THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES savs Nfiat w ** / . PREFERENTIAL TRADE PREFEKENTIAL TRADE A STUDY OF ITS ESOTERIC MEANING BY BENJAMIN , HOARE AUTHOR OF "THE PROTECTIONIST HANDBOOK" "A WHITE MAN'8 LAND ' " TWENTY-FIVE YEARS OF PROTECTION " AND OTHER ECONOMIC WORKS LONDON KEGAN PAUL, TRENCH, TRUBNER & CO. Ltd DRYDEN HOUSE, GERHARD STREET, W. 1904 (The rights of translation and of reproduction are reserved) HP PBEPACE Thoughts of a thirty years' growth are here. They have come £2 to me at all manner of times. In the hard grind of a daily v> journalist ; in the reading and ponderings on books ; in the fc conversation of friends ; in the whirl of platform politics ; in gj the waking hours of the night. I can trust to their soundness '** all the more because they have been of slow and even tardy development. There was once a time when, in my earlier years, I was half caught by the fascinations of some of the Cobdenic theories. I need not blush to admit it. Some of the reasonings of Mill and Marshall are excessively alluring. Even more of Henry George's speculations, owing to their literary charm and 1 their refreshing frankness, are particularly seductive. One may very easily fall o> into these intellectual pitfalls unawares. 1=0 This is really why I have written my book — to warn others t3 off the quicksands and shallows of fallacy which were a some- 9 time lure and somewhat of a danger to me. Fortunately for me the profounder reasonings of the German school of economists came as a corrective. And so it happened that even while coquetting with the danger I never actually fell a victim to it. There was in it certainly one beneficial result. It made me tolerant of even the intolerance of the average Cobdenist. There 2= is no department of knowledge, I should think, in which a little gi learning is a more dangerous thing than it is in fiscal economics. s Most certainly it is true respecting that study that There shallow draughts intoxicate the brain, And drinking largely sobers us again. 384813 vi PREFACE But a man must not drink too much and too constantly of the same kind of intoxicant. Ruskin and Carlyle and List, diversi- fied by Henry Carey and Judge Byles's " Sophisms," are a very saving prophylactic when the mind is becoming a trifle hardened in the sterility of the English classical school of the last half-century. I have written very little that is original. But at this time of day can anyone be original on such topics ? I have tried rather to combine, compare, and analyse. I have not con- sciously shirked any difficulty, though I have sometimes rather indicated than fully stated the refutations of the less recondite errors. Covering much ground, I have never lost sight of the need of abridgment, and can only hope that I have not too much sacrificed the argument to the imperious call for brevity. I had designed to call my book by another name. But the opportune revival of sound opinions in England has determined the name of " Preferential Trade." In that name I recognise the whole force and doctrine of Tariff Protection to National Industry. National Trade is Preferential Trade, and the trade of every nation within itself is the first consideration for statesmen to aim at. Imperial Preferences are good, but not so good as domestic Preference. My work is therefore for Preferential Trade in its widest signification of a national policy of Protection. The Author. "Marinook," Kew, Melbourne: December 30, 1903. CONTENTS BOOK I THE WANT OF A TRUE SCIENCE LETTER I.— TO OPEIUS The Root op the Tariff Controversy PAG* 1. Economic Science still a Riddle. 2. The Tariffs of the World. 3. A Clue to a Solution. 4. Deduction and Induction. 5. Opposite Methods employed. 6. Advantage of Modern Research ... 1 LETTER II.— TO THE RIGHT HON. LEONARD COURTNEY Clearing the Ground 1. Theories which help and Theories which hinder. 2. Is Political Economy a Science? 3. The Doctrine of Selfishness Unscientific. 4. Man a Multiform Being. 5. Religious Motives modify Gain Motives. 6. Mill's Mistakes of Definition. 7. Conflict in the Eco- nomic Camp. 8. Political Economy in Chaos 10 LETTER III.— TO SIR HIGGLER OF THE MARKET Cheapness — A New Juggernaut 1. The Free Trade Formula on Cheapness. 2. Two Kinds of Cheap- ness. 3. Cheapness lessens Wages. 4. Cheapness of Production based on Cheap Labour. 5. Cheapness not Abundance. 6. Cheap- ness lessens Employment. 7. Cheapness which changes Wealth into Poverty. 8. Carlyle and Carey on Cheapness. 9. Cheapness deplored as Ruin by Free Traders. 10. The True Formula . . 18 viii PREFERENTIAL TRADE LETTER IV.— TO THE WAR SPIRIT OF COMPETITION Tium: Competition — The Great Demoraliser PACK 1. The Deduct ionist Doctrine. 2. Defining Terms. 3. Trade Compe- tition riot an Eternal Law. 1. Trade Competition tends to Destroy it.-elf. .">. Trade Competition co-exists with Monopoly. 6. Com- petition in Sale of Commodities. 7. Competition with the Mask off. 8. Competition in Wages, it. Trade itself not a Natural Law. LO. The Waste of Trade Competition. 11. Trade Competition of Two Kinds. 12. Competition when a Tonic and when a Poison. 13. Nature of Trade Competition 31 LETTER V.— TO THE FRATERNAL SPIRIT IN MAN Co-operation — The Solvent op Competition I. A Half way -house to Socialism. 2. How Industrial Co-operation began. 3. The Social Condition it had to meet. 4. The Traders' Remedy. 5. The Co-operators' Remedy. 6. The First Growth. 7. Early Testimony. 8. The Doctrine of Ability. 9. The Co- operative Wholesale. 10. The Moral Achievements of Co-operation. 11. Co-operative Achievements on the Continent. 12. Ethical Tendency of Co-operation. 13. Subsidiary Means .... 51 LETTER VI.— TO LORD ROSEBERY Trade — Its Tendency and Nature 1. Trade not Altruistic. 2. Trade Idolatry. 3. Trade which is Hurtful. 4. Trade Roguery and Adulteration. 5. A Review of Trade History. 6. Trade and Slavery. 7. Commerce versus Trade. 8. Where Trade leads (J4 BOOK II TRADE VIEWED IN THE LIGHT OF HISTORY LETTER VII. — TO MR, JOHN BULL Building the World's Workshop 1. England's Early Social Condition. 2. Early Policy of Protection. 3. English Wars for Monopoly. 4. The Landed Interests of England. 5. Wages and Food-cost at various Periods. 6. How England used the Competitive System. 7. Trade Wars. S.England's Wealth and Poverty. 9. England's Trade Decline. 10. A National Dan S er 80 CONTENTS ix LETTER VIII.— TO MICHAEL DAVITT, ESQ. Free Trade the Destroyer op Ireland PAGE 1. Ethics and Economics. 2. Early Irish Manufactures. 3. England begins to destroy. 4. J. R. Green's Opinion of it. 5. The Effects of Protection in Ireland. 6. The Death-blow. 7. As Ruinous as War. 8. The Consequence of Free Trade Wisdom. 9. A Terrible Fact. 10. The Doctrine of Sacrifice. 11. Free Trade the Mother of all the Evils. 12. Decline of the Population. 13. The National Aspiration. 14. Causes of Irish Decline . . 93 LETTER IX.— TO LORD CURZON The Hindoo and the Trader 1. India before the Trader. 2. The British Trader in India. 3. Idle- ness and its Waste. 4. The Mutiny and its Cause . . . .108 LETTER X.— TO PRESIDENT EMILE LOUBET Why France abjured Free Trade 1. Her Policy of War and Trade. 2. Character and Policy of Colbert. 3. The Relapse of France to Free Trade. 4. The Revolution brings back Protection. 5. Agricultural Progress. 6. France and England compared. 7. Material Growth. 8. Wonderful Recovery from the War. 9. French and English Wealth compared. 10. Pauperism in France and England. 11. Concluding Reflections . . . .118 LETTER XL— TO PRESIDENT THEODORE ROOSEVELT How America found her Fiscal Faith The American Intellect. 2. The Effects of Custom. 3. The In- fluence of Slavery. 4. The First Protective Tariff. 5. The Second Protective Tariff. 6. The Third Protective Tariff. 7. The Free Trade Tariff of 1846. 8. The Fourth Protective Tan if. '.». The Fifth Protective Tariff. 10. The Population Test. 11. The Productive Test. 12. The Pauper Test. 13. The Wages Test. 14. The Con- sumers' Test. 15. A Comparative Period Test. 16. Imports and Exports. 17. The Cultivation Test 136 x PREFERENTIAL TEADE LETTER XII.— TO THE UNSPEAKABLE TURK How n!i: Im'i;i:h;.n Trader blighted Turkey PAQE 1. Turkey's Gr« 2. Turkey's Decline. 3. Industrial Collapse. 1. Agricultural Decline. 5. National Bankruptcy .... 150 LETTER XIII.— TO THE PRIVY COUNCILLOR M. DE WITTE, Ex-Minister of Russian Finance The Rise of the Muscovite Manufacturer 1. Bnssla in the Past. 2. Russia's Trial of Free Trade. 3. Russia's Start of the Protective Policy. 4. Vital Necessity of Manufac- tures. 5. Slow Growth of Manufactures. 6. The New Protection. 7. Cobdenist Opinion of it. 8. Professor Mendeleeff's Official Report. 9. Mid-century and Fin-de-siecle Critics agree. 10. Cotton Growth and Manufactures. 11. Siberia and its Economic Uses. 12. Popula- tion and Area. 13. The Russian Farmer and Low Prices. 14. Russia's Foreign Trade. 15. Russian Internal Policy 156 LETTER XIV.— TO KAISER WILHELM German Ethics in Political Economy 1. German Method of Inquiry. 2. The National Method versus the Cosmopolite Theory. 3. The Leading Features of National and Historical Schools. 4. Lessons from German History. 5. German Agriculture. 6. Return to Protection and its Results. 7. Free Trade Explanations of the Success of German Protection. 8. Customs Taxation in Germany. 9. The Growth of the Collectivist Idea . . 172 LETTER XV.— TO THE MINISTER OF THE INTERIOR OF THE NETHERLANDS The Hanseatic League and the Netherlands . The Hanseatic Traders. 2. Their Great Success. 3. Useful History. 4. Hanse Trade Decline. 5. The Rise of Holland. 6. Her Energy and Riches. 7. Dutch Supremacy challenged. 8. Adam Smith on the Carrying Trade. 9. Rival Tariff Systems compared. 10. Hol- land's Failure. 11. The True Lesson taught 185 CONTENTS xi LETTER XVI.— TO DAVID SYME, ESQ., Pioneer of Australian Protection Why Australia sued Cobdenism 1'AQE 1. Free Trade Energy. 2. Reason of the Revolt. 3. Victoria in Riches. 4. Victoria in Poverty. 5. The Want of a New Colony. 6. Protec- tion in New Zealand. Queensland, South Australia, Tasmania, and Western Australia. 7. New South Wales Tariff. 8. Contributory Motives. 9. Population compared. 10. Other Marks of Progress. 11. Cost of Living 194 LETTER XVIL— TO THE RIGHT HON. JOSEPH CHAMBERLAIN The World-wide Experiences of Free Trade 1 . Free Traders admit their own Decadence. 2. Instances of that Decay. 3. Opinions of Bismarck, Schmoller, and List. 4. Policy of Colbert, Napoleon, and Thiers. 5. A Galaxy of America's Intellectual Stars. 6. English Thinkers and Statesmen 207 BOOK III REACHING A CONCLUSION LETTER XVIII.— TO SIR A. CON AN DOYLE The Science of Protection Word-worship an Ignis Fatuus. 2. Diversity of Occupation a Neces- sity. 3. What hinders Diversity. 4. How to prove the Doctrine of Diversity. 5. Diversity stimulates Ability. (5. Diversity is Economic. 7. Free Trade opposed to Diversity. 8. Why not protect the Provinces as well as Countries 1 9. Commerce versus Trade. 10. The Soldier and the Trader. 11. The Trader's Interests. 12. Adam Smith on Foreign Trade and Home Commerce. 13. Henry George's Attempt to answer Smith. 14. Ricardo's Failure to answer Smith. 15. Comparative Volume of Home and Foreign Trade. 16. Revenue Tariffs are not Free Trade. 17. The Conclusion . . 21J xn PREFERENTIAL TRADE ,,,,,,• xix po THE RIGHT BON. ABTHUB BALFOUR, Prime Minister of England Tim: PHILOSOPHY OF PbOTKCTIOH The Utet of PhiloBophy. 2. Politica] Economy the Science of Bappineas, not of Wealth. 8. Human Motives for Actions. 4. Di- B Philosophic Truth. 5. Philosophy inculcates SOtion to the Boy and Man. 7. Protection to the TMe and Flower. B. Parallel between the Individual and the Production insufficient. 10. Protection a House Father 232 LETTER XX.— TO MR. JOHN BURNS, M.P. The Cost of Protection 1. Free Trade Objections. 2. Nothing Good without Cost. 3. Free Trade Admissions. 4. Views of the Statesman and of the Counter. 5. Method of Estimating the Cost of Protection. 6. Concrete Examples. 7. Some Australian Examples. 8. An American Example. 9. Some English Examples. 10. Who pays Customs Duties? 11. Cases where Customs Duties are paid by Consumers. 12. Theories and Facts concur 243 LETTER XXL— TO THE GENIUS OF THE COBDEN CLUB Tiie Cost of Free Trade The Agricultural Debt. 2. Cost of Navy for protecting Transport. 3. Loss of Industries. 4. Loss by Unnecessary Transport. 5. Loss of Man's Time. 6. The Cost of the Soil. 7. Loss in the Want of Diversity of Avocation 256 LETTER XXII.— TO SIR FREDERICK HOLDER, Speaker of the Australian Parliament Tiie Free Trade Case Summarised 1. Focussing tint Pointe of Dispute. 2. Why Free Trade ignores History. Maxim-. 4. Henry George on Free Trade. 5. Free Trade Methods 263 CONTENTS xiii LETTER XXIII.— TO W. D. BEAZLEY, ESQ., Speaker of the Victorian Parliament The Protectionist Case summarised I'AQK Want of a Science. 2. Cheapness, Competition, and Co-operation. 3. Trade and its Tendency. 4. Historical Resume — England. 5. Ireland's Ruin. 6. India's Ruin. 7. The Fiscal Story of France. 8. The Fiscal Story of America. 9. Turkey's Decline. 10. Russian Industrial Growth. 11. The German Lesson. 12. The Hanse Towns and Holland. 13. Why Australia is Protectionist. 14. The World's Teaching. 15. The Science and Philosophy of Protection. 16. The Cost of Protection. 17. The Cost of Free Trade. 18. Free Trade Admissions of Protection 273 LETTER XXIV.— TO THE HON. ALFRED DEAKIN, Prime Minister of the Australian Commonwealth Reaching the Goal 1. Laissez /aire condemned. 2. The State in loco parentis. 3. Ethics in Political Economy. 4. Diversity of Avocation. 5. But Trade 1 6. Who pays Customs Duties ? 7. The Lessons from History. 8. Preferential Trade : what it Means. 9. The Conclusion . . 280 INDEX 293 PREFERENTIAL TEADE A STUDY OF ITS ESOTERIC MEANING BOOK I THE WANT OF A TRUE SCIENCE Letter I.— To OPEIUS THE ROOT OF THE TARIFF CONTROVERSY Wise men learn by other men's mistakes ; fools by their own. — Proverb. My dear Harry, — You and I have spent many an hour in lively cracks over what Carlyle called the " Dismal Science," 1. Eco- without finding it in the least dismal. I always nomic arraigned you for holding the text writers too cheaply, still a But in turn I have to confess that had Pope lived in riddle. our d a y h e might certainly have described Economic Science as The glory? j egfc> and riddle of the W01 . ld A few men, such as Adam Smith, Ricardo, Bastiat, Carey, and Mill, have deemed the study of it a glory. To many — as to Carlyle, Ruskin, and Argyll — it has appeared a jest. To the great mass of men it is still an unsolved riddle, too dismal to approach the solution of. After all that you and I have said together, you will scarcely ask me, as some might — Why add another knot in this tangled skein of sophistication ? You know that I am not unmindful of the Pythagorean wisdom, that " we ought either be silent, or speak things that are better than silence." I cherish a hope B PREFERENTIAL TRADE that, instead of adding to the tangle, I may, in part at least, unravel it. All men are agreed that on the question of a trade that is free nist a trade that is restricted, the world is still full of con- troversy, as it has been during most of the last century. States- men, economic doctors, and thinkers have ranged themselves on both sides. For the Restrictionists the mind most readily to such names as Colbert, Napoleon, Pitt, Alex. Hamilton, Clay, List, Greeley, Webster, Carey, Bismarck, and Thiers. On the side of Free Trade we think of Adam Smith, as long as peace lasted, McCulloch, Mill, Peel, Cairnes, Cobden, Bright, Fawcett, Bastiat, Say, and others. All of these have spoken thoughtfully, some eloquently, and most of them have acted as well as preached. Yet still the contest continues, without exhibiting any very decided indications that its end is defi- nitely approaching. The statesmen of the world are as busy as ever putting up tariffs and pulling them down. I have got out for you a sort of classification of the nations, as they range at present, under the two banners. It is true that customs duties exhibit all varieties, ranging from the sternest prohibition to an almost imperceptible impost. But, taking in one group all those tariffs which are levied purely for revenue purposes, and in another those where the duties are levied with a view to foster industry, the classification is as follows : 2. The Tariffs ot the World. State Protective Tariffs Free Trade and Revenue Tariffs Population Area in Square Miles Population Area in Square Miles I tinn . Austria-Hungarj urn n a ;l . 1 Chirm 1 I Uica D( mnark . lor . 4,000,000 43,000,000 7,000,000 1 .250,000 15,000,000 ::. I<>0,000 '0,000 403,000,000 4,000,000 11,000,000 240,000 2,300,000 1,270,000 ' 10,000,000 1,113,000 241,000 11,000 567,000 3,200,000 24,000 293,000 4,218,000 504,000 82,000 23,000 15,000 120,000 400,000 — — Carried forw ard . 1 508,260,000 10,811,000 — — THE EOOT OP THE TARIFF CONTROVERSY Protective Tariffs Free Trade and Revenue Tariffs State Population Area in Square Miles Population Area in Square Miles Brought forward . 508,260,000 10,811,000 — — France and Colonies 94,000,000 4,571,000 — — Germany . 58,000,000 208,000 — — Great Britain : United Kingdom — — 42,000,000 120,800 British Crown Set tlements in Europe Asia (including India), Africa America & Oceana exclusive of self governing colonies — 350,000,000 4,440,000 Newfoundland 220,000 162,000 — — Canada . 5,400,000 3,653,000 — — Australian Com monwealth . 3,900,000 2,972,000 — — New Zealand . 730,000 104,000 — — Cape Colony . 1,700,000 230,000 — — Natal 1,000,000 35,000 — — Greece 2,500,000 25,000 — — Guatemala 1,600,000 48,000 — — Hayti 1,250,000 10,000 — — Holland and Colonies — 40,000,000 796,000 Honduras . 420,000 46,000 — — Italy . 33,000,000 114,000 — — Japan 45,000,000 148,000 — — Liberia 2,000,000 35,000 — — Luxemburg 220,000 1,000 — — Mexico 14,000,000 767,000 — — Montenegro , 230,000 3,600 — — Morocco . 9,000,000 219,000 — — Nepaul 3,000,000 54,000 — — Nicaragua . 400,000 50,000 — — Paraguay . 500,000 157,000 — — Persia . - 9,000,000 628,000 — — Peru . 5,000,000 695,000 — ■ — Portugal and Colonies 14,000,000 920,000 — — Roumania . 6,000,000 51,000 — — Russia 130,000,000 8,800,000 — — Salvador . 810,000 7,200 — — San Domingo 620,000 18,000 — — Servia 2,400,000 19,000 — — Siam . 5,000,000 200,000 — — Spain and Colonies 19,000,000 440,000 — — Sweden and Norway 8,000,000 297,000 — — Switzerland 3,500,000 16,000 — — Turkey — — 40,000,000 1,580,000 U. S. America . 80,000,000 3,600,000 — — Uruguay . 900,000 72,000 — — Venezuela . 2,500,000 594,000 — — Total 1,073,060,000 40,780,800 472,000,000 6,936,800 n 2 4 PKEFERENTIAL TRADE Here, then, we find the facts summarised to stand thus : — Number of Governments Population Area in square miles Protection Trade 51 3 1,073,060,000 472,000,000 40,780,800 6,936,800 I am not going to predicate that this overwhelming preponder- ance of Protectionists is any proof against the soundness of free trade. You used often to remind me of Oxenstiern's proverbial saying about the wisdom of government; and he but confirmed Pope's reflection : " Thou little thinkest what a Jit tic foolery governs the world." But all will concur that our first duty is to get a grip of the facts as they exist, and of the forces which have to be reckoned with. I am quite aware that this table needs discounting on both sides. India's 290 millions are largely governed by the interests of Manchester and Bradford. The myriads of China and Russia have almost as little voice in determining the policy under which they live as has the Indian ryot. Still, the fact remains that, in most of the States of the world, minds of light and leading have guided the national policy, whether on the side of Restriction or of Freedom. Consequently, the problem before us is how, in the light of knowledge, to decide the question on which so many eminent doctors disagree. I can well remember a remark of yours on the wisdom of the sage, that " talking comes by nature, silence by wisdom " ; a. A clue and trul y en °ugh I do not forget that " the fool shineth to a no longer than he holdeth his tongue." Yet, as I am persuaded that I spy a clue out of the labyrinth, it seemeth to me that I had better follow it a little. The first step, I take it, in order to find the path of truth, ia to affix finger-posts on the by-paths of error. Wherever eminent thinkers arrive at opposite conclusions there must have been some false factor in the sum of their reckonings. That error may have arisen in several ways. It may have come from a defective method of investigation, or from a true method defectively treated; or it may have arisen in errors both of method and treatment. We have often together looked at the methods employed, and what have we found ? We discovered, THE BOOT OF THE TARIFF CONTBOVEBSY 5 at the very outset, a fact which is sufficient to account for all the honest differences of opinion between the two schools of Restriction and Freedom. Free Traders, with perhaps the sole exception of Marshall, adopt the method of the Deductionist school, and Protectionists are almost invariably Inductionists, though often unconsciously so. In this fact, followed up, I am persuaded you will find some pregnant meaning. All men will agree that both these methods of inquiry are legitimate processes of investigation; but all will readily con- cede that they are not equally applicable to all inquiries. By the inductive process, which reasons from a multiplicity of small facts to a general law, Franklin showed electricity and lightning to be identical. By the deductive method, which reasons from a general law to minor conclusions, he inferred that iron rods would protect buildings from the lightning stroke. The deductive method uses the syllogism. That is well enough, provided only that the syllogism be sound. The weak- . _ , ness of some schools is that they have too often assumed tion and a series of general propositions as " axioms," and, from induction. suc ] 1 assume( J truths, have reasoned down to particulars by means of a middle term. Granted the premises be true, the process is infallible. Everything depends on whether the major premises be merely assumed or be validly proven. Adam Smith, for example, built his system on the proposition that The effort of every individual to better his own condition, when suffered to exert itself with freedom and security, is so powerful a principle that it is alone, and without any assistance, not only capable of carrying the society to wealth and prosperity, but of surmounting a hundred impertinent obstructions. 1 Another economist says : " The laws of the market . . . are precisely those which tend best to the universal benefit." 2 " Every man desires to obtain additional wealth with as little sacrifice as possible." 3 This, says Senior, is " the corner stone " of every system of exchange in trade. 1 Adam Smith, Wealth of Nations, Book 4, ch. 5. 2 Newman, Lectures on Political Economy, p. 63. s Senior, Political Economy, p. 28. 6 PREFEKENTIAL TRADE Here, then, we have the doctrines that enlightened self- interest and "buying in the cheapest markets " will create the max i urn in of wealth. From these and some other general propositions concerning the benefits of competition, the Free school has deduced all its general conclusions. You will see at once that all depends on the soundness of the propositions. In this system the Deductionist school has followed a well- beaten path. For twenty centuries the world went on building up the Ptolemaic theory of the universe. Every investigator began with the Ptolemaic assumption of the geocentric system, and squeezed all acquired knowledge into the compass of that doctrine. At length Copernicus came, and instead of inter- preting known facts by a set of assumed formulae he challenged the Ptolemaic theory itself, and that theory was found to have led all the world wrong. Richard Cobden was a mere Deductionist, and a very sincere but narrow visioned one at that. He saw that human intercourse tends to break down barriers of exclusiveness. From this general fact he formulated the proposition that unrestricted trade would prove a panacea for wars, poverty, and distress. His supreme merit was that he devoted his immense energy to promulgating the doctrine he sincerely believed. His demerit was his com- pressing all the facts of life into conformity with his unproven formula. The Protectionist school have followed the contrary plan. The advocates of a Nationalised Trade have proceeded on the inductive method. They have observed the operation of the actual facts of life, and reasoned from these facts to a general law. That law regards cheapness and freedom, and competition in trade, even trade itself, as elements which require the most careful regulation and restraint. But while they may claim to have been more accurate in the interpretation of facts, they appear to have been less constructively logical than their oppo- nents. The Free Trade system may be pronounced perfect, pro- vided only its premises are proven. The Protectionists, while 5. Opposite more exact m their observation of facts, have failed methods more than their opponents in giving scientific expres- emp ° ye ' sion to the meaning of those facts. Such are the causes, as it seems to me, which keep the THE BOOT OF THE TARIFF CONTEOVEESY 7 controversialists at arm's length, and which render much good writing and argument sterile. The economic student has no fair ground of complaint in this. We must accept things as they are ; and we know that the patient process of inductive reasoning is one which is too slow for ardent temperaments. Man in the mass will probably be always moved rather by ideals than by the sober results of analysed facts. Leaders of thought are fully aware that truth often fails to approve itself on its merits. There must always come in, too, the " personal equation." A typical English rector, a fervent partisan of British politics, is reported to have said : "I had rather be damned with Derby than saved with Gladstone." Even the most ingenuous of us have possibly a corner in our characters where that spirit finds a lurking-place. My object now is, first of all, to indicate what appears to me the only sound method of investigation in the science of Political Economy. It will be shown, I think, that the deduc- tive process is incapable of application to Political Economy. If that be found to be so, inquirers will in future have to investi- gate their facts dispassionately ; and having gathered them carefully from ancient and modern history, try their value, and weight, and meaning, by the process of induction. By this means we may hope to arrive at a result which is at least sound, if not unchallengeable. As it is, we know that statements of the same truth bear to different minds different meanings. For example, the industrious members of the Cobden Club zealously turn out every year a mass of statistical literature. Their figures are sometimes facts, and are always designed to prove the infallible wisdom of buying in the cheapest market and selling in the dearest one. These they proclaim as a revelation of " axiomatic truths." You know that "What ardently we wish we soon believe. The advocates of Restriction, on the other hand, have filled innumerable Blue-books with " Reports," " Statistics of Trade," and " Industrial Records," purporting to demonstrate that human progress is indissolubly bound up with protective tariffs. Even the latest Board of Trade figures seem to give comfort to PREFERENTIAL TRADE the opposite schools. I myself at times have been a good deal puzzled a1 this 'lash and jar of alleged data. Yet the explorer, rightly guided, ought not to find much difficulty. The world has certainly amassed a good deal of experience since Mr. Cobden first assumed the mantle of a fiscal prophet. During the past sixty years our industrial archives , lU have become great storehouses of scientific achieve- inodem incuts. Knowledge is abroad on the earth. Where 8earch ' a former generation pioneered its way, we follow a well-worn track, charted with beacons to warn and guide. And yet I am persuaded that Political Economy, as a science, is still in its swaddling clothes. In this, as in other departments of knowledge, science has to fight, not alone prejudice, but self-interest also. Men come to a study of facts with a pre- disposition to magnify them or minimise them according as they tell f<>r or against their preconceptions. May I say, without presumption, that it seems to me I have passed through that stage and understand it ? Nevertheless we moderns have many advantages. From the high ground which overtops a century of keen controversy we are now able to survey the fiscal battle- field, strewn as it is with the wrecks of shattered argument and exploded errors. We may again, as we have often done, take a walk amongst this rhetorical debris, pick up and examine portions of broken polemical shields, critically consider controversial spearheads, resurvey seemingly shivered and battered breastplates, and in the light of the latest knowledge gather together those invul- nerable argumentative coats of mail, and those invincible weapons of logic which appear to have come unscathed through the fire of battle. For we must hopefully believe that Truth, crushed to earth, shall rise again ; The eternal years of God's are hers ; But Error, wounded, writhes with pain, And dies among her worshippers. A man might be all the more encouraged to undertake this task, because in some lands the clang of arms is still fierce. Democracy itself is divided in the conflict, and is but slowly THE EOOT OF THE TAEIFF CONTEOVEESY 9 working its way out into clear views. In spite of the warp of mistaken views and the woof of vested interests, it will always remain true that the majority of men seek for what they deem truth. These are they who will leaven and shape the world's opinions. It is for these alone that it is worth a man's while to write. 10 PEEFEEENTIAL TEADE Letter II.— To the Right Hon. LEONARD COURTNEY CLEARING THE GROUND Avoiding oppositions of science falsely so called. — 1 Timothy. By the glare of false science betrayed.— Beattie. My dear Sir. — You have long been a light in the Cobden Club ; but has it ever occurred to you that before we can hope fully , _ to know Truth we must be able to identify Error ? You 1. Theories J which and I and everyone else lose labour when we endeavour heip^and to i nves tigate material facts without having first elimi- which nated certain disturbing falsities. Theories are like hinder. finger-posts. They may direct our quest rightly or wrongly. The traveller would be very unwise who should take his way through a strange country under the direction of irre- sponsible road guides. Equally unfortunate is he who sets out in search of knowledge freighted with, and guided by, a number of unproven theories. With theses and theories, as such, we can have no sort of quarrel whatever. They are sometimes great helps towards the apprehension of truth. They are objection- able only when put forward as axioms. The scientific mind will naturally be wary of affirmations which are loosely labelled "natural laws " and " fixed principles." In the same way there are few things more liable to mislead the deductionist than defective syllogisms. The syllogism is the most natural weapon alike of the logician and the sophister. Truth may be verified by it, but Error may lurk in it in the very likeness of Truth, as, according to the proverb, " falseness often lurks beneath fair hair." Theories framed and used in this spirit are hindrances, not helps. They become the tyrants of the judgment which collapses under their domination. It is really a matter of doubt as yet whether Political Economy has any valid ground on which it can claim inclusion amongst the CLEAEING THE GKOUND 11 sciences. Mr. Ruskin contemptuously denies those claims. 1 He says that we find " the defiance of every modern law of human relation by modern Political Economy." M. Comte ticai Eco- holds that Political Economy should fail to rank as a no.my a „ science, because it has shown itself so far incapable science * of prediction — a faculty of all true sciences. Pro- fessor Marshall, who has certainly shown a great advance in clearness of vision on his predecessors, doubtingly concedes its claims, but unhesitatingly pronounces on the crudity of the present condition of the science. 2 Mr. David Syme declares the very term " Political Economy" to be " either meaningless or misleading. Next we have to fall back on the term Wealth to indicate the subject matter ; but this ... is neither in accordance with its etymological nor its popular meaning. Surely no science was ever so unfortunately placed for want of a proper vocabulary." 3 Great discrepancy in opinion exists amongst the professors of this so-called science. Professor Jevons contends that people who would study human nature in connection with Political Economy, " quite misunderstand the purpose of a science like a Political Economy," 4 because it treats only of wealth. Mill takes the same view when he defines Political Economy as a science which " does not treat of the whole of man's nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to acquire wealth." 5 He recurs to this definition in another place, and says : " Political Economy considers mankind as occupied solely in acquiring and consuming wealth. Not that any political economist was ever so absurd as to suppose that mankind are really thus constituted, but because this is the only mode in which science must necessarily be studied." G Senior defines Political Economy as " the science which states the laws regulating the production and distribution of wealth." 7 But 1 J. Ruskin, Fors Clavigera, Letter 85, p. 23. 2 Alfred Marshall, Principles of Economics, p. 77. 3 David Syme, Outlines of Industrial Science, p. 6. 4 Jevons, Political Economy, p. 8. 5 J. S. Mill, Some Unsettled Questions, p. 137. 6 J. S. Mill, System of Logic, Book 6, ch. 8. 7 Senior, Introductory Lectures on Political Economy, p. 36. 12 PKEFEEENTIAL TEADE he goes much further than this in another place, where he says : Neither sympathy Avith indigence, nor disgust at profusion or avarice— neither reverence for existing institutions, nor detestation of existing abuses — neither love of popularity, nor of paradox, nor of systems, must deter him (the economist) from stating what he believes to be the facts ; or from drawing from those facts what appear to him to be the legitimate conclusions. 1 From which we infer that, in estimating the consequences of certain actions, the political economists must carefully abstract all these considerations, building only on the theory that men in the pursuit of wealth are uninfluenced by them. In this, however, they are in sharp collision with other writers. Pro- fessor Marshall says : It is said that the scope of economics is limited to a considera- tion of those motives which are governed by self-regarding, if not by selfish motives. This view seems to be mistaken. Even the most purely business relations of life assume honesty and good faith. . . . While many take for granted, if not generosity, yet at least absence of meanness. . . . Just as a racehorse or an athlete strains every nerve to get in advance of his competitors, and delights in the strain, so a manufacturer or a trader is often stimulated much more by the hope of victory over his rivals than by his desire to add something to his fortune. The action of such motives as these must be studied carefully by economists ; and the allowance required to be made for them will in some cases be so great as to alter perceptibly the general character of their reasonings. 2 Mr. Euskin declares such a basis of selfishness to be entirely unscientific. Political Economy, he says, is the science which 3. The teaches nations to desire and labour for the things doctrine that lead to life. " There is no wealth but life— life oi selfish- . ,. ness un- including all its powers of love, and joy, and admira- scientific. tion ... by means of which a nation may consist of the greatest number of human beings, noble and happy." 3 The Duke of Argyll thus deals with Professor Jevons's 1 Senior, Outlines of Political Economy, p. 130. 2 Alfred Marshall, Principle of Economics, pp. 78-80. 3 Ruskin, Fors Clavigera. CLEARING THE GROUND 13 attempt to apply the mathematical methods to his crude theories : He looks out whether he can construct, out of the elements of human nature, some dicta which may take the place of mathematical axioms and postulates. The result, of course, is that in order to cram the complex facts of human nature into a verbal formula, pretending to the character of self-evident or axiomatic truth, he is obliged to make an abstraction, which rests on nothing but a mere bit or fragment of the facts. Never were such broken victuals passed off on any hungry mortals, as Jevons passes oft* on us as the pure extract of human character and motive. The scraps vouchsafed to us are three : Firstly, " that every good person will choose the greater apparent good." Secondly, " that human wants are more or less satiated " ; and thirdly, " that prolonged labour becomes more and more painful." 