sixty-five, and on the off-chance that each adult living to-day may be one of those lucky souls, all are to be asked to submit to an increased cost of living. I wonder what an insurance company would say in its joy if it had to deal with simpletons willing to pay such a heavy price for such a small chance. The poor are to be made poorer ; the rich are not to be asked to bear the burdens of their social responsibilities. The cost of social reform is to be borne by the most poverty-stricken of the victims of the evil conditions which exist to-day. The slum- Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EARNERS 59 dwellers by eating taxed bread are to be made to provide the funds for housing reform ; the families living below the poverty line are to ease the burdens of the ratepayers by feeding on taxed beef and mutton. Mr. Gould has aptly ridiculed the whole idea by representing Mr. Cham- berlain in the character of Mother Hubbard telling the British workman that he can easily have an old age pensions bone if he bites a bit oif the end of his tail. But whilst these fictitious funds are sup- posed to be accumulating, the duties on raw material at our ports will be levied, and the foreign countries which deal with us will be withdrawing from us what benefits they now give under the most-favoured-nation provisions in their fiscal Acts, or they may be taking still more drastic measures to damage our trade. Let us now consider how the Lancashire operative, as a type of British workmen generally, will be affected by the new system. Our cotton imports amounted in 1901 to £41,263,000 from foreign countries, and Digitized by Microsoft® 60 THE ZOLLVEKEIN AND BRITISH INDUSTRY £707,500 from British possessions. Of the former figures, £8,305,758 came from Egypt and £32,355,712 from the United States. For 1902 we imported £40,564,683 worth of cotton from foreign countries (of which £9,938,484 came from Egypt and £29,284,000 from the United States) and £584,519 from our Colonies and dependen- cies. These figures show at a glance how much the Lancashire cotton operative is at the mercy of the American should any retaliatory policy be adopted designed to withhold from English looms the cotton products of America. At the present moment the operations of financiers and speculators in cotton futures ai'e hampering Lancashire industries and reducing the aggregate of Lancashire wages by with- holding the supply of raw cotton ; but if their eflPbrts should be in any way supple- mented by a State policy, say, of export duties, the Lancashire workman will be in the same famine- stricken condition as his grandfather during the Civil War. The supposition that countries like Digitized by Microsoft® THE ZOLLVEREIN AND "WAGE -EARNERS 61 America, which send us raw material, will retaliate upon us by restricting the supply is not at all remote. If the Empire is to assume J;hat aggressive trading attitude which is the dream of Mr. Chamberlain, we must not suppose for a moment that our challenged rivals will merely content themselves by increasing their own protective tariffs. They can hit us very much more severely than that, for they can control the supply of raw materials upon which our commerce depends. They are not stupid enough to fail to see that so long as we have to impoi't raw materials their crushing reply to our feeble attempts to launch into Protection will be to starve our industries. That being so, our cotton industry lies at the mercy of the United States so soon as a lion's-tail- twisting Government rules from Washington and listens to the advice of the New York Sun. Mne- tenths of the people of Lancashire would then live on American sufferance. Our woollen industry is better circum- stanced. Of a total import of goat's wool or hair (1902), amounting in value to Digitized by Microsoft® 62 THE ZOLLVEEEIN AND BRITISH INDUSTKY £1,844,592, £1,054,658 came from Cape Colony ports ; and of a total value of sheep's and lamb's wool imports amounting to £20,000,000, £16,669,000 came from within the Empire. But it is of some im- portance to note that there is less tendency for our imports of wool from the Colonies to expand than those from foreign countries. Our imported flax comes mainly from out- side the Empire, and so do our hemp, hides, metal ores (except tin), and timber. The prospect to the workmen of an Im- perial Customs Union is therefore one of scarce and dear raw materials, stagnation of industry generally, and the obliteration of some industries altogether. It has been said that countries exporting - raw materials to us will not be foolish enough to limit their sales. That may be true of Chili or the Argentine Republic, but it is not true either of Germany or the United States. In the present industrial condition of these countries an export duty on raw materials would mean that our manufactured articles would meet with in- Digitized by Microsoft® THE ZOLLVEREIN AND "WAGE-EARNEES 63 creasing difficulty in competing with theirs, that their own manufacturers would have a plentiful supply of cheap raw materials, that their own industries would have an incen- tive to consume more and more of the native raw produce. If it be true that a small export duty on our coal is really borne by the foreign purchaser, equally true would it be that a small export duty on American cotton would be borne by the Lancashire manufacturer, and that extra cost would disorganize Lancashire trade. It must be kept in mind, of course, that such an export duty would tend to develop cotton-growing in India, Egypt, and West Africa; but it would be many a long year before we could get supplies from these countries sufficient to make us independent of America, and meanwhile our trade would be depressed, our people unemployed, and our market destroyed beyond possibility of recovery. Moreover, whatever may ultimately happen, it is quite certain that for some Digitized by Microsoft® 64 THE ZOLLVEREIN AND BRITISH INDUSTRY years after the fiscal change our industry will have to undergo a process of readjust- ment. Food will increase in price, house- rents will tend upwards except in towns where industry is immediately damaged by the change. People with fixed incomes and salaries will have to lower their standard of living. During this change there is nothing more certain than that wages will fall. It is not so very easy to disentangle the factors which will determine wages so soon as the country settles down to its new conditions. The classes who work on salaries, like clerks, or on wages pro- tected by no combinations from falling, and fixed simply because satisfactory men can be got to accept them, will most certainly receive no substantial advance to compensate for dear food and other increases in living costs. This also will be true of the un- skilled and the unorganized labourers — all those people struggling to live with their heads barely above water. There are crowds of them wanting work, and an increase in the cost of living will, with dire certainty. Digitized by Microsoft® THE ZOLLVEEEHf AND WAGE-EARNERS 65 make their lot harder without aflPording them the least chance of augmenting their wages. If, by-the-by, a generous Govern- ment recognises its obligations to its officials, and raises their salaries in order to compensate them for the extra cost of living imposed upon them, the Old Age Pensions Fund becomes still more shadowy. But Mr. Chamberlain's bribe is evidently meant for the artisan — for the man we find' in trade unions. As regards this class of wage-earner, it must be evident that an Imperial Customs Union will afffect some in one way and others in other ways. Take the case of the railway servants, for instance. How will an Imperial Customs Union place more profits at the disposal of railway companies, so that these com- panies may voluntarily increase their wages bill ? They will probably have to pay more for iron and wood, and their miscellaneous expenses, under such heads as oils, cotton- waste, etc., will be increased. They cannot very well charge higher freights than they are now doing, and they properly anticipate n Digitized by Microsoft® 66 THE ZOLLVEREIN AND BRITISH INDUSTRY that increased efficiency in working will mainly contribute to increased facilities being given to users. At any rate, no portion of their funds available from this last source will go to labour without a struggle, and labour is much more likely to win its battles when cost of living is low than when it is high, since cost of living is the only thing which stands between the "striker and assured success in every struggle in which he engages. Thus we see that, in the case of wage- earners working under conditions similar to those of railway service, not only will Pro- tection in any form not increase wages, but it will put difficulties in the way of trade unions forcing up wage standards. But supposing that, in the long run, the profits of certain industries are increased by Protection, how far will that affect wages ? These profits will tend to fall to the economic minimum, and if it be true that profits de- termine wages, then wages will very soon drop to the present normal. But, as a matter of fact, profits do not determine Digitized by Microsoft® THK ZOLLVEEEIN AND WAGE-EAKNERS 67 wages, except apparently in those industries where the principle of a sliding scale is in operation, as in some coal-mining districts. Even in these industries the sliding scale basis has to be revised from time to time. The sliding scale is, indeed, not a method of determining wages, but an expedient for temporarily settling how much a workman is to receive over and above a certain minimum. A working method of settling accounts between capital and labour must not be confused with an economic law of wages. Nor will wages rise because cost of living has risen. Prices of food rose between 1900 and 1902 from 65 (1899) to 69 (1900) and 67 (1901) (Sauerbeck's index num- bers).* According to the Board of Trade Reports, the aggregate wages bill of the nation increased during 1900 by £209,000 per week, and fell by £78,000 during 1901. The rise in wages during 1900 thus appears to be considerable, and so far seetos to sup- * Jownal of the Boyal Statistical Society, March, 1902, p. 87. 5—2 Digitized by Microsoft® 68 THE ZOLLVEREIN AND BRITISH INDUSTRY port Mr. Chamberlain's economics ; but, as a matter of fact, it was confined practically to the miners, who had a weekly increase of £168,362 out of a total increase for the whole country of £209,373, Moreover, only 14*2 per cent, of the wage-earners of the trades affected participated in the increase. Therefore, figures which at first sight appear to support Mr. Chamberlain, in reality do not. The increases in wages which took place owing to the disturbance which the war occasioned in industry had no direct con- nection with the increased prices demanded for the necessaries of life, but arose mainly because a sudden scarcity of labour was created in some industries where wages were easily influenced (wages being less rigidly fixed in some industries than in others), and also because employers — e.g., coal- owners — suddenly found they could increase profits of which, owing to the operation of sliding scales and trade- union vigilance, they had to give a small share to their work- people. Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EAENEES 69 I know of no case where wages have been permanently increased relatively to cost of living simply because cost of living had increased, but the history of wages in England, Europe and America shows that real wages have increased most rapidly whilst the cost of living was falling. Let us consider another period, some- what similar to that through which we have been passing — that which centres round 1810. That year the average cost of living including rent was 27s. 4Jd.* Since 1790 this cost had risen by 12s., and in 1824 it had dropped by over 7s. Anyone acquainted with industrial history knows that these extreme dates cover times of good and de- pressed trade, and also times of great indus- trial change and much suffering to the wage- earners. During the twenty years before 1810, wages rose all over the country. London tailors' wages rose by 8s. per week, London carpenters' by from 3s. to 6s. In * "A Glance at Wages and Prices," by G. H. Wood, Manchester Co-operative Wholesale Society. Digitized by Microsoft® 70 THE ZOLLVEREIN AND BEITISH INDUSTRY Sheffield the increase averaged about 30 per cent, and similar rises are recorded for country towns. The explanation is that large profits were being made, at a time when war depleted the labour market. The ending of the war and the return to specie payments relieved the pressure on the labour market, and at the same time caused whole- sale prices to drop. But whilst the cost of living fell by 7s, 5d. per week between 1810 and 1824, Manchester cotton-spinners' wages fell only 2s., London compositors' remained stationary, and the London building trades' rates dropped between 6d. and 2 s. A study of wages and prices in these two periods, therefore, shows that real wages in no way kept pace with the increased cost of living between 1790 and 1810, and that from 1812, although wages fell, real wages improved owing to the greater fall in prices. The following table, which I take from Mr. G. H. Wood's excellent study, will dispose at once of the contention that a rise in the cost of living means an equivalent rise in the cost of labour — e.g., wages — or that wages Digitized by Microsoft® THE ZOLLVEEEIN AND WAGE-EAENERS 71 are fixed by cost of living. The table fixes 100 as the index number for both prices and wages in 1790, and the proportionate rises are shown under the various dates : 1790. 1810. 1S24. 1840. 1850. 1860. 1872. 1887. 1900. Money wages . 100 169 155 139 141 161 210 205 236 Cost of living, including rent }ioo ISl 137 137 133 128 142 115 127 Real wages . 100 93 113 101 106 141 149 178 185 From this table it is seen that whilst cost of living fell between 1810 and 1824, real wages rose; whilst it was stationary between 1824 and 1840, wages fell ; whilst it fell between 1840 and 1850, 1850 and 1860, wages rose rapidly towards the last date; whilst it rose considerably between 1860 and 1872, real wages did not rise so much as they had done when it was falling in the previous period ; whilst it fell between 1872 and 1887, real wages again bounded up, and its final increase between 1887 and 1900 is not marked by any striking rise in real wages. This table, so far from supporting Mr. Chamberlain's contention, almost proves Digitized by Microsoft® 72 THE ZOLLVEEEIN AND BRITISH INDUSTRY the opposite — viz., that real wages rise most rapidly when cost of living is falling. The Continental workman knows all this by hard experience, and the result is that the German Social Democratic party can increase its vote by millions simply on account of its opposition to the tariif. Whilst the German wage-earners were expressing their opinion of a tariff at the polls, the Austrian trade-unionists were meeting at Vienna in their annual Congress, and voting with enthusiastic unanimity a resolution opposing tariffs, on the ground that they are an expedient by which the wealthy rich can place financial burdens upon the struggling poor. But the best foreign country to consider is undoubtedly America, the facts regarding which are to be perverted so magnificently by the Protectionists during the coming campaign. Let us take the period 1830- 1860, during which the Eastern States began to awake to their industrial pos- sibilities. Mr. Carroll D. Wright deals with the period in his " Industrial Evolu- Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EARNERS 73 tion," and shows that whilst the prices of fourteen groups of necessities rose only 13 per cent., wages rose 52 per cent.* The only great increase in cost of living was in agricultural produce. For the period from 1860 to 1891 the Aldrich reports form our most reliable source of informa- tion, and they show during the period an increase of 3 '9 per cent, in the cost of the chief necessaries (due exclusively to the increased price of fish) ; but the average cost of living had fallen 4 per cent, in 1891 below what it was in 1860. (This, in view of increased efficiency of production, is a damaging indictment against Protection.) But in the meanwhile wages had risen 60 per cent. The period between 1861 and 1868 is, however, of special interest in connection with our present investigation. During these years currency was depreciated by the issue of " greenbacks," and prices rose, comparing 1860 with 1865, by 116 per cent. Daring the same time wages only rose * P. 225. Digitized by Microsoft® 74 THE ZOLLVEEEIN AND BRITISH INDUSTRY 44 per cent., so that in 1860 the workman was one-third better off than he was in 1865. These figures are conclusive. They show that Mr. Chamberlain was neither equipped nor qualified to enter into the economics of Protection as he did on May 28 last. It only remains to give some figures showing the wages paid in Germany com- pared with those paid here in typical in- dustries. I shall take the two staple trades of cotton and engineering. In the Reports from Various Nations* presented to ,the Textile Congress held in Berlin in July, 1900 (p. 15), it is stated by the German section : " The earnings of the men em- ployed in the textile industry varied from 500 to 1,200 marks " (£25 to £60); "those of females fi-om 250 to 550 marks" (£12 10s. to £27 10s.). Only 3 per cent, of the men were earning above 1,000 marks (£50), and over half were earning 800 marks (£40) and under. Weavers' wages never exceeded £50 ; dyers' £40. Of the * Manchester Co-operative Society, Limited. Digitized by Microsoft® THE ZOLLVEBEIN AND WAGE-EARNERS 75 women 65 per cent, were earning only £20 and under, and only 10 per cent, received £25. The average working day was one of eleven hours. The Labour Department of the Board of Trade shows that the English average wage in the cotton industry is 25s. 3d. per week — from £10 to £20 per annum higher than the German average. The iron industries show the same result. The Royal Statistical Office of Wurtemburg recently published a return of wages which seem to be a fair average for industrial Germany, and from that we find that turners get 24s. per week, fitters 23s., boilermakers 25 s. 6d. The English en- gineering average, even including lads' pay, is now about 27s. or 28s., whilst turners and fitters are paid about 30s., and boiler- makers 40 s. Wages depend on the efficiency of labour in production, and the ability of labour to demand the value of that efficiency. Efficiency determines the maximum, effec- tive power of demand determines the actual, Digitized by Microsoft® 76 THE ZOLLVEREIN AND BRITISH INDUSTRY payment. The apostle of the Imperial Customs Union must therefore satisfy us on one of two aspects of the wages pro- blem. Will Protection steady trade ? And, will Protection make the workman more efficient ? If it will steady trade, aggregate wages will rise ; if it will make the workman more efficient, the price of labour will rise. The first question is easily answered. There have been more severe depressions of trade and fluctuations in the demand for labour in Germany and the United States under Protection than in Great Britain under Free Trade. Indeed, one of the eventualities which Mr. Chamberlain threatens is a time when German and United States trade is so depressed that those countries will unload surplus pro- duce upon us and ruin us by the w;eight of the " dump," sold under cost price, owing to the necessity imposed upon the hard-hit employers to clear off stock. The second question must also be answered in the negative. If Protection has any influence upon the efficiency of Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EARNERS 77 labour, it is to reduce it. America appears to be an exception to this. But America has had a command of young, virile colonist workmen, full of ideas and enterprise before they left their European homes. They have supplied the energy which has founded American industry, and that energy owes nothing to Protection. I have already shown how little the cost of commodities is a prime cause of the high American wages. That height is owing to the exist- ence of the backwoods, the energy of American manufacturers, the efficient hand- ling of American capital, the great waste that goes on in American life keeping the volume of consumption large, and it is conditioned by the social characteristics of America and the republican institutions of the country. Professor Levasseur, writing with a marvellous fulness of knowledge of American industry, says of wages : " It is not certain that wages are increased by Protection. Some of the protected indus- tries pay high wages, like the steel industry, while others pay low wages, like the cotton Digitized by Microsoft® 78 THE ZOLLVEEEIN AND BRITISH INDUSTRY industry^ And, moreover, one does not find the same kind of labour — carpentering or manual labour, for instance — receiving higher wages in protected than in unpro- tected industries." So it is with German trade. German industry is founded on German education, but education is not a result of the German protective system. Protection rather tends to make a country careless of its efficiency, and Germany's intellectual keenness, not its fiscal policy, has made it prosper. Pro- tection tends to encourage conservative methods, and, unless corrected in some way, it stereotypes old processes, and thus discounts education. There is absolutely no economic or intel- lectual result of Protection which will increase the activity of those forces in British industry making for high wages or for steady industry. But the mere fact that it increases the cost of living means that it will hamper labour in its negotiations with capital for better con- ditions, and will make it more disastrous Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EAENEES 79 for the workman to leave his work in order to enforce his demands against his employer. A strike will then be more expensive, the entailed suffering will be more acute, the chances of labour winning will be more remote; whilst a period of trade depression or