1 The noble author goes on to show that not one of these three formulae " has the quality of a self-evident truth about it." The first he shows to be demonstrably false, and the others only very partially true. Yet it is on these, and such as these, that we have political economists of a certain type declaring that their findings are based on " axiomatic truths." For very similar reasons Carlyle derided Political Economy. He saw clearly that England's greatness did not depend on the laissez-faire doctrine of government and the so-called natural laws of supply and demand. In his " Past and Present " he says that the practical labour of England is " the one God's voice heard during the past two centuries," and that we hear it not to be the voice of God to us, but we regard it as a voice of earthly profit and loss ; and have a hell in England — the hell of not making money. And coldly see the all-conquering valiant sons of toil sit enchanted by the million, in their poor-law bastille, as if this were nature's law — mumbling to ourselves some vague janglement of laissez-faire, supply and demand, cash pay- ment, the one nexus of man to man, free trade, competition, and devil take the hindmost, our latest gospel yet preached. We see, then, that one school of political economists refuses to treat of man except as a selfish being actuated by the sole 1 Argyll, Unseen Foundations of Society, p. 13. 14 PREFERENTIAL TRADE desire of gaining wealth. Man, say these professors, may have other motives in relation to other things ; but with these motives Political Economy has nothing to do. This method would be « lint.' just i liable had its basis been first proved instead of assumed. But instead of testing their assumptions before adopting them, this school of economists have endeavoured to work deductively from unproven theories. Nor is it too much to say that they have followed one another in almost slavish subservience to the tyranny of this dominating idea. To speak of such a method as scientific is a misapplication of terms, because it is clear that no accurate conclusion can be thence derived. Man is moved to important social actions, and is influenced in ordinary business transactions by a multiplicity of motives. The desire to acquire material wealth is only one among many. Man's nature is complex, and is stirred by love of what he conceives to be abstract justice, truth, patriotism, pleasure, and virtue. Many men with little or no desire of gain have engaged in business from a love of action and a distaste for idleness. Man is equally moved in business pursuits by vanity, ambition, pride, love of honour, and family affection. Under any one or all of these motives he will often sacrifice material riches. A Political Economy, therefore, which deals with man, in the words of Mill, " solely as a being who desires to obtain wealth," 4 Man a ma ki n g an " entire abstraction of every other human multiform passion or motive," is not science but nescience. Alfred Marshall fully perceived this fundamental error in Mill's teaching, and tried to minimise it by pointing out that Mill had been better than his own principles. This is true. But it evinces the confusion of thought which pervades Mill's reason- ing, and justifies Ruskin's caustic comment in Fors Clavigera, that Mill is most reasonable where he is most inconsistent with his own principles, and never utterly wrong except where his own conclusions are in consonance with his premises. It is in one of his appendices to the same work that this same writer tells us why modern " Political Economy is of the devil." It is because it teaches—" I. That good things are only good if they can be turned into money." " II. That all human prosperity must be founded on vices of human nature, because these are the essential powers of human nature, and its virtues are acci- CLEARING THE GROUND 15 dental and impotent." In another book Ruskin gives us an illustration of a science which studies man by leaving out of count every " human passion or motive except gain." It is, he says, like " a science of gymnastics which assumed that a man had no skeleton. Modern Political Economy stands on a pre- cisely similar basis." ! The Founder of Christianity had also a system of Political Economy. He condemned selfishness as the root of direct evil. 5 Reli- ^ 8 teaching is in the sharpest contrast with that gious we have considered. One or the other is false. As a modify 3 qualifier of men's actions this fact cannot be ignored, gain The political economist says he can consider man only motives. ag a bgjng stimulated by the desire of gain. The Chris- tian Founder teaches man that that desire, if fully gratified, would make it almost impossible for him to enter the kingdom of heaven. Here, then, is a point at which religious motives in many men touch gain motives, and modify them with tremendous force. Which fact proves conclusively that the doctrine that selfishness is the sole motive power in business, being based in error, vitiates all conclusions which are deduced from it. Alfred Marshall must have had something of this feeling, reticent as he usually is ; for on this point he recommends his readers to study David Syme's " Outlines of Industrial Science," which denies that Wealth is the true basis of inquiry, and affirms that Industry ought to be substituted for it. Syme shows, moreover, that Mill has fallen into quite a maze of contradiction in his attempts to define the position of 6 Mill's Political Economy amongst the sciences. He quotes mistakes Mill as follows : of defini- The laws of the production of the objects which con- stitute wealth, are the subject-matter both of political economy, and of almost all the physical sciences. Such, however, of these laws as are purely laws of matter, belong to physical science, and to that exclusively. Such of these as are the laws of the human mind, and no others, belong to political economy, which finally sums up the result of both combined. Ruskin, Unto This Last. 16 PREFERENTIAL TRADE On this he observes : It would be difficult to put together statements more irre- concilable with each other than those contained in the three sentence- I have just quoted. The laws of the objects which con- stitute wealth, we are told in the first sentence, are the subject- matter of political economy, in common with all the physical sciences ; in the second, we are informed that only such of these laws as are the laws of human mind belong to this science ; and in the third, notwithstanding that we have just been informed that political economy has to deal with only a portion of these laws, it is stated that it finally sums up the results of both combined. One tiling only is certain — that all three statements cannot be correct ; for if political economy has to deal with the laws of matter, it cannot be a mental science ; if, on the other hand, it has to deal with both, it cannot be exclusively either the one or the other. 1 He is scarcely less successful in showing the inconsistencies of Professor Cairnes. Clearly, then, our estimate of Political Economy as a science must be a good deal qualified with misgivings. Its doctors 7. Con- are m profound disagreement concerning its basic flict in principles. Some of them teach that it is founded only nomic in the instinct of man to cheat his neighbour. Mill camp. sa y S that it is purely a deductive science. Syme says that it is impossible to treat it except by the inductive process. "In all investigations of which man is the subject, the only proper method of treatment is by induction." 2 Alfred Marshall is unable to make up his mind about it, and therefore favours both methods, saying that economists must make use of all sources of knowledge. 3 Carlyle, as we have seen, condemned Political Economy as a " dismal science," and sterile as dismal. And JRuskin said : " Now I tell you, once for all, Carlyle is the only living writer who has spoken absolute and perpetual truth about yourself and your business ; and exactly in proportion to the inherent weakness of brain in your lying guides will be their animosity against Carlyle." 4 Even Fawcett, one of the 1 Syme, Outlines of Political Science, p. 8. 2 Syme, Outlines of Industrial Science, p. 28. 3 Alfred Marshall, Principles of Economics, p. 79. 4 Huskin, Fort Clavigera, Letter 10. CLEAEING THE GBOUND 17 frankest of them all, lays down on no more solid basis what may be regarded as his root principle. He uses such prelimi- naries as : " It is natural to suppose," etc. 1 But where would be the science of geometry if it were merely " natural to suppose " that the three interior angles of a triangle are together equal to two right angles. When we reflect that the whole doctrine of Free Trade has been deduced from a so-called science which is in this state of 8. Poli- unphilosophic chaos, a regard for accuracy will compel tical Eco- us £ p rove a u things and hold fast only that which is nomy m r ° J chaos. found to be sound and true. 1 Fawcett, Manual of Political Economy, p. 105. 18 PREFERENTIAL TRADE Letter III.— TO SIR HIGGLER OF THE MARKET CHEAPNESS — A NEW JUGGERNAUT The devil was fairly voted out, and of course the devil's gone; Bui simple folks w'd like to know who carries the business on.— HOUGH. My dear Sir Higgler,— You have been consistent in ever making cheapness the chief deity in your economic temple. Now, I want to have a few words with you on that article of your adoration. I am mindful that he is not the best carpenter who maketh the most chips ; and, despite Home Tooke's dictum that " the world is governed by words," I hold that superfluous words are verbal chips. But we cannot build until our founda- tions are level. To that end I would invite you to reconsider with me some current notions about cheapness. Men have a tendency to make idols out of ideas. I want you to think out with me the question as to whether cheapness is not one of these false gods, and amongst the very falsest of them. I venture to predict that even you, Sir Higgler of the Market, wedded to a competitive cheapness as you are, will find it a very hollow tin deity. The Japanese have a proverb that a fog cannot be dispelled by a fan. But in this case a very few blows on the sconce of this particular idol will make his god- ship rattle and shake and betray all the evidences of his imposture. This fetish cheapness has issued three commandments as follows : 1. It is economically wise for all buyers to buy in Free Trade the cheapest markets. Thus shalt thou do. formula on o. Restrictive tariffs are a hindrance to buying in the cheapness. 1 , „. cheapest markets. Therefore thou shalt have none of them, thou, nor thy son, nor thy daughter. 3. Wherefore, to all buyers, freedom of exchange is to be preferred before restrictive trade. Leave thou the competition of the trader perfectly free. CHEAPNESS-A NEW JUGGEKNAUT 19 The very first step in examining into this doctrine of cheap- ness necessitates a classification. There are two distinct kinds 2 _, of cheapness, or rather cheapness is something which kinds of springs from two distinct causes. There is a cheap- c eapness. negg ^JqJj j s entirely beneficent. It springs out of mechanical discovery. We are living in times of wondrous ingenuity. The genius of invention is abroad. Almost every invention has a labour-saving element in it. Electricity carries our messages to and fro upon the earth. Steam, linked with machinery, performs with multiplied efficiency and cheapness what man could do only by greater effort and higher cost. The circular saw rips a forest into planks with a celerity that never entered the dreams of the old pit-sawyer. The Nasmyth hammer is a docile giant, each of whose blows, obedient to the will of a single operator, does the work of a hundred brawny human toilers. The diamond drill pierces into the secrets of mother earth's bosom with more speed than could the picks and spades of a hundred expert workmen. All this, and a thousand things besides, tend to cheapness and to abundance — to a reduction in the labour cost and money cost of commodities. It means much produce for little labour. It is a most legiti- mate and beneficent cheapness, since it arises from the triumph of man over nature — not from the triumph of man over man. With this kind of cheapness you, Sir Higgler of the Market, have nothing to do. It is a blessing outside your sphere. There we will gladly leave it while we pursue our inquiry into the other kind of cheapness. This other kind is peculiar to you. It is trade cheapness — competitive cheapness — the cheapness which comes from the struggle of man against man, and the victory of money over man. The cheapness which we have to deal with is a cheapness which invariably lessens wages, or which has a tendency to lessen them. It is quite true that this tendency of 3. Cheap- , ,. . . * Al J . J , ness cheapness to diminish the wage rate is counteracted lessens D y ther movements. But the tendency is always W8,fiT6S there. The fruit-laden branch of my apple tree has a tendency to droop to the ground ; but I counteract that ten- dency by the use of artificial supports. There are some facts very frequently quoted which appear to make against the c2 20 PREFERENTIAL TRADE tendency of cheapness to diminish the wage rate. Looking over long periods, we find that wages have improved while prices of commodities have fallen. A review of the century shows this to be undeniably true, at least in union-protected trades. But this fact, when taken in connection with two other facts, does not in the least contravene one aspect of Ricardo's " iron law," or the law that the struggle for cheapness of goods is one for the degradation of the labourer. When we inquire into the causes which have contributed to the simultaneous cheapening of goods and the raising of wages, we shall find two opposite processes to have been in operation. The age has been remarkable for organisation and combination amongst workers. By means of trade unions those workers have waged a perpetual warfare against the law of supply and demand, and have thus maintained wages above the rate which would have ruled in " The higgling of the market." That struggle is still going on with unrelaxed fierceness. Employers still make a determined stand for the " right of private contract," which is the right to hire men at the lowest market rate. Employes are fiercely contending for a minimum or " living " wage — that is, the abolition of competition of labourer against labourer. This contest between the wage earner and the wage payer is one carried on often at the expense of life and . liberty. The issue of the conflict is always in doubt. Victory leans now to one side, and anon to the other. But the net result has been to stem the law of unchecked competition and maintain wages at a higher rate than that which would have resulted from the law of competitive cheapness. Henry George expressly asserts this. " Increased emigration, the greater diffusion of education, the growth of trades unions, sanitary improvements, the better organisation of charity, and governmental regulation of labour and its conditions have, during all these years, directly tended to improve the condition of the working classes." ' Along with these factors which have helped the workman to maintain his wage rate against the downward tendency of cheapness there has been the abundance which has sprung from the triumphs of mechanical invention. When we make the 1 Henry George, Protection or Free Trade, p. 252 CHEAPNESS— A] NEW JUGGEENAUT 21 necessary allowances for these disturbing influences — invention and labour organisation — it has followed, as the night the day, that money cheapness in the products of labour means the greater cheapness of labour itself, and dearness of money in relation to it. This may be proved in two ways — by a priori reasoning and by the citation of indubitable facts. All commodities are the 4 Chean- P r °duct °f labour and land. It is clear, therefore, that, ness of other things being equal, the cheapest commodities will tion based ^ e ^ e P r °duct of the cheapest labour and the cheapest on cheap land. To show that well- waged men with large machine power can undersell low-waged men without it, is nothing to the purpose, since these inequalities, like water, always tend towards a level. Moreover, cheap labour has always been the aim of competitive free trade. Ricardo fought for the cheap loaf as the primary means of evolving the cheap workman. The London Times said : An inexhaustible supply of cheap labour has long been a con- dition of our social system. Two men have been after one master so long that we are not prepared for the day when two masters will be after one man, for if they were, the laborious part of the population . . . will not be sufficiently at the command of capital. . . . The great works of this country depend upon cheap labour. The American slavers taught precisely the same thing, that " cheapness of labour is essential to the material progress of every people." Six years after the repeal of the Corn Laws the North British Review declared : " The whole question has become one of cheap labour." This, of course, is historically beyond dispute. Continental productions were to be undersold by free-trade England, and the efficient agency in this cheapness of production was to be cheap labour. Trades unionism has done much to thwart this laudable purpose, but that is quite by the way. We know that " The Song of the Shirt " is the outcome of the doctrine of cheapness, as are all the sweaters' dens of the world. Nor is this creed a thing of the past. The Cobdenist authorities of our own time declare that we must pursue the race for cheapness I even if English farms should be 1 Farrer, Free Trade versus Fair Trade, p. 150. PREFERENTIAL TRADE all closed, English looms stopped, and English forges extin- guished. In the presence, then, of this universal free-trade demand for cheapness it is incumbent that we examine it and find out exactly what it means. What, for example, do you, Sir Higgler of the Market, mean by it ? When we thoroughly know all this a good many things will change their complexion to us. We have generally looked upon the terms Cheapness and Plenty as meaning the same thing. That is a cardinal error, as we shall see. They are very different — often the ness not"' negation of each other. We cannot purchase a single abund- << bargain " until some poor working producer has been sweated in order that we may get it below its value. Behind the cheap coat there must stand the cheap man. If I buy my 4-lb. loaf of bread for 4d. the wheat grower or the baker or both are sweated in producing it. That is a cheap- ness which makes famine in the houses of the farmer or the baker. But the farmer and the baker are both buyers of my books. In times of famine they can buy books no longer. Their poverty reacts upon me, and helps to make me poorer. My income decreasing, I have less to spend with the tradesman, the builder, the parson, the teacher, who again, in turn, have less to spend with me. Hence we have a vicious circle, in which cheapness, instead of breeding plenty, breeds poverty. Want of employment lowers demand, decreased demand creates cheapness, cheapness mostly means low reward of labour, low reward of labour means small spending powers, and that again means want of employ- ment. I therefore challenge the major premise of your free-trade syllogism. It is not always wise to buy in the cheapest market. We know that most men are sellers as well as buyers ; that selling cheaply is a disadvantage, and that as no man can buy cheaply without another selling cheaply the advantage of the buying consumer is the disadvantage of the selling producer. Therefore, as most men are producers as well as consumers, cheapness is no economic advantage, since what the consumer CHEAPNESS— A NEW JUGGEENAUT 23 gains in cheapness he more than lose3 as producer. A breakfast- table free from taxes is theoretically an excellent thing ; but not so when through the non-employment of the bread-winner it is also free from food. It was remarked to Dr. Johnson that several eggs might be had for a penny in the Hebrides. The doctor answered : "It is not that eggs are plentiful, but that pennies are scarce." Wc are all familiar with the Irishman in New York, who, seeing some luscious-looking apples exposed for sale, inquired the price. " Sixpence the half-dozen." " Sixpence the half-dozen, is it ? Why I could buy a basketful in Ireland for sixpence." " Why did you leave so admirable a place ? " " Faith, I couldn't get the sixpence there to buy 'em." That was a cheapness of eggs and apples quite useless to the average consumer. It meant, not plenty, but famine. When flour sold for £. They cannol stay at home and starve. It is just natural that they come hither as ;i curse to us. 1 But Free Traders deny that this cheapness of man is any curse. On the contrary, they say it is a great blessing to the capitalist, for cheapness in labour is essential to cheap pro- duction, and a cheap production promotes industry and yields employment. " The whole system," wrote Carey, " rests upon the idea that the prosperity of man is to be promoted by the cheapening of the raw products of the earth. And yet the experience of the world, past and present, teaches that wherever they are cheapest the cultivator is most a slave, while land has little value." 2 Such is the cheapness of competition. Its features are well known all the world over. They are haggard and starved. Cheapness sits by the side of the girl who " sews at once with a double thread a shroud as well as a shirt." It lives in the sweater's den. The clutch of its nails has left scratches on the broad pages of all economic history. Wherever money has been dear and labour cheap the toiler of all grades has been most indigent ; and this where the land has been overflowing with the riches of the loom and the factory. The pseudo-economist is not unaware of these truths. And he sometimes seeks to evade them. Sir T. H. Farrer once wrote : " Mere cheapness is not what Free Traders aim at or desire . . . what they desire is abundance for all — abundance of consumption, abundance of production, and of the employment necessary to production." 3 But, if Free Traders do not desire cheapness, it is singular that they have sacrificed English agriculture to the cheap wheat 9. Cheap- °^ America. And, for abundance, of what use is it when ness it means warehouses and granaries filled to repletion as P ruin while famine sits gaunt in the houses of the con- by free sumers ? It is openly declared, in the very work just quoted, that the English farmer must perish if he cannot growj wheat and meat as cheaply as they are grown on the 1 Carlyle, (Jliartism. 2 Carey, Principles of Social Science, vol. ii. p. 80. a Farrer, Free Trade versus Fair Trade, p. 130. CHEAPNESS— A NEW JUGGERNAUT 29 steppes of Russia, on the ranches of California and Argentina, on the Queensland downs or the Victorian mallee land. Sin- gular as it may sound, the producer everywhere desires to see scarcity and not abundance, because scarcity means a demand and a brisk market — the opposite of cheapness. What has cheapness done for the world of to-day ? Not a man you meet but will tell you that low prices (cheapness in money) lie at the root of all the evil that affects industrial inter- ests. Indeed, Free Traders are quite as ready in this admission as are Protectionists. So far they are truer than their prin- ciples. Even while they plead for a " free port," in order to attain greater cheapness, they rejoice as soon as corn rises a little ; and they mourn over the depression that results from its decline. Even in English circles sacred to Cobden's shade the rise in the price of wheat is hailed with glee ; its fall as a sign of disaster. People constantly talk of the low prices as "deplor- able." Yet if cheapness be good per se, how can such a term be applicable ? We smile at this. So must every man who has not lost all sense of the ludicrous, or divested himself of the last vestige of the logical faculty. Yet such are the exigencies of the case — that the very professors of the cult of cheapness are compelled to bewail it as an evil. If cheapness were a blessing to be striven for, instead of a curse to be avoided, the cheaper the price the greater the blessing, even though the fat bullock sold for 5s. or 5d., and the bushel of wheat for a groat. We have seen both wool and wheat at zero in money value, cheaper than ever in the century before. Yet every class of consumer was poorer in consequence. Cheapness of wheat in England has been gained at an admitted depreciation of from £300,000,000 to £400,000,000 in the value of English land l — Mulhall places the loss at £450,000,000, Mr. Harris at £670,000,000 — and at a loss to the agricultural annual income 2 of £42,800,000. It is said that the cheap English loaf has ruined an English agricultural industry worth £670,000,000. Well might Edmund Burke say that you should " make things dear that they may be cheap." There is in those words an economic truth unper- 1 Williamson, British Industries, p. 178. 2 Farrer, Free Trade versus Fair Trade, p. 192. 30 PREFERENTIAL TRADE ceived by you, Sir Higgler of the Market. Hence it is we see that though cheapness is the very corner-stone of free trade, some free traders repudiate cheapness in wages. Henry George says : " To raise and maintain wages is the greatest object that all who live by wages ought to seek." : Yet it is simply impos- sible to degrade the money value of labour's products without a degradation of the money value of labour itself. Other things being equal, the one degradation logically involves the other. Or, rather, it would be truer to say that the one degradation is the other. Respecting the doctrine of cheapness, therefore, instead of the formula with which we opened this letter, we reach the following : I. It is economically wise that labour should always be paid for at rates sufficient to maintain the workman decently in the 10 The usages of civilised life, with a surplus to guarantee the true future. II. The rates ruling in the cheapest markets are not always sufficient for such maintenance. III. It is therefore unwise that labour or the product of labour should always be bought in the cheapest market. In this proposition, cheapness, as cheapness, stands con- demned. It does not follow logically as fact that all cheapness is pernicious because it is so generally. The cheapness that flows from abundance, after all human wants have been fully satisfied, is always a beneficent cheapness. Such a cheapness arises " in the steamship, in the railway, and in the thoughts that shake mankind." But, as we have seen, mere abundance in produc- tion is too often the prelude to starvation in the producers — to a cheapness in man and a dearness of money. The doctrines here promulgated are gaining the assent of all thinkers. It is true that they cut clean across the teachings of some economists, for whom the world has great respect. Before men will be able to approach political economy they must realise the fact that indiscriminate cheapness is a male- ficent thing, not a goal to be struggled for. 1 Henry George, Free Trade or Protection, p. 5. 31 Letter IV.— To THE WAR SPIRIT OF COMPETITION TRADE COMPETITION — THE GREAT DEMORALISER War its thousands slays, peace its ten thousands. — Beilby Porteus. Your Most Malign Puissance, — To you as the author of trade competition I address this letter. It is a favourite formula of the deductionist school that you, " Sir Competition, are the soul of business." Starting from the basis that self-interest is the beginning and the end of economic motive, the cult naturally evolves the principle of trade competition. Lord Farrer, in the name of the Cobden Club, said of you : " Competition is one form of a higher law. . . Free trade cheer- fully obeys this law." l Henry Fawcett adores you deduction- thus : " Competition befriends the working classes. It ist doc- cheapens commodities and ensures that the maximum of wages shall always be paid." 2 Sentences full of self- contradiction. Bastiat says of trade competition : " Of all the laws to which Providence has confided the progress of human society, it is the most progressive levelling and communaiiiaire^ 3 Despite all this praise, however, he admits in another place that you have some drawbacks, for he says that he " had not failed to see, and will not deny, the extent of evil that competi- tion has inflicted upon mankind." 4 Newman says of your influence that it is " what gravitation is in the mechanism of the heavens, an all-combining, all-balancing, and beneficial law." 6 Professor Thorold Rogers is in quite a maze of uncertainty about you. Respecting the operation of competition in fixing 1 Farrer, Free Trade versus Fair Trade, p. 149. 2 Fawcett, Manual of Political Economy, p. 110. 3 Bastiat, Harmonies Economiques, p. 267. * Ibid. 5 Newman, Lectures on Political Economy, p. 119. 32 PREFERENTIAL TRADE rent, he condemns you : " No human skill can draw the line between a competitive and a famine rent." x He believes, more- over, that no sound writer would ever sanction such an applica- tion of your system, but that " unfortunately most political economists, misled by their abstract methods and habitual dis- regard for facts, treat the movements of capital as all equally fluid or nearly so." 2 But in relation to ordinary industry he holds that " to extinguish competition is to extinguish enter- prise." 3 Yet he readily admits that trade competition often ruins producers, 4 and that some other economic expedient is sadly required, 5 for there is no denying one sad result of it is — adulteration. 6 Dr. Hearn's view of trade competition is : " The whole result incessantly tends towards the general advantage and elevation of our kind." 7 J. S. Mill speaks of trade competition as a principle which alone entitles Political Economy to the rank of a §cience. 8 Therefore, in the opinion of this economist, if trade competition is an unsound principle, all the economist's structure falls. Professor Walker takes a more discriminating view. He is dubious about you, and defines his term thus : " Competition signifies the unrestrained operation of individual self-interest amongst the buyers and sellers of every article in the market. It implies that each man is acting for himself solely, in exchange, to get the most he can from others, and to give the least he must himself." 9 He would agree with Bastiat as to the bene- ficence of the system if we were living in an ideal world where trade competition could be really free and equal. That is where Bastiat has fallen into error : trade competition can never be free or equal unless all the competitors meet with equal advan- tages ; and this is what the world, he says, has never seen and never can see. 10 He points out; that competition absolutely failed in Ireland over the land question, and has always failed in the money market. 11 1 Rogers, Economic Interpretation of History, p. 173. 2 loid. 3 md p 375 4 im p 376 5 Ibid. p. 377. « Ibid. p. 388. 7 Hearn, / Ivtology, p. 335. 8 Mill, Principles, vol. ii. Book 4, ch. iv. " Walker, Political Economy, p. 96. 10 loid. » Ibid. TRADE COMPETITION -THE GREAT DEMORALISES 33 Adam Smith lays down the doctrine that trade competition is an almost perfect regulator of produce and price, the com- petition of sellers restraining production in times of excess, and that of buyers stimulating it in times of scarcity. 1 Such has been the almost stereotyped view of the English deductionist school, which has followed the teaching of Adam Smith. Alfred Marshall modifies this somewhat ; but only to the extent of saying that " Competition can never be perfect," 2 and therefore has to be accepted with numerous allowances. His views largely coincide with those of Walker. It is of the very first importance to ascertain how far these varying views concerning your Most Puissant Malignity are sound or unsound. There appears at first sight some contra- diction between the admissions of Bastiat that trade competition has inflicted much evil on mankind, and his praise of it as the most " progressive and levelling " law given by God to man. But the contradiction is only in seeming. Newman's com- parison of the law of competition with that of gravitation makes Bastiat's meaning clear. Gravitation has caused the death and mutilation of millions of men, but its general beneficence is not to be impugned on that account. In inquiring how far com- petition corresponds with the character of a " higher law," we shall have to note, in the first place, why it is called a law. This seems to be because it naturally flows out of the doctrine that all men are moved by a master-motive of self-interest to desire an increase of material wealth ; and that that self-interest is quite sufficient to insure perfect economic harmony. But then we have seen how that doctrine is based upon a totally unsupported hypothesis, which is itself founded on a manifest fallacy. In treating hereof competition we have to distinguish between that emulous principle which lies at the root of human motive, 2. Defining an d your competitive principle in the production and terms. exchange of wealth. Emulousness, being a part of our common nature, can never be stamped out ; and if it could, it would be only at the cost of producing an emasculated race. Emulousness bears no inward likeness to you. The desire in 1 Smith, Wealth of Nations, pp. 59, 60, 89. 2 Marshall, Principles of Economics, pp. 72, 73, 95, 96. D :;i PEEFEEENTIAL TEADE man to excel is almost as strong as the desire to perpetuate his B8. Both can be regulated; neither can be suppressed. The institution of the family, jealously guarded by the law, limits the sexual instincts within rigorous bounds. The emulous faculty in man is just as capable of regulation. Suppress it and we Bhould stunt the noblest faculties; direct it to the cultiva- tion of the higher altruism, and rigorously cut it off from the acquisition of material wealth, and we retain all its usefulness and draw the sting of its mischief. It will be understood, there- fore, that the form of competition dealt with here is that form which is in the mind of all economic writers, pertaining to trade and production — your own special war spirit — trade competi- tion. If trade competition, as asserted, were one of the highest eternal laws, it must always have been operative in that form. 3. Trade ^ an cannot for an hour suspend the laws of gravitation competi- or heat. They are from eternity unto eternity. But eternal n °t so with trade competition, which is an economic law. system of quite modern development. We can chain you up absolutely whenever we will. Bastiat asks L very triumphantly of those who deny the utility of competition what they are prepared to substitute for it. He implies that while once it could be done without, it now fulfils a function which renders it indispensable. Man, we are told, is a competing animal ; competition is a common seeking after a common object of desire ; man competes with nature ; the Polish Jew competes against the London artisan ; the Chinese laundryman competes against the European ; capitalist competes against capitalist, workman against workman, and each against the other ; women compete against men, and child- labour against both ; children are taught in their school lessons to compete for prizes ; athletes compete for place of honour in the boat, the cricket, and the football teams ; authors compete for readers ; competition may work harshly sometimes, and its abuse make devils of human beings, but " God's seal is upon it." Sir Edmund Beckett once said that only lunatics can question the fact of the eternal truth on which competition is based. Workmen, he urged, must be free to take advantage of their 1 Bastiat, Harmonies Eeononiiques, p. 265. TEADE COMPETITION— THE GREAT DEMORALISED 35 employers' jealousies, and to compete against each other for work ; or, as Sir H. Maine put it, " strive to climb on the shoulders of one another, and remain there, through the law of the survival of the fittest." These are the grounds on which competition in industry is defended, on which it is declared to be indispensable. These are the points we have to examine. In former times industry was organised, not on a competitive but on an ethical basis. You, Sir Malignity, were scarcely known. It may be so again ; indeed, it must be so again, as we shall see. John Stuart Mill expressly admits : Competition has only become in any considerable degree the governing principle of contracts at a comparatively modern period. The farther we look back into history the more we see all trans- actions and engagements under the influence of fixed customs. The reason is evident. Custom is the most powerful protector of the weak against the strong — their sole protector where there are no laws or governments adequate to the purpose. Custom is a barrier which, even in the most oppressed condition of mankind, tyranny is forced in some degree to respect. To the industrious population in a turbulent military community, freedom of competition is a vain phrase. They are never in a condition to make terms for them- selves. There is always a master who throws his sword into the scale, and the terms are such as he imposes. But though the law of the strongest decides, it is not the interest, nor in general the practice, of the strongest to strain that law to the utmost, and every relaxation of it has a tendency to become a custom, and every custom to become a right. Rights thus originating, and not com- petition in any shape, determine in a rude state of society the share of the produce enjoyed by those who produce it. The relations, more especially between the landowner and the cultivator, and the payments made by the latter to the former are, in all states of society but the most modern, determined by the usage of the country. Never, until late times, have the conditions of the occupancy of the land been (as a general rule) an affair of competi- tion. The occupier for the time has very commonly been considered to have a right to retain his holding while he fulfils the customary requirements ; and has thus become in a certain sense a co-pro- prietor of the soil. 1 1 Mill, Principles of Political Economy, vol. i. p. 285. 36 PREFERENTIAL TRADE Nor does the proof of this fact depend on any admission of Mill. In early Christian times some of the Fathers, like St. Augus- tine, (aught that all mere trading for a profit, like usury, was immoral. Leo the Great, in the fifth century, is among the first who conceded its lawfulness, and who laid down an ethical rule for i i s regulation. His trade maxim was the maxim of the Gospels : " Whatsoever ye would that men should do unto you do ye also unto them." Then came the angelic doctor of the schools, Thomas Aquinas, a man whose wisdom touched everything, and illumined everything that it touched. He dealt with the problem of prices, and concluded that the worth of a thing must be its cost of production and conveyance to the purchaser. This allowed for no unnecessary interposition of a middleman, nor for any toll being taken by the capitalist. Custom pre- scribed the style of living of all the classes engaged in production, and the charges of each had to be regulated by that custom. He would not give an instant's countenance to your Potent Malignancy. It was the same in England. Some of the statutes of Edward I. fix prices and qualities of goods, and some of these were continued down to the eighteenth century. We see, therefore, that this supposed " eternal law," which is supposed to be your throne, had till recently little or nothing 4. Trade to do in economic questions. We have still other means competi- f proving that your Competitive Highness, as we know tion tends r . ° . , " r . . ° to destroy y°u in trade, has no more basis in natural law than itself. nas cannibalism or any other barbarous custom. Com- petition is, indeed, a relic of barbarism, because it is in savage life that the strong oppress the weak, and triumph " in the survival of the fittest." Competition is inherently self -destruc- tive ; pursued to its logical conclusion, ends in monopoly. The most successful competitor is he who destroys competition. Competition, therefore, ever works towards competitive suicide. Mr. Syme has an admirable passage in which this view is insisted on : Competition exists when possession is disputed. If competitors, however, act exclusively with a view to their own interests, as we are told they must, it will be their main object to reduce competition to a minimum, or, in other words, to create a monopoly. Thus the TEADE COMPETITION— THE GEEAT DEMORALISES 37 principle from which the Deductionist started, namely, the suffi- ciency of self-interest, instead of tending to competition, leads back ultimately to restriction in its worst possible form. 1 It may be objected that while some competitors perpetually aim at abolishing competition, others just as constantly revive it against the monopolist, and that thus, springing like the phoenix from its own ashes, it has a life that is perennial. Even if this were true, which it is not, it would not answer the objection that the more successful the competitor the more he destroys all competition, and that the most successful com- petitor of all absolutely extirpates his competitive rivals and establishes monopoly. We have only to depict you thus to exhibit your Puissant Malignity in your true colours. Therefore it is only when competitors fail in their aims that competition succeeds. When they succeed, competition fails and monopoly ensues. From this it follows that competition, instead. of being a natural law, is a system, the supreme success of which is self- destruction. But is it true that competition possesses the inherent faculty of perpetual revivification ? All the history of the ancient and 5 Trade m °dern world is a proof to the contrary. It is in the competi- nature of the trader that he tolerates no competition exists"" wnen ne can by an y means prevent it. The industrial with history of every considerable State is a record of con- monopo y. £ r j vances f or getting rid of competition and for the maintenance of monopolies. The Carthaginians, in the day of their power, forbade any- one to purchase the raw materials of Africa except through their markets. The Athenians, after the days of Solon, made their State the centre of similar monopolies. The Venetians, the Genoese, the Spaniards, the Dutch, the English, have done the same. All of them have at different long periods maintained absolute monopolies of trade. If we cite the most recent examples of our own time they are many. McCulloch tells us 2 how English traders stamped out the competition of Indian cotton factories, and obtained a monopoly which lasted twenty years. Several of the Australian 1 Syme, Outlines of Industrial Science, p. 59. 2 McCulloch, Commercial Dictionary, article on Calcutta. 384813 PREFERENTIAL TRADE colonies applied the system in the disposal of their crown lands by auction. It was a wholesale failure. The land shark and blackmailer attended all the auction rooms, insisted on being bought off, and then arranged for each buyer to get the land at their own prices. The modern brewing system is conducted on the monopoly principle. The great brewing companies buy up the smaller hotels, and put in landlords who are obliged to buy all their malt liquors from the proprietary establishments. The Victorian coal importers for twenty years crushed all attempts to develop Victorian coal mines ; certain gas companies held the field against all competitors ; and coach proprietors and steamboats have everywhere killed competition at great sacrifices in order to enjoy monopoly. The system of tendering is a very special form of competition. Contractor competes against contractor. Under this method Governments have believed that they can feed and clothe armies, supply navies, make railways, carry mails, and do the various things incidental to government, at the most economical rate. Yet the history of contracting competition is one long history of fraud. In this your Malignity is in excelsis. Armies have been robbed, soldiers starved, brave warriors betrayed by going into battle with villainous weapons, and mammoth chica- nery supplied with opportunities for its most efficient exercise. Even where palpable roguery has not acted, knock-outs and combinations have enabled great contractors to obtain work at monopoly prices to the detriment of the public. Some men, like the contractors Brassey and the late Baron Hirsch, have made enormous fortunes altogether disproportionate to their exertion ; and others have been disastrously ruined, to the loss of the community who trusted them. The actual labourer has rarely got the due reward of his labour. In fact, the chronicles of modern trade are full of successful monopolies carried on for years in defiance of competition. These, then, are the results where competition is so entirely successful that some one competitor has succeeded in beating down all rivalry. This continues until the enormous profits made by the monopolist provoke competition once more, and then the battle of supremacy begins all over again. TEADE COMPETITION— THE GEEAT DEMORALISES 39 We may view it in another aspect. There are many examples where the competitors in business are so equally equipped in 6. Com- knowledge and capital that no one of them can attain petition to any permanent advantage over the other. In that commodi- case, where they are not too numerous, they often corn- ties. Dme anc [ charge the public with monopoly prices. This was the case with a number of the London gas companies. But where the number of competitors is too large for such a com- bination there ensues a state of war as cruel, cutting, wasteful, and destructive as any carnage of the battlefields. The business of a newsagent in any large city is a case in point. It is one to which the indigent appear to flock just as the despairing traveller in the desert tries to reach the drying-up well. Every street is crowded with poor men, women, and children struggling to make a few pence per day by the sale of the weekly and daily news sheets. Every hour they tread on each other's kibes, and snatch the coveted morsel from each other's lips. Their life is a daily competitive strife against penury. A picture of the result was drawn by Mr. W. S. Lilly, one of the most accomplished of all philosophical and economic thinkers of the day : Unrestricted competition regulating the price of things by supply and demand is the great principle on which the old orthodox political economy hangs. And adulteration, as Mr. Bright, a great admirer of that old orthodox political economy, has told us, is merely a form of competition. The consequence is, that in the fierce striving to be rich every man's hand is against every man. Manufacturers fight against one another and against the public, the masters fight against the men, and the men against the masters, and in this internecine war the weakest, as is natural, have succumbed. Individual firms and companies compete for profits. Labourers, skilled and unskilled — hands they are called, and there is a world of meaning in the term — compete for wages. Society exercises no control over the production of wealth. And from the haste of the capitalists to be rich there arises from time to time a glut of goods in the market. Commodities are produced, not for use but for sale, and when a glut comes they can no longer be sold. The warehouses are choked with produce, for which there is no market. The labourers have to fall back on their petty savings — if they have any — or to look starvation in the face. This is a peculiar 40 PREFERENTIAL TKADE feature of the existing industrial individualism. Of course, trade crises and famines happened under the various industrial systems which have hitherto existed — in the nomadic state, in primitive communism, in the state of great land and slave ownership, in the feudal state. But never, until our own day, were these evils attribu- table to a superfluity of wealth. Never was the institution of property harder and less human, than it is now. It has been said, with a great amount of truth, that our present type of society is, in many respects, one of the most horrible that has ever existed in the world's history — boundless luxury and selfish indulgence at one end of the scale, and, at the other, a condition of life as cruel as that of a Roman slave, and more degraded than that of a South Sea [slander. 1 Everyone is familiar with the spectacle of several rival butchers, bakers, grocers, or colleges, struggling to live where there is room only for one. The shifts, evasions, adulterations, and chicane resorted to are endless, each trying to secure patron- age from the others by underbidding in price. This it is which causes Ruskin to exclaim : " The wicked trade of underbidding ! If you are the sellers, it is the law of heaven that you must sell your goods under their price." In that struggle of brother man against man, who can name the heartburnings, the secret wrath, the open hatred sometimes, which are engendered during the process of destruc- tion of the one by the other ? This ill-will is not like the sudden tragedy which follows a spasm of wrath. In this trade com- petition — where one of the parties can live only by the annihila- tion of the other — there is aroused all the venom which flows from the infliction of mutual daily wounds, and from hatred fanned by ever-recurring injuries. Some time ago we received through the cable an appalling account of a mad scramble in Moscow amongst 44,000 people for some prizes of the royal bounty. The expectant petition multitude waited up all night for a chance of the good ^V^ * nm g s > an d at a signal in the morning they made a simultaneous rush for the expected feast. They were under the inspiration of your most Malignant Highness. In that terrible stampede nearly 6,000 of the weakest men and 1 W. S. Lilly, Melbourne Argus, July 27, 1895. TEADE COMPETITION— THE GEEAT DEMORALISE!* 41 women went down to be trampled flat under the merciless feet of the human Juggernaut of unregulated competition. The picture is an accurate similitude of what is taking place every- day of the week in the world's social system. Nor is it in the least overcharged. Mr. Syme well remarks that industrial progress has made no such advance as was reasonably to be expected. He asks : Is not the struggle for industrial existence as keen, as un- scrupulous, and as deadly as ever it was 1 Do not competitors regard each other as enemies, who are to be got rid of at all hazards, and as soon as possible ? Why, may I ask, should the static con- dition of the industrial world be one of warfare 1 Why should the man of large capital be allowed to crush his weaker rival, or the honest trader be ruined by the rogue ? Why, in fact, should not industry be conducted on the principles of justice, instead of, as at present, by brute force and cunning ? x But when we turn from competition in the sale of commodi- ties to the competition for the sale of labour the evil is greatly 8 c accentuated. This hardship arises out of the nature of petition the thing to be sold. If a man has wheat to sell, and in wages. k e canno £ g e ^ j^ s va l ue m the market, he may hold it over for another day, and borrow a little money on its security for his immediate needs. But if, instead of wheat, he has fish or oranges, he must sell at once, or his commodity will perish in a few hours. He is at the mercy of the buyer who knows his needs. With the seller of labour the necessity is still more imminent. If he cannot sell his labour on the instant, that labour is irrevo- cably lost. Every hour's idleness is, to the worker, an hour's profit lost beyond recall. But even that is not the worst. Not alone does the lost day's wage leave the wage-earner so much poorer, but it is an equal loss to the aggregate wealth of the community. Count Edward Soderini scouts the popular notion that com- petition obviates oppression or extortion. He says : " Com- petition unchecked does not hinder, but rather helps it." And he says that the benefit it has conferred in some things does not 1 Syme, Outlines of Industrial Science, p. 91. 42 PREFERENTIAL TRADE alter the fact that in its excess it aids the strong against the weak, until " the fulness of freedom has generated a kind of slavery." ' Leo XIII. is still more emphatic. He says : * Although the guilds of arts and crafts were in the last century suppressed without anything being substituted in their stead, at the vciv lime when institutions and laws were withdrawing from the Christian spirit, it came about that by little and little workmen were left isolated and unprotected against the spirit and the greed of employers and of* unrestricted competition. 2 The competition for the sale cf labour ramifies much further than this. When two men compete for the work of one master, the employer who buys his labour in the cheapest market pits the necessities of one man against the other, and pays, not the value of the work done, but the lowest price for which he can get either of the competitors to sell his services. Here arises the ethical element in the transaction. We have now a fourfold wrong done. First, the wrong done to the work- Inan, whose labour was rejected because he could not sufficiently underbid the true value of his work. Secondly, the wrong done to the workman obtaining the work, who was sweated because of his poverty. And, thirdly, the moral wrong, self- inflicted, by the employer who has wronged them both. Fourthly, the wrong done to society, which is poorer in all its parts to the extent of the injury to its members. Yet we are told that society can have no other true economical basis than that of wrongs such as these — wrongs which spring out of the fact of each unit regarding himself alone. Competition is a war between hostile forces — those of the buyer and the seller. Mr. J. B. Say put it very candidly that : Humanity would rejoice to see labourers and their families dressed in clothing suitable to the climate and season ; having homes in roomy, warm, airy, and healthy habitations, and fed with wholesome and plentiful diet, with perhaps occasional delicacy or variety ; but there are very few countries where wants, apparently 1 Soderini, Catholicism and Socialism, p. 175. 2 Leo XIII., Encyclical Rcruvi Novarum. TEADE COMPETITION— THE GEEAT DEMORALISES 43 moderate, are not considered far beyond the limits of strict necessity, and therefore not to be gratified by the customary wages of the mere labouring class. 1 It was the acute realisation of this fact which made Carlyle paint the pitiful picture of the competition of the Irish labourers with the English hind. He cursed this traffic, in his " Chartism," as of the devil most devilish, and this he did while a priori economists of the deductionist school were preaching the doc- trine that the cheapest labour was a necessity of the national well-being. Kingsley, too, has touched the same phase of life, where his tailor says of the sweating system : Our wives will be forced to sit up night and day to help us ; our children must labour from the cradle, without chance of going to school, hardly of breathing the fresh air of heaven ; our boys as they grow up must turn beggars or paupers ; our daughters, as thousands do, must eke out their miserable earnings by, prostitution. And after all, a whole family will not gain what one of us has been doing, as yet, single-handed. 2 These are the acknowledged fruits of competition. They are those which Bastiat finds so " levelling " and " progressive " ; which Farrer considers indicative of the " higher law," which Newman describes as " all balancing and benevolent," which Hearn applauds as tending " towards the general advantage." We are now in a position to see that competition is no natural law ; at least only in the same sense that it is natural for the fleeter and stronger beasts of the forest to prey on the weaker. To speak of competition in trade as a natural law, or a law at all, is a misuse of terms, since trade itself is not a natural condition of man, but purely artificial. It is natural, 9. Trade itself not a perhaps, for the stronger savage to spoil the feebler one natural an( j ea t him, but not to trade with him. Nevertheless, competition in trade is natural to the aboriginal instinct to this extent, that it tends towards barbarism, in which the weakest must sink in the struggle. 1 J. B. Say, Political Economy, p. 336. 2 Kingsley, Alton Locks* 44 PEEFEEENTIAL TEADE Trade competition rejects all the ethical teaching on which alone society can rest ; and it endeavours to build on a purely- barbarous law of self-interest an economic law applicable to civilisation. The advocates of trade competition are accus- tomed to admit most of these accusations against their system ; but they say that all human things are inseparable from an admixture of evil, and that some of these will correct themselves as competition becomes more scientific. But we see no sign of this improvement — rather the reverse. As trade competition deepens, frauds increase. Mr. Syme strikes this nail on the head : When there are no longer any customers to cheat, cheating will no doubt be abandoned as an unprofitable business, just as the thieves' occupation will be gone when there is nothing to steal. But why the fate of the thief should be so different from that of the dishonest trader, who flourishes on his gains in all the odour of respectability, is one of the mysteries which the economists have left unexplained. They both take what does not belong to them ; they both bring discredit on the country ; but, if anything, the dishonest trader is worse than the thief, for in addition to all this he helps to ruin the country which supports him. 1 I have, so far, barely touched upon the economic waste involved in competition. Yet this consideration alone might condemn it. In all states of society we see new corn- waste of petitors, workers pushing their way into ranks which trade com- are already overcrowded, petition. J Lawyers, doctors, architects, engineers, painters, poets, artisans, are elbowing each other aside in the struggle for bread. The mere misuse of effort involved in this is stupendous ; but when we add to this the necessary deterioration in the moral fibre of men thus engaged in a lifelong anti-social strife, the loss to the race becomes incalculable. It was this which made Frederic Harrison say that " the waste of the competitive system is awful," and that " 90 per cent, of the actual producers of wealth live always within a narrow margin of pauperism, so that a single month of sickness must plunge them into it." 1 Syme, Outlines of Industrial Science, p. 90. TRADE COMPETITION— THE GREAT DEMORALISER 45 Fisk longed, as we all do, for " an ideal State in which there would be no misapplication of the lives, intellects, and souls of men." But trade competition is directly productive of waste in all of these. Indeed, it very often increases cost to the con- sumer. Professor Gide says : In France, more probably than in any other country, the number of middlemen is increasing, and is becoming a regular nuisance, aggravating prices enormously without profiting anyone, not excepting the middlemen, since their numbers and the competition they cause reduce their share to a minimum. According to the figures given by M. Tresor de la Ilocque, the number of tradesmen, which in 1876 was only 1,717,000, is to-day over 5,000,000; thus it has trebled in less than twenty years. This refers of course only to small retailers or debitants, a sort of trade which seems to have a special attraction for the French temperament. Herein there may lie explanation of such a miraculous multiplication. Many peasants, many servants, look upon it as the ambition and aim of their life to establish a business as grocers, drapers, or bakers. To have a shop, a sign in the street, to chat with customers, to have even some little political influence, and, above all, a sedentary life and little bother — here is an ideal seductive to very many. Now, this multi- plication of middlemen has, as its result, by no means a continual lowering of prices to consumers, but, contrary to the fundamental principle of classical political economy as to the effects of competi- tion, a gradually increasing divergence between the price at which the producer sells his produce and the price paid by the consumer. At this present moment the French producer is selling his corn at 18 francs the 100 kilograms, and the consumer is paying for his bread at the rate of 30 to 35 francs the 100 kilograms. Now, we know that one kilo of corh represents one kilo of bread; hence the divergence is enormous, and it is the same for consumers' com- modities. " Exactly so," cry the middlemen. " We've got to live." Indeed?* We don't quite see the necessity; and, accordingly, if proprietors and consumers succeed in putting themselves in direct touch one with another, it will be a great benefit, not only to the former, who would sell at better prices, and to the latter, who would buy cheaper, but also to the entire nation, inasmuch as all these parasites would be eliminated and forced to set about getting more useful and more productive employment. Let no one think this testimony peculiar to France. In 46 PREFERENTIAL TRADE Acland's " Working Men Co-operators," page 16, we find the following : But, petty shops started with insufficient capital, with no 1 nisi i icss experience, and with no means of getting at the wholesale markets; shops which must make working men suffer either in the charges for or quality of their goods, and which hold many of them in bondage through the baneful credit system, are the cause of the most serious loss to the working classes. It will often happen that twenty shops are doing a business which five persons could easily manage. Are the working people, who least of any class can afford it. to be obliged to pay out of their own pockets for the livelihood of fifteen unnecessary distributors 1 It has been calculated that there are in London twenty- five shops for every ten that are really needed, even if every householder required all his shops to be within one-third of a mile of his house, and a public-house to be within one-sixth of a mile. 1 The same thing is true in Melbourne. Some years ago Mr. W. Nuttall made a calculation that there is in this city one shop for distributing food and clothing to every twelve or thirteen families. It requires no thought to perceive that these, in order to live, must take toll from both producer and consumer. Under the competitive law this uneconomic waste is for ever intensify- ing itself. In England, in 1862, there were ninety-nine people to every shop open. In 1882 there were only seventy-nine people to every shop open. I have not the figures for to-day ; but I doubt not the shop competition has been brought to the Mel- bourne level, where one shop exists for every sixty persons or thereabouts. All this is a consequence of the competition in shops, multi- plying the middle man, and raising the cost to the consumer. In Scotland competition gave us the " clearances " that depopu- lated whole counties like those of Sutherlandshire. In Ireland, your Most Malignant Highness gave us a famine with its con- comitant fever and death, reducing its population by nearly 50 per cent. In India an equal devastation has been the result. That 1 Economic Journal, June 1895. TRADE COMPETITION— THE GREAT DEMORALISES 17 country, as Europeans found it, was declared to be " not inferior in civilisation to the people of Europe." l It fed its own people plentifully, and clothed them in a cotton of its own growth and manufacture. Manchester trade competition broke its industry more than Olive's soldiers broke its power. All this, and a score of instances beside, have tended to check the forces which make for the progress of man. Carey has well said : " Whatever tends to deteriorate the con- competi- dition of man anywhere, tends to do so everywhere." 2 tionoftwo This economist, who is a keen observer, a shrewd reasoner, and an original thinker, has a theory that trade competition is both good and bad according to circum- stances. He says : " Competition is of two kinds — the one being for the sale of labour and its products, and the other for its purchase. Whatever tends to increase the first tends towards slavery. Increase in the other on the contrary tends towards freedom." 3 He elaborates this point somewhat in another passage, where he says : The more the competition for nature's services, the more rapid is the advance in the value of land and labour. ... A century since, steam power was scarcely known in England. Now it does the work of 600,000,000 men. Like England, Turkey and India have coal ; yet they scarcely use steam, " because English policy has annihilated the industries which would have developed Turkish and Indian coal-mines. France and Germany have ignored the doctrine of cheap raw materials and cheap labour. The more competitors, he argues, there are for nature's powers, the greater the demand for man's services." 4 In other places, too, he makes the broadest distinction between the two kinds of competition. When two workmen compete for employment by one employer, he says, the result is slavery. When two employers compete for the services of one workman the result is freedom. In the same way he will have it that if A competes for the purpose of B's labour B will be 1 Sleaman's Rambles in India, vol. i. p. 4. 2 Carey, Principles of Social Science, vol. iii. p. 244. 3 Ibid. vol. iii. p. 423. 4 Ibid. vol. iii. p.' 254. 48 PREFERENTIAL TRADE likely to compete for the labour of C, and so on to the end of the alphabet. It is abundantly evident that there is a broad economic dis- tinction between the two classes of competition — the competi- tion of the buyer, and the competition of the seller. The first creates what Adam Smith calls " effectual demand," and the second supplies that demand. But it is difficult to see how, if two masters compete for the purchase of B's labour, they will not afterwards have to compete as sellers of the products of that labour. You will have remarked that I have admitted Carey's broad economic distinction between th°, results of competition when applied to buying the products of industry and selling those products. That is so because, when the producer knows he can find ready sale for his wares, production is brisk, employment abundant, and wealth multiplied. When two men desire to sell what one only desires to buy, production is discouraged, and producers are idle. There is still more difference between the results which flow from competition when it is directed to the acquisition of per- ,„ „ sonal riches, and when it assumes the form of emu- 12. Com- petition, lousness in well-doing. Thinkers who confound the ^ h ? n a , emulousness of schoolboys and athletes with the com- when a petition by which traders seek to destroy each other's poison. means of living, will not perceive the difference between the man who drinks wine medicinally and him who wallows an inebriate in its slops. Arsenic is a deadly poison ; but in the medicinal pharma- copoeia it is used as a valuable remedial agent. Trade competi- tion is equally deadly and blasting in its nature ; but com- petition, applied to the higher purposes of life, may produce what is known as an emulousness in virtue. It has been said that in subduing the earth man competes with nature. That is an inaccurate use of language, and a slovenly mode of thought. When a man converts a wilderness into a garden, he trains nature, and does not compete with her any more than the teacher competes with his pupil in the instruc- tion which he imparts. The final objection is, that we have nothing to use as a sub- TEADE COMPETITION— THE GREAT DEMORALISE!* 49 stitute for trade competition, and hence that it is indispensable. This also is a mere assumption, unwarranted by the facts existing. This letter is not the place to expound the principle of co-opera- tion. But it is the time and place to assert that the principle of co-operation, if scientifically applied, is sufficient to adequately meet all the needs of society in avoiding alike the Scylla of trade competition and the Charybdis of monopoly. The position, then, that we have reached is this, that trade competition is in itself a warfare, and, like other war, is more or less disastrous according to the virulence with which 13 Nature of trade & is waged. Its nature and practice are intrinsically competi- maleficent, because they are regardless of all ethical tion. ., considerations. Clausewitz declared that economic competition is a form of war, and war only an " altered form " of economic competition. The primary object of the competitor is to gratify his desires at the expense of another. The seller receives more or less than the true worth of what he sells, according as the buyers are keen or slack in their competition. The famished digger, dying of thirst by the side of his new discovery, would give his El Dorado for a flask of brandy and water and a dry crust. The strict laws of trade competition, as interpreted by your Malign Highness, will sanction the trader making a bargain on these terms. The more extreme the want, the more extreme the price to be paid for its gratification. The economic Deductionist recognises this ; and attempts to escape from the difficulty by arguing that though self-interest may operate to the debasement of the individual, it gives a resultant of economic perfection in the aggregate. In other words, ten thousand acts of overreaching and chicane will yield a sum total of human beneficence. It is not that, There is a soul of goodness in things evil, "Would men observingly distil it out, but that out of a multitude of acts purely selfish we get altruism and goodness in the economic product. The logic is strictly analogous with that of the trader who lost on every article he sold, but was compensated in the great aggregate of his business. There is little wonder that the rising school of German £ 50 PEEFEKENTIAL TEADE economists — with their doctrines that ethics and economics are indissoluble — should pour ridicule on such dogmas as those we have been considering — that from the tree of vice we are to pluck the fruit of virtue ; that the more men pit their selfishness against each other the more altruism will grow ; that you have only to sow thorns in order to gather grapes, and thistles to secure for yourselves the most luscious figs. Net result — competition is ethically vicious, and economi- cally false. 51 Letter V.— To THE FRATERNAL SPIRIT IN MAN CO-OPERATION — THE SOLVENT OF COMPETITION Surely it stands to reason that only a fuller love can compete with the love of the world. — Professor Drummond. Love rules his kingdom without a sword, and binds without a cord. — Proverb. My dear Beneficence, — When the " common sense of most " shall have fully grasped the fact that unrestricted trade com- petition in its very essence is of the devil damnable, it will look about for the best means of supplying its place. The rest- less spirit of research is even now keenly on the scent for a substitute. Many thinkers, scared from the uncharted waters into which State Socialism seems to launch the national bark, stand shivering on the shore, preferring to bear the wrongs, reeking and radical, which stain the competitive system with the plague spots of infernalism rather than take the larger plunge. Is there not a practical via media ? Some there are, no doubt, who refuse to countenance co- operation because of its affinity to Socialism. Co-operation is a sort of Socialism. Others oppose it because it does 1 A half- ^ ay not go far enough. The followers of Lassalle and Karl house to Marx are impatient of what they deem the inadequacy Socialism. . ,. *■ ,. ■•it,,,,, , , oi the co-operative principle. But both of these classes alike — whether they think its methods too drastic or too feeble — pay tribute to the purity and nobility of the co-opera- tive aim, which is to expedite the time when Man to man the waild o'er Shall brithers be and a' that. Before it is possible to ascertain what co-operation can do we must find out what it has done and what it is. In some shape or other co-operation is ubiquitous, and has always been E 2 52 PREFERENTIAL TRADE so. Every nation, as such, is a co-operative body— a body organised to defend mutual rights and to resist mutual wrongs. Every municipal section of that nation is a co-operation within a co-operation. Every business company or partnership is in a sense a co-operative body. Every friendly society, every trades union, every church congregation, every mutual improvement society, every political league, every speculative syndicate is a form of co-operation. But it is with industrial co-operation we have now to do. Rochdale Equitable Pioneers subscribed their first £28 of capital 2 How m 1844, and set up their little business in Toad Lane, industrial That name is famous now wherever the English lan- ti°on Per g ua g e i s spoken. But in that day (fifty-nine years ago) began. it meant only a handful of obscure working enthusiasts, strong in the possession of a common altruistic idea that all men are brethren, and who saw a practical means of asserting that brotherhood. Close around them, hedging them in on every side, they saw the surging billows of human misery — poverty in the midst of plenty. In the cities there were horrible nests of squalor and vice, peopled by thieves and beggars, and by their side honest slop workers — " poor men," says Queen's Coun- sellor Thomas Hughes, " women and children, who, if their employers could only have flogged them, would have been in a far worse state than any negro slave." I saw (he said), that the competitive struggle for life had brought them to this pass, and yet the most approved teachers in reviews and newspapers were insisting on free competition as a corollary to free trade, and as a necessary pillar of industrial pro- sperity. . . . One universal cry of distress is going up from every great trade and industry in the land. And what is the cry? Surely, my friends, the strangest that ever went up from any great trading community until now, " Too much corn ! " " Too much sugar ! " " Too much cotton ! " " Too much labour ! " Too much, in short, of every species of wealth; and yet our merchants and manufacturers are being ruined, while two-thirds at least of our people are underfed, badly clothed, and miserably housed. The Rochdale Equitable Pioneers had asked themselves many times how all this came about. They saw that too often it was because the producer was too little of a consumer, and CO-OPEKATION— THE SOLVENT OF COMPETITION 53 he was too little of a consumer because he was paid a sweated wage and not a living one. Men were in misery, and increasing each other's wretchedness for want of a guide to the way out. Paley,in his " Moral Philosophy " (vol. i., book 3, ch. i., p. 119), had sketched the position for them exactly : If you should see a flock of pigeons in a field of corn, and if (instead of each picking where and what it liked, talcing just as much as it wanted, and no more) you should see ninety- social nine of them gathering all they got into a heap, condition reserving nothing for themselves but the chaff and meet ° re f use > keeping this heap for one, and that the weakest, perhaps worst, pigeon of the flock, sitting round and looking on all the winter whilst this one was devouring, throwing about, and wasting it ; and if a pigeon, more hardy or hungry than the rest, touched a grain of the hoard all the others instantly flying upon it and tearing it to pieces ; if you should see this, you would see nothing more than what is every day practised and established among men. Among men you see the ninety and nine toiling and scraping together a heap of superfluities for one (and this one, too, oftentimes the feeblest and worst of the whole set — a child, a woman, a madman, or a fool), getting nothing for themselves the whole while but a little of the coarsest of the provisions which their own industry produces ; looking quietly on while they see the fruits of all their labours spent or spoiled ; and if one of the number take or touch a particle of the hoard, the others joining against him and hanging him for the theft. Now the impatient Socialist, looking upon these evils, became a physical force Chartist ; got shot, imprisoned, or drifted into 4 -,, the ranks of the malcontent proletariat. The free- traders' trade doctrine set up quite a different remedy. The remedy. eY ils of the world were to be cured by a beneficent law of ultra selfishness. Free competition was proclaimed as the sole adjuster of the law of supply and demand — the semi- sacred law of trade ; and this of itself was to work out the millennium. Such was the kind of political economy in vogue when the Rochdale Equitable Pioneers looked around and saw their countrymen starving in the midst of plenty. Men were to be saved by the selfishness of trampling each other down. This pagan teaching imposed on millions of men ; but it never touched those who believed in Christian ethics, except to revolt them. 54 PREFERENTIAL TRADE Teaching men that it was their destiny to climb into happiness only by trampling on each other's shoulders was the exact reversal of " Bear ye one another's burdens," and "Do unto others as ye would they should do unto you." The Rochdale Pioneers seized instinctively the true basis on which to build. That principle was afterwards embodied in three propositions, which remain the foundation of co-opera- co-operation to this day. Those propositions are : tors' l. That human society is a body consisting of many reme y. mem bers, not a collection of warring atoms. 