even an ordinary reduc- tion of wages* (as we know so well to be the case both in Germany and the United States) will be more terrible for every family whose breadwinners are out of employment. The Imperial Customs Union will in- evitably increase the cost of government, and therefore increase the relative share of wealth assigned to unremunerative labour, and reduce the available share due to the productive worker. Social reform will thus suffer, and so far from the Imperial duties being the means of enabling Mr. Chamber- lain to redeem his pledge to grant old age pensions, they will supply no fund at all * " The American Workman," by Professor Levas- seur, p. 431 : " If a reduction of wages or the loss of his place forces him temporarily to retrench a little, he thinks himself very unfortunate, and feels the privation keenly." Digitized by Microsoft® 80 THE ZOLLVEEEIN AND BRITISH INDUSTRY for the purpose. And even if they do, it will be because they have so increased the cost of living that a pension o£ 5 s. a week will not go so far as one of 4s. can go to-day, and not so many people will live to the pensionable age. Such is the workman's prospect under the Im- perial Zollverein, We have had no statement as to how heavy the tariff upon foreign inaports is to be so that the preference may be suflSciently satisfactory to our Colonies, but anything under 10 per cent, would be futile. Sup- posing we imposed a 10 per cent, duty upon imports of foreign corn and meat, we should be adding to the burdens of the con- sumers of the country, three-fourths of whom belong to wage-earners' families, a sum of about £7,000,000. This works out at the rate of 3s. 6d. per head per annum, which means, on the basis of six persons to a family, that £l Is. of a worker's family in- come (over an average week's wages) will go every year to maintain British landlordism, and increase the prosperity of Canadian and Digitized by Microsoft® THE ZOLLVEBEIN AND WAGE-EARNEBS 81 Australasian agricultural pursuits. But, of course, a tax on grain, beef, and mutton will not suffice. Our Colonies are largely interested in butter and cbeese (of which about £19,000,000 worth comes from outside the Empire and nearly £7,000,000 from within), and in fruit, lard, coflfee, and live animals for slaughter. So that when the Imperial Customs Union is in full operation we may reasonably expect that the working-class families will be called upon to add to their burdens a sum of something between £2 and £3 per annum. This burden is seriously proposed for a class, 40 per cent, of which is under the poverty line, and of which 999 members out of every 1,000 die without accumulated property except what they are using for the time being — i.e., household effects. I am not going to describe the poverty and misery of the people before the Corn Law was abolished, because that was not merely owing to Protection. The country was undergoing an industrial revolution, the occupations of the people were rapidly 6 Digitized by Microsoft® 82 THE ZOLLVEREIN AND BEITISH INDUSTRY changing, uncertainty prevailed, men did not understand the fateful changes by which they were surrounded. But I do say that an increased burden of £2 to £3 per annum upon poor families^iHr be disastrous, and will shadow the l^wer sti=ata of our society with a deeper shade than has clouded it since the early /^ears of the last century. To reduce the consumption of the working- classes by about/£lO,000,000 or £14,000,000 per annum, or/ to limit their expenditure on harmless " luxuries," intellectual or other- wise, to that extent is a serious lowering in their standard of living, and, like all such downward steps, will be followed by strenuous attempts to keep that standard from rising again. It is almost fufUe, in the case of a politician who has championed as many contradictory opinions as the rainbow has colours, to quote his past speeches in reply to his current utterances; and if I bring to my assistance Mr. Chamberlain's 1883 and 1885 opinions, it is not to accuse him of an in- con istency (that would be lashing a dead Digitized by Microsoft® THE ZOLLVEREIN AND WAGE-EARNERS 83 horse), but because he then put my present contention in a very satisfactory way. He said in Birmingham (March 30, 1883), reply- ing to Lord Salisbury, who was then only the representative of privilege and property, that if Free Trade were departed from " it means that every workman in Birmingham and throughout the country should pay more for his loaf and more for his clothes, and more for every other necessary of his life, in order that great manufacturers might keep up their profits, and in order, above all, that great landlords might maintain and raise their rents." 6—2 Digitized by Microsoft® CHAPTER IV THE ZOLLVEEEIN AND THE EMPIRE What is a ZoUverein ? — Free trade in the Empire. — ZoUverein essentials. — Colonial defence contribu- tions. — ^Mr. Chamberlain's "idea." — Britain and the Empire. — The Colonies and the Empire. — The ZoUverein and the Empire. — The ZoUverein and armaments. THOSE who dream of an Imperial Customs Union tell us that they take Germany as their model. They might also instance the United States and the Austra- lian Commonwealth. How far do these States offer a model for the British Empire? A ZoUverein is a fiscal union of States under which the individual State agrees to levy no Customs duty from the other federated States. The fedei*ated States, however, protect themselves — or raise a revenue — by Customs duties levied on goods sent from foreign States. In other words, [84] Digitized by Microsoft® THE ZOLLVEEEIN AND THE EMPIRE 85 a ZoUverein provides for Free Trade within the Federation, but levies Customs duties against the rest of the world. Before proceeding further with the con- sideration of this proposal, it may be well to refresh our memories as to what the existing position of Free Trade within the Empire is. The Mother Country is free, and she takes from the Colonies and dependencies materials to the value of £105,500,000 (1901). India is also free (and that is one of the reasons why I have left it out of account in the figures of trade which I have used in previous chapters),* and it takes from the Empire goods and materials valued at £55,000,000; the Straits Settlements, Ceylon, Hong Kong, the West Indies, and our other minor dependencies are also free in the sense that they do not levy Customs duties for protection, but only for revenue. Summarizing the trading relations between the Home Country and the Empire, over one-third of our imports come from Free Trade sections, and one-half of our exports * Except table on p. 28. Digitized by Microsoft® 86 THE ZOLLVEREIN AND BRITISH INDUSTRY go to them. As a matter of fact, however, under an Imperial Customs system these Free Trade countries would be blots on the red, and the people of India, of West Africa, of Ceylon would be expected, out of loyalty to the Empire, to sink themselves into deeper poverty in order to afford preferential treatment for Imperial goods. But supposing we make up our minds to recast the fiscal arrangements of the Empire on the model of the Prussian ZoUverein, what are the essential features of such a plan ? All ZoUverein federations we have hitherto known have been unions of con- tiguous States. That seems to be the first essential. For a ZoUverein to be successful, it must become a political unity as well as a trading co-partnership. The exist- ence of the Prussian ZoUverein depended on the fact that the federated States were aiming at the fulfilment of the desire for German unity, not merely that they considered it good policy to pool their Customs revenues. If Massachusetts were Digitized by Microsoft® THE ZOtLVElREIIif ANt) THE EMPIRE 87 separated from Alabama by thousands of miles of sea, and knit to it only by a patriotic sentiment and by a trading arrange- ment, it would not accept with equanimity the new competition in Alabama cotton products. This propinquity of territory seems to be necessary if the federated States are to lose a sense of their separateness, and if they do not lose that sense in the Zoll- verein their rival interests are sure to clash, especially the moment one invades another's home market. Canada and Australia, com- peting together on the Home Country market, will accept similar terms (they have them now under Free Trade) and will not lose their tempers with each other; but if the time ever comes when Canada and Australia compete with each other on their own markets, it will be quite a different matter. We know as an ex- perienced fact that though Canada offered special terms for other Colonies which treated its products as the Mother Country did, no self-governing colony came under the Preferential Treatment Act except New Digitized by Microsoft® 88 THE ZOLLVEREIN AND BRITISH INDUSTRY Sou til Wales, and that this favourable treat- ment was of no value to the Free Trade Australian colony. And, as I have already shown, we have no grounds from the past history of our self-governing Colonies for supposing that any of them will allow the products of the Mother Country to elbow out local indus- tries. The fact is that, scattered as they are over the world, the States of the British Empire are bound to develop an indepen- dence of feeling and of interest. Their political loyalty to their Motherland need never be weakened, and that loyalty will always make them regard the commercial interests of the Motherland with senti- mental favour. We see that in the figures given in a previous chapter. But their local institutions, laws, and political move- ments will always be so much more real to them than their Imperial connections that they will never see their way to sink themselves, as Baden has sunk itself in Germany, in an Imperial organization from which they can receive but little Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIRE 89 material help, and which, as I shall pre- sently show, may be somewhat burdensome to them. The British Empire, therefore, has not that propinquity of States which is necessary for the success o£ a ZoUverein. Another essential to a ZoUverein is that the Customs revenues of the separate States are pooled for Imperial purposes. At the present time all Customs dues are paid into the Imperial Exchequer in Germany, the same holding good in the United States and also in the Australian Commonwealth, When the ZoUverein was as yet only a Customs Union with Prussia as its centre, before the creation of the German Empire, the ZoUverein exchequer was common to the Federated States, and its contents were divided out according to the State popula- tions (Customs Treaty, 1833). It is im- possible for the States of the British Empire to come to any such agreement. Again, there can be no Imperial Customs Union, however tentative and incomplete, without an obligatory and systematic con- Digitized by Microsoft® 90 THE ZOLLVEREIN AWD BRITISH INDUSTRY tribution on the part of the Colonies to Imperial expenses, especially Imperial de- fence. This would be the Mother Country's side of the bargain. At the present moment the Colonies contribute practically