2. That true workmen must be fellow workers, and not rivals. 3. That a principle of justice, not of selfishness, must govern exchanges. But the laws of the land were adverse. They made every member responsible for the debts of the whole, there being no limited liability. Legal remedies, however, soon came. first Amendments in the laws took place in 1846, 1850, 1852, growth lg56j 1862j 1867? 1871> an( j 1876 . The Act of 1862 gave to the workers the privilege of limited liability. In this latter year, 1862, the position of co-operation was as follows : Number of societies 450 Number of members 90,000 Shares and loan capital . £450,000 Annual sales .... . £2,350,000 Profits ..... £166,000 Two years later, in 1864, in the House of Commons, Mr. Gladstone said of the co-operative movement : For my part, I am not ashamed to say, that if ten years ago anybody had prophesied to me the success of that system as 7. Early illustrated in Rochdale and other towns in the north — testi- if I had been told that the working men would so mony ' associate together for their mutual advantage, to the ex- clusion of the retail dealer, I should have regarded the prediction as absurd. There is, in my opinion, no greater social marvel than the manner in which these societies flourish in Lancashire, com- bined with a consideration of the soundness of basis on which they are built. CO-OPEEATION— THE SOLVENT OP COMPETITION 55 The Rochdale Pioneers saw that in trade many inferior men drew large salaries, while able subordinates were underpaid. 8 _. Many political economists contend that the law of doctrine supply and demand regulates this with precise justice, of ability. Decause the scarcity of organising power, they say, properly claims high remuneration. Mill afterwards exploded this fallacy by showing how the few are often born into manager- ship, and the many to hard work and poverty throughout life, irrespective of ability. The Pioneers observed that, in most great firms, son succeeds father, while in others rich men pur- chase into management and ownership, with no other capacity than long purses. Mr. Benjamin Jones is a man well qualified to speak on this phase of the subject, and I will quote him to illustrate a point on which I shall have to enlarge a little directly. Mr. Jones, in his lecture on " What is meant by Co-operation," says : Almost everybody knows establishments where all the best positions are filled by relatives, irrespective of their capacity, and their shortcomings are made good by men in humbler positions with inferior remuneration. This is not only morally wrong, it is economically unsound. A business cannot succeed so well with inferior men at the head as it can when superior men take the lead. Failure brings misfortune to the humblest individuals in the firm's employ — however well they may have done their duty — as much as it does to the master whose incapacity has caused the disaster. Co- operators see this clearly and they believe that co-operation will remove the unsoundness, and will bring into action the principle of the best men in the best positions. They knoAv that there is no scarcity of organising power, nor of administrative ability. Their experience satisfies them that there is an abundance of both, and that the apparent scarcity of it is caused by a real monopoly of it by a limited class of the community. In 1864, or just twenty years after the Rochdale Pioneers started, there was organised the English Co-operative Wholesale 9. The Society. Up to that time all the retail stores had been co-opera- compelled to purchase from competitive wholesale whole- merchants. This wholesale organisation was a com. Bale. bination of the retail societies to provide funds for a wholesale business, which might buy direct from the producers 5G PREFERENTIAL TRADE and sell to the retail societies at prime cost, phis expenses. It : .11 in purchasing in wholesale quantities from local dealers, next from importers and manufacturers. This saved the travel- ling expenses and time of hundreds of retail buyers, inasmuch as each retail society sent its orders by post to the federal wholesale. This had another good effect. Many more retail stores started as soon as it was found that a small society of 100 members could get its goods as cheaply as one of 10,000 members. From this time forward co-operation extended by leaps and bounds. The wholesale society appointed buyers in Ireland, America, France, Germany, Holknd, Denmark, Greece, Austria, Finland, Italy, and Sweden. It commenced with sales of only £1,000 a week. It is now over £300,000 per week, while the whole co-operative business reaches nearly two million per week. Having an enormous command of ready cash, the wholesale, with its trained buyers of selected ability, buy out whole planta- tions and factories on the best terms. They employ analysts to secure purity and good quality. In twenty-six years the total co-operative sales came to £471,000,000 and the total profits to £40,000,000. All those profits went into the pockets of co-operators. The following figures show to what extent this magnificent business had attained in 1890 and 1902 respec- tively : 1890 1902 Number of societies . 1,515 1,800 Number of members . 1,054,996 2,022,208 Share capital . £11,199,934 £21,000,000 Annual business . £40,225,406 £85,586,000 Profits for year . . £3,775,646 £9,544,000 Education expenditure £26,947 £64,000 It is estimated that about four-fifths of the 2,022,208 members in the United Kingdom are heads of families, so that, reckoning that each head of family stands for five persons, the co-operators represent about 8,400,000, or one-fifth of the population of the United Kingdom. The cause supports a good weekly paper. The country is mapped out into six sections : — The Scottish, the Northern, North- Western, Western, Midland, and Southern. The united board meet quarterly, each sectional board monthly. CO-OPEEATION— THE SOLVENT OF COMPETITION 57 and a national congress annually, attended by about 1,300 delegates. This is a genuine labour parliament, of which the central, elected yearly by delegates at Easter, is the cabinet. Although this organisation is so vast, and its business almost inconceivable in its dimensions, yet it goes on with surprising regularity and absence of friction. It has grown by degrees under the ablest management in the world. Such are the statistical outlines of what co-operation has achieved in England. But the statistician alone can never tell 10 The ^ e s * or 7 °^ co-operation. His figures and facts are moral very brilliant, but they reveal less than half the real mentJof ^ rmm P n - When we read of a co-operative business co-opera- with a banking turnover of £85,000,000 a year, the stupendous total arrests and startles the imagination ; but it is a very imperfect measurement of the actual achieve- ments of co-operation. The first of these is the wonderful educational stimulus it has given to the working masses of the country. In every one of the 1,800 societies a small group of men is being continuously trained in business habits, forethought, tolerance, and self- restraint. They encourage one another in a high standard of morality in trade, and they are becoming more and more fitted to lead their fellows in political thought. The second of those benefits which it has conferred is that it has enabled the very poorest of men to become provident, with- out that parsimony which is the economic bane of some other modes of saving. The dealer at a co-operative store pays the current rate for all he buys ; but the saving and profits are regularly credited to him, and so he becomes a capitalist without any effort, further than a steady attention to the rules of the society. This brings me to a third service rendered by co-operation. It is much allied to the first, but has vaster ramifications. It is the lesson it has taught to statesmen and thinkers. Mr. Gladstone owned to having been educated by the co-operative movement. Mill did the same, and in consequence changed one of his views respecting the wage fund. But it has much yet to teach to the nation's teachers. One example of this I cannot forbear quoting. 58 PEEFEEENTIAL TEADE Mr. Lecky, a Conservative historian, a few years ago, published a book on " Democracy and Liberty," in two large volumes. That book has provoked a good deal of comment, and was quoted with much approval by unprogressive writers. Mr. Lecky confessed to being terribly afraid of the extension of the English franchise, lest the country should be " governed by its ignorance " instead of by its intelligence. He said : One of the great divisions of politics in our day is coming to be whether, at the last resort, the world should be governed by its ignorance or by its intelligence. According to the one party, the preponderating power should be with education and property. According to the other the ultimate source of power, the supreme right of appeal and of control, belongs legitimately to the majority of the nation told by the head — or, in other words, to the poorest, the most ignorant, the most incapable, who are necessarily the most numerous. It is a theory which assuredly reverses all the past experiences of mankind. In every field of human enterprise, in all the com- petitions of life, by the inexorable law of nature, superiority lies with the few, and not with the many, and success can only be attained by placing the guiding and controlling power mainly in their hands. In this the historian coolly assumes three things, none of which he attempts to prove. The first is, that the minority vote is always an intelligent one. Secondly, that, being intelli- gent, it uses its intelligence for the benefit of the whole people, and not for its own limited class. And thirdly, that the popular vote would be unintelligent. On all these points the co-opera- tive movement teaches us very much. First, that most of the unjust, foolish, and restrictive laws against labour, and therefore against the common weal, were enacted under the limited fran- chise. It was not until after the passing of the Reform Bill of 1832 that anything approaching to Liberal Factory Acts could be secured, or any recognition of the organisation of labour. It was the minority vote of England that always opposed the co-operative movement, and which, in this very important question of social and industrial development, proved itself most CO-OPEEATION— THE SOLVENT OF COMPETITION 59 unintelligent. We have a right to remember that the upper and middle classes in England held themselves aloof from the Rochdale Pioneers, and noticed them only to treat them con- temptuously. Even to the present day this is true with refer- ence to most phases of co-operative production. In one respect this has proved a great benefit. It is true that, for a time, it sorely discouraged the workers. But it threw the working men on their own resources, and compelled them to find their own feet in the struggle. The publication in 1857 of Mr. Holyoake's " History of Co-operation " was an event. It showed thoughtful England the extent of its neglected fund of democratic organising ability. Here was a proof that the most exalted of social conceptions, and the soundest execu- tive wisdom, were to be found in the lowest ranks of labour. In this fact, then, we see two of Mr. Lecky's assumptions shattered by accomplished facts. The minority vote of England, in one of the greatest social movements of any age, proved itself unintelligent. The wisdom which springs out of the masses proved of the greatest intelligence. The other assumption, that an intelligent minority will generally use its intelligence for the good of all, and not for its own class, is shown to be false all along the line of history. What the Rochdale Pioneers conceived and organised with so much skill is a very solid disproof of the error that organising capacity is a thing only to be looked for in the very few. It seems to prove another thing — that the supercilious assumption of the minority, that in them alone lies wisdom, has been the fruitful cause of stifling the true genius of the race by giving to favoured mediocrities that control of affairs which their talents did not warrant. Herein co-operation has proved itself, to some extent, the right hand and brain of the democracy. It does not insist that all men are equal ; it knows them not to be so. But it determines, as far as in it lies, that they shall all have an equality of opportunity, so that true talent may always come to the front and exert its best powers for the benefit of all. These are some of the broad facts which co-operation in England has placed to its credit in the half -century since the Rochdale Equitable Pioneers came together. GO PREFERENTIAL TRADE Professor Sedley and Mr. Gilman have both written on profit-sharing abroad. The latter has given ample details ,- c respecting more than 130 firms which are sharing operative profits with their workmen. In France this system mention ^ as Gained to its highest development. The name the Con- of the Maison Leclaire readily occurs to the mind ; as does Godin, the ironfounder of Guise ; the Maison Moutier at Germain-en-Laye in France. In Germany, Italy, Austria, and, in fact, nearly every country on the Continent, the movement is established, and with a constant expansion. And now what is the economic work that co-operation has to do ? We have seen that the defenders of competition, while 12. Ethi- admitting many of its cruel effects, have declared it to cai ten- De indispensable on the ground that there is nothing to co-opera- take its place. Through co-operation men are more and tion. more coming to perceive the cardinal mistake involved in the apotheosis of competition. And what, perhaps, is better than all, co-operators are recognising that there is no possibility of compromise between the competitive system and their own. Sir Edmund Beckett once said that only lunatics can ques- tion the fact of the eternal truth on which competition is based. Workmen, he urged, must be free to take advantage of their employers' jealousies, and to compete against each other for work ; or, as Sir H. Maine put it, " strive to climb on the shoulders of one another, and remain there, through the law of the survival of the fittest." This, which was at one time received as economic gospel, is now very largely discounted in all quarters, and there is no intelligent co-operator in the world to-day who does not disavow it as a blighting heresy, as foolish as it is false. Thomas Hughes, whose voice no co-operator will disregard, has declared, in language singularly like that of Herbert Spencer, that if the time has not " actually come when an honest and scrupulous man cannot live by trade, it is not far off. The coach will be over the precipice before we know it, unless the horses can be turned into the right road." He holds up the finger of solemn warning to every co-operator : " How long will ye halt between two opinions ? If ' competition ' and ' self- assertion ' be the law, then follow it ; but if ' concert ' and the sacrifice of selfish desires be the law, then follow it. Believe CO-OPERATION— THE SOLVENT OF COMPETITION 6] me there is no halting-place between the two. One or the other you may be faithful to. To both ye cannot be faithful." It seemed at first a hard saying to co-operators, this denuncia- tion of competition. It was like the surrender of a corner-stone from their snug economic edifice. But when they came to per- ceive that in all cases competition means war, and co-operation means peace, the two principles were seen to be mutually destruc- tive. Competition and co-operation are deadly opposites. One means strife and the other harmony. Competition must die before co-operation can truly live. Men must get clear views about the doctrine of selfishness — that it can never be a true science for man, even in the baldest of political economies — not even as a wealth science. Matthew Arnold had the truer philosophy : " No individual life can be truly prosperous, passed in the midst of those who suffer. To the noble soul it cannot be happy ; to the ignoble it cannot be secure." The highest class of co-operators are setting their teeth like flint against the blasting cry of mere money cheapness. They know, as President Harrison put it, that " behind every cheap coat there must stand a cheap man." They have looked through the emptiness of the formula which seeks a profit in buying cheaply and selling dearly. They see — what the mere trader has been blind to — that the very market in which they must buy cheaply is identical with the one in which they seek to sell dearly. There are not two distinct markets in the world. The buyer is also a seller. He cannot buy cheaply without selling cheaply. The consumer is also mainly a producer. If you cheapen consumption by the sweating principle of competi- tion, you cheapen production at the same time, and when you cheapen production you cheapen the producer, and in cheapening the producer you cheapen men's lives, bodies, and souls. Co- operation is the deadly enemy of all this. It will make men brethren instead of rivals — helpers instead of enemies. John Stuart Mill saw the want of something better than his competitive principles — something that will " seek conciliation, not by compromise, but by justice — by giving to every man, not the half of what he asks, but the whole of what he ought to have." At another time he wrote : " Of all the agencies which are at work to elevate those who labour with their hands there 62 PREFERENTIAL TRADE is none so promising as the present co-operative movement." Yet he failed to perceive that the vivifying principle of that movement is one in direct contrariety to that of competition, which he lauded. " I look upon co-operation as the salt of the working men," said Charles Kingsley ; and in the same spirit, Professor Thorold Rogers declared : I never yet met a man who had seriously forecast the means by which his countrymen could be bettered who did not detect the readiest means in co-operation. The kindliest and most genial men have laboured for and advocated it ; the shrewdest have commended it ; and if the mass of working men fairly grapple with the problem and undertake to work it out, the present progress of the English nation will be as nothing compared to its future. We naturally wonder why so potent a principle has occupied so small a space in the text-books, seeing that many thinkers of the first order have not been less emphatic. Mr. 6. J. Holy- oake says : Co-operation supplements political economy by organising the distribution of wealth. It touches no man's fortune, it seeks no plunder, it causes no disturbance in society, it gives no trouble to statesmen, it enters into no secret associations, it contemplates no violence, it subverts no order, it envies no dignity, it asks no favour, it keeps no terms with the idle, and it will break no faith with the industrious ; it means self-help, self-dependence, and such share of the common competence as labour shall earn, or thought can win, and this it intends to have. I cannot refrain from quoting another class of intellect on the same subject. Professor Cairnes says : Our reasoning brings us to this conclusion, that what is known as Co-operation — the contribution by many workmen of their savings towards a common fund, which they employ as capital and co-operate in turning to profit — constitutes the one and only solution of our present problem, the sole path by which our labour- ing classes as a whole, or even in any large number, can emerge from their position of mere hand-to-mouth living, to share in the gains and honours of advancing civilisation. 1 1 Professor Cairnes, Leading Principles, p. 345. CO-OPEEATION— THE SOLVENT OP COMPETITION 63 Therefore it is, my dear Beneficence, that I confidently suggest co-operation as a good working substitute for the outcast demon . _, of a ruthless unrestricted trade competition. We cannot sidiary forget that competition in wages has already been super- means. se ded in many trades by the principle of unionism. But that principle lacks as yet the sanction of statutory con- firmation. It needs enforcement by such laws as those which have been passed in New Zealand and New South Wales, where compulsory arbitration has snuffed out freedom of contract, and in doing so has abrogated strikes and competition, so far as its application extends. The details of this process can be evolved only gradually. But they will emerge along with the perception of the truth that competition is a principle that must be used only sparingly, and subject to the most careful regulation. It is an importunate fact that English co-operators are to-day so intent on the mere money profits of their own great businesses that they are unwilling to abandon the competitive methods which they employ in them, and that they clamour against Mr. Chamberlain's principle of preferential trade. That is but an example of the seeming immortality of error, and of how an evil principle will sometimes linger in the inner recesses of men's minds after its practical abandonment. The same thing reappears amongst many trade unionists, who imagine that they remain free traders. Trades unionism is protection in its very essence, and a trades union free trader is a contradiction in terms. But custom is always stronger than logic. Thoughts are things — perhaps organisms. And the modifications of organisms are of slow growth. The great point is to get the current of thought set towards the truth — that for the progress of society men must co-operate with each other rather than compete against one another. 64 PEEFERENTIAL TEADE Letter VI.— To LORD ROSEBERY TRADE — ITS TENDENCY AND NATURE He was a man Who stole the livery of the court of Heaven To serve the devil in. — Pollok. My Lord, — You have been a diligent student of the records of trade and commerce. I am sure, however, you have heard of the man who could not see the forest for the trees. May it not be that your Lordship has failed to perceive the popular delusion that underlies the trade idea in consequence of an inadequate conception as to the nature of trade ? Trade has often spoken with a Circean voice. Half the world, more or less positively, has accepted the doctrine that trade per se is beneficent. Yet nothing is more absolutely opposed to fact. It is con- cerning the nature and character of trade that your Cobdenist , reaches his highest altitude of dogmatism. You are not altru- familiar with the writings of Mr. W. S. Lilly — certainly istic. no £ ^g } eas t f th e philosophical thinkers of England. In an article published in the Melbourne Argus of July 27, 2. Trade 1895, he exactly described the doctrine of your cult in idolatry. f 0U r lines : " Give every man a vote, and let every man have perfect liberty to buy in the cheapest market and sell in the dearest — such was their panacea for the woes of the world." Your Lordship, reversing the ordinary rule, has a maxim of your own — " Take care of the imports and the exports will take care of themselves." Cobden used to say very much the same when he preached from the text — " The more we buy the more we sell." But it was Bright, his colleague, who, culminating in trade fanaticism, said : " Free trade, if not given amid the TEADE— ITS TENDENCY AND NATURE 65 thunders of Sinai, is not less a commandment of God, and not less intended to promote and secure the happiness of man." ' The doctrine of the a priori school of political economists may be stated in the following formulae : 1. Growth in trade is human progress, and is a fair gauge of civilisation and prosperity. 2. The greater a nation's imports and exports the larger its trade, and the more its consequent progress and prosperity. 3. Therefore the promotion of free trade, as a natural law, is the prime means of promoting the national well-being. These formulae are described as " axioms," springing out of the principle that buying in the cheapest market and selling in the dearest is the end of economic man. Yet I submit to your Lordship that there is not one of them in which there does not lurk a fallacy. Increase in foreign trade is not synonymous with increase in prosperity. The ancient Peruvians reached the summit of their prosperity without the smallest knowledge of external trade ; and they lost their happiness and well-being only with the advent of the soldier and the trader. It is not true that imports and exports are a test of prosperity. Those of England are the largest in the world, and, though it is quite true that Great Britain is wonderfully opulent, there is scarcely any other nation so blighted with pauperism. It is not true that trade of any kind is a natural law. Trade of all kinds is the product of a strictly artificial system of society. These general corrections dispose of the claims of the free traders to " axiomatic truths." Men do not dispute axioms, 3 Trad nor cna ^ en g e mathematical demonstrations. No man which is denies that a straight line is the shortest distance be- hurtfui. tween any two points ; that the whole is greater than its part, or that between any two hills there must be a valley. But tens of thousands of men of light and leading deny that trade, qua trade, is either altruistic or beneficent. It is quite true, doubtless, that trade is sometimes of genuine utility — sometimes wealth-producing and beneficial. But this is acci- dental to it. It is quite as frequently a matter of great and serious injury. The trade which the publican has with the 1 Bright 1 $ Speeches, p. 436. 66 PKEFEKENTIAL TRADE drunkard is a trade which is profitable to the one and accursed to the other, and to all that is his. The trade in which a man passes off worthless stock in exchange for good cash is really an economical loss ; for though it merely transfers wealth without diminishing it absolutely, it lowers the moral tone of society, and decreases that common stock of confidence between man and man which is itself a potential source of wealth. When a broker floats a new mine or a trading company, and sells shares on a deceptive prospectus, or even upon an honestly drawn prospectus based on mistaken data, he does a brisk trade and pockets large gains ; but the whole of these trade transactions are a loss to the community. A merchant, perhaps, receives special information respecting the world's crop of tea, sugar, or rice. Buying largely, he creates a " corner," and, " unloading," acquires a fortune at the expense of the consumer. All the operations in that trade are hurtful. The merchant's gains are the gains of the gambler who has played with loaded dice, and who wins only what others have lost. A speculator receives early information of the death of the Kaiser, or the Sovereign of Great Britain. By means of agents he buys up all the available crape in the market. He exercises the power of the monopolist, and reaps a prodigious profit. The whole of such trade is anti-social and injurious. A grain dealer has a telegram handed to him over his break- fast coffee. It tells him of a sudden rise in the wheat market. He immediately closes a dozen pending transactions with as many farmers, whose necessities compel them to sell at glut prices. The grain dealer makes a great profit — the grain grower barely makes bread and butter. The blessing of that trade is the benison which the shark bestows on the swimmer — devouring him. In Wall Street, New York, or on the Stock Exchange, London ; in Collins Street, Melbourne — as in many similar places all over the world, every day in the year — there may be seen a crowd of men who pass their lives in buying and selling stock. Only a small percentage of that trade is of any real benefit to society. The transactions are mainly as unproduc- tive as are those of the tens of thousands of betting bookmakers who live in fine villas, travel in first-class style to all sports, TEADE— ITS TENDENCY AND NATUKE 67 drink champagne, and smoke shilling cigars — all out of the profits of their trade. We may see some other kinds of trade. Ruskin gives us a specimen : Some fishermen (he says) at Aldborough, who have a boat of their own, told my brother that one season, when the sea seemed full of herrings, they saw in the newspapers how dear they were in London, and resolved to make a venture on their own account. So they spent all their available money in the purchase of a quantity of the right sorts of baskets, and, going out to sea, filled them all, putting the usual five hundred lovely fresh fish in each, sent them straight up to London by train to the charge of a salesman they knew of, begging him to send them into the market and do the best he could for them. But he was very angry with the fishermen, and wrote them word that the market was quite sufficiently stocked — that if more fishes were sent in the prices would go down — that he would not allow their fish to be sold at all, and, if they made a fuss about it, he would not send their baskets back, and would make them pay the carriage. As it was he returned them after a time ; but the poor men never received one farthing for their thousands of nice fish, and only got a scolding for having dared to try to do without the agents, who buy the fish from the boats at whatever price they choose to settle amongst themselves. ... A few hundred pounds sacrificed any day to keep up the prices they think well worth their while. And Ruskin comments on this in the following language : What do you think of that by way of free trade, my " Britons never, never, never will be slaves " — hey 1 Free trade ; and the divine law of supply and demand, and the sacred necessity of com- petition, and what not ; . . . and you, you simpletons — fishermen, indeed ! cod's head and shoulders, say rather — meekly receiving back your empty baskets ; your miracle of loaves and fishes executed for you by the Costermongering Father of the Faithful in that thimble-rig manner ! l Another case may be cited of a class of trade well known to all. A man hears that his neighbour is anxious to buy a horse, a house, a piece of land, a dog, or a picture. He hurries away, buys it, and then resells it to his friend at an advance. Few would venture to call that trade beneficent. We turn our eyes 1 Ruskin, Fors CUwigera. f 2 68 PREFERENTIAL TRADE further afield— from the individual to the nation. According to a recent statement, the alcohol trade in Africa has already- assumed large proportions. The Gold Coast imports some millions of gallons a year, and Lagos even more. What is feared is that the West Coast railways will be used for the exten- sion of the traffic. There can be no question of the moral degeneracy which follows the free use of intoxicants by savage or semi-savage tribes. But how is it to be prevented ? Should Great Britain pass a self-denying ordinance, it would not stop the supply of alcohol to the natives. The trade would simply pass to the French and German traders, and not merely the supply of intoxicants, but great part of the general trade as well. The prohibitive policy was tried in the South Seas with unsatisfactory results. British merchants were prohibited from selling spirits and firearms to the natives ; but as the order was not binding on foreign traders the latter obtained something like a monopoly of the trade, and the natives got guns and gin all the same. The world was all the poorer for that trade. I may ask your Lordship's attention to one other sample of the means by which a nation of traders holds its own share and 4. Trade grasps other people's as well. The trading spirit is the roguery immediate progenitor of the brood of the adulterator, and adul- teration. Q n a |i sides (says Herbert Spencer) wo have found the result of long personal experience to be the conviction that trade is essentially corrupt. In tones of disgust or discouragement, reprehension or derision, according to their several natures, men in business have, one after another, expressed this belief. Omitting the highest mercantile classes, a few of the less common traders, and those exceptional cases, where an entire command of the market has been obtained, the uniform testimony of competent judges is that success is incompatible with strict integrity. To live in the commercial world it appears necessary to adopt its ethical code ; neither exceeding nor falling short of it, neither being less honest nor more honest. Those who sink below its standard are expelled, while those who rise above it are pulled down to it or ruined. As, in self-defence, the civilised man becomes savage amongst savages, so it seems that, in self-defence, the scrupulous trader is obliged to become as little scrupulous as his competitors. It has been said that the law of the animal creation is " Eat to be eaten " ; and of our TRADE-ITS TENDENCY AND NATURE 69 trading community it may similarly be said its law is " Cheat to be cheated." A system of keen competition, carried on as it is without moral restraint, is very much a system of commercial cannibalism. . . . There are but two courses — either to adopt the practice of their competitors, or to give up business. ... It is impossible to carry on trade with strict rectitude. . . . The scrupulously honest man must go to the wall. A few examples may be given by way of illustrating what Mr. Spencer says, and showing what this unrestricted foreign trade really is : A regular branch of trade here at Birmingham is the manufac- ture of guns for the African market. They are made for about a dollar and a half. The barrel is filled with water, and if the water does not come through it is thought proof sufficient. Of course they burst when fired, and mangle the wretched negro who has purchased them upon the credit of English faith, and received them most probably at the price of human flesh. No secret is made of this abominable trade, yet the Government never interferes, and the persons concerned in it are not marked or shunned as infamous. 1 The London Engineer says that at some works to which its attention was drawn, boiler-plates were being turned out in rather large quantities, which made it tremble for the consequences that may ensue when these plates are being submitted to the work to which many boilers, both in our country and in America, are now not infrequently subjected. " Boilermakers ought to be aware that it is impossible to get a good plate at the prices at which some are being now supplied to them. The rage for low-priced iron occasions the greatest apprehension in our minds." In matters of clothing it is a thing of every-day experience that the poor labourer finds his new shirt to be mostly starch, and his woollen coat shoddy and cotton waste. In food, vinegar is water and sulphuric acid ; tea is sometimes gypsum and Prussian blue ; coffee is chicory, and chicory ground bullock's liver ; curry powder is mixed with red lead, pickles with verdigris, cheese with vermilion, and so on through a hundred others of the tricks resorted to by trade in order to undersell and crush rivals. 1 Southey, Ettpriella's Letters. 70 PEEFEEENTIAL TEADE Turkish trade in the middle of the seventeenth century was amongst the most important in Western Europe. Turkish merchants were amongst the wealthiest. In those vieVof da y s Turkey had an internal commerce and great manu- trade facturing productivity. Her weaving and dyeing and history. ^ manu f actures were amongst the best in the world. She made a free-trade treaty with France and England, and as soon as keen competition began through England's advance in mechanical invention, Turkish industries, one by one, collapsed ; the soil largely reverted to barbarism ; and the country is now an insolvent State and abjectly poor. Turkey was half ruined by external trade. Mr. Prescott has given us a book showing the aboriginal state of the Peruvians. They lived on a territory of 500,000 square miles, and numbered 30,000,000. There was not a pauper in the land. Famine and hunger were unknown. The invader came, bringing them war and trade, and ruined them. India is another instance. Previous to the British occupa- tion India clothed and fed her own people from the products of her own fertile soil. Lancashire competition, when it entered, shut up the Indian looms ; and poverty and starvation stalked over the land. Indian-grown cotton, instead of being woven in Indian factories, was transported to England and returned in piece goods, and this while hundreds of thousands of the ryots were standing idle. All this frightful economic waste was deliberately incurred in order to give profit to the carrier, the shipper, and the trader, not one of whom, except in a secondary sense, is a producer. Mexico, when Cortez found her, was a rich, well-fed land with forty cities. She had no external trade, but great internal opulence. She was self-contained. She manufactured for her- self, and had means and markets. She fell under the traders' power, her products declined, her markets collapsed, and she sank by the middle of the nineteenth century to a country of no account amongst nations. Athens is sometimes cited as an example of a State which grew great by means of trade. Never was there a more un- fortunate reading of history. Ancient Athens is a shocking TEADE— ITS TENDENCY AND NATURE 71 example of the blight of foreign trade. When Attica became united under Theseus she had a system of peace and internal commerce and interchange. The people manufactured for themselves. Solon consolidated this happy system. He encouraged arts, trades, and diversities of occupation. A hun- dred years after Solon's time Attica had a hundred towns, each the centre of its own hive of industry and local government. External trade was little or nothing. Then came the Persian invasion, the change of government, the democracy of peace converted into an aristocracy of war and foreign trade. The power of the State grew immensely. Athens became the mis- tress of the seas. War was her trade and trade was her pastime. Ostentation flaunted everywhere, and slavery and poverty grew beside it. There was the usual fate. The nation passed from despot to despot — from Themistocles and Cimon to the Thirty Tyrants, to Alcibiades and Pericles, to Philip of Macedon, to Alexander, and finally into Roman subjugation. Rome presents us with another example of the same thing. " The history of Rome is but a repetition on a grander scale of that of Athens." : Mr. Marshall quite concurs in this, where he says : And yet a lesson might have been learnt from the quick deca- dence of Greece, which was brought about by the want of that solid earnestness of purpose which no race has ever maintained for many generations without the discipline of steady industry. . . . The Romans were a great arniy rather than a great nation. They resembled the Greeks in leaving business as much as possible to slaves. 2 The history of Sparta is one that ought to stand as a " shock- ing example " to the world. Industry was despised. Honesty was a thing almost unknown. The people lived for war, and rapine, and trade. There was no foundation in the State, and when it sank, as it was bound to do, there passed away a power which possessed the single virtue of courage, marred by almost every crime, and destitute of all progressive industry. In estimating the value of trade it would not be right to omit mention of Carthage. All the resources of that once 1 Carey, Principles of Social Science, vol. i. p. 247. 2 Alfred Marshall, Principles of Economics, p. 19. 72 PREFERENTIAL TRADE magnificent city were built upon trading monopolies. There was no industrial foundation. For a time she flourished, just as may a pirate who robs and scuttles ships. When she fell, she fell like Lucifer, never to rise again. Venice and Genoa afford us like examples. Instead of building from the internal industry of the people and the pro- motion of home commerce, there was a constant hankering after the profits of foreign trade and the monopolies which could be secured by them. Splendour there was, and power — the usual accompaniment of success in war and trade ; but stability and freedom there was none. Their national existence was that of the moth, and their end the same Are other examples wanted ? Portugal is one. This nation built herself on her trade monopolies secured as the result of her discovering the passage via the Cape to India. But, like all power that comes from mere trade, it is a national weakness. At the end of the fifteenth and in the beginning of the sixteenth century her estate was splendid. At the end of the sixteenth century she was a Spanish province. She regained her inde- pendence, and set to work to plant home industries. She suc- ceeded, when in an unlucky hour the Methuen Treaty of 1703 threw open her ports to foreign trade. Her manufactures were crushed out, her lands declined, and she has gone on for a century and a half sinking in the relative scale of nations. That is what mere trade has done for Portugal. Spain is a very cogent example of the blighting effects of mere trade. The country, before the union of Castile and Aragon, had always been ravaged by wars, pestilences, and piratical and trading raids. There was little or no steady industry. Fer- dinand and Isabella reformed all that, and encouraged the establishment of manufactures. Unfortunately, however, for Spain, religious hatred against the Moors caused the expulsion of the flower of the nation's manufacturers. Spain had at that time thirty millions of people, and with them a splendid diversity of industry, making her correspondingly prosperous. But the fatal act which drove out her most enlightened artisans was a signal for a start on the down grade to decay. Her markets died out, her lands went into the hands of great nobles, and the nation was engulfed in poverty. She became strong and great TRADE-ITS TENDENCY AND NATURE 73 again, but only as a mere spoiler of colonies, and a hunter for trade. At length, having lost nearly all her colonies, she turned her attention from foreign trade to home development. She encouraged native industries, and slowly and surely from that day she has been regaining her industrial position amongst the nations of Europe. England has done much to thwart her policy by encouraging smuggling through the lines of Gibraltar ; but the result has been on the whole an improving one for the nation. We shall have by-and-by to look at the direct action of trade on Great Britain. Here we may simply note that her deter- mination to be the trader of the world has destroyed her real independence. She is no longer self-contained, as in the days when she could feed and supply herself. In the early part of last century, when her troops were winning for her the crown of Waterloo, she grew all her own breadstuffs, and had besides nearly £40,000,000 worth of produce from her soils to exchange for the produce of other lands. Now she has 42,000,000 of people ; and for 27,000,000 of these she grows no food. She has nothing of her own produce to send abroad save coal and iron. Everything has been sacrificed to make her the carrier and trader of the world. If her fleets were to lose the control of the seas for a fortnight, she would be in the throes of a famine. How different this from the picture of the Avonian bard ! — This royal throne of kings, this sceptred isle, This earth of majesty, this seat of Mars, This other Eden, demi-paradise ; This fortress built by Nature for herself Against infection and the hand of war ; This happy breed of men, this little world, This precious stone, set in the silver sea, Which serves it in the office of a wall, Or as a moat defensive to a house, Against the envy of less happier lands — This blessed plot, this earth, this realm, this England. Here is a trifling incident which shows the spirit in which trade is followed. When the American iron trade began to improve, the London Mining Journal suggested that if the English ironmasters could only reduce their prices by £2 per 74 PREFERENTIAL TRADE ton, " for some considerable period, it would ruin many of the American manufacturers, and would for a time open the way for a large demand of English iron." It was trade which caused Ireland to export food while her people were dying of famine. It was trade also which declared the unjust opium war against China — a war that has tarnished British honour. Historians have traced the rise as well as the fall of Napoleon to trade ideas. His " Continental System," designed to ruin England through the ruin of her trade, made him popular with the Jacobinical Revolutionists. On the other hand, England had dreams of universal trade dominion, just as Napoleon had of territorial dominion. One writer in the English Historical Review says : " There is, indeed, room for belief that the policy of the Orders in Council was an attempt, not merely to retort on our enemies the evils of their own injus- tice, but also to crush neutral commerce, and establish a com- plete maritime monopoly." Russia could not afford to dispense with English manufactures, and so infracted Napoleon's blockade. " English goods began to pour into Central Europe by way of Riga." Napoleon could not permit this gap in his Continental System, and went to Moscow. Thus it was English trade attrac- tiveness which ruined Napoleon. There is one sort of trade we must not omit to glance at in this place — the Slave Trade. All the more so because this was „ „ , the first form of trade known to man. I am often told 6. Trade and that free trade is natural trade. People who say so use slavery. WO rds which confuse their meaning. Trade, as we know it, is not a natural system at all. It is the growth of an artificial and highly organised society. But in one sense the savage was the first free trader. Force was the first law, and the first trade commenced when some strong warrior stole upon his surprised victims and procured a supply of men and women for the slave market, or for his own or his neighbour's larder. The slave traders' gains have always arisen from the same source as those of all other traders whatsoever — viz. the amount of toll he can levy on humanity. This is as true of the merchant who buys and sells tea as of Zebehr Pasha who captured and sold men and women. At all events, the slave trade has been a well-recog- nised one for forty centuries at least ; and the slaver has always TEADE— ITS TENDENCY AND NATURE 75 been the most uncompromising and consistent of free traders. He seeks his commodity in the cheapest market, and sells it in the dearest one. Those who would put down slavery are Pro- tectionists to that extent. These, perhaps, may suffice in the way of samples taken out of the actual trade records of the world. Having got this glimpse of what trade has done, it is well that we should see what are its nature and its pedigree. We must not for one moment — if we would think accurately — confuse trade with commerce. Commerce is the association of persons with each other, whether for the exchange of m erce their products, their thoughts, or their affections. Com- versus merce may be trade — trade is never commerce. Com- merce is that direct or indirect interchange which natu- rally springs out of the division of labour, and which is strictly limited by the requirements of the most facile distribution. Trade is a system superimposed upon commerce by a class that seeks to grow wealthy by the multiplication of exchange. Commerce seeks to bring the producer and the consumer together. The trader seeks to keep them as far apart as possible, because in that he finds his profits. Commerce is always good. Trade is only sometimes so ; and often, as we have seen, very baneful. Sometimes, as in the case of the pedlar who carries his pack to the far settler, the trader is a necessity. But even in such cases he is the most expensive part of the social machine, to be tolerated only as long as he is indispensable. Production and distribution are two parts of the social machine. Both are necessary ; but they are very different in their utilities. The highest economic efficiency is that state in which production is at a maximum and distribution at a minimum, where the con- sumer lives close beside Che producer, and where the carrier finds little or no occupation. All machinery, social or mechani- cal, is costly in proportion to the complexity of its parts. Every- thing which simplifies, improves. Every unnecessary trans- action in the work of distribution is an economic waste. There- fore, every unnecessary trader is a mischievous wheel in the industrial machine, causing a loss which some producer or con- sumer somewhere must make good. Clearly it is the interest of the trader to keep the producer and the consumer as far apart as possible in order that he may 76 PREFERENTIAL TRADE be necessary to their traffic. He insists sometimes in standing, half a dozen deep, between those who create wealth and those who use it. But it is the interest of the producer and consumer to come together. The trader, therefore, has an interest anta- gonistic to those of the producer and the consumer. This may- be proved in another way. The trader must make his profit by buying cheaply and selling dearly. He can do that best when prices fluctuate most, because uncertainty offers him most scope for making shrewd bargains. But the producer and the consumer desire steadiness — the one that his profits may be secure and his business stable, and the other that his means may be calculated to cover his needs. Therefore the trader's interests, even where he is necessary, always conflict with those of society. We now see that in the nature of things trade always aims at centralising industrial production and keeping it as far as possible from the point of ultimate consumption. Commerce aims at planting the farriery in the neighbourhood of the farm. Trade in itself produces nothing. It seeks its gain in the business of exchanging what others produce. Carey, therefore, had a very definite meaning when he wrote : " War and trade regard man as an instrument to be Q ,„. used. Whereas commerce regards trade as an instru- 8. Where b trade ment to be used by man. . . . Trade is to commerce leads. what mathematics are to science. Both are instru- ments." l And again : " Trade is dispersive and warlike. . . . Commerce diminishes the necessity for the trader's services and lessens his power." 2 There remains to be noticed one other feature about the operation of trade. It is clear that if every man in this world were perfectly self-helpful the trader could have no place in it. If every man could build his own house, find his own food, make his own clothing, the middleman or trader would find his occupation gone. That, however, can never be. There must be division of labour. Such division is, indeed, most expedient. It creates diversity amongst men, corresponding to the diversity of their talents. So long as this diversity promotes association 1 Carey, Principles of Social Science, vol. i. pp. 214, 215, 216. 2 Ibid., vol. ii. pp. 238, 239. TEADE— ITS TENDENCY AND NATUEE 77 and commerce it develops human faculties to the highest. But that is just what the trader in his own interest seeks to prevent. He endeavours, by the very nature of his calling, to separate all trades and associations by the greatest possible distances, in order to increase his own power. The fewer the varieties of industries in any one place, or any one country, the greater must be the work of transport and trade. Therefore the power of the trader grows as human faculties are dwarfed, and as diversity of industry is obliterated. By this process of reasoning we hold that trade in its essence is opposed to human development. When people talk of trade, therefore, as something altruistic and benevolent, they are deceiving themselves or deluding others. Strictly speaking, trade does not pretend to be philanthropical. It is an act in which a man strives to make a gain for himself through doing the work of exchange for another man which that man cannot do for himself. Such trade may be mutually beneficial ; or it may be a loss to one and a profit to the other, according to the degree of consideration, shrewdness, or skill shown by the one towards the other. The interests of the human race as living entities are not of the smallest consequence to trade, except as creating a vacuum for the reception of goods. A pestilence which demands a supply of coffins is just as welcome to the trader as a bountiful harvest which calls for a fleet of ships. Hence it is that the school of mere trade has been called that of " the exploiter, the promoter, the amalgamator, the floater, the inflater, the expounder, the puffer, the wire-puller, the rigger." All these qualities find their highest development in the middle- man. Herbert Spencer's essay on " The Morals of Trade " gives us an idea of its utter corruption ; and Ruskin's essay on " The Roots of Honour " reveals the interval that yawns between the integrity of exchange and the practices of the trader. The question not long since was discussed in one of the London dailies. A list of the trade tricks enumerated is almost gruesome enough to turn the stomach of a gourmet. Going into a draper's shop is almost as perilous as an excursion into an enemy's country in time of war. Traps are laid for customers on every side, and the tempting counter is often an ambush as full of 78 PREFERENTIAL TRADE wiles as Circe's banqueting table. On entering a shop the buyer has left the conventional world, where the ten com- mandments still have a place in our religious exercises, and crossed into a nether region of topsy-turvy morals in which the golden rule " Do to others as you would be done by " is replaced by the brazen warning " Do others, or they will do you," and where whisky is a concoction of potato spirit, jams are composed of turnip mash, margarine is sold for butter, lemonade is guilt- less of lemon juice. The history of trade in our times is indeed very much as it was when De Foe wrote his " Complete English Tradesman," and satirically laid it down that fully to merit the claim to such a character a man must first be " a complete hypocrite." The tradesman of his day, he tells us, had his doctored scales and tape measures, his bag of spurious coin, which he handed his customers in the way of change ; the false lights to give delusive appearances to his shoddy, and the " shop rhetorick " and " flux of falsehoods " that have such a charm for the ear of the shop-going daughters of Eve ; and, of course, tend to inflate the bill that paterfamilias has to pay. The defence which De Foe offers for " the complete hypocrite " of his day is precisely that which the trader offers for himself in ours, namely, that it is as impossible to carry on business on the lines of the Sermon on the Mount, as it is to carry on war. Strict integrity spells bankruptcy, and is hopelessly incompatible with com- petition, which is, in fact, a state of war. Either he must shut up his shop, defraud his creditors, reduce his wife and children to beggary, or he must resort to the artifices used by his com- petitors. Some of the tradesmen who reply to the charges brought against them, in the correspondence we have quoted above, aver that they are driven to adopt practices of which their con- sciences disapprove by " the insane cutting of prices " ; others declare that they are often blamed for what is really owing to the dishonesty of their employes — " the very errand-boy can't be trusted " ; while a favourite excuse among most of them is that the fraudulent customers who get their goods and evade payment for them on one pretext or another are responsible for the sufferings of the innocent. This is equivalent to saying that they can't be honest because other people are dishonest. TKADE— ITS TENDENCY AND NATUEE 79 If, then, trade be of this equivocal character — accursed between the liquor dealer and the drunkard ; mischievous between the broker and his victim ; if it be murderous and cruel in the slave dealer ; destructive and warlike where the com- petitors of one nation crush out the industries of another ; if it aim at multiplying obstacles and distance between the man who grows food and the man who eats it ; if it be the enemy of that diversity amongst men which is the soul of human develop- ment ; if it be so often the cause of economic waste in the un- necessary multiplication of distributors ; and if it be wise and beneficent only in the comparatively few cases where producers and consumers cannot meet, and where it works as an aid to the broader commerce — it seems to follow that free and unre- stricted trade must be a national peril. The formulas, therefore, which we now reach will be as follows : — I. Trade, like fire and water, may be of real utility as the well-ordered servant of man. II. But trade, like fire and water, is liable to overleap con- trol and become a scourge and a source of serious economic loss, when the business of exchange is promoted beyond the strict requirements of efficient distribution. III. Therefore, trade requires the most careful regulation and restriction, and should be no more free than the elements of fire and water. 80 PREFERENTIAL TRADE BOOK II TRADE VIEWED IN THE LIGHT OF HISTORY Letter VII.— To MR. JOHN BULL BUILDING THE WORLD'S WORKSHOP To found a great empire for the sole purpose of raising up a people of customers, may at first sight appear a project fit only for a nation of shop- keepers. It is, however, a project altogether unfit for a nation of shopkeepers ; but extremely fit for a nation which is influenced by shopkeepers. — Wealth of Nations, Book iv., ch. vii., part 3. Oh, how full of briars is this working-day world !— As you like it. My dear John, — For just about a century you aimed at concentrating within your own grasp the trade of the world, l Eng- Ik was a verv ambitious conception. You see now how land's illusory it was. Napoleon's dream of universal military social dominion was inferior to it in point of magnitude. It condition, seems curious that you, who, up to the middle of the eighteenth century, were so backward amongst the nations in the mechanical arts, should ever have formed so vast a scheme of universal trade subjugation. However, the idea came to you, and with that fine masterful way of yours you followed your destiny. When you glance back on your country's history you find that previous to Magna Charta it presents to your gaze a nation of hinds. Of internal commerce in those early days England had little or none, and consequently little or no industrial stability. Generally speaking the nation was exceedingly poor, even when bread and ale were plentiful. The exports were princi- pally raw hides, wool, and tin. The imports were cloth and manufactures. Your farmers were never sure of what they would reap from their sowings ; for, added to the uncertainty BUILDING THE WOBLD'S WORKSHOP 81 of seasons, there were constant and violent oscillations in prices. Wheat values were ever swinging from famine to glut. Adam Smith has compiled some curious illustrations of this. For example, in 1302 wheat sold at 4s. per quarter, equal to 12s. modern money. Fifteen years later there was a famine, and wheat sold at £8 per quarter, modern money. In 1336, and again in 1349 (the latter the year of the Black Death), wheat sold at 6s. per quarter, modern money. For 280 years it averaged only 5s. llld. per quarter. 1 And then, as to the occupations of the people, there was scarcely any diversity in them. Skilled handicraftsmen were of the scantiest. It is true that McCulloch tells us that " Edward III., and others of our princes, incurred no little odium by the precious protection which they afforded to the foreign manufacturers who took refuge amongst us." But, for all that, it is certain that for more than 300 years after Edward's feeble attempts at planting industries, England was practically without manufactures. And as for the carrying trade, the Dutch at a later period managed England's foreign trade for her. Flanders, Holland, and Germany, in those early days, were the workshops of the western world. So you will admit, John, that in your young days you were not an apt scholar in trade and manufactures. Indeed, the folly of England was a theme of ridicule abroad. It was a common saying, " The stranger buys off the Englishman the skin of the fox for a groat, and sells him the tail for a shilling." Cromwell somewhat altered this, as he did a good many other things. His Navigation Laws created the English mercantile navy. But his hands were too full of soldiering to do much for England's industrial development. There were a few early attempts to establish English woollen manufacture by means of protective duties, and they were partially successful ; but the first definite idea of pro- poifcy r of tection that I can find, after Elizabeth's well-meant protec- clumsy attempt, came from Andrew Yarranton in 1677. He printed a book with the quaint title " To outdo the Dutch without Fighting." It was a simple scheme of tariff protection, in which he lamented the fact that England was 1 Thorold Rogers, Work and Wages, p. 1 . • McCulloch, Discourse Introductory to the Wealth of Xations, p. 25. G 82 PREFERENTIAL TEADE importing canvas from France and cheap coarse cloths and yarns from Germany, while English workmen were standing idle. His scheme of " outdoing the Dutch " was to import their skilled workmen instead of their products, and he concludes : Now I have shown you the two manufactures of linen and iron, with the product thereof ; and all the materials are with us growing. These two manufactures will, if by law countenanced, set all the poor in England at work, and must enrich the country, and thereby fetch people into the kingdom, whereas they now depart. That was not quite the first note of systematic protection ever sounded in England, but it was among the first. It was a strange note then ; but it is familiar now all the world over. About that time the country began to legislate for the esta- blishment of home industries. Two centuries ago London mer- chants prayed the Government of William III. to " discourage the woollen manufactures of Ireland " in order that all Irish wool might be forced to pass through English looms. Both Carey and Curtiss cite statutes of George III. forbidding artisans to leave Britain lest they should carry their skill to other lands. By Act 21 George III., 1781, the export of utensils for the manu- facture of silk was likewise forbidden for the same reasons. In the next year, Act 22 George III. extended the prohibition to workers in printed calicoes, muslins, or linens, or in making blocks and implements to be used in their manufacture. Three years later, in 1785, Act 25 George III. prohibited the export of tools used in iron and steel manufactures, as well as the workers in the same. Fourteen years later, again, in 1799, by Act 39 George III., colliers were included in the same category. Most of these laws remained in force for nearly fifty years ; and they were all made to compel the colonies and independent nations to send their raw material for manufacture into England. As the years went on English protection grew more rigid. British colonies were not permitted to refine their own sugar. 3 Enelish -^ord Chatham declared that he would not allow the wars for colonial settlements to make so much as a hobnail for monopo y. themselves. 1 The Virginian tobacco growers were for- 1 List, National System of Political Economy, p. 167. BUILDING THE WORLD'S WORKSHOP 83 bidden to sell a pound of their produce in any market save that of England. British trade ruined Jamaica by strictly prohibiting all manufactures there. It is estimated that Great Britain bought and shipped 1,700,000 slaves to the British islands in the West Indies ; and all of these toiled in order to pour wealth into England. Yet when these slaves were emancipated there were found only 660,000. The remainder, together with the natural increase, had been worked to death for their taskmasters. Jamaica was drained of its wealth, and Bigelow describes it in terms of most terrible misery. There is no doubt, my dear John, that you were a terribly tyrannous Protectionist in those days. No half measures with you. Here is a specimen of what one of your typical English- men, a Mr. Gee, said in 1750 : Manufactures in American colonies should be discouraged, pro- hibited. We ought always to keep a watchful eye over our colonies, to restrain them from setting up any of the manufactures which are carried on in Great Britain ; and any such attempts should be crushed in the beginning. That all clothing mills and engines for drawing wire or weaving stockings be put down. That all negroes be prohibited from weaving either linen or woollen, or spinning or combing of wool, or working at any manu- facture of iron. If we examine into the circumstances of the inhabitants of our plantations and our own, it will appear that not one-fourth part of their product redounds to their own profit, for out of all that comes here they carry back only clothing and other accommodations for their families. New England and the northern colonies have not commodities and products enough to send us in return for their clothing, and therefore any ordinary sort sell with them, and when they have grown out of fashion with us, they are new-fashioned enough for them. 1 That, John, was the spirit of your traders a century ago. It was exactly the same towards the Australian colonies a quarter 1 Quoted by Carey, vol. i. p. 290. o 2 84 PREFERENTIAL TRADE of a century ago. In that document we see trade casting aside all disguise and appearing in its true character — that of the war maker and invader. In order that Great Britain might be mistress of the world's commerce every foreign interest had to be destroyed. Mr. Gee spoke only the language of foreign trade, though he may have spoken it a little too bluntly. This English policy succeeded to a miracle. Her mineral riches in coal and iron, her application of machinery, and her command of the sea, made England industrially invincible. In 1726, Defoe wrote, in his " Tour through Great Britain," that " not a beggar was to be seen or an idle person." At the close of the eighteenth century your manufacturing supremacy was unquestioned ; and no military war was ever more cruel and unsparing than the war of the trade through which that supremacy was achieved. During the Napoleonic wars England grew rich amidst the destruction of the nations. From 1815 until 1874 there was a steady expansion of British trade, the percentages of increase being almost exactly the same in the Protectionist and Free Trade periods. In 1856 England had 28,000,000 cotton spindles at work, while Europe had only 10,000,000. She employed 379,000 cotton weavers against 393,000 in all the principal continental nations. By 1872 America and Germany became competitors with England. From that year Great Britain's supremacy began to dwindle. In 1885 there was appointed the Commission to inquire into trade depression and agricultural decline. But trade supremacy may mean much or little. We must ascertain its true significance to England. In the early part of 4. The l as t century thinkers like Ricardo began to perceive landed that England could outrival all the world in manufac- lnterests ° of Eng- tures only by means of cheap labour ; and to this end land - a cheap loaf was a necessity. The English landlord was a ruthless oppressor of the poor. The high price of corn meant no extra profit to the farmer nor higher wage to the farm labourer. It simply increased the rent. Professor Thorold Rogers says : The condition of the agricultural labourer has been different from that of the artisan. Scattered and incapable of combined action with his fellows, bowed down by centuries of oppression, hard BUILDING THE WORLD'S WORKSHOP 85 usage, and hard words, with, as he believes, every force against him, the landlord in league with the farmer, and the clergyman in league with both, the latter constantly preaching resignation, the two former constantly enforcing it, he has lived through evil times. . . . 'There is nothing in the history of civilisation more odious than the meanness of some English landlords, except it be their insolence. 1 The revolt against this came in the abolition of the corn duties. By the middle of the nineteenth century the last of the corn laws went by the board, and England began to import her corn and neglect her own agriculture. It was concluded that having gained by her protective tariffs a commanding position in manufactures, the nation could best consolidate her power by open competition against the world. Surely, with her splendid supply of iron, coal, and cheap labour, combined with mechanical supremacy, England might undersell every other nation, and hold the world at her mercy. The vision was a splendid one. To Cobden it was a new religion of pure unmiti- gated selfishness. It is literally true that under the spur of the new policy of cheapness English factories multiplied their out- put, and English trade expanded by leaps and bounds ; but, owing to the development of trades unions, wages rather increased than diminished. Since the beginning of the century the wage rate had been slowly improving and food was cheapening. Mr. Thorold 5. Wages Ro g erS Sa 7 S : and food cost at If we can only rely on Mr. Leone Levi s figures, taken various from the record of prices paid at Greenwich from 1800 to periods. lg20 ^ and between lg21 an(1 1840> we shall find that wages had actually risen and the price of the necessaries of life had greatly fallen. 2 After 1840, chiefly through the development of trade com- binations, wages more than maintained their rates, so that the workman, getting higher pay and eating a cheaper xoaf, began to spy a sort of paradise. The revolution in the English tariff made not an atom of change in England's industrial aims. Her goal was still to become the workshop of the world. 1 Thorold Rogers, Work and Wages, p. 144. * Hid., p. 140. 86 PKEFERENTIAL TRADE Monopolist laws and protective tariffs had proved efficient agencies towards destructive ends. The monopolist weapon H of competitive cheapness was now to make a cleaner England and deeper cut than could the sword of the tariff mono- com etT- P onst - But in each case monopoly was the end in tive view. These facts are sometimes illustrated very curi- system. 