nothing for their own safety. The Australian fleet is obsolete. The Canadian and Cape Colony contributions to our army and navy are hardly worth mentioning. I doubt if they will ever do much more than they are doing, and particularly there are no indications of their willingness to pay a properly calculated share of the cost of Imperial defence, what- ever that cost may be. Voluntary contri- butions are not enough. If the Colonies are to force upon us Imperial bonds of a heavier and more rigid kind than we now wear, they must be prepared to share pro- portionate expenses year in and year out. What a fair share in the cost of Imperial defence means to the Colonies can easily be calculated. The expenditure on the army and navy in 1902 imposed a payment of 29s. 3d. per head upon the people of the United Kingdom ; the Canadian pays pnly Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIEE 91 2s., the New Zealander and Australian 3s. 4d., and the South African 2s. to 3s. These are figures from one of Mr. Chamber- lain's own speeches,* and with his comments on them I quite agree. " No one," he said, " will pretend that that is a fair distribution of the burdens of Empire. No one will believe that the United Kingdom can for all time make this inordinate sacrifice." Since then the Colonies have added about £300,000 to their Imperial naval contribu- tions ; but another £3,000,000 for the same purpose has been added to the home tax- payer's burdens, and so the distribution has become still more unfair. The population of the United Kingdom is 41,600,000, and it is estimated that there are about 12,000,000 whites in the rest of the Empire. It may be assumed that the normal cost of our army and navy will not fall under £60,000,000 per annum in future. If we regard this warlike expenditure as being necessary for the Empire's existence, it ought to be distributed over the Empire * Colonial Conference, 1902. Digitized by Microsoft® 92 THE ZOLLVEREIN AND BRITISH INDUSTRY according to population; that means that the Colonial contribution should be raised to about £1 3s. per head. We may, how- ever, regard the navy as a form of trade insurance, and in that case the costs of the navy would be distributed in proportion to the trade of the various Colonies, when the result would be that the charge per head for the United Kingdom and Australia would be lowered, whilst for New Zealand and South Africa it would be increased, and for Canada it would not be much altered. No one seriously thinks, however, that the Colonies, unless granted a controlling voice in Imperial policy, will ever pay these charges, and few believe that they will accept the controlling voice if they have to buy it by meeting these costs. The British ZoUverein can therefore be but an apology at the best. It is to be an arrangement by which the Mother Country is to allow her foodstuffs and raw material for manufacture to be increased in price so that Colonial exports may find a ready sale in the British market — a position they Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIRE 93 already occupy — whilst, on the other hand, the Mother Country herself is to have pre- ferential treatment by the Colonies — such a treatment as Canada at present offers without very much advantage to British produce. Evidently, when such an arrangement is likened to the Prussian ZoUverein of the German Empire, or the United States of America, the ignorance of the British public is largely taken for granted. We are, however, at a loss in criticising with a definite marshalling of arguments the proposal which the Grovernment, in its secret chambers, is fortifying by darksome inquiries and misleading messages. The whole business has not reached a more mature stage in Mr. Chamberlain's mind than that of an " idea " ; in Mr. Balfour's than that of an interesting problem j in the Chancellor of the Exchequer's than that of an impractical suggestion that, for the sake of Cabinet harmony, may be inquired into. But we do know what expectations have been formed of the result of the change. These expectations are delightfully con- Digitized by Microsoft® 94 THE ZOLLVEREIN AND BRITISH INDUSTRY tradictory, and I shall only state those which Mr. Chamberlain has given us as his own. It is to promote colonial trade with the United Kingdom and diminish our commerce with foreign States. That vain hope has already been dealt with. It is, however, to furnish us with Imperial funds derived from duties on foreign imports, and these funds are to be available for social reform. That claim, inconsistent with the first, has also been dealt with. It is to protect the home farmer and also provide a market for colonial grain, another inconsistency which needs no consideration. But behind all these its chief virtue lies. It is to unite the Empire, in the first place, and, in the second, it is to protect our home manufactures and raise wages more than it increases the cost of living. In its first aspect the "idea " is in keeping with a Zollverein ; in the second, it is simply the old familiar Protection cry. Let us now examine these two further aspects of Mr. Chamberlain's " idea." Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIRE 95 The newly-created Imperialist feels no security in a mere blood relationship, in mere sentiment, in a common origin, com- mon racial character, common political problems, a common literature, a common historical past. He sees individual State development going on in the Colonies, and he does not like it. I have shown how futile it is to imagine that the British Empire can be united as the German, American, or Australian States have been ; but an Imperial Customs Union would undoubtedly bring the Colonial States into more frequent touch (it might be harmonious or the opposite) with the Mother Country, and more bargains and ar- rangements would be concluded between the sections of the Empire. The Colonies would then naturally step into more prominence and power in determining Imperial policy. The seat of Empire would tend to be re- moved from the old Motherland ; the con- trol of the Empire would no longer centre in London ; from being dutiful daughters, the Colonies would become equals. Digitized by Microsoft® 96 THE ZOLLVEREIN AND BRITISH INDUSTRY This aspect o£ Imperial Federation has never been honestly faced by Imperial Federationists. One here and there has recognised it. Mr. Bernard Holland, for instance, considering the change which would come about after federation and an Imperial Zollverein, describes it in these words : " And then England will have to melt into the British Empire, even as Rome, proud Rome, had to melt into the Roman. England, the metropolitical country, must ever hold the first place in point of honour- able primacy or precedence, but in respect of controlling power she will hold but that place to which she is entitled by her rela- tive population and resources." Coloured by Mr. Holland's fine words, " that place " seems to retain some dignity. In sober truth it contains none. England will then be but the aged beauty whose day of rule is past, and who is tolerated in her decay by those who have taken up her sceptre. This may be in store for us ; indeed, in due time, if the Empire last, something like this is bound to happen. But in the Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIRE 97 meanwHle we can surely pay our due respect to and show our real affection for the Colonies, and yet say that at the present time the colonial mind has not become settled enough, colonial interests 'have not become matured enough, the colonial outlook has not widened enough, the colonial touch with the world Powers is not close enough, the colonial respon- sibility in Imperial affairs is not heavy enough, for us to feel justified in hastening by hurried political action the time when the Home Land, "even as Rome, proud Rome," will cease to be the central authority in determining Imperial policy. The present relationship between the Colonies and the Mother Country is not final. But whatever form of Imperial unity the British Empire, if it lasts, is ultimately to assume must be allowed to grow slowly, and must not be forced by the wild day- dreams of an impractical politician. The bonds of Empire cannot be forged by the presence of a few gentlemen, removed thousands of miles from the people they 7 Digitized by Microsoft® 98 THE ZOLLVEREIN AND BRITISH INDUSTRY represent, at a council sitting in London. The strength of the Empire can never be o£ the rigid legal kind such as that of the German Empire or the United States of to- day. The only true policy — true both from the point of view of the Colonies and the Home Land — is to allow the present loose relationship to mature, to let time harden it here and soften it there, to let the Colonies themselves open out the road home- wards again — ^in short, to trust to spon- taneity and development rather than to masterful reconstruction and legal enact- ment. An Imperial Parliament is bound to be either a mere shadow or a heavy yoke, and those who advocate its establishment have written many essays and magazine articles, impressive only on one point — ^their ability to shun a consideration of the difficulties attending their proposals. But yet the experiment of an Imperial Parliament repre- sentative of colonial and dependency in- terests is safer imperially than a Zollverein. Every time that Canada has made an attempt, Digitized by Microsoft® THE ZOLLVEREIN AND THE EMPIBE 9! or has had it made for her, to readjust he tariff in order to accommodate the Mothe Country's exports, every time Imperial fisca questions have been brought before he manufacturers, a movement in favour c closer union with the United States ha been created. This movement reached dangerous point in 1891, when, in order t obtain free access to United States markets the Canadians were about equally divide^ as to whether they would or would no haul down the Union Jack for ever. Let u once establish in Canada two trading sec tions, one competing with home product and interested in open United States markets the other supplying the home and Imperia markets with raw material, and we one more call into being the separation move ment. At the present moment this move ment is submerged beneath a flood c sentiment, but no flood runs down mor rapidly than sentiment once the ebb begins We have also had a proof from Nei Zealand of how irritating unfulfilled trading hopes are. Mr. Seddon's vulgar display c 7—2 Digitized by Microsoft® 100 THE ZOLLVEEEIN AND BRITISH INBUSTE.Y temper and bullying threats occasioned by the fear that Mr. Chamberlain's utterances may be rejected by the country in its sane and calm moments, lift a corner of the veil and show us a little of the repellent motives concealed behind. "If we do not get our way, if you do not tax yourselves in our interests," said Mr. Seddon in effect, " I shall conclude treaties with foreign , countries, and allow the Empire to look after ' itself." This is the first footnote contributed "" by the Colonies to Mr. Chamberlairfs -argu- ment for Imperial harmony and unity. Only nominally