0US i V- j n ig54, eight years after England had got rid of her last protection on corn, a commission sat and reported on " the state of the population of the English mining districts." Here is an extract from the pages of that Report, as published by the House of Commons : The labouring classes generally in manufacturing districts of this country, and especially in the iron and coal districts, are very little aware of the extent to which they are often indebted for their being employed at all to the immense losses which their employers volun- tarily incur in bad times in order to destroy foreign competition, and to gain and keep possession of foreign markets. Authentic instances are well known of employers having in such times carried on their works at a loss, amounting in the aggregate to three or four hundred thousand pounds in the course of three or four years. If the efforts of those who encourage the combinations to restrict the amount of labour and to produce strikes, were to be successful for any length of time, the great accumulations of capital could not then be made, which enable a few of the most wealthy capitalists to overwhelm all foreign competition in times of great depression, and thus to clear the way for the whole trade to step in when prices revive, and to carry on a great business before foreign capital can again accumulate to such an extent as to be able to establish a com- petition in prices with any chance of success. The large capitals of this country are the great instruments of warfare (if the expression may be allowed) against the competing capital of foreign countries, and are the most essential instruments now remaining by which our manufacturing supremacy can be maintained. Nor has this policy of " warfare" been in any degree changed since 1854. Rather has it been strengthened and systematised. Instances are all around us. India is one example. India used to admit raw cotton duty free, and imposed a small duty of 3 to 5 per cent, on cotton manufactures for revenue purposes. By-and-by Indian cotton mills began to start up and flourish under this minute modicum of protection. Then Lancashire, BUILDING THE WOELD'S WOEKSIIOP 87 finding its trade threatened, grew uneasy about the duty of 5 per cent., and demanded its repeal on the ground that it was " burdensome to the poor ryot." The Lancashire millowners solemnly assured the Secretary for India that if he would remove this " iniquitous impost " which, they said, was crushing the heart of India's poor ryot, they would supply cheaper wares to him. The Secretary for India was all complaisance ; but, as the duty was bringing in a million a year, it could not be taken off instantly. However, the official was equal to the occasion. When the new tariff of 1875 appeared the 5 per cent, duty was slightly reduced, and a duty of 5 per cent, was placed on a certain long-stapled raw cotton imported into India as a necessary to mix with the native short-stapled cotton before the Indian millowners could compete with England. The new 5 per cent, tax on the raw imported cotton was equal to a protective duty to Lancashire. This little transaction was effected in secrecy, and in bad faith on the part of the Indian Government. Indian writers denounced the new Tariff Bill as being " as infamous a measure as ever a subservient legislature sought to impose upon a voiceless people." This was in 1875 ; but in 1895 the same identical tactics were pursued. Indian finance in that year was failing, new taxes were necessary. Amongst other schemes for providing revenue a 5 per cent, revenue duty was placed on cotton goods. Lancashire was instantly in arms. All the dominating trader's spirit was aroused. The Indian Government was ordered to put an equal excise duty on all the products of Indian cotton, lest local industries should get any advantage. And this was done. This is the temper of the English Free Trader wherever he fears a foreign competitor. Some 290,000,000 people in India were to be taxed, not as was best for them, but in order that Lancashire cotton traders should not suffer any loss of custom. Besides these wars of capitals there was nothing to prevent the country prosecuting her little " trade wars" as before. Eng- 7. Trade l an d had her Chinese war to push the opium trade ; wars. Indian wars to push the calico trade ; African " little wars " to find " colonies of customers " ; the Egyptian war to save the bondholders' money ; besides little "affairs" in Burmah and elsewhere. All the world had to be taught the sublime 88 • PEEFEEENTIAL TEADE gospel of " buying in the cheapest market," that market being England. These being the facts, we may now reckon up the results. One result certainly is that England has grown enormously 8. Eng- wealthy. Before the close of the eighteenth century land's she exported £200,000,000 more than she imported, and an d had all the profits of her shipping trade besides. Her poverty, foreign trade continuously increased from the begin- ning of the nineteenth century up to 1872, both under protection and free trade. The Napoleonic wars had made her supreme in manufacturing production. She is said to have loaned abroad a sum of money not less than £2,000,000,000. She receives back in interest not less than £50,000,000 worth of commodities every year, perhaps more. Half the globe pays her tribute — a tribute won, not, like that of Imperial Rome, at the point of the sword, but by the warfare of the trader. Her flag flies in every clime ; her ships and sailors cover the sea. That surely is a goal worth winning ! Stay ! Look on the reverse of the shield. Look at home, and see what has come of it. If gold may be purchased too dearly, may not manufacturing industry also ? British agricul- ture is comparatively a thing of the past. England has starved her lands in order to feed her furnaces. The result is that everywhere farming has gone to decay ; the richest land remains untilled ; the English farmer has been driven from his home ; internal commerce has been crippled in order that the trader may flourish by buying American wheat and meat in the cheapest market and selling it in the dearest. In 1851 the farmers and agricultural labourers in England and Wales numbered 1,670,000. In 1901 they had fallen to 981,000. In 1866 the area under wheat in England and Wales was 3,350,000 acres. In 1903 the area had diminished to 1,581,000 acres. The loss in the value of agricultural land, which has taken place to the extent of £670,000,000, is no light price to pay even for the world's workshop. Mr. Cunninghame Graham said : " I am a rabid Fair Trader, or Protectionist if you like, because the workpeople of this country are starving in the streets, undersold by foreign labour." BUILDING THE WOELD'S WOKKSHOP 89 But what if this " world's workshop " should prove a myth ? There is now no longer any question that England has been successfully challenged in her very strongholds of land's industry by the protected trades of the United States trade f America and Germany. Belgian ironmasters are taking away her contracts and building England's bridges and public buildings for her, while 4,000,000 of ' sub- merged ' wretches, her own idle subjects, are struggling with starvation, despair, and death. The richest nation on earth is one of the most supremely wretched in pauperism. Sir H. Campbell-Bannerman says there are 12,000,000 of hungry people every day living in England. It is, indeed, beyond denial that England has lost her indus- trial supremacy. In 1872 the total declared value of British produce, exported from the United Kingdom to foreign coun- tries, apart from British Possessions, was £190,800,000. In 1902 it had sunk to £174,000,000. Yet in that interval the population of the United Kingdom had risen from 32,000,000 to 42,000,000. In the meantime the exports of other nations had greatly increased. The following table is very significant : Comparative Exports, 1872-1902 l - 1872 Millions 1890 Millions 1900 Millions 1902 Millions £ 109 174 283 Increase or decrease since 1872 Exports of British produce : (1) To British Possessions (2) To Foreign Countries £ 61 196 £ 87 176 £ 94 197 Per cent. + 79 - 21 + 10 Total 257 263 291 French Exports . Italian Exports . Belgian Exports German Exports U. S. America Exports 150 46 42 116 89 150 36 57 166 176 164 53 77 238 304 170 59 74 241 282 + 13 + 28 + 76 + 108 + 217 We see there that Great Britain's increase is the lowest of the countries quoted, and that in her trade with foreign 1 National Review, Sept. 1903, p. 53, special article from Board of Trade Returns. 90 PREFERENTIAL TEADE countries there is an alarming decrease. The same magazine establishes the proposition that — British exports to the competitive and protective countries apart from coal have been declining in value rapidly and without inter- ruption since 1872, and are not only lower in point of value than they were in that year, but are hardly higher than they were in 18GG. So far has this gone that it is said with truth that, for the purposes of British trade, Europe is a dying market. Thirty years ago England had no rivals. Now she is outclassed on every hand. Just one other table referring to Great Britain's exports of her own manufactures and imports of foreign manu- factures : - Export British Manufactures Millions British Imports for Manufactures Millions Net Exports Millions 1872 1882 1890 1902' £ 236 217 230 229 £ 35 52 (53 99 £ 201 165 167 130 These results might have been accepted with some sort of patience were they general throughout the world. But this is not so. The trade between India and China and Japan has enormously expanded in the very years that English trade has declined. Such is the result of Lancashire's " instrument of warfare " after fifty years of a free-trade paradise. The wise words of Adam Smith perforce recur to us : A nation that would enrich itself by foreign trade is certainly most likely to do so when its neighbours are all rich, industrious, and commei'cial nations. A great nation surrounded on all sides by wandering savages and poor barbarians might, no doubt, acquire riches by the cultivation of its own lands, and by its own interior commerce, but not by foreign trade. It seems to have been in this manner that the ancient Egyptians and the modern Chinese acquired their great wealth. The ancient Egyptians, it is said, neglected foreign commerce, and the modern Chinese, it is known, 1 Omitting ships. BUILDING THE WOKLD'S WORKSHOP 91 hold it in the utmost contempt, and scarce deign to afford it the decent protection of the laws. The modern maxims of foreign commerce, by aiming at the impoverishment of all our neighbours, so far as they are capable of producing their intended effect, tend to render that very commerce insignificant and contemptible. 1 The fact is, that most of the predictions of English free-trade prophets have been falsified by the event. Instead of other nations throwing open their ports to buy in the cheapest markets, they have raised their tariff walls ever higher and higher. Lord Salisbury, as far back as October 20, 1879, made a speech before the Manchester Chamber of Commerce in which , n . he referred thus to these hostile tariffs : 10. A national Jt j s an ac £ f fi sca ] war. War is a bad thing ; but it is the only way of defending ourselves against this wrong. Why is it wrong to do it in dealing with your fiscal matters as well as in other international relations 1 What I desire to impress on you is that under cover of this fetish worship of a set of doctrines which are called free trade, but which are not free trade, you are excluded from these acts of self-defence, and so long as you are excluded you may sigh in vain for justice in fiscal matters. Mr. Chamberlain and Mr. Balfour are both speaking and thinking the same thoughts now, and they express the sense of unrest which underlies all England. In 1894 there was published a volume called " British Industries," in which the author, Mr. Williamson, wrote in the preface as follows : Nearly half a century has passed since, by the abolition of the Corn Laws, a new principle was introduced which, twenty-five years later on, led to the final abandonment of the protective system. The promises then so confidently held out of abiding prosperity, universal peace, and the adoption of free trade by other countries — an indispensable element of its success — have not only not been fulfilled, but our markets are now subject to long periods of un- exampled depression followed by fleeting revivals. Agriculture, our greatest industry, is wellnigh ruined, and the outside world is more wedded to protection than ever. May we not, therefore, claim that the whole question of our fiscal system should be reconsidered, and that it is time we should abandon that attitude of blind indifference which assumes that, although the civilised world is against us, we alone are right ? 1 Wealth of Nations. 92 PREFERENTIAL TRADE Mr. J. S. Jean, in his work on " England's Supremacy," says that 600,000,000 quarters of wheat are imported into England annually. A fortnight's loss by the country of the command of an ocean highway, and England would be at starvation point. It is from this point of view that the following passage from Alison's " History of Europe " has a great meaning : No nation can pretend to independence which rests for any sensible portions of its substance, in ordinary seasons, on foreign, who may become hostile, nations. And if we would see a memorable example of the mariner in which the greatest and most powerful nation may, in the course of ages, come to be paralysed by this cause, we have only to cast our eyes on Imperial Rome, when the vast extent of the Empire had practically a free trade in grain with the whole civilised world, and the result was : cultivation dis- appeared from the Italian plains ; the race of Roman agriculturists, the strength of the Empire, became extinct ; the legions could no longer be recruited but from foreign lands ; vast tracts of pasturage overspread even the fields of Lombardy and the Campagna of Naples ; and it was the plaintive complaint of* the Roman annalist that the mistress of the world had come to depend for her subsistence on the floods of the Nile. No man, placing these facts against England's multiplica- tion of riches, can feel anything but dissatisfaction. Yet that is the short story of what " free imports" have done for England. 93 Letter VIIL— To MICHAEL DAVITT, Esq. FREE TRADE THE DESTROYER OF IRELAND A bold peasantry, their country's pride, When once destroyed can never be supplied.— GOLDSMITH. My dear Michael, — You have loved your country ; lend me your ear awhile. Somehow, I have observed, an Irishman is almost instinctively a Protectionist. You, I think, are an exception. Would it not be interesting to you to try and find out why it is that the average Irishman turns to protection as a young duck to the stream ? And really, you haven't far to look ; for, if ever a nation was shrivelled up under a trade blight, Ireland has been the victim. No one can consider the facts which lie beneath the surface without perceiving that almost every page of modern Irish l Ethics hi storv i s a warning against unregulated trade. The and eco- competition of the foreign trader was most certainly one nomics. Q £ ^ c y e f a g en t s i n stamping out Irish industries and depopulating the country through sheer starvation. Mr. W. S. Lilly, in dealing with the " Ethics of Property " in his book of " Right and Wrong," makes one very subtle remark. He says that a sincere profession of Christianity is quite com- patible with a life of practical atheism. He is thinking of the people who, while professing the Christian creed, insist on divorcing ethics from economics, as John Stuart Mill and Pro- fessor Jevons do. And what he means is that as the theistic idea is rooted in the moral law, the ignoring of Christian morality in industrial science, as a science, is practical atheism. The study of Irish history is a liberal education in at least one phase of economic science. " If you sow thorns you will not reap roses," says a wise proverb. Confining our investiga- tions to the trade relations between Great Britain and Ireland, 94 PREFERENTIAL TRADE we have to try and discover the law operating between what the dominant partner has sown and what both partners have reaped by the sowing. When you and I look back attentively at the condition of early Irish manufactures, we shall find them to have been in advance of England. In the fourteenth century England Iris h r 7 imported most of her cloth ; but there are documents manufac- ex tant which seem to show that Ireland, even at that date, had made considerable progress in the manufac- ture of apparel. For example, a poem, " Dita Mundi," written before 1367, in which year its author died, speaks of the " noble serge " which Ireland sent to Italy. Then there is a special Act of Parliament in 1376 passed for the care of Irish frieze. Coming down to the time of Charles II., Act No. 12 prohibited the export of raw Irish wool for the express purpose of encou- raging the manufacture of the article at home. This legislation quite answered its intended purpose ; for we can learn from the " Encyclopaedia Britannica" that woollen manufactures increased in Ireland with great rapidity. What that means we can understand from the fact that, in 1641, some thirty years pre- vious to Charles's Act, there had been some 30,000 people engaged in Ireland in manufacturing woollen fabrics. It was for these the wool was kept at home. The linen trade was almost equally prosperous. Green, the historian, 1 tells us that " the foundation of the linen manufacture, which was to bring wealth to Ulster, and the first development of Irish commerce, date from the Lieutenancy of Wentworth." This was from 1632 to 1640. It was quite clear that at the time of the exit of the Stuart dynasty in 1688, when King James made his inglorious skedaddle, Ireland had a flourishing commerce in manufactures, more particularly in linen and woollens. It was natural, I suppose, that anything good in Ireland should create the jealousy of England. At any rate, this Irish „ „ skill in manufactures roused the London merchants 3. Eng- . . . land ln to activity and resentment. They formally peti- bcgins to tioned William III. for " the discouragement of the cicstrov woollen manufactures of Ireland." As a matter of course this most delectable prayer was graciously acceded to. 1 Green, Short History, p. 506. FKEE TEADE THE DESTROYER OF IRELAND 95 William could not very well suppress the trade by direct law, so he prohibited all Irish exportations, except those that were sent to England, and he placed heavy duties on Irish goods entering English ports. The law was quite effectual. It pro- tected England against Ireland. It destroyed the Irish industry, and caused frightful poverty and destitution amongst the Irish people. The Irish farmers were now compelled to export their wool in a raw state to London, and receive a small part of it back in a finished condition. Irish people in thousands stood idle the while and starved. But this policy of the ultra-pro- tected English traders injured England as well as Ireland. Numbers of skilled Irish workmen, being shut out of a living at home, emigrated to France, Spain, and the Netherlands, where they planted their industries and became formidable competitors against the English looms. Mr. Froude has told this story at length, fully bringing out how English traders, for their own supposed advantages, wrought destruction on the manufactures of the Sister Isle. But neither you nor I will be partial to taking James Anthony Froude's word for anything, even when he agrees with us ; so I will rather quote the " Encyclopaedia " article already referred to : The materials manufactured were of such a quality as to awaken the alarm of English manufacturers, at whose instance both Houses of Parliament petitioned William III. to come to the rescue. In accordance with his wishes the Irish Parliament in 1698 imposed additional heavy duties on all woollen clothing, with the exception of friezes, exported out of Ireland, and in the following year an Act was passed by the British Government prohibiting the export from Ireland of . all woollen goods to any country save England, to any port in England save six, from any town in Ireland save six. That, of course, was protection to England at the expense of Ireland. Green thus glances at the subsequent develop- ment : The history of Ireland, from its conquest by William Green's HI- U P to this time (1815), is one which no Englishman can opinion recall without shame. For more than a century Ireland was the worst governed country in Europe. England did her best to annihilate Irish commerce, and to ruin Irish agriculture. 96 PREFERENTIAL TRADE Statutes passed by the jealousy of English landowners forbade the export of Irish cattle and sheep to English ports. The export of wool was forbidden, lest it might interfere with the profits of English wool- growers. Poverty was then added to the curse of misgovernment, and poverty deepened with the rapid growth of the native population, till famine turned the country into a hell. That statement is to be found at pages 787-8 of his " Short History " ; and at another place he says : Ireland then, as now, was England's difficulty. The tyrannous misgovernment under which she had grown ever since the battle of the Boyne was producing its natural fruit. . . . Pitt saw that much, at least, of the misery and disloyalty of Ireland sprang from its poverty. The population had grown rapidly, while culture remained stationary and commerce perished. And of this poverty much was the result of unjust law. Ireland was a grazing country ; but to protect the interests of English graziers the import of its cattle into England was forbidden. To protect the interests of English clothiers and weavers, its manufactures were loaded with duties. This brings us to one of the most instructive parts of Irish industrial history. England had been forced to withdraw troops from Ireland to assist her trade war in America ; effects of sne was threatened with a French invasion ; she had Protection reluctantly to consent to the arming of Irish volunteers. No sooner did these volunteers find themselves with arms in their hands than they demanded the " independence " of Ireland. England had no option but to submit. Grattan's Parliament was commenced in 1782, and College Green was empowered to make its own laws without let or hindrance. Almost its first work was the establishment of a protective policy for Irish manufactures. The duties imposed on imports ranged as high as 60 per cent. Ireland began to have gleams of hope. Her industries commenced at once to improve. With unconscious irony Green reminds us that " the first financial effort of Pitt, and the Bill which he introduced in 1785, did away with every obstacle to freedom of trade between England and Ireland." We have no wonder at the contempt with which the Irish Parliament rejected this Free Trade Bill of Pitt's. For eighty-five years FREE TEADE THE DESTROYER OP IRELAND 97 England had laboured to crush Irish industry, and had suc- ceeded. English manufacturers were now strong ; Irish manu- facturers were now weak. The English offer of free trade to Ireland in such conditions was like the invitation of the house- wife to her poultry-yard : " Dilly, dilly, dilly, come and be killed." Pitt's free-trade measure was artfully designed to complete the ruin which a previous one-sided protective policy had begun. The Irish Parliament rigidly adhered to a policy of protection of its own. By the year 1800 nineteen articles of Irish export were largely on the increase ; and Ireland's prosperity had grown so great under her protective tariff that Plunkett could say : " Her revenue, trade, and manufactures are thriving beyond the hopes or the example of any other nations of her extent. Within these few years she is advancing with a rapidity astonishing even to herself." Grattan said : " No nation in the habitable globe, in cultiva- tion, in commerce, in manufactures, has advanced with the same rapidity in the same period." All the authorities agree in the main with these statements. An " Encyclopaedia " writer says of the new Irish cotton industry of 1784 : " Under the protection of high import duties and bounties the manufactures increased with such rapidity that in 1800 it gave employment to 13,500 people, chiefly in the neigh- bourhood of Belfast." The sequel is a harrowing story. But the eighteen years of Protection between 1782 and 1800 had done marvels. The population was increasing rapidly, and had already overtopped 5,000,000. Hopes were buoyant ; employment was good ; trade brisk. The nation had begun to feel herself. The animosities of ninety-eight might soon have been assuaged. But it was not to be. The baleful shadow of free trade was upon her. It was the same monster which had crippled Holland, and Turkey, and Portugal, and which England was so wisely keeping from her own door. And now we come to the time of the Union. Pitt felt an independent Ireland to be a thorn in his side. He resolved to end it. You know how he did it. Castlereagh told him that for a million and a half of money he could buy a majority of the H 98 PREFERENTIAL TEADE Irish Parliament to repeal the independent constitution. The cash was forthcoming ; the votes were bought ; and after one abortive attempt the legislative union of the two countries was effected. The immediate consequence was a repeal of the Irish protective policy. Some of the duties were immediately- abolished ; others were fixed by law on a gradually vanishing scale, to disappear entirely in twenty years or so. Industry began at once to decline. Silk manufacture virtu- ally died out with the last of the duties in 1826. Linen had particularly flourished up to the time of the Union death- under the protective duties ; but it died out so much blow - that the Linen Board ceased to sit after 1830 for want of anything to do. After ten years of Protection, in 1792 the Irish were exporting 360,000 yards of drapery. Two years after Free Trade, in 1802, that export had fallen to 20,000 yards. The Irish imported 610,000 yards in 1782 ; these imports in- creased to 2,500,000 yards in two years after the free trade of the Union. In the year 1800, the last of the protective period, 13,500 hands were employed in cotton manufacture. In thirty- nine years of free trade these 13,500 hands had dwindled to 4,622 ; in the year 1850 they were only 2,937 ; and in 1879 they had decreased to 1,620. These figures are .taken out of the " Encyclopaedia Britannica." Such a result was, of course, inevitable. The Irish market was opened to the competitive raids of the Lancashire weavers. The high duties against English calicoes were continued until 1808, and those of cotton goods till 1810. There were ninety- one master woollen manufacturers in Dublin in 1800. Forty years later they were all stamped out but twelve. Wool-combers and carpet-makers had at the same time almost wholly vanished. 1 Free traders everywhere admit that English traders ruined Irish manufactures ; but some of them assert that the ruin was not inflicted by free trade, but by protection. Henry George, in " Protection or Free Trade," p. 18, says : " As for the assertion that the English theory of free trade has been used to destroy the industries and oppress the people of Ireland, the truth is that it was the English theory of protection that was so used." The observation is quite true. Mr. George is welcome to 1 Carey, Principles of Social Science, vol. i. p. 322. FREE TRADE THE DESTROYER OF IRELAND 99 all the help it can give him, which is none at all, seeing that the English protectionists denied protection to Ireland and forced free trade upon her. What I am now demonstrating in this case is the inherent nature of free imports. I want to show that it possesses the devastating qualities of war. We have seen that the ruinous foreign trader invaded Ireland and destroyed her as war. nascent industries as soon as her tariff guard was broken down. Whether it was done by a free trade or protective nation is nothing to the purpose. Everyone knows that a trade war waged by a protective nation is just as deadly as if waged by a free-trade one. So long as Ireland was protected by the law made in Grattan's Parliament she was safe and strong. When her protective tariff was destroyed her industries went with it. The competition of English traders swept Irish manu- factures out of being. This is exactly what the free trader admits would happen in Australia under his tariff. In the House of Representatives one of them openly declared that we can have no woollen manu- factures here in Australia till our people are worse off than they are at present, and ready to work at sweated rates, the same as other countries. How Ireland was affected is told us very succinctly by Carey in the work I have already cited : England had the home market, the foreign market, and that of Ireland open to her ; while the Irish manufactures were forced to contend for existence, and under the most disadvantageous circumstances, on their own soil. The former could afford to purchase expensive machinery, and to adopt whatever improvements might be made, while the latter could not. As a natural con- sequence of this, Irish manufactures gradually disappeared as the Act of Union took effect. From and after that time (1800) commerce gradually declined, until it finally died away, and there was wasted each and every year an amount of Irish capital equal, if properly applied, to the creation of all the cotton and woollen machinery existing in England. To this enforced waste of capital we must look, if we desire to find the cause of the decline and fall of the Irish nation. .... The poor people were, in fact, selling their soil to pay for cotton and woollen goods that they should have manufactured for themselves. B 2 100 PREFERENTIAL TRADE That is a condition of things the free traders assert to be economically wise. If the Irish could purchase in the English „ „,,_ market more cheaply than in their own, it was well to 8. The r J conse- do so, say these doctrinaires. The consequence was Iree* 56 ° f *^at ^ a ^ ew y ears * ne y nac * n °t nm g to purchase with. Trade With the abolition of Irish manufactures the Irish unem- wisdom. pi y ec i were everywhere. The people were all thrown back on the land, or left to starve, or to emigrate. They did both. Mr. George himself admits that Ireland was " exposed to starvation on the failure of a single crop." We remember with a shudder how that starvation eventually came. Millions of Irishmen daily wasted the capital of their labour because there was nothing for them to do. And this while English manufacturers were killing off their industries by cutting prices under a free-trade doctrine. It was one of the most ruthless trade invasions and devasta- tions ever known. But it was strictly in accordance with the everlasting laws of the same doctrine that is now actually pro- posed by Australian foreign traders for the Australian Common- wealth ; and with the same identical object in view. While this ruin was being effected in Ireland middlemen and traders made fortunes, and they carried those fortunes out of the country. Foreign trade stood over and dominated commerce. Even the savings of the people were forbidden by law to be invested in Ireland. The landlords took their rents and spent them abroad. The country had nothing to rely on but its lands ; and woe to any country which is reduced to the raw product of the soil ! From Ireland the produce of the land was sent abroad, while the poor wretches at home starved. This is not a mere rhetorical assertion. I will give you a few figures. The export of Irish grain at the Act of Union was 9. Aterri- 300,000 quarters. The rest of the national grain pro- bie fact, duct was consumed at home by the manufacturers and the workers in subsidiary callings. In thirty years after the beginning of free trade the people could no longer consume at home, and they sent abroad 2,500,000 quarters of grain. The country was drained ;o pay for the imported goods, and for the ient of absentee landlords. The consequence was unavoidable. The best men fled the country. Those who could not do so FREE TRADE THE DESTROYER OF IRELAND 101 remained and famished by millions. Let any Irishman just glance at this picture of Thackeray's : Throughout the West and South of Ireland the traveller is haunted by the face of the popular starvation. It is not the exception, it is the condition of the people. In this fairest, and richest of countries men are suffering and starving by millions. There are thousands of them at this minute, stretched in the sunshine at their cabin doors, with no work, scarcely any food, no hope, seemingly. Strong countrymen are lying in bed " for the hunger," because a man lying on his back does not need so much food as a person afoot. Many of them have torn up the unripe potatoes from their little gardens to exist now, and must look to winter, when they shall have to suffer starvation and cold too. It was the contemplation of these things that made Sydney Smith say in his indignation : The conduct of the English to that country (Ireland) has been a system of atrocious cruelty and contemptible meanness. With such a climate, with such a soil, and with such a people, the inferiority of Ireland to the rest of Europe is directly traceable to the wickedness of the English Government. My own comment on that is, that it was not so much the malice of the English Government, as the inherent wickedness of that doctrine which will sacrifice everything to the 10. The . . doctrine theory of " buying in the cheapest market." And I of sacn- recall these things now because the same policy of in- sensate selfishness and stupidity is proposed in some quarters to be applied to the Australian Commonwealth. From Ireland Nemesis assailed the wrongdoers in a peculiar manner. Thousands of famished Irishmen invaded England and swamped the labour market there. Prices fell too, so that the Irish tenant could no longer pay his rent, and the landlords were in almost as much distress as the peasantry. Professor A. R. Wallace says of this : The modern Irish cotter really lives in a state of hopeless and helpless degradation comparable with that of the least fortunate serfs of the Middle Ages. . . . They were obliged to be poor and miserable to escape robbery. . . . The injustice, the cruelty, the short-sightedness of this system had been urged again and again on 102 PEEFEEENTIAL TEADE our legislators, but wholly without effect, till the terrible calamity of the potato disease in 1846 and 1847, and the horrible events that ensued, and forced them into action. 1 The same writer adds : The law has hitherto given to the landlord complete power over the land he holds, to deal with as he pleases. Millions of people who possess no land, nor any other property, are absolutely dependent, not for happiness only, but for the power to live, on having a portion of this land to cultivate. Under these circum- stances the landlord is master of the situation. He can demand what he pleases for his land. He can let it out on what terms he pleases ; and he can subject his tenants to any rules or regulations he or his agents think proper. The people must have land or starve; so they offer any rent, agree to any terms, and are consequently always the virtual, if not the actual, slaves of the landlord. Hence the perennial misery and crime of Ireland. Hence famines, evictions, and the shooting of landlords or agents. Some of the people blame the landlords. But why 1 The law tells them that the land is their property. Political economy tells them to sell it, or the use of it, in the dearest market ; that supply and demand regulate the price of all commodities ; and that it is best for all that it should be so regulated. They simply act on these principles, which have been drilled into them as the highest teaching of political science. Yet the result is a nation in the most helpless misery to be found anywhere in the civilised world. Now, I am not blind to the fact that there is a land grievance there as well as a free-trade grievance. But the land grievance 11. Free was immeasurably increased by the destruction of Trade the Irish manufactures ; and it was absolutely created by ail the the application of the unrestricted free-trade competi- eviis. ti ve system to the land. The same results, in a more or less aggravated form, have always followed when the manu- factures of a country have been starved, and where the whole population, or the greater part, have been compelled to depend on the land alone. You remember the advice given to his countrymen by the worthy Dean of St. Patrick's. If they would prosper, he told them, they should burn everything that came from England 1 Wallace, Land Nationalisation, p. 34. FREE TEADE THE DESTEOYER OF IRELAND 103 except her coal. He saw that large importations of English manufactures must close up Irish factories, and drive the people back on the soil. That is just what occurred. Seven millions of people were dependent on almost a single crop — at any rate, on a single industry. The true policy amongst all peoples is to increase the diversity of occupations to the utmost limits of practicability. The reason for this is obvious. As men's talents are diverse, so should be the means of their employment, in order that each land may obtain from its people the best that is in them. Wherever a nation becomes nomadic, or purely pastoral or agricultural, the genius of its people is stunted ; square human pegs are forced into round holes, and there ensues a colossal waste of energy and talent. That is what took place after the Union in Ireland. John Stuart Mill, having seen the Irish in their native homes, said of them : The rents which they promise, they are almost invariably incapable of paying; and consequently they become indebted to those under whom they hold, almost as soon as they take possession. They give up, in the shape of rent, the whole produce of the land, with the exception of a sufficiency of potatoes for a subsistence ; but as this is rarely equal to the promised rent, they have constantly against them an increasing balance. . . . Almost alone the Irish cottier is in this condition — that he can scarcely be any better or worse off by any act of his own. If he were industrious and prudent, nobody but his landlord would gain. If he were lazy or intemperate, it is at his landlord's expense. 