can our Empire be united by an Imperial Customs Union ; in reality, such a union will crush apart rather than weld together, for the conflicting interests of its different States, harmless so long as each State is left to decide what is good for itself, become terribly weaken- ing when they have to be haggled over by a Joint Committee, a Federal Chamber, or a Motherland arbitrator. The fact is, Mr. Chamberlain has thrown down the apple of discord, and has put the Digitized by Microsoft® THE ZOLLVEEEIN AND THE EMPIRE 1 Mother Country in a position which comp her either to sacrifice her own interests seem to meet the Colonies with cold rej^ tion. It is the first step in Englan decline, " even as Rome, proud Romi into Imperial servitude. Ahd if the Empire does not gain in r( cohesion by its establishment of the symb( of unity, it certainly will not gain stability in relation to the outer worl In a military sense we are very vulnerab and no nation would sufier more than ' should if engaged in a war with a first-ck Power. Yet we are deliberately prove ing attack. If our markets at home ai abroad are shut, or partly shut, agair foreign products, international irritation w follow and the enemies of the Empire strengthened. The world has enter upon a fierce struggle to supply markel the capital sunk in productive undertakin increases by leaps and bounds, industri revolution is inevitable : tarifi's can no mo hold it off than magnets. The natic which is preparing for the struggle 1 Digitized by Microsoft® 102 THE ZOLLVEEEIN AND BRITISH IKDUSTEY sharpening- the wits and training the intelli- gence of its people is the nation that may have to face distress, but it is going to win in the end. The nation that controls impor- tant markets and closes them, is calling down upon it the armed forces of its. com- petitors. If the United States were a Free Trade nation, it would command more love than it does. Russia's trade policy in China, France's in Madagascar, have led to more shakings of the mailed hand against them than any other action they have taken during the past generation. In spite of all the nasty things said against this country, our policy of the open door and the open market has won for us a regard which has perhaps lain unexpressed or even denied by those who held it, but which, never- theless, has had a great influence in deter- mining international conduct towards us. The day we begin to tinker with tariffs, either for protective or Imperialist, for trade or for political, purposes, will also herald a policy of bristling armaments, and there will be no reasonable answer to Digitized by Microsoft® THK ZOLLVEREIN Al^t) THE EMPIRE 103 the politician who then declares that the one safety of the Empire is to be ever ready for war. From this deadweight, from this menace, we should strive to deliver an Empire whose one justification is that it desires to promote international commerce and to maintain peace. Digitized by Microsoft® THE ZOLLVEREIN ALIAS PEOTECTION Fencing the " dumping-ground." — Protection and industrial problems. — Will Protection repopulate the soil ? — Will it improve manufactures 1 — American progress. — Germany's progress. — Great Britain's start. — Germany's advantage. — American enterprise. — The facts. — Eetaliation. WE are now in a position to discuss Mr. Chamberlain's second purpose — the protection o£ the British manufacturer against " dumped-down " articles. "Is it not conceivable," he said in the House of Commons that night when he stole a march on his leader and Cabinet colleagues (May 28), " that we shall have to defend our own trade against unjust competition ; not against free exchange of commodities at the natural price, but against something which I believe is absolutely new, and to which I am afraid insufficient attention has [ 104 ] Digitized by Microsoft® THE ZOLLVEREIN ALIAS PROTECTION 105 been given up to the present time ? Has the House considered what is the practical working o£ the great trusts which are now being formed in America and in Germany and on the Continent — the enormous aggre- gations wielded by one man, by a single brain, and which can be brought to bear in the way of destroying a particular industry in this country without running any risk whatever ? We are the one open market of the world. We are the one dumping- ground of the world, (Ministerial cheers,) Now what happens ? Let me try to make that clear. Let us suppose a manufacturer sells goods to the extent of £50,000 a year, and makes a profit of £5,000. His fixed expenses would be probably £6,000. But now if he can increase his business and sell £100,000, his profits will be, not merely £10,000, but they will be added to by the reduction in the fixed expenses on the second £50,000. His profits upon the £100,000, instead of being £10,000, will probably be £15,000 ; and the result of that is that he can afford to sell, as com- Digitized by Microsoft® 106 THE ZOLLVEREIN ASfi BRITISH iNDtJSTKY pared with Hs previous condition, his second £50,000, not only without profit, but at a loss. That is what is happening. In America the manufacturers are making and building up their works, and when there is a boom, as there has been recently, the works are at once increased ; and so long as the home trade will take all the works make, that is a most profitable arrangement for the manufacturers, and no goods come to this country. But the moment — if to-morrow — there was a depression, say, in the iron trade, there is not the slightest doubt — it has been stated publicly by the president of that tremendous Steel and Iron Corporation, and it is actually being done at this moment by the great German Trust — it is perfectly certain that quantities of iron will be put down in this country or the countries we are supplying at a price we cannot possibly contest. Remember, that is the issue." These remarks have nothing to do with knitting the Empire together, but raise the question of pure and unadulterated Protec- tion in as crude a form as Mr. Chaplin or Digitized by Microsoft® THE ZOLLVEREIN ALIAS PEOTECTIPN 107 Sir Howard Vincent has ever dreamt of. So soon as the American iron market gets glutted, either owing to overproduction or to a slackening of demand, Mr. Chamberlain proposes to put an import duty on American iron so as to prevent it being exported under cost price to flood our markets. If such a flood were to happen — and it may happen — it could not be of long duration, and whilst it lasted it would give a great impetus to our engineering trade, though it might temporarily inconvenience and de- press other branches of the iron industry. But on the whole our industries would not suffer, and our national wages bill would be as likely to increase as to diminish. If, however, it is necessary to protect ourselves against the cheap overproduction of Trusts abroad (and there is only one Trust as yet that we may fear, and that one, as Mr. Jeans* points out, is overcapitalized and on a very unsound financial basis), the Protection should be steady and continuous. * " American Industrial Conditions :" " The Steel poration." Digitized by Microsoft® 108 THE ZOLLVEEEIN AND BRITISH INDUSTRY For it is not a sudden flood of iron we need dread, but the constant imports year in year out of the surplus of normal produc- tion. This means Protection naked and unashamed — the protection of the inefficient British equipment against the efficient American equipment ; and it must be dis- cussed, not from the special point of Adew of the Steel Trust or of sections of the iron industry, but from the point of view of national industry, the national wages bill, and the national cost of living. If, however, Mr. Chamberlain is right, and these bounty-fed Trusts really menace our industry, how is he to meet the com- petition of the Trusts now being created in our Colonies 1 Canada is at this moment paying a diminishing bounty of lis. per ton on her pig-iron manufactures, and Australia pro- poses to follow suit. Not only are these Trusts protected by tariffs as in the United States, they are fed by grants of public money. Will their products be turned away from our ports ? Will they be sub- Digitized by Microsoft® THE ZOLLVEEEIN ALIAS PROTECTION 109 ject to a specially high duty ? If they are, our Colonies will soon discover that there is not much sentiment in trade, and our own people will be taught that this policy, begun as a scheme for uniting the Empire, will create in its development wider gulfs than ever have been fixed between us and our children across the seas. The home producer will not be more but less content to be ruined by specially favoured colonials than by Germans, and the colonial will not be more consoled to see his Trust products turned away by us than by foreigners. Whilst this is passing through the press the following paragraph appears in the weekly Times (July 10, 1903) : " In order to encourage the lead industry the Canadian Government has decided to grant a bonus of fl5 a short ton on all lead pro- duced during the next five years. When, however, the standard price of pig-lead in the London market exceeds £12 10s. a long ton, the bounty is to be reduced pro- portionately by the amount of such excess." It is thus clear that the Canadian bounty is Digitized by Microsoft® 110 THE ZOLLVEREIN AND BRITISH INDUSTRY to "be paid in order to allow Canadian lead to compete on the London market. It is apparent to everyone that Great Britain has to face an industrial competition which, in point of keenness and efficiency, is unlike any which it has had to meet hitherto, and in the light of this new con- dition of affairs we have to consider what our future guiding industrial idea is to be. Does Protection really touch the problems which we have now to face ? What is the plea of those who have more insight than the Colonial Secretary, and who hail with joyful expectation his tottering incursion upon the territory of Protection ? They say English exports are relatively declining. The following table, taken from a paper read by Mr. D. A. Thomas, M.P., to the Statistical Society,* will show precisely upon what figures the Protectionists rely. * " Trade in Coal during the Last Half Century " (Royal Statistical Society), at present in private circula- tion, but the paper will probably appear in the Society's Jownal for September. Lest it should appear by the context that Mr. Thomas is a Protectionist, I desire to make it clear that he is not. Digitized by Microsoft® THE ZOLLVEREIN ALIAS PROTECTION 111 H m h n O o iJ tf •a! ^ P(X| o 5 S 2 Qj & pq CD? i 1 * ^^ !^ « M o 9 W § ^ ^ fv N o ^ 02 § > H oj 1^ o ■«! 3 k! ■< i •■) 3 - oo O CO eo op -r Oi 1 1 th OS CT rH cq 1 1 -* eo tH 00 (n I-H tH d oo lO f£> «p 00 OS CO T-1 w 03 eb ■^ c« (N s OS (M eo eo •^ ^ 00 J-H « OO op lO ? OS i>- e-1 00 r-i »— I 6 r-i -* ds 4h i-( - CT eo OS 00 iH 6 6 oa m CQ OD 1—1 i-H 00 -* eo lO eo Oi ,5o6 24,186 | 86,162 ■ 1901 . 440^045 2,552,958 10,470 119,831 I Gkrsus Exports to Gbkit Britain. 1900 31,181,667 1901 33^207,214 Digitized by Microsoft® THE ZOLLVEREIN ALIAS PROTECTION 135 British Exports to Germany. & 1900 38,542,790 1901 ... .., 34,221,080 Such is the volume of trade that would be affected. So far as the Colonies are con- cerned, any retaliation which would have the effect of closing German markets to their produce would be most detrimental as their exports to that country are steadily on the increase, having improved by over £2,000,000 in 1900-1901. The Colonies will give us very little thanks for our tit- for-tat friendship so soon as it gets into working order. The most serious argument against the policy of retaliation, however, is that it has no finality, that it will lead us on and on to thorough-going Protection. It will not succeed in opening ports, as Lord Lans- downe supposes, because a threat of retalia- tion on our part can easily be met by a counter-threat on the part of the other side, and in that game we stand to lose most, Digitized by Microsoft® 136 THE ZOIiVEREIS AND BBITISH ESDUSTRT an account of the importance of fomgn markds and fordgn law material to as. "We admit the growth of new conditions which bear wil^ them pressing problems for the British statesman, workman and mann- £ictiirer, but preYions chaptras have shown that neither the old - &shioned, ample- minded Protection nor the newly - dis- coTored, per^ ZoUverein has any heating npon these problems, except in so far as a tariff change will indirecdj tend to per- petuate the pes^mism, the conservatism, and die hardens which are the bane of British indostry to-day. Digitized by Microsoft® CHAPTEE VI THE STAGE ATTEE FEEE TRADE The Trnst. — ^Britain's true policy : (i) Political. — (ii.) Bent and land. — ^Mining rents and royalties. — (iii.) Bailway policy and Britifih trade. — (iv.) Waate and loss. — Indnstrial organization. — The Free Trader once more. THE efficient organization of foreign industry, the skill with which it is conducted, its freedom from dead charges, offer a serious menace to the future of British industry, and should awake us out of our day-dreams and our ignorant assump- tions that we can continue to be the work- shop of the world. But whether we avoid the threatening disaster or rush into it depends upon what we now do. I have shown in previous chapters that whether we adopt a Zollverein, an Imperial Customs Union, or simple Protection, we step into [137] Digitized by Microsoft® 138 TIIK ZOT.LVRRRIN AND niirTTHII INDUSTRY the abyss — we drop a bone for its shadow. What, then, must we do ? The bogey of the day is the Trust. It is an American importation, and our Free Traders tell us that it is a child of Protec- tion. It has no more to do with Pro- tection than with the moon. Protection has given it some advantages and deprived it of others. But Protection has not called it into being. The Trust is the logical and economic ending of capitalist disorganiza- tion and industrial anarchy. It is the rise of cosmos from chaos — a cosmos which may be dangerous to the State, as it is in America, or which may be used by the^ State as it is in this country in the shape of municipalization. Even here, although the opportunities of combining businesses are fewer than in America, and although there is no protective tariff levied at our ports, the trust has taken root. During 1902 in Great Britain eleven trusts were either formed or extended with an aggregate capital of £26,.500,000. The danger of the Trust is not its organi- Digitized by Microsoft® THE STAGE AFTER FREE TRADE 139 zation, but its control. In America it subverts politics and rules States ; in England it seems mainly to raise prices. But it is not business-like either to close our ports against it or to pass legislation, limiting its influence. We have reached a time when Imperial minds are to control commerce, and when the managers of syndi- cates will deal with revenues bigger than those of States and control populations more numerous than those of nations. In this movement there is no sentiment either patriotic or human. It is all hard business. Some English patriots sell their fleets of ships for an advantageous percentage, and others threaten to sell theirs unless they receive State subsidies. Birmingham is as willing to manufacture arms for the Boer as for the British Government, and as ready to cheat the one as the other. Such is the spirit of modern commerce, and Germans, Americans, English alike act in accordance with it. The price-list is the final arbiter in trade. The problem we are therefore called Digitized by Microsoft® 140 THE ZOLLVEEEIN AND BRITISH INDUSTEY upon to solve is how to cheapen production and yet retain its efficiency. A more liberal expenditure of public money on technical and scientific education is a necessary step to this end. But certain political, social, and economic changes are also necessary. To discuss these changes in elaborate detail is impossible in this book. But as their advocacy is the only possible alter- native movement to an agitation in favour of Protection, I shall indicate, as briefly as possible, their general outline. We can dispose of the necessary political changes in a few sentences. In the course of the discussion on Mr. Chamberlain's " idea," much is to be made of the removal of Canada from Germany's special treatment list, on account of the preferential treatment which Canada has granted to us. The incident should be discussed with common-sense. Germany has a perfect right to discriminate between Canada and ourselves, for the sufficient reason that Canada itself objects to being merged in the Empire for fiscal purposes, Digitized by Microsoft® THE STAGE AFTER FREE TRADE 141 and insists upon being regarded as a separate State. Canada has, therefore, no fair ground of complaint. It is, of course, a pity that its goodwill to us should entail evil con- sequences upon itself, and it is the duty of our Foreign Minister to do what he can to save the Dominion. This raises a politi- cal consideration vital to the existence of the British Empire. Are the classes from which our statespien are at present drawn competent to govern? The mess they made in South Africa is admitted by everybody qualified to speak. Mr. Brodrick, in any country except one of a rather ponderous and careless frame of mind, would long ago have been first a laughing- stock and then a victim. Lord Lansdowncj to come to the person most concerned in the German trouble, has but one distinguishing characteristic as a Minister: that of absolute and utter failure in every office he has ever filled. His one qualification for the im- portant post he now occupies is that he speaks good French. Not one - fourth of the present array of heavily - paid Digitized by Microsoft® 142 THE ZOLLVEREIN AND BRITISH mDUSTBY Ministers would have risen, had they been born in working-class families, above the status of mediocre workmen or of make- shift secretaries to local branches of trade unions. When we were still the workshop of the world, we had no need to trouble about a million or two either way ; we did not require to support private enterprise by efficient State activity ; Consuls and Ministers alike could then be nobodies of social influence, selected for their offices by feminine patronage, and it did not matter very much. But that day has gone by, and if the Mother Country is to retain the confidence of her daughter States and effec- tively aid them when their interests are menaced, her Ministers must be chosen on account of their ability, and not because their blood is blue and their names appear on the gilded list of Society. We need a Cabinet of business men — not in the mis- taken sense in which poor befogged Lord Kosebery, floundering and blundering about as usual between his excellent instincts and his political incapacity, used the word, but Digitized by Microsoft® THE STAGE AFTER FREE TRADE 143 in the sense of men of political and ad- ministrative experience, men who have shown a firm grasp of large sociological and industrial problems, men who have governed trade-unions, men who have con- trolled great organizations, men who have dealt with aflPairs involving a knowledge of people's minds, instincts, and social, political and business motives. Given such a body of statesmen, what would they do for Great Britain to-day in order to equip her for the industrial struggle ahead of her, in order to establish a reign of contentment in her homes and of peace in her workshops ? Their first reform would be a change in the law which enables the landowner to exact a toll of annually increasing weight upon the producer. It is estimated that British labour has to pay to classes which do nothing to assist national industry £250,000,000 per annum as rent. The meaning of this is so clear that it is almost unnecessary to emphasize it by illustrative instances. Such cases as that of the land Digitized by Microsoft® 144 THE ZOIiLVEREIN AND BRITISH INDUSTRY upon which the Glasgow Town Hall stands, which was sold about the j'ear 1800 for £800, and bought by the Corporation in 1890 for £175,000, are already well known. One of the claims which the London County Council contested in its land purchases in connection with its Holbom to Strand hga^ provement related to a plot which had been purchased in 1879 for £5,000. Sifiee then it had been kept vacant, and no money spent upon it except for a hoarding. It was in the midst of a congested population and in a good business situation, and had a building been erected upon it in keeping with the surrounding houses, at least £600 a ye&r would have been paid in rates. In spite of this neglect to use much-needed land, and this failure to contribute to local revenues, the Council was asked to pay £14,025 for the site, and was finally com- pelled to buy it for £11,084. Every local improvement, like a new street or a tram- way extension, adds to the toll-levying powei' of the landlord ; evei'y expenditure of public or private money on town amenities Digitized by Microsoft® THE STAGE AFTER FREE TRADE 145 enables landlords to put their hands deeper into social income; and this incubus of unearned exactions increases year by year. For every £l earned by labour 3s. 4d. is abstracted in rent, and this wealth might be thrown into the sea for all the good it does to trade. It is a dead weight on industry. We are told that rent does not enter into prices, and that therefore it can be paid without harm to society. That was the only conclusion which individualist econo- mists could reach. They seemed somewhat surprised at their own conclusion, and wrote of it as thdtigh it were something approach- ing the miraculous. Their sociological views blinded them to the real nature of rent Land value is not an individualist creation, and therefore in any system of economics which leaves out of account all forms of property, except private property, rent must be treated as something which only expresses the value of a special natural advantage, the payment of which, conse- quently, can be made without in any way 10 Digitized by Microsoft® 146 THE ZOLLVEEEIN AND BRITISH INDUSTRY upsetting the market price of products. But so soon as we recognise that the State or the community can not only create value, but can also hold property, and that it can use