1 In 1824 De Beaumont declared that the condition of the Irish cottier was then worse than that of a savage ; and Judge Fletcher once publicly stated that he had seen English sows housed better than Irish peasants. The bitter consequence of all was the great famine, and the virtual dispersal of the nation. It has been well said that the country which begins by living on the export of raw products must end by the export of men. Never was this more terribly demonstrated than in Ire- 12 De- • cline of land. Mulhall, the eminent statistician, in his " Dic- the popu- tionary of Statistics," points out very forcibly that the reign of Queen Victoria was more disastrous to Ireland 1 Mill, Political Economy, Book 2, cli. ix. 104 PREFERENTIAL TRADE than that of any other previous king or queen. During the reign of Queen Victoria there died of famine 1,225,000; emi- grated 4,386,000, evicted 3,668,000— a total of 9,279,000. There is a volume of meaning in the following table of the growth and decline of Ireland's population, and its comparison with that of Scotland : — Tear Ireland Scotland 1801 5,020,580 1,608,420 1811 5,820,000 1,805,864 1821 6,801,827 2,091,521 1831 7,767,401 2,364,366 1841 8,175,124 2,620,184 1851 6,552,385 2,888,742 1861 5,798,967 3,068,684 1871 5,412,377 3,360,018 1881 5,174,836 3,735,573 1891 4,704,750 4,025,647 1901 4,456,546 4,471,957 Between the years 1841 and 1851 the population of Ireland decreased by 1,600,000. Ireland had been reduced to a farming nation depending on its crops. In 1846 the free imports of all agricultural produce struck the nation's industry in a vital place. At that time the London Times made a statement that has been properly pilloried for its cynical cruelty : " For a whole generation man had been a drug in Ireland, and popula- tion a nuisance." That sentence reveals the underlying morality of the foreign trader as laid bare in the doctrine of " supply and demand." The same journal wrote about the " inexhaustible Irish supply " which had " kept down the price of English labour," adding that " this cheapness had contributed vastly to the improvement and power ... of those who had money to spend. . . . We may possibly live to see the day when the chief produce of Ireland will be cattle, and English and Scotch the majority of the population." Is there any wonder, when Free Trade England has thus applied its principles to ruin Ireland, that the Irish are instinc- tively Protectionist ? People have said that Ireland's popula- tion increased beyond the means of sustenance. Mr. George has demolished that fallacy : " When her population was at the highest Ireland was a food-exporting country. Even during the FREE TRADE THE DESTROYER OF IRELAND 105 famine, grain and meat, and butter and cheese were carted for exportation along roads lined with the starving, and past trenches into which the dead were piled. For these exports of food, or at least for a great part of them, there was no return." ' This is corroborated by Carey in his " Principles of Social Science " (p. 337, vol. ii.), where he tells us that the export of wheat from Ireland during her three years of famine and pestilence, 1849, 1850, 1851, was 2,445,000 quarters ; flour, 3,000,000 quarters ; and 1,467,000 head of live stock. Surely this was a hideous example of the horrible development of foreign trade — this selling abroad for a profit the food that was necessary to save life at home. That was a supreme example of an inversion of " supply and demand." Nor did the decrease of the population restore the people's lot to tolerable comfort. The "Encyclopaedia" article already quoted from tells us of that decrease, that " great as it was it only removed the abnormal strain of hardship under which the peasant was suffering, and brought him no permanent relief from his burdens by an increase of wages." We know that the great majority of Irishmen to-day would instantly revert to Protection if they had the direction of their own national policy. Mr. Parnell made no secret at all national of his desire to adopt a protective policy for Ireland, aspira- jj e j s reported, in the Freeman's Journal of August 22, 1885, to have said : " It is my firm belief that it will be impossible for us to keep this portion of the labouring classes at home without protection to Irish industries." On this a Cobdenist writer observes : It is not surprising, when we bear in mind the iniquitous and suicidal commercial policy of England towards Ireland in former times, that Irishmen . . . should propose to follow our bad example. To them revenge, in the shape of retaliation, may well appear to be justifiable, whilst to reverse the action by which England deprived them of manufactures may appear the natural plan of recovering those manufactures. The economical weakness of Ireland is the dependence of too many persons on the same precarious industry of Irish agriculture. 2 1 George, Progress and Poverty, p. 87. 2 Farrer, Tree Trade versus Fair Trade. 106 PEEFEEENTIAL TEADE It is astonishing how those remarks cut to pieces the free trader's exhortation in Australia, to drop manufactures and take to the land. As a matter of fact, wherever agriculture is pursued to the neglect of manufactures it becomes precarious, because in such cases it must depend on the export trade. That is what, in Ireland and elsewhere, has so often raised the question — " How are the people to be fed and employed ? " This problem still baffles an age which can transmit a message round the world in the twinkling of an eye, and which can point out the locality of a planet never seen. It is a question which confounds alike the bold and the wise. And yet the answer to the question thus stated ought not to be far to seek, if men only approached it with the scientific 14. Causes mind. Carey asks pertinently enough : of Irish decline. To -what may this extraordinary course of events be attributed 1 Certainly not to any deficiency of land, for nearly one- third of the whole surface — including millions of acres of the richest soils of the kingdom — remains in a state of nature. Not to the ori- ginal inferiority of the soil in cultivation, for it has been confessedly among the richest in the Empire. Not to a deficiency of mineral ores or fuel, for coal abounds ; and iron ores of the richest kind, as well as those of other metals, exist in vast profusion, Not to any deficiency in the physical qualities of the Irishman — it being an established fact that he is capable of performing far more labour than the Englishman, the Frenchman, or the Belgian. Not to a deficiency of intellectual ability, Ireland having given to England her most distinguished soldiers and statesmen, and having throughout the world furnished evidence that the Irishman is capable of the highest intellectual improvement. Nevertheless, while possessed of every natural advantage, he is, at home, a slave to the severest taskmasters, and in a condition of poverty and distress such as is exhibited in no other portion of the civilised world. That is the problem. Surely history answers it. Besides which Ireland has been persistently overtaxed. Mulhall, in his " Industries and Wealth of Nations," says: " If taxation were adjusted in proportion to earnings the share that corresponds to Ireland would be exactly £6,000,000 per annum, or 24 per cent, less than at present." FEEE TRADE THE DESTROYER OF IRELAND 107 We saw Ireland, in the days of her early manufactures, quite as well to do as England was. We saw the wars of the traders ravage her industries and destroy them for a century, during which period Swift called upon his countrymen to burn every- thing from England except her coal. We saw in the birth of an independent Parliament, in 1782, a tariff wall set up to guard the land against the invasion of trades, and in that period we perceived a splendid effort at national regeneration. But as soon as the beneficent safeguards were broken down the domestic industries of Ireland collapsed, and the people drifted into unexampled poverty and famine. This is but the operation of a well-known law — that no land can be prosperous while it lies at the mercy of the trader, who, when unrestricted, is the universal foe of human well-being. 108 PKEFEEENTIAL TEADE Letter IX.— To LORD CURZON THE HINDOO AND THE TRADER " Covetousness disbelieveth God, and laugheth at the rights of man." My Lord, — You know that Great Britain is indebted to trade for her Indian Empire. There can be no denial of that. What- ever of merit is in that stupendous acquisition it equitably belongs to trade ; and, of course, whatever of demerit also. The political economist may study the career of the trader in India with great advantage. We may take one preliminary glance at what was the social condition of the country over which you preside prior to the advent of the trader. The Indian Empire, you know, like China and Egypt, had prohibited external trade, and according to Adam Smith had l India g rown opulent in doing so. India had both arts and before the manufactures in a much more advanced state than had trader. either Mexico or Peru. Many historians concur in stating that the natives of India enjoyed much simple liberty. Greig is one. He says : The natives of Hindustan seem to have lived from the earliest period down, comparatively speaking, to late times, if not free from the troubles and annoyances to which men, in all conditions of society, are more or less subject, still in the full enjoyment, by each individual, of his property, and of a very considerable share of personal libei'ty. 1 The rule of the native princes had been that of despotic tyrants, and their taxes were often grinding ; but their exactions were always spent in methods which found employment for the people. There were laws of village communities which were never violated ; and the direct commerce of the producer and 1 Greig, History of British India, vol. i. p. 46. THE HINDOO AND THE TEADER 109 consumer was always maintained, with the result of a generally prosperous social condition. Mr. Campbell, in his " Cotton and Commerce of India," says : " Under native princes India was a paying country." Before the era of the East India Company, according to the description of Edmund Burke — of whom Macaulay said that " all India was present to the eye of his mind " — all ranks " of people had their place in public concern, and their share in the common stock and common property." There are other means of verifying these things. Sir Alex- ander Johnston, in a letter to the President of the Board of Control, quoted by Mr. Carey, 1 says : Education has always from the earliest periods of their history been an object of public care and of public interest to the Hindoo governments in the peninsula of India. Every well-regulated village under those governments had a public school and a public schoolmaster. The system of instruction in them was that which, in consequence of its efficiency, simplicity, and cheapness, was a few years ago introduced from Madras into England, and from England into the rest of Europe. Every Hindoo parent looked upon the education of his child as a solemn duty which he owed to God and his country, and placed him under the schoolmaster of his village as soon as he had attained his fifth year. The old East India Company was established in the year 1600, by a charter from Queen Elizabeth, with a capital of £744,000 in shares of £50. The Portuguese had been 2. Tlie British already settled in India for more than a century ; and trader in the Dutch had followed the Portuguese and preceded the English. Both had trading companies. At first the English company prospered ; but competition gradually set in, and by the time of Charles II. the old East India Company was in distress. The Government was appealed to, and in 1698 a new East India Company was formed with exclusive trading privileges, in return for which the corporation loaned to the government of William £2,000,000 at 8 per cent. The old Com- pany finally closed in 1701. Unforeseen legal difficulties cropped up in the new Company, and competition recommenced. It 1 Carey, Principles of Social Soienoe, vol. iii. p. 281. 110 PREFERENTIAL TEADE very nearly ruined the new venture. Forty years later these differences were composed, and the company acquired and exercised exclusive rights. Then came Clive. He was a mere clerk in the Service ; but on troubles arising with the natives he turned out in arms, and having fought and won Plassy, he gave the Company a position in India by right of conquest. A few years of great prosperity followed — some brilliant fortunes were made ; but, in 1773, the Company was again in a state of bankruptcy. Warren Hastings had been sent out the previous year to pull things together. He did it by a course of such energetic and unscrupulous rule as made all England shudder, when, later on, the facts became known. The Regulation Act of 1773 took most of the governing power out of the hands of the Company direct, and vested it in a Board of Control. Warren Hastings ruled for thirteen years, and returned in 1785 to be impeached for high crimes against humanity. Adam Smith, writing the year before his return, said : " The Company is now in greater distress than ever." The House of Lords, a body in the eighteenth century as corrupt as Walpole's own Commons, passed a vote of censure on the course of appalling treachery and cruelty of the first British rulers in India. As for the hideous crimes of Warren Hastings — crimes of murder, rapine, spoliation, treachery, and extortion almost unexampled — Green says they were mostly committed to " glut the ceaseless demands of the Company at home. . . . The tyranny and corruption of the merchant clerks, who suddenly found themselves lifted into rulers, was fast ruining the Province of Bengal." l Your Lordship cannot avoid feeling a pang on a review of these things. Apart from open robbery, the very dealings of the Company with the natives were an intolerable oppression. I have said that India's new masters possessed exclusive trade rights. The East India Company could fix its own selling price on what it sold, and its buying price on what it bought. It exactly resembled Sydney Smith's definition of marriage : " Marriage resembles a pair of shears, so joined that they cannot 1 Green, Short History, pp. 758, 766. THE HINDOO AND THE TRADER 111 be separated ; often moving in opposite directions, yet always punishing anyone who comes between them." The Hindoo — passionately attached to the place of his birth, and ready to suffer any privations rather than abandon it — had no escape from the Company's trade. There was no customer for his tea and his corn but the Company, and no one else from whom he could get his necessaries. He was between the blades of the trader's shears, and Macaulay tells us how he was cut to pieces : The misgovernment of the English was carried to a point such as seems hardly compatible with the existence of society. They forced the natives to buy dear and sell cheap. . . . Enormous fortunes were thus rapidly accumulated at Calcutta, while thirty millions of human beings were reduced to the extremity of wretched- ness. They had been accustomed to live under tyranny, but never under tyranny like this. They found the little finger of the Company thicker than the loins of Surajah Dowlah. Under their old masters they had at least one resource — when the evil became insupportable the people rose and pulled down the government. But the English government was not to be so shaken off. That government, oppressive as the most oppressive form of barbarian despotism, was strong with all the strength of civilisation. It resembled the government of evil genii rather than the government of human tyrants. Sometimes they submitted in patient misery. Sometimes they fled from the white man as their fathers had used to fly from the Mahrattas, and the palanquin of the English traveller was often carried through silent villages and towns that the report of his approach had made desolate. 1 The foreign trader ruled everywhere. The weight of his tyranny was heavier than the sword of Clive. According to Adam Smith, even while food was abundant in the country, the exactions of the rulers caused three or four hundred thousand people to die from hunger every year in Clive's time, in the Province of Bengal, purely on account of the extortions of what he describes as the mercantile Company which oppresses and domineers in the East Indies. . . . The great fortunes so suddenly and so easily 1 Macaulay, Essay on Lord Clive, 112 PEEFEEENTIAL TEADE acquired in Bengal and the other British Settlements in the East Indies may satisfy us that, as the wages of labour are very low, so the profits of stock are very high in those ruined countries. 1 Even Clive himself, a ruthless tyrant over the subjugated natives, felt compelled to denounce the still more unsparing rapacity of the honourable merchant traders who had employed him. Burke, in a dozen speeches of immense power, laid bare the iniquitous policy of the East India Company, and showed that the methods employed, the fraudulent collusions between the London board of directors and their officers in India, their wars, broken treaties, ruination of zemindars, and usurious exactions, were the root of the nation's misery and bankruptcy. India, he said, was " lashed from oppressor to oppressor, whilst a single drop of blood is left as a means of extorting a single grain of corn." It was in this way that production itself was arrested. The poor ryot, who was charged 40, 50, and even 60 per cent, on money lent to him, threw up his cultivation in despair. The land reverted to jungle, and the Company reaped in bankruptcy the harvest which it had sown in rapine. There was seen in the Madras Presidency four-fifths of the land out of cultivation, while famines abounded. Vast heaps of humanity festered in compulsory idleness, and encumbered the soil which they ought to have tilled. Then was illustrated the difference between the tax imposed by the foreign tyrant and the domestic one. The taxation of the native princes had always been spent where it had been levied ; and the country as a whole appeared to be little poorer for it. But the taxation of the Company was sent to pay English dividends. The imposts of the native rulers, in being spent, had given employment ; but the foreign tax drained the country of nutriment and returned nothing. It was the enforced idleness that inflicted the most deadly evil. The ryot was prohibited from gathering salt on the shore, 3 idi even though salt was necessary to him to ward off ness and disease. The Company would collect only as much as its waste. wou i(i se \\ a ^ a monopoly price — a price ten times as great as that he had had to pay to his Mohammedan masters. 1 Adam Smith, Wealth of Actions, pp. 75, 94. THE HINDOO AND THE TEAD] 113 It was the same in cotton goods. Cotton and silk manufacture used to be a feature of Indian industry. One writer, in the early part of the century, said that the majority of the inhabitants of Bengal were engaged in cloth manufacture. "It is diilicult to find a village in which every man, woman, and child is not employed in making a piece of cloth." ' It is well known I at one time Bengal made the finest of muslins. Cotton was abundant in India ; but this domestic cloth-making did not suit the Company. A tax was placed on every Indian loom in order that the import trade might flourish at the expense of the natives. In twenty years an Indian export cotton trade worth £1,600,000 was annihilated. The natives were thus reduced to the necessity of selling their raw cotton to the Company. They received for it a penny per pound, and had to buy it back in English-made goods at 2s. per pound. The brokers, transporters, and traders took the difference, while the ryot, who would gladly have made his own clothing, stood idle. Thus was cotton carried 20,000 miles to an English spindle, and back again, rather than permit the spindle to be set up near the cotton-field. Lancashire children were made to drudge seventeen hours a day, and six on Sundays, for 2s. 9d. per week, in order to do for the tawny Indian what he would have been pleased and profited in doing for himself. The Hindoo had to be underworked somehow, and white slaves had to do it. The waste in this useless transportation may be gathered from a quotation taken from the London Economist describing some of the cotton districts of India : The rate of carriage, owing to bad roads, was seven miles a clay in the pre- railway days, for sometimes a hundred days. If the herd of bullocks were overtaken by rain, the cotton, saturated by moisture, became heavy, and the black clayey soil through which lay the whole line of road, sank under the feet of a man above the ankle, and under those of a laden ox to the knees. In this predica- ment the cargo of cotton lay sometimes for weeks on the ground, and the merchant was ruined. Thus was the Hindoo shut out of his own workshop, with a 1 Oroie, Historical Fragments, 1605, p. iO'J. (Quoted by Carey.) I 114 PREFERENTIAL '-TRADE prohibitive tax on his loom and his spindle, and an embargo on the collection of salt that crystallised before his door. What idleness means in moral declension is incalculable. Idleness is the grave of living men. It is the mother of poverty in pocket and in mind. Idleness has been called the devil's bolster. It is the greatest prodigality in the world ; and certainly the proverb runs true that if the devil catch a man idle he will set him to work. Doing nothing is always to do ill. And the policy of the East India Company was to compel the ryot to do nothing for half his time. The London Daily News, some years ago, said of the Indian peasantry that they were " becoming reckless through ruin. . . . When food should have been passing in exchange for other commodities the way was strewn with the gaunt corpses of 500,000 people starved to death." Similar facts caused Mr. Campbell, in his " Modern India," to say : " The longer we possess a province the more common and general does perjury become." And another writer says : " In places the longest under our rule there is the largest amount of depravity and crime." Mr. Carey, writing in 1856, the year before the great Mutiny, says : Calcutta grows the city of palaces, but poverty and wretched- ness grow as commerce is more and more sacrificed for the promotion of the interests of trade. Under the native rule the people of each little district woidd exchange with each other, giving food for cotton or cotton cloth, paying nobody for the privilege. Now, every man must send his cotton to Calcutta, thence to go to England with the rice and indigo of his neighbours, before he or they can exchange food for cloth or cotton. This was not an accident, but a part of a well-considered and deliberate plan. McCulloch, in his " Commercial Dictionary," expressly admits that from English trade Indian " manufacture has received a shock which it is not likely it will ever recover." In another place he says : " From Smyrna to Canton, from Madras to Samarcand, we are supplanting the native fabrics." There is no mistaking language like this, written by an economist who understood the true meaning of competition in trade, when the weak were pitted against tho strong. There is THE HINDOO AND THE TRADER 115 a consensus of opinion that the English system of trade govern- ment was the ruin of India. Henry George says : The millions of India have bowed their necks beneath the yoke of many conquerors; but worst of all is the steady grinding weight of English domination — a weight which is literally crushing millions out of existence ; and as shown by English writers, is inevitably tending to a most frightful and wide-spread catastrophe. 1 We know what a terrible day of reckoning came in 1857, when, the cup of misrule being full, and its iniquity running M m over, a flood of blood and crime drowned the land, sub- 4. Tug Mutiny merging the innocent and the guilty alike. No one and its can sa y fa^ the terrible uprising was unforeseen, or that it was the result of blind fanaticism. An Indian officer gave this testimony to a London journal : For years and years we have been acting as if we were under no moral responsibility whatever — as if India were a thing made expressly for our mere worldly advantage and nothing more — the natives of the soil no better than the wild beasts of the jungle, or, being more helpless, only fit to be hewers of wood and drawers of water, the slaves of the white man . . . left entirely to the mercy of the merchant and the money-lender. It is a terrible indictment against the trader, whose all- devouring avarice in India is thus referred to by M. Michelet : You have everywhere been gathering and sucking the substance of the earth, but implanting nothing — neither sympathy nor thought. Having brought no moral idea with you, you have founded nowhere. Your India, one of the finest empires the sun has seen — what have you done with it 1 It has withered in your hands. You remain exterior to it. Even the very troops before the Mutiny were housed in insanitary ovens. The death rate in the barracks was 6" 9 per cent, per annum for Europeans, and 2 for natives. Now, owing to more humanity since the rule of the trader has been expelled, the mortality is only 16 per cent, for Europeans and 1*2 for natives. Nor was the ruin confined to material things. The Hindoo, ' George, Progress and Poverty, p. 82. i 2 116 PREFERENTIAL TRADE when he was made a slave, was treated as a brute in the matter of education. This people, which set such high store by educa- tion when under the rule of their own princes, have been debased by the most sottish ignorance. In 1858, the year after the outbreak, only £38,000 was set apart for the education of all the children of India. Now the Government spends more than £3,000,000 a year ; but the condition of the natives may be gauged by the fact that there are 250,000,000 of them unable to read and write. After the Mutiny the iniquitous rule of the Company was abolished by the Indian Act of 1858. The Queen took over the whole government. A Secretary of State in London, with an Indian Council, rules the dusky empire with its three hundred millions of souls. In India itself you are the Governor- General or Viceroy, assisted by a Council of Advice, and you administer the government. The area over which you rule is 1,000,000,000 acres, with a population of 184 to the square mile. I have shown, in the chapter on the " World's Workshop," the method by which Lancashire traders in our own day have sought to suppress all attempts at restoring Indian manufactures. Under free trade and protection alike the nature of the trader is ever the same. The Indian Government for purposes of revenue put a 5 per cent, duty on cottons. All Lancashire was in arms lest this revenue impost should incidentally encourage the re-establishment of Indian mills ; and the Rosebery Govern- ment was threatened with extinction unless it reversed this Indian policy. Even now, the exports of India are almost entirely agricultural ; and one third of them are swallowed up in English pensions and expenses of government. In the last Indian famine but one it was estimated that six millions of people died of starvation. Mr. F. H. Barrow, writing in the Calcutta Review of December 1892, says of the condition of the country in the Province of Bengal : "All the old parts are more or less in a state of decay. . . . Bengal is raising a paradise for lawyers and a pandemonium for everybody else." It is an astounding fact that in a country populated by 184 peroons to the square mile four acres out of every five are returned as uncultivated. The consequence is a depleted revenue and a shrunken expenditure. A single item from the list of imports THE HINDOO AND THE TRADER 117 and exports in 1900 will show a little of the old bad system still remaining. Value of raw cotton exported — £656,749. Cotton goods and yarn imported from Lancashire £17,500,000. Sixty million men stand half their time idle in order that cotton and other goods may be carried to Manchester in the raw state and sent back manufactured. So in the past did the British trader treat the Hindoo. So in the present is he partially treating him. For these manifold blessings the Indian ryot has to thank a free-trade rule which is based on the ethics of the shopkeeper. 118 PEEFEEENTIAL TRADE Letter X.— To PRESIDENT EMILE LOUBET WHY FRANCE ABJURED FREE TRADE If thou seest a man of understanding get thee betimes unto him, and let thy foot wear the steps of his door. — Ecclesiasticus. My dear Monsieur, — In Jean-Baptiste Colbert, France was once happy, in just such a man as is described by Ecclesiasticus — a man of luminous understanding — and he shines polic/of down upon us as a beacon through ages of economic war and darkness. His life's work will never be forgotten by trade • . his grateful countrymen. It is a story full of instruc- tion — this industrial history of France. There was never a people on earth who wrought more for their own undoing than your countrymen have done. Never was there a nation which more persistently followed the policy of the warrior and the trader. For a thousand years, with brief exceptions, France pursued the ignis fatuus of foreign trade and spoliation, with its almost invariable concomitant of industrial neglect. Glory and trade were her goals. She has often gained both. But she gained them, only to discover, again and again, in the midst of her seeming splendour, that her domestic weakness and destitution laid open her territory to the spoiler. Ignoble wars of rapine and conquest have frequently dazzled the eyes of French vanity, only to end in national humiliation and collapse. The path of French glory has invariably led to the grave of the nation's hopes. You, Monsieur, will scarcely dispute this. Pepin and Charle- magne overran Italy and Germany. They wrote their names on the open page of history in a blaze of glory. They passed away and left a kingdom so exhausted and defenceless that it fell a prey to a horde of Norman robbers. Twice, for brief WHY FRANCE ABJURED FEEE TRADE 119 intervals under the reign of Louis XI. and Henri Quatre, there were spasmodic efforts at the cultivation of a home trade in the light of the arts and sciences. But they were like flowers bloom- ing out of due season. They were industrial encouragements offered to a people bent on conquest and rapine. The soldier and the trader have always scorned the toiler. Work was dis- honourable. Through murder and theft lay the prime path to honour. It was so much easier, according to the feudal code, to levy tribute on foreigners at the point of the sword than to raise riches from the soil under one's feet, or from the atelier of one's own city. This, Monsieur, is well known to you. It is written large in very red letters. During the whole Valois dynasty a policy of violence and plunder continued. The Bourbons exhibited but little improvement. Magnificence in the nobleman and poverty in the peasant existed side by side, the one at the expense of the other. France was always a country of social extremes — one class revelling in luxury, and the other ground to the earth by rent and taxation. Hard as was often the lot of the English peasant, it was regal compared with the hopeless indigence of the Gallic hind. Reading the following passage from an old writer we cease to wonder how it was that the French troops went down before the sturdy English bowman and billman at Crecy, Poitiers, and Agincourt : Thay drynke water, thay eate apples with bred right brown made of rye. Thay eate no flesche, but if it be selden, a litill larde, or of the entrails, or heds of bests sclayne for the nobles and mar- chaunts of the lond. Thay weryn no wollyn, but if it be a pore cote under their uttermost garment, made of grete canvas & cal it a frok. Their hosyn be of like canvas, & passen not their knee ; wherefor they be gartried, and their thyghs bare. Their wyfs & children gone barefote ; thay may in non other wise ly ve ; for sume of them, that was wonte to pay to his lord for his tenement, which he hirith by the yere scute payyth now to the kyng over that sen) fyne skuts. Wher thrugh they be artyd by necessitie so to watch, labor, & grub in the ground for their sustenance, that their nature is much wastid, and the kynd of them brought to nowght. Thay gone crokyd and ar feble, not able to fyght, nor to defend the realme ; nor they have wepon nor monye to buy them wepon 120 PEEFEEENTIAL TEADE withal ; but verely thay lyvyn in the most extreme povertie & myserye, & yet thay tlwellyn in one the most fertile realme of the world. 1 That was a French peasant of the fifteenth century. He was but a shade better in the middle of the seventeenth century, when the Grand Monarch began to dazzle the world and racterand overawe Europe. It was in 1661, when that magnifi- poiicy of cen t piece of royal meanness, who had a peculiar talent for choosing capable servants, summoned Colbert to take charge of the finances of the country. Never did ruler make a happier selection. Men of the most diverse minds have agreed in eulogising this minister. I do not think, Monsieur, that you are an exception. Jean-Baptiste Colbert was France's first and greatest Pro- tectionist Minister. He was Scotch by descent, and is described by an " Encyclopaedia " writer as having " a mind somewhat heavy and harsh, but solid, active, and unwearied in work." 2 Green says that no financier could compare with Colbert. 3 On coming into office Colbert took a survey of the state of the country. He found agriculture at the lowest ebb, and manufactures scarcely in existence. He saw that French arts and industry had every- where declined, while those of Holland, Germany, and Italy were flourishing. With what in that age was a touch of genius he at once diagnosed the disease and divined the remedy. The French peasant, he observed, had not been unmindful of the soil ; but he needed a home market in order to escape depend- ence on a foreign trade which left him no profit. There was no chance of agriculture flourishing except in conjunction with manufactures. To the establishment of these he bent all his energies. But Colbert did more. He found domestic commerce crippled by a system of internal Customs houses, set up between every province of France. They were the engines of royal rapacity. He removed them all to the frontiers of the country, and there increased the duties on imported manufactures, with a view to their entire exclusion. 1 Quoted by Carey, Principles of Social Science, vol. iii. p. 140. 2 Encyclopedia Ih-lln unlea, art. France. 3 Green, Short History, p. 658. WHY FKANCE ABJUEED FREE TRADE 121 In one of Colbert's reports to Louis he describes his proposals as they were subsequently adopted : Reduction of export duties on all domestic products ; diminu- tion of import duties on raw materials ; exclusion of foreign manu- factures by means of increase of duties. That, in brief, was the great Minister's great policy. To us it looks a very familiar and even hackneyed thing. In that age it was almost a new conception. It was not until 1667 that he was able to put it into vigorous execution ; but from that year until his death in 1683 he pursued it as far as his master's many warlike schemes permitted. Colbert was not dismayed by any complaints from courtiers and others that these duties increased the cost of living to the consumers. It was his purpose to increase that cost, in order that luxury might contribute a more equitable share of the State's financial burdens, and that French labour might find remunerative employment. Results amply justified his policy. France very soon saw her artisans working in proximity to her farmers, each exchanging with the other. " She made extra- vagant progress in all directions," says the " Encyclopaedia " writer. The transport trade dwindled, and the consequent transport tax was saved to the people. Jean-Baptiste Say, speaking of Louis's great statesman and his policy, says : " If France has now the most beautiful manu- factures of silk and woollens in the world, she is probably indebted for them to the wise policy of Colbert." And this is almost a general opinion amongst economists. M. Blanqui says of Colbert that his system was the finest politico-economical edifice ever erected by any govern- ment. Alone amongst the rains of the past it has remained stand- ing, and it towers now at its greatest height amongst- our institu- tions, which, notwithstanding the shock of revolutions, have never lost the stamp of his imposing originality. Colbert opened the way for the national labour in a manner at once wise and regular. 1 Louis XIV. might with truth and justice say that, in giving him Colbert, God had done much for the prosperity and glory of his reign. France might add that she owes to his wise counsels 1 Blanqui, Histoirc de V Economic Politique, vol. ii. p. G. 122 PEEFERENTIAL TRADE the wonderful development of her industry. Even Adam Smith testifies to " his great abilities," and says he was " a man of probity, of great industry, and knowledge of detail ; of great experience and acuteness in the examination of public accounts ; and of abilities, in short, every way fitted for introducing method and good order into the collection and expenditure of the public revenue." ' Dr. Smith properly blames Colbert for his prohibi- tion of the export of French corn, and likens it to the fallacy of the school of the free-trade French philosophers, who, a century later, " represented agriculture as the sole source of the revenue and wealth of every country." 2 But splendid as were the results to France which followed Colbert's protective policy, they were much interfered with by the king's constant wars, as well as by his persecution of the Huguenot artisans and skilled artificers. For a dozen years before the Revocation of the Edict of Nantes in 1685, the monarch had harassed these clever tradesmen by fines and forfeitures. Indeed, four years before Colbert's death the Dutch secured, under the Treaty of Nimeguen in 1679, a partial repeal of Colbert's tariff of 1667. Subsequently other treaties were forced upon Louis — those of Ryswick (1697) and Utrecht (1713) — completing the industrial discomfiture of the country. The discouragement that came to French manufactures when the ports of France were again thrown open extended at once to French agriculture, and the grand monarch ended a reign of seventy-two years, after begging a peace dictated by Marlborough, and being reduced to the extremity of selling titles for his royal maintenance. History is replete with chronicles of the social misery which filled the country between the death of Colbert and the rise of 3. The Turgot. We know how that misery was revenged in relapse of ^he Revolution and the Reign of Terror. Turgot, who Free fnlly grasped Colbert's idea of the enormous advan- Trade. tages of internal commerce compared with external trade, declared that in ten years he would undertake to peace- fully revolutionise the condition of the country. But after three years Louis XVI. superseded him by the appointment of Necker, who concluded a commercial treaty with England which in two 1 Adam Smith, Wealth of Nations, p. 622. 