that property for the public good, we see that public expenditure can increase the efficiency of labour by providing it with proper living conditions, supplying ample educational facilities, and so on, and there- fore can determine price. Moreover, the robbery of the public resources by landlords not only necessitates a serious limitation of municipal and State action, but also imposes burdens upon trade in the shape of rates and taxes which directly add to the cost of carrying on industry and to the uncertainty of a livelihood which besets the industrial classes. The existence of private ownership in land stands as an unsurmountable barrier against the relief of the industrious from the ever-increasing financial burdens of government. This point is obscured by the pretentious jargon economists use whilst dealing with it. They speak of " economic rent " as Digitized by Microsoft® THE STAGE AFTER FREE TRADE 147 though it were something fixed in nature, and as though any departure from its standards were a violation of the creative decrees of Providence. There is no such thing as " economic rent " when the ex- pression is used to indicate that the open market value of land is its true value. That which is " economic " must satisfy more conditions than that of a free exchange of price. A rent which necessitates over- crowding, or which drives the people into towns, or which is wrung out of people owing to the existence of monopolies, is in no sense " economic." An " economic " rent expresses the market value of land, or of other purchasable things of the nature of land, when conditions are attached to its use designed to preserve social interests. But there is one form of rent which enters directly into price, and which has most serious consequences on our industry — I mean mining rents and royalties. Here the owner of land practically stands at the mouth of the mine and seizes upon every ninth or tenth truck that comes up for his 10—2 Digitized by Microsoft® 148 THE ZOLLVEEEIN AND BEITISH INDUSTRY own use. The mine may be rich or poor, working at a profit or a loss, but the land- lord has power to exact his royalties. The Royal Commission on Mineral Rents and Royalties adduced evidence to show that coal paid on the average a royalty of about 8d. in the ton. Mr. Percy, late of the Wigan School of Mines, tells of a Lan- cashire Colliery Company wMch went into liquidation after having paid £80,000 in mining rents. Sir Charles Palmer told the Mineral Rents Commission that he knew of one colliery in Northumberland which, on an output of 650,000 tons, paid royal- ties to the tune of £27,000. The royalties paid on ironstone, coal and lime together, Mr, Percy calculates, amount to no less than £6,000,000 on the manufacture of 40,000,000 tons of Cleveland pig-iron. Contrast this with what obtains in Ger- many, France, and the United States. In Germany the State owns the coal and iron. On the latter no royalty is paid, on the former 2 per cent, on the profits of the undertakings. In France the State is also Digitized by Microsoft® THE STAGE AFTER FREE TRADE 149 the owner of coal- and iron, and the royalty is 5 per cent, on profits. In Belgium the royalty on coal is only 2^ per cent, on profits. Sir Christopher Furness, M.P., in his book " The American Invasion," publishes the following table showing the mining rents and royalties borne in France, Germany, and England by the products mentioned : France. Gennany. England. Pig - iron, per ton . Ship-plates, „ Steel rails, „ s. d. 8 1 1* 11 s. d. 6 1 8i s. d. 4 6 5 9 5 6 The United States iron industry started under a very low scale of royalties, but as the fields become more valuable the royalties are being raised by the owners of the mining rights. America is just beginning to suffer from the evils of landlordism, but even now, after repeated increases, the average rate is not quite so high as it is with us. The same applies to coal, but it is worth noting that the Steel Corporation only charges itself Digitized by Microsoft® 150 THE ZOLLVEREIN AND BRITISH INDUSTRY with a royalty of Ad. on coal from its own fields. It is evident that the United States will soon have to face the problem of mining royalties. We know how the problem will be solved there. The owners of the fields will be merged in the great operating com- panies like the Steel Corporation — that is, the American Trust method. What this means to British industry is illustrated by the experience of the London County Council. During the electrification of its trams it advertised for tenders of steel rails. On February 12, 1902, it reportied that of seven tenders for 6,000 tons of rails and accessories, the three lowest were Bel- gian and German ; that the lowest foreign tender was for £41,742, and the lowest English tender for £50,463, a difference of 18 per cent. In the January following another similar contract went abroad. It is interesting to work out from the figures supplied by Sir Christopher Furness how much landlordism cost the British competitors for this contract. At 5s. 6d. per ton the owners of mining rents and Digitized by Microsoft® THE STAGE AETER FREE TRADE 151 royalties alone would receive on the London County Council order no less a sum than £1,650. One-sixth of the weight of the British handicap is therefore imposed by British landlords, and as much again by British railway rates, as we shall presently see. And yet the governing classes pretend that they are business people, and appeal to business people to protect property against Socialist economics and Socialist morality. The fact is, British iridustry is being strangled by British landlordism. A half- century of trade union " tyrannical inter- ference " is less damaging to British trade than half a dozen years of the plunderings of men like the Duke of Devonshire, who owns the Barrow iron-fields, or the Marquis of Londonderry, who owns Durham coal- seams. The British iron industry may or may not need Protection, but it certainly needs immediate relief from the heavy incubus of a small class of landowners who contribute nothing to social well-being or national wealth, but who are in the position to abstract hundreds of thousands of pounds Digitized by Microsoft® 152 THE ZOLLVEEEIN AND BRITISH INDUSTKY each year from the hives which the busy workers store with riches. Capitalist interests also prey on rival capitalist interests. Take our railway charges for instance. Nothing is more necessary for a vigorous national industry than transport facilities, and yet the English railway rates are the dearest obtaining in any industrial country in the world. Mr. Stephen Jeans has recently supplied us with reliable figures comparing American and English fi-eights.* He says that Mr. Schwab gave him information showing that ores are carried to Bessemer and Homestead from Lake Erie (156 miles) for 40 cents (Is. 8d.) per ton, equal to half a ferthing per ton mile, whilst the North-Eastern Rail- way Company charges almost a penny per ton mile. " When one thinks," writes Mr. Jeans, " of the rates charged on British rail- ways, as typified by the normal charge of 10s. to 12s. for the transport of pig or other metal from South Staffordshire to London, a * "American Industrial Conditions" (Reports of British Iron Trade Commission), 1902. Digitized by Microsoft® THE STAGE AFTER FREE TRADE 153 distance of 120 miles, and by a charge of 7s. 6d. for carrying a ton of coke from the South Durham Coalfields to West Cumber- land, an average distance of less than 100 miles, this American ore-carrying line (Lake Erie to Pittsburg) surely suggests great possibilities in the way of cheapening British mineral transportation in the future."* And again : " When we say that mineral traffic is carried on certain American railroads for one-fifth to one-tenth of the rate charged by British railways, the fact is liable to create an erroneous impression unless it is accom- panied by an explanation of the increase of the cost of working due to short hauls. Even so, however, the difference by increase against the rates charged on British railways is such as provokes feelings of dissatisfac- tion."f The following table showing the results of Sir Bemhard Samuelson's investigations into railway rates at home and in Germany, Belgium and Holland is an eloquent supple- ment to Mr. Jeans' American figures : * Pp. 95, 96. t P. 160. Digitized by Microsoft® 154 THE ZOLLVEREIN AND BKITISH INDUSTRY Bates fok sake Distances. Britisli. German. Belgian. DutdL Bar-iron (N. Staffs to Lon- don) ... Iron wire (Birmingham to London) ; Packed Unpacked . Hardware (Birmingham to London) . Cutleiy (Sheffield to Hull) Cotton goods (Manchester to London) Cotton goods (Manchester to Liverpool) . Woollens (Bradford to Lon- don) .... Machinery (Leeds to Hull) Cotton (Liverpool to Man Chester) .- . . 13s. -id. 24s. 4d. 19s. 2d. 23s. 6d. 20s. 6d. 36s. 10s. 6d. (6s. lOd. for export) 39s. 4d. 25s. (12s. 6d. export) 78. 2d. 9s. lOd. 108.4d.to lis. 2d. 8b. 6d. lis. 4d. 6s. 7d. 20s.to23s. 58. 4d. to 5s. Hd. 20s. 8d. to 23s. 8d. 4s. 6d. 68. 4d. 8s. lid. 8s. lid. 13s. lid. 8s. 9d. 18b. Id. 5s. 9d. 18s. 4d. (58. Sd. export) 4s. 6d. 8s. 8d. 8s. 2d. 8s. 2d. lis. 3d. 6b. 14b. 4d. 4s. 2d. 14s. 6d. 5s. 6d. 48. 2d. These figures are more instructive than all the tables of falling exports ever published, for they explain such tables. In order that these rates may be kept up the companies have bought up canals as possible rivals, and have allowed them to go to wreck and ruin. In these charges at the mine and the railway depot are buried the prospects of English industry. Looking down these tables, one can understand the presence of American and German manufactures on our Digitized by Microsoft® THE STAGE AFTER FREE TRADE 155 markets, and one can also understand how those " who toil not, neither do they spin," but who flourish on royalties and inflated railway charges, desire to induce the British workman, in a moment of unthinking Im- perialist fervour, to submit to dear food in order that these exactions may be continued for another generation. But, on the other hand, whenever the question has been faced by business men, their recommendations have always followed the Socialist lines of " Let the State own the minerals and operate the railways." For instance, the Delegation of the British Iron Trade Association, which went abroad to study the causes of the increased pressure of foreign competition, reported in 1896: " Undoubtedly the greatest factor in favour of the foreign producer is the much larger cost of carriage in this country. . . . The Belgians send their iron 100 miles to Antwerp by rail, and thence by sea to London, for considerably less than is charged by railway from Stafibrdshire to London. . . . We are of opinion that if English Digitized by Microsoft® 156 THK ZOLLVEREIN AND BRITISH INDUSTRY manufacturers enjoyed the same railway rates and royalties as those on the Continent, foreign competition could be defied in neutral markets." The supreme importance of cheap and efficient railways to national industry, is well illustrated in America, where the con- trol of railroads and preferential railway rates have been regarded as essential by every successful Trust operator like Mr. Rockefeller and Mr. Morgan. Railway manipulation has, indeed, done much more to build up the American Trust than Pro- tection. The Standard Oil Trust would hurry down to ruin were it not for its hold on certain railroads ; the existence of the Steel Trust would be much more pre- carious than it is were it not for its owner- ship of railroads. The most recent tendency in American capitalist concentration is for railroads to acquire controlling interests in certain industries within their area of ser- vice, and in this way the Pennsylvania anthracite coal-fields, the Nevada and Mon- tana silver and copper deposits, the farms Digitized by Microsoft® THE STAGE AFTER FREE TRABE 157 of the middle States, are becoming adjuncts of railway enterprise. As time wears on, and the minds of business men are turned with fresher vigour to grapple with the in- dustrial problems which are maturing for solution, it will be seen more and more clearly that one of the most important bulwarks of our industrial position is our railway system. So long as British rail- ways are run by antiquated titled directors for shareholders' profits, British industry will suffer ; as soon as railways are nationalized, and regarded as part of the great national mechanism of production, distribution, and exchange, British industry will have a chance. These are but specific instances of our present waste and mismanagement. But those of us who have patiently thought out the trend of capitalist industry, and see in it only the chaotic beginnings of a properly organised State, are filled with a greater " dissatisfaction " than can arise from a study of this and of that source of national loss. We look round and see nothing but Digitized by Microsoft® 158 THE ZOLLVEEEIN AND BRITISH INDUSTRY disbrganization and chaos. There are scores of shops where one would suffice ; hundreds of thousands of pounds are sunk as capital where thousands would more adequately meet the needs of the community. Indus- tries which are naturally interdependent are operated separately and even in antagonism. M. Leroy Beaulieu estimates that out of every hundred attempts in France to estab- lish a business, twenty fail immediately, fifty or sixty drag on a mere existence, and only ten to fifteen really succeed. Our own Board of Trade returns show an equally "disappointing" state of things. During the year 1901 there were 4,244 bankruptcies and 3,369 deeds of arrange- ment in England and Wales alone, involving altogether a loss of £8,300,000 to creditors, a sum equivalent to over 4 per cent, of the annual national savings; and 1901 was a good business year. In America the waste is still greater. " There has long been a substantial agreement," writes Mr. David A. Wells, the American economist, in his " Re- cent Economic Changes " (p. 351), " among Digitized by Microsoft® THE STAGE AFTER FREE TRADE 159 those competent to form an opinion, that 90 per cent, of all the men who try to do business on their own account fail of success." These failures are not all dead loss. Some of the capital, which apparently has disappeared, has in reality been sunk as national capital, just as capital lost in ex- periments is ultimately productive. But the great mass of these failures is absolute and irredeemable loss, and it has all to be paid for from the aggregate productions of labour. We need organization of industry and conservation of capital and labour, and in this America is leading the way. Mr. Eockefeller not only owns the Standard Oil supplies : he controls the railways, the banks, the shops (in -many instances), and, people whisper, the Legislatures as well, upon which his Trust depends. The Steel Corpora- tion not only makes steel : it owns coal and iron fields, ore steamers, railways ; it pays the miners on Lake Superior, the engineers and the sailors on Lake Erie, the railwaymen on Digitized by Microsoft® 160 THE ZOLLVEBKIN AND BRITISH INDUSTRY the Erie and Pittsburg mineral railway, as well as the operatives in Homestead. We oppose the Trust, not as an organization, but because it is controlled by individuals who use its powers for their own ends, and who study the needs of the consumers only in order to make profits out of them. But the Trust points out the line of British advance. In this country, however, the introduction of the Trust should be marked by public awnership. Municipalization is the beginning of organized industry. The municipality can write down the value of land when it needs urban sites for working-class dwellings, and it can recoup itself ultimately from the im- proved stamina and morals of its citizens. Its expenditure on parks, music, libraries can yield a similar return — a return which the private provider could never secure, as social values have often no exchange value. In addition to that, the municipality can dovetail its tram policy into its housing policy, and though it may show very little ledger-profit on either, it may be doing Digitized by Microsoft® THE STAGE AFTER FREE TRADE 161 better business than if it made big per- centages on both services. It can throw away apparent profits on gas and water, and by doing so increase the real income of the users of these services, and thus, though apparently returning no great benefit to the citizen as ratepayer, it may greatly benefit him as consumer without violating any sound law in economics. Tfie future lies with co-operation and co-ordination, with the party which does not merely utter the shibboleths of Free Trade, but which supplies constructive ideas for the further improvement of business organization, for the easing of the burdens which productive labour and skill have to bear, for the final elimination from our national charges of those remnants of anti- quated feudalism which now hang as mill- stoiies round the neck of our industry, for the abandonment of that chaotic disorganiza- tion known as capitalist competition which was the natural interregnum between the social organization of the medieval ecclesi- astical and military spirit — Feudalism — and 11 Digitized by Microsoft® 162 THE ZOLLVEREIN AND BBITISH INDUSTRY that of the future industrial and inter- national regime — Socialism. So long as England was the workshop of the world, only the landlords, thinking of their rents, cried for Protection. Now that other countries are exploiting their natural wealth and skill, some manu- facturers, too timorous to seize new opportunities, too conservative to welcome progressive change either in the State or the workshop, will join the landlord classes, and seek to protect their inefficiency against foreign competition. And against them will stand the mere Free Trader. He will pulverize their whining complaints, he will destroy their statistical miscalculations, he will hold up their muddled economics to the derision of every man whp can follow an economic argument. As a hilarious trouncer of wheezy Protection he is excel- lent. As one who stands at the opening of the temptingly smooth road leading to the Castle of Giant Despair, challenging everyone to combat who would turn the people aside on to that road, he is worthy of Digitized by Microsoft® THE STAGE AFTER FREE TRADE 163 support ; but as a leader he is hopeless. He may understand the German secret of success, efficient education, but he is puzzled by the American secret, efficient co-ordination and organization of industiy. He has not discovered that a State organization is neces- sary ; he does not believe it to be possible. The whole idea is alien to his social philo- sophy. He lisps the shibboleth that we should buy in the cheapest market^ and considers that to be the last word in national economy and fiscal criticism. Dis- tribution, according to him, is effected by a tug-of-war between capital and labour, the scanty advantages won by the latter being husbanded by the exercise of thrift. On the other hand, we consider that buy- ing in the cheapest market need not be of itself either economical or enlightened. We prefer to speak of buying in the best market, and the idea of the best must include some consideration of the circumstances under which the produce on the market has been made. Progress in the present century is marked by a limitation of the field of indi^ 11—2 Digitized by Microsoft® 164 THE ZOLLVEREIN AND BRITISH INDUSTRY vidual enterprise and action which the Free Trader desires to see unfenced. Factory Laws, Fair Wages resolutions, Trade Unionism itself, are contradictions of the economic creed based on the chea,pest market policy. They are all Protection — not the Protection of Mr. Chaplin, the land- lord, nor of Mr. Chamberlain, the dema- gogue, but the Protection of the Socialist ; not the protection of tariffs, but the pro- tection of the communal conscience and the communal wisdom imposing itself upon individual conduct. It is the same with the Free Trader's view of industrial competition. We are in no way enamoured with the hundred men who start business in order that ten to fifteen may succeed ; we fail to see any hope of an equitable distribution of wealth ever arising from working arrangements which labour can exact from capital. We see capital-con- centrating Trusts becoming more powerful, the small business undertaking being more and more completely elbowed into back streets and jobbing trades, and over all Digitized by Microsoft® THE STAGE AFTER FREE TRADE 165 we see the power of the common interest directly expressed by State and municipal control. Co-ordination, organization, public con- trol, democratic Trusts, are as necessary to British industry now as Free Trade was three-quarters of a century ago. It is not enough that we conserve our advantages against a revival of economic ignorance and political ineptitude; we have to discover how to seize upon new opportunities, how to move with the times, how to meet the energies and the devices of the new genera- tions. This cannot be done with an equip- ment which has been rusting for a century in our halls, but with one which has been devised and tempered to resist all the attacks which can be brought against us to-day. That equipment must be the practical application of the Socialist idea to the industrial and political problems of the time. THE END BILLING AND S0N8, LTD., PRINTEBS, GUILOrOKD Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® Digitized by Microsoft® The date shows when this volume was taken. All books not in use for instruction or re- search are limited to four weeks to 'all bor- ' rowers. ^ ^ Periodicals of a gen- eral character should be returned as ,soon as possible ; when needed beyond two weeks a special request should be made. Limited borrowers .are allowed five vol- umes for two weeks, with renewal privi- leges, when a book is >. not needed by others. Books' not needed during recess periods should be returned to the library, or arrange- ments made for their return during borrow- ' er!s absence, if wanted/' Books needed' by more than one persons are placed on the re- serve list. 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