2 Ibid. p. 623. WHY FEANCE ABJUEED FEEE TEADE 123 years gave the coup de grace to the remnants of French manu- factures. M. Blanqui describes the position for us : While England and Holland could borrow at 3 or 4 per cent., the farmers of the revenue charged the King of France 10, 20, or even 50 per cent. The enormous taxation had exhausted the country, deprived as it had been of the labourers by reason of the demands for the war. Commerce had almost ceased to exist ; and manufactures, decimated by the proscriptions of the Protestants, seemed condemned to lose all the conquests for which they had been indebted to the genius of Colbert. 1 In this disastrous return to free ports ended France's first experience of protection. That policy had made the country prosperous beyond any previous example ; its extinction caused her to relapse into her former condition of misery. The eclipse, however, was a brief one. The Revolution was at hand, and with it came the re-establishment of protection. 4 The ^ e ph 111 ? 6 which France made into foreign war neces- Kevoiu- sarily closed French ports to foreign manufactures, and brings what commenced as a mere military necessity Napoleon back pro- subsequently expanded into a definite policy. His " Continental System," though conceived as an act of war against England, had most beneficial results on France internally. It revived all the national traditions of Colbert ; and as fast as Napoleon's perpetual levies drained France of men and money, the newly awakened energy and industry of the people made good the losses sustained from war. It was a wonderful and almost unique instance in which the soldier has helped industry. And then, Monsieur le President, there was in addition another point which told in France's favour. The subdivision of French soil had begun, in pursuance of Colbert's policy, before the Revolution. Arthur Young travelled in France in 1789, and, describing the Dunkirk district, he speaks of " one or two fields enclosed, of most wretched blowing dune sands, naturally as white as snow but improved by industry. The magic of owner- ship turns sand to gold." The small peasant proprietorship was growing commonj 1 Blanqui, Histoirc de V Economic Politique, vol. i. p. 254, 124 PREFERENTIAL TRADE How much these two forces — revived agriculture and stimu- lated manufactures — must have aided the country, may be partly gauged by what she had to endure in the first two decades of the century : From 1808 to 1815 (says Dupin), twelve campaigns cost us nearly a million of men, who died on the field of battle, or in the prisons, on the roads, or in the hospitals, and 6,000,000,000 of francs. . . . Two invasions destroyed or consumed on the soil of old France 1,500,000,000 francs' worth of raw products, or of manufactures, of houses, of workshops, of machines, and of animals, indispensable to agriculture, to manufacture, or to com- merce. As the price of peace, in the name of the Alliance, our country has seen herself compelled to pay 1 ,500 additional millions, that she might not too soon regain her well-being, her splendour, and her power. . . . We found ourselves thus dispossessed of all our conquests, and with 200,000 strangers encamped on our territory, where they lived at the expense of our glory and our fortune, until the end of the year 1818. . . It will be interesting to give some comparative cultural figures, showing the progress of French agriculture, progress, rj^v are compiled from the " Statistique de 1' Agricul- ture de la France " and the " Statesman's Year Book " : Year. Fiscal System Annual Average Increase Farm Produce 1700 to 1760 1760 to 1788 1788 to 1813 1813 to 1890 Protection (all but one short interval) Francs 445,000 18,000,000 53,000,000 198,000,000 There has been a marvellous expansion in French agricul- tural production of wheat. Thus : - Acres tilled Value Bushels per acre 111 194 1818 1894 12,800,000 17,500,000 £ 49,100,000 72,700,000 Mulhall says that since 1850 the total tillage remains at about 36,000,000, but that the tonnage of the crops has increased WHY FRANCE ABJURED FREE TRADE 125 from 12,800,000 to 20,100,000. An area of 27,000,000 of waste land has been reclaimed since 1840. The average sheep carcase has increased from 50 lbs. to 80 lbs., and oxen from 700 lbs. to 1,030 lbs., the total of meat production being more than doubled. Pasture and agricultural production in 1816 was estimated to be worth £187,000,000. In 1894 it was worth £416,000,000. Mulhall gives the following comparisons for 1894 : — - Number of Landowners, Farmers, and Farm-hands Acres under Tillage and Pasture Product Value £ 416,000,000 230,000,000 France United Kingdom . 7,222,000 2,527,000 90,000,000 48,000,000 He says that the profits per worker were £58 per head in France, and £91 in England. There were only 19,275 estates in England, and 1,638,000 in France, and he adds that " if agriculture be considered an occupation in which to maintain in comfort a very large section of the population, the French method is pre- ferable." French farms returned 13 \ per cent, on capital as compared with 11 per cent, in England. The social condition of both England and France has improved during the present century ; but the improvement in France 6. France nas Deen by ^ ar *^ e more marked. Speaking of the and Eng- French in the early part of the century, M. Blanqui land com- pared. sa y s : Whatever diversity exists in the soil occupied by these people in their customs, aptitudes, dispositions, the salient characteristic fact of their situation is wretchedness — a general insufficiency of the means of satisfying even the first necessities of life. One is surprised how small is the consumption of these myriads of human beings. They constitute, however, the majority of the taxpayers, and the slightest difference in their favour, of income, would not merely benefit them, but vastly advance all fortunes and the prosperity of the State. Those alone who have seen it can believe the degree in which the clothing, furniture, and food of the rural population are slender and sorry. There are entire cantons in which particular articles of clothing are transmitted from father to son; in which the domestic utensils are simply wooden bowls and spoons, and the furniture a bench and a crazy table. You may 126 PKEFEKENTIAL TEADE count by thousands men who have never known bedsheets ; others who have never worn shoes ; and by millions those who drink only water, who never, or very rarely, eat meat or even white bread. The number of people said to be engaged in agriculture in France is about 18,000,000. Mulhall sets down the " hands " as 7,220,000 ; but this means with him the landowners and their male assistants. If the families are reckoned in, there is not any real discrepancy in the two calculations. Mr. Harris, in a paper read before the Royal Statistical Society in June 1895, estimated that the value of English land has decreased of late years by as large a sum as £670,000,000. In France the story is all the other way, thus : £ Value of French land in 1813 . . . 1,500,000,000 Ditto ditto 1840 . . . 2,000,000,000 Ditto ditto 1856 . . . 2,600,000,000 Ditto ditto 1894 . . . 3,200,000,000 The English contrast is given as follows : £ Value of English land in 1815 . . . 1,225,000,000 Ditto ditto 1843 . . . 1,250,000,000 Ditto ditto 1885 . . . 1,694,000,000 Ditto ditto 1895 . . . 1,024,000,000 These figures are not final — perhaps they are disputable ; but there is no possible question that English land has declined in value enormously. That is what protection has done for the French farmer, and what free trade has done for the English farmer. In France 18,000,000 people earn a living on the land from agriculture. In Great Britain and Ireland there are only 2,527,000 who do so. In French silk culture, in production of coal, iron ore, pig iron, and finished iron and steel, there is a record of continuous 7 Mate- advance. Sugar beet produced only 4,400 tons in the rial first quarter of the century ; in 1884 it produced growth. 1^00,000 tons. In considering the foreign trade of the two countries there are some exceedingly interesting facts to be noticed. France had a century's start of England in WHY FRANCE ABJURED FREE TRADE 127 external commerce. 1 She lost that advantage when England adopted protection, and England took a strong lead. Napoleon's " Continental System " was designed to ruin English trade. Curiously enough, it was really the ruin of Napoleon himself. It assisted French manufactures greatly ; but the blow it aimed at England was largely foiled by the vast system of contraband trade that it encouraged. This was so enormous that Napoleon's own soldiers were clad in great coats made in England and marched in shoes made in Nottingham. It is an historical fact that Napoleon's irritation against the Russian Emperor Alex- ander arose primarily because the Czar would not or could not enforce strictly the blockade of English goods. Napoleon went to Moscow to compel the Czar to obey him, and he found his fate. The foreign policy of France during all this century — save in a brief period during the reign of Napoleon III. — has been one of protection to the national manufactures. This may be seen in her tables of imports and exports. She exports nearly three times as much in manufactured goods as she imports. She imports much raw material and exports little. There is always a large balance of bullion finding its way to France. The growth of her foreign trade, which has come without forcing, is as follows : — Average Annual Year. Imports and Exports. 1827-36 . 54,000,000 1837-46 . 84,000,000 1847-56 . 127,000,000 1887 . 367,000,000 1894 . 356,000,000 1901 . 424,000,000 rate of foreign trade per head was as follows : — Per Bead £ 8. » 55 55 1881 . . 3,435,400 ?> 55 55 1891 . . 2,305,600 5> 55 55 1901 . . 3,102,753 55 55 55 1902 . . 3,067,204 That means a declension from £7 9.9. per head in 1871 to £2 per 9 p . head of the population in 1891. tion com- The following table will show the relative growth of pared. ^ p p U l a ti n of the two States : Year Population in Victoria Population in New South Wales Total Per Square Mile Total Per Square Mile 1871 1881 1891 1901 731,528 862,346 1,140,405 1,201,070 832 9-81 12-98 1375 503,981 751,468 1,132,2:: I 1,354,846 L-62 212 3-65 444 That is a very significant table. In spite of the area of the Free Trade State being nearly four times that of the Protectionist one, and the revenues being over three millions a year more in New South Wales, Victoria has still a density of population 10 other more than three times that of the older State. marks of Other comparisons in national progress may be progress. stated ag foUow3 for ^ year 19()2 . 204 PEEFEEENTIAL TEADE New South Victoria Wales Railway mileage 3,383 3,220 Railway mileage per square mile 1 in 26 1 in 96 Postal offices ....... 1,649 1,693 Telegraph offices 880 983 Free libraries 342 340 Free books 752,191 520,000 Primary schools 2,041 2,846 Scholars in schools . 228,241 212,848 Value of farm crops . £8,625,000 £6,687,000 Value per capita (1901) £7 3s. 5d. £4 17s. Qd, Acreage cultivated 3,246,568 2,249,092 Acreage per capita (1901) 26 1-7 Value, orchard and garden crops (1901) . £1,470,200 £474,500 Value per acre (1901) £25 £8 9s. 8d. No. of dairy cows 521,612 417,835 Value of milk, butter, cheese .... £2,845,000 £2,083,000 Export of butter, cheese Export of swine products ..... £436,000 £266,000 Production primary industries per square mile £244 2s. Ad. £92 18s. 6d. Bread-winners ....... 499,000 567,000 Dependents 702,100 787,800 Miners ........ 28,670 36,615 Registered factories 3,249 3,368 Hands employed in factories .... 66,529 66,135 Dwellings occupied 241,410 252,502 Dwellings unoccupied ..... 11,629 14,831 Houses being built 1,438 617 Houses of 1 and 2 rooms 18,300 24,100 Houses of 3 to 6 rooms 164,000 178,000 Houses of 7 to 10 rooms 43,242 43,844 Houses of 11 and upwards .... 7,600 9,700 Depositors in Savings Bank .... 418,511 323,212 Deposits ........ £10,341,757 £12,425,464 Depositors per cent, of population . 34 22 Friendly Society funds ..... £1,267,068 £710,003 Friendly Society members .... 97,937 79,021 Public debt (1903) £53,749,738 £80,970,961 Public debt, per capita £42 13s. &d. £54 15s. lid. No. of estates ....... 17,818 11,886 Value of estates £50,981,576 £28,339,908 Proportion of estates per 100 deaths of adult males and females 34-3 26-8 Proportion of estates per 100 deaths of popula- tion 2163 1515 The above table embraces six distinct heads, constituting the main elements of progress : 1. Application of the arts and sciences. 2. Education — moral and primary. 3. Population — volume and density. 4. Industry — scope and development. WHY AUSTEALIA SHED COBDENISM 205 5. Accumulated wealth. 6. Diffusion of wealth. In all of them Victoria holds an advantage. There are a few other comparisons which can be made. The people of the two States have always lived at the same 11. Cost level in food, clothing, and lodging. What is the rela- of living, tive cost of living under a Free Trade and a Protec- tionist tariff ? Here is a statement of prices copied out of a trade price-list : Candles, per lb. Cocoa (Epps), per packet Coffee, per lb. . Tea, per box . , Figs, per box Fresh herrings, per tin Jam, per lb. tin . Lollies, per lb. . Currants (Patras), per lb. Marmalade, per lb. tin Oatmeal, per 7 lb. bag Rice . Sago . Salt . Soap, per cwt. . Tapioca, per 12 lbs. Moran & Cato, Melbourne s. el. 5 5 1 1 6 6| 3i 2J 9i 5± 1 2 2 2 0| 11 2 Lassette, Sydney a. 4 8 8* 7 3 1 6 3 There are still other means of proving that the cost of living under free trade is higher than it is under protection. Mr. Coghlan, the statist of New South Wales, says in his " Seven Colonies " : " The conditions of life and the standard of living are much the same in all the colonies." He proves this by the table of food consumption. He then gives the following table, showing all Protectionist Australia under one head and Free Trade New South Wales under the other : Divisions of Expenditure New South Wales Australasia £ t,. d. £ .v. d. Food and non-alcoholic beverages 13 15 2 12 15 11 Fermented and spirituous liquors 3 4 2 2 L9 8 Tobacco ...... 16 10 15 7 Clothing and drapery .... 5 10 3 S 2 7 Carried forward .... 11 10 3 23 17 5 22 4 206 PREFEBENTIAL TEADE Divisions of Expenditure New South Wales Australasia Brought forward ..... Rent or value of buildings used as Fuel and light Personal attendance, service and Medical attendance, medicine and Religion, charities, education Art and amusement .... Books, newspapers, &c. Postage and telegrams Direct taxes not falling on trade . Household expenses not included else- Miscellaneous expenses £ s. d. 23 17 5 4 8 10 1 7 5 1 10 1 1 17 5 13 5 14 7 17 2 12 5 4 5 11 4 1 11 19 5 £ s. d. 22 4 4 2 7 1 5 6 18 1 1 14 10 119 13 6 15 11 11 6 4 2 10 6 1 8 10 18 3 Total .... 39 14 11 36 19 5 New South Wales consumes, consequently, less food, less drink, and lodges in slightly inferior houses. Still it costs 19s. 3d. per head more for her less food, 4s. 6d. more per head for her less drink, 6s. 3d. more per head for her inferior houses, and Is. Id. more for her lower charity and education. All these instances, which are the citations of the Free Traders them- selves, prove that the actual cost of the same articles is dearer under free trade than under protection. They prove beyond honest dispute that the free-trade citizen gets less food, less drink, and worse lodging for more money which he has to pay for it. There could not be a more triumphant demonstration that Mr. Coghlan is right — that while the standard of living is about the same in all States, the cost of that standard is less by £2 15s. Qd. per head under protection than it is under free trade, and that the free- trade house father is taxed £13 17s. 6d. per annum for the pleasure of living under an importing regime, instead of buying the products of his own citizens. All these things have sunk into the popular mind, and have fructified in an enlightened public opinion. Every one of these statements, being an unassailable fact, has to be reckoned with if a man would base his judgment on ascertained truths instead of trying to make the truths square with a preconceived judg- ment. 207 Letter XVII. To the Right Hon. JOSEPH CHAMBERLAIN THE WORLD-WIDE EXPERIENCES OF FREE TRADE How long-halt ye between two opinions ? — 1 Kim//. I have bought Golden opinions from all sorts of people, Which would be worn now in their newest gloss, Not cast aside. —Macbeth. The common sense of most. — Tennyson. My dear Tribune, — As far back as 1887 Professor Fawcett warned his countrymen that he detected signs of " a fresh vitality l Free * n tne doctrines of Protection " in England. He corn- Traders plained that this was because Free Traders did not thrown ar g ue - Tne y merely abused Protection and sneered deca- at it, dubbing their own doctrines " axiomatic truths." Mr. Gladstone made the dolorous admission to M. Leon Say that England was then left " almost a solitary witness to what was once regarded as an established economic truth." The fact is that mankind will not shut its eyes to the facts of life, and a seeing man can observe all around him, and on every page of history, evidence bearing on the doctrine of " free imports." The toast of the Kidderminster carpet-makers used to be : " May the trade of our town always be trodden under foot ! " That is how the world has treated the Cobdenic doc- stances trines. All countries in their time and turn have tried of that anc l tested those doctrines — Germany, France, Russia, America, Italy, as well as the smaller states. In every case it led to decline of trade and to their eventual abandon- ment. In Canada it was the same. Sir John Macdonald, Sir John Thompson, Sir^ Richard Cartwright, all tried free trade and rejected it. At the present moment it may be doubted if 208 PREFEEENTIAL TEADE there is any party in Canada which has a desire to return to free trade. Denmark, Norway, and Sweden touched the policy and were scorched by it. Switzerland has always followed a policy of natural protection, and Belgium has done so with a few lapses. China grew opulent in the cultivation of a purely domestic trade. " Open doors " were forced on her at the sword's point ; and though we may truly say, Better fifty years of Europe than a cycle of Cathay, that remark refers to the political development of the country and not to its industrial condition. No one can study the system of Greece without seeing that her troubles always came from foreign trade and foreign wars, which generally meant the same thing. Of Rome, Green and Kidd are both agreed that " the freemen of Rome could hardly be said to work ; they fought and lived on the produce of righting." And this despite Cincinnatus and his plough. " The purely despotic system of the Roman govern- ment, by crushing all local independence, crushed all local vigour." There was no commerce in the country. Depopula- tion, hunger, rapacity, misery, and fraud form the long terrible story. Even Brutus lent money at 4 per cent, per month. The pauperised and brutalised people cried only for bread and circuses, as when under Septimius Severus a thousand pairs of gladiators fought, and rare wild beasts were exhibited. And this continued until the Empire went out of existence, almost without a blow. What they lacked were home industries. Venice, too, grew and flourished by war, rapine, and trade. She became very great and famous and powerful. Her Republic boasted of great antiquity and grandeur. She made wars for the sake of trade, and she made the subject peoples buy and sell with her on her own terms, just as England did with the Indians. Her colonies were ruled for the sake of giving riches to her trading aristocracy. Her subjects were ground with tyranny, and were in constant revolt. She had naval and military strength, but no stability, not even when she seemed most substantial. The one essential of all — home trade and association — was lacking. In her day of trial she went out like a puff of smoke, WORLD-WIDE EXPERIENCES OF FREE TBADB 209 Spain, says Adam Smith, lost her manufactures by her lust for gold in distant colonies, and he tells how those colonies were " obliged both to buy very dear and to sell very cheap." Her armies brought her at once splendour and weakness. She declined from the same causes as those which ruined Carthage and Rome — the want of internal strength and industrial stability. Every student is familiar with the manner in which England's free-trade policy ruined Jamaica, and how Spain, by precisely the same means, ruined Cuba, preventing her internal commerce and manufactures, and compelling her to trade abroad. Portugal has gone down by her dependence on foreign trade and by relying almost solely on her export of wine. It is impos- sible to conceive of an old and once thriving nation being reduced to a much lower ebb than Portugal, and it all dates from the fatal Treaty of Methuen, which threw her ports open to the unchecked invasion of the foreign trader. The list might be easily extended. But enough has been said to show that a universal law governs nations in their indus- trial development or decline. The people who seek foreign trade as an object of national life, and to the neglect of diversified employment and home commerce, have ever failed, and often failed miserably. But the nations, wherever they have pursued the enlightened policy of cultivating arts and avocations amongst themselves, so that a copious domestic exchange was rendered possible, have always flourished. We have, indeed, seen instances in which the same peoples at different stages of their history have waxed and waned, according to whether they fostered their home industries or neglected them. It was the perception of these facts which made Bismarck exclaim on May 2, 1879, in the German Parliament : I see the countries which protect themselves prosper, and that the countries which are open are declining-, and th it great and powerful England, that strong combatant, who after nions of strengthening her muscles entered the market and said : Bismarck, " Who will contest with me? I am ready for any one," a°dL t' * s gradually going back to protective duties, and will in a few years adopt them so far as is necessary to preserving at least the English market. . . . One thing is clear, that, through the widely open doors of its import trad'', the < lerman market had P 210 PEEFEEENTIAL TEADE become the mere storage space for the over-production of other countries. They must, therefore, shut their gates, and take care that the German market, which is now being monopolised by foreign wares, shall be reserved for native industry. Countries which are enclosed have become great, and those which have remained open have fallen behind. Were the perils of Protectionism really so great as sometimes painted, France would long ago have been ruined, instead of which she was more prosperous after paying the five milliards, than Germany is to-day. And Protectionist Russia, too, look at her marvellous prosperity ! Manufacturers there had lately been able to save from 30 to 35 per cent., and all at the cost of the German market. . . . Let us close our doors and erect somewhat higher barriers, and let us then take care to preserve at least the German market to German industry. Schmoller is the able leader of the younger school of German political economy. He says in his work on " The Mercantile System " : At last all the voices alike of scholars and of the people come together in unison. There is but one way out of it. We must do what England, France, and Holland have done before us. We must exclude foreign wares. We must become masters in our own house. Facts had taught them with inexorable clearness that at a time when the most advanced nations were carrying on the collective struggle for existence, with the hardest national egotism, with all the weapons of financial legislation, and of force, with navigation laws and prohibition laws, with companies, and with a trade under state guidance and discipline, those who would not be hammer would assuredly be anvil. Professor List began his scholastic life as a Free Trader. Inquiry undeceived him, and he became the author of the German Zollverein, and the philosophical exponent of Protection in his " National System of Political Economy." And so Germany has become Protectionist. The judgment of the great Corsican was keen as a lancet. He saw through the 4. Policy fallacy of free imports as through a transparency. He of Colbert, saw that England was growing richer all through his an( i ' wars, because her towns were beehives of industry. Thiers. He rightly called her the " workshop of the world." England, while fighting Napoleon, found money for her own armies and those of her allies, and loaned abroad some WOKLD-WIDE EXPEKIENCES OF FREE TRADE 'J 11 £65,000,000. l Napoleon saw that his surest way of ruining England would be through her trade. He tried to do it by bis "Continental System." He failed only because he could not command the sea as he commanded the land. Napoleon bad studied political economy for some years, as it was then taught, and he declared that " if an empire were made of adamant, free trade would crush it to dust." Napoleon was greatly influenced by the teaching of the great Colbert, whose policy of protection rescued France from misery, and led her into great internal prosperity. Thiers founded his opinions on the systems of both these great thinkers, and taught France a protective policy with great zeal and success. And France for more than a century, except for a short interval, has been zealously Protectionist. Daniel Webster began his student life as a Free Trader. Experience and study caused him to change his opinions and to 5 A declare that free trade is based on an erroneous theory, galaxy of which in practice would inflict mortal ini ury on America, intellec- Henry Clay was another convert. He was at first tual stars. a lukewarm Protectionist. Greater knowledge came to him, and in 1844 he became an earnest and convinced Pro- tectionist. President Lincoln's keen intellect pierced to the kernel of the Free Trade doctrine, and he crystallised one phase of it in his historic remark : " When an American pays 20 dollars for steel rails to an English manufacturer, America has the steel and England has the dollars. But when he pays 20 dollars for the steel to an American manufacturer, America has both the steel and the 20 dollars." Another convert is found in Willard Phillips, who is con- vinced that free trade tends directly to distress, decay, and degradation. In his " Propositions " he says : Being then imbued with the economic creed which is taught in our public seminaries, I had occasion to attempt its vindication, . . . and I had the good fortune to convert myself to the opinions I had undertaken to combat. I came out with the thorough conviction that the science which seemed so luminous to those at 1 The Condition of Nations, quoted by Geo. B. Curtiss in Protection and Prosperity, p. 97. p l 212 PREFERENTIAL TRADE the feet of the Gamaliels, consisted very much of groundless postulates and sophistry. George Washington said : Congress has repeatedly and not without success directed atten- tion to the encouragement of manufactures. The object is of too much importance not to ensure a continuance of these efforts in every way which shall appear eligible. To Thomas Jefferson protection appeared in the guise of patriotism. He said : The duties we lay on all articles of foreign manufacture which prudence requires us to manufacture at home — with the patriotic determination of every good citizen to use no foreign article which we can make ourselves — secure vis against a relapse into foreign dependency. Benjamin Franklin put it thus : Every manufacture encouraged in our own country makes a home market, and saves us so much money to the country that must otherwise be exported. ... It seems to me to the interest of our farmers and owners of land to encourage home manufactures in preference to foreign ones. President McKinley was a whole-hearted Protectionist. He said : We have now enjoyed twenty-nine years continuously of pro- tective tariff laws, and we find ourselves at the end of that period in a condition of independence and prosperity, the like of which has never been witnessed at any other period in the history of oui country, and which has no parallel in the recorded history of the world. There is no nation in the world where the same reward is given to the labour of men's hands and brains as in the United States. President Roosevelt is equally explicit, thus : Every application of our tariff policy to meet our national needs must be conditioned upon the cardinal fact that the duties must never be reduced below the point that will cover the difference between the cost of labour here and abroad. The well-being of the wage-workers is a prirne consideration in our entire policy of economic legislation. — Jlessage to Congress. WOELD-WIDE EXPEKIENCES OF FREE TRADE 213 Alexander Hamilton, the greatest thinker and statesman of America, said : Though it were true that the immediate and certain effect of regulations controlling the competition of foreign with domestic fabrics was an increased price, it is universally true that the contrary is the ultimate effect with every successful manufacture. When a domestic manufacture has attained to perfection, and has engaged in the prosecution of it a competent number of persons, it invariably becomes cheaper. . . . The internal competition which takes place soon does away with everything like monopoly, and by degrees reduces the price of the article to the minimum of reason ible profit on the capital employed. — Treasury Report, December 6, 1791. And so America has finally cast out the Cobdenic creed. Edmund Burke declared : 6. English It is one of the finest problems in legislation — what the thinkers State ought to take upon itself to direct by public states- wisdom, and what it ought to leave with as little inter- men, ference as possible to individual exertion. Adam Smith holds that capital employed ... in foreign trade will give but one-half the encouragement to the industry or productive labour of the country. ... A capital employed in the home trade will sometimes make twelve operations, is sent out and returned twelve times, before a capital employed in the foreign trade of consumption has made one. If the capitals are equal, therefore, the one will give four and twenty times more encouragement and support to the industry of the country than to others. — Wealth of Nations. Chatham : I would not allow the colonies to make even a hobnail for themselves. Mr. Justice Byles : A nation, whether it consumes its own products or with them purchases from abroad, can have no more value than it produces. The supreme policy of every nation, therefore, is to develop the producing forces of its own country. What are they? The working men, the land, the mines, the machinery, the water power. 214 PEEFEEBNTIAL TRADE Cromwell : Now I have showed you the two manufactures of linen and iron, with the product thereof, and all the materials are with us growing ; and these two manufactures will, if by law countenanced, set all the poor in England at work, and must enrich the country, and thereby fetch people into the country whereas now they depart. Lord Farrer in his " Free Trade versus Fair Trade," though a Cobdenist, said that the result of a protective policy would be greatly to increase our agricultural industry ; to bring much waste and bad land into cultivation ; and very largely to increase the employment of agricultural labourers. Frederick Greenwood : The forms of government vary in different communities : absolute autocracy in one place ; something less autocratic in another ; elsewhere various degrees of democracy down to the most extreme. But no matter what the form of government may be; no matter whether the decision is made in the undisturbed cabinet of a Czar, or in the roaring tumult of street politics, there is no acceptance of free trade outside of England. Herbert Spencer : A system of keen competition, carried on as it is without moral restraint, is very much a system of commercial cannibalism. . . . There are but two courses — either to adopt the practices of their competitors or to give up business. ... It is impossible to carry on trade with strict rectitude. . . . The scrupulously honest man must go to the wall. You yourself, sir, tell us that light has come to you after many years — forced upon you by the facts of life. You say that the British nation needs educating, as you frankly admit was the case with yourself. You, like Bismarck, Webster, and Thiers, have had the courage to avow past mistakes, and the grace to correct them. England is in process of following your high example. 215 BOOK III REACHING A CONCLUSION Letter XVIII.— To SIR A. CONAN DOYLE THE SCIENCE OF PROTECTION Wealth may seek us ; but wisdom must be sought, Sought before all ; but (how unlike all else We seek on earth 1 ) 'tis never sought in vain. — Young. My dear Sir, — With a frankness that does almost as much honour to your sincerity as your literary lifework does to your acute judgment, you have confessed that the facts revealed in the current fiscal controversy have compelled you to abandon the tenets of the Cobden Club. That fact induces me to ask your special attention to the considerations pressed in this letter. I do not hope that any argument, however sound it may be, can be enough of itself to convince all men, for I recog- nise the truth of the statement that " an economic principle by itself, as all sensible men have now learnt, can never be decisive of anything in the mixed and complex sphere of practice." * But at least we may guard ourselves against word worship. Too many men have deified the word ' ; Trade " more than ever l. Word they apotheosised that blessed word Mesopotamia, worship Laing, in his " Chronicle of the Sea Kings," says very fatuus. truly : We, too, worship our signs, our words. Let any man set himself to the task of examining the state of his knowledge on the most important subjects, divineor human, and he will find himself a mere word worshipper. He will find words, without idea or meaning in his mind, venerated, made idols of — idols differing 1 Morley, Life of Cobden, vol. ii. p. 239. 216 PEEFEEENTIAL TEADE from those carved in wood or stone only by being stamped with printers' ink on white paper. There is another word which has been made a great god of, as has the word " Trade." It is the word " Freedom " as applied to " Trade " and to " Contract." It is a word the rhetorician always employs to conjure with, and he rarely fails, not so much because of his own deftness as from the credulous gullibility of his audiences, who often merely open wide their mouths and swallow any tasty morsels put into them : The word " freedom " has exercised over them [Free Traders] an irresistible fascination, and they have drawn from it many pernicious consequences. Thus they have not perceived that if in theory " free trade " be seductive, in practice it is very often not so, since while it seeks to obtain well-being by means of freedom, it attains to neither one nor the other. . . . By dreaming of liberty all round radicals have allowed themselves to be fascinated by the illusion of that magic word, and have forgotten but too readily the saying of Chamfort that he would bet that every accepted idea, if it sprung from the great word " liberty," is an outrage. 1 And now I ask you to turn to something much more important to any nation than mere freedom of foreign trade. Douglas Jerrold used to say : "In this world truth can wait : o Diver- sity of oc- she's used to it." But diversity of occupation is some- cupation a thing which cannot wait, except at a national sacrifice, necessity. f - , , , , . . „ A truth, clearly stated, slowly wins its way. lo that end I would wish very exactly to define this position. One basic principle on which Protection must stand, if it stand at all, is found in the diversity of human talents. May I put it thus ?— No nation ever did, and no nation ever can, become perma- nently great and prosperous, without a wide diversity of employment existing among its people. That proposition is really the foundation-stone of the doctrine of preferential trade as treated in this book. If it be sound and true, I am confident that it will carry the argumentative super- structure. If it be not true, my main conclusions must be doubtful. 1 Soderini, Socialism ami Catholicism, pp. 184-5. THE SCIENCE OP PKOTECTION 217 It has been well said, I think by Ruskin, that the material wealth of any country is the portion of its pos- sessions which feeds and educates good men and women in it. . . . The strength and power of a country depends absolutely on the quantity of good men and women in the territory of it, and not at all on the extent of the territory. If that be so, it follows that we must strive to make the avocations of the people as wide and various as the talents they possess. Indeed, the consequence which immediately flows from the doctrine of diversity is that every nation which aspires to be strong and prosperous must found its economic policy on a maximum cultivation of the industrial arts and sciences consistent with the climate and natural resources of the State. The underlying principle of Free Trade is "Division of Employ- ment." The Cobdenist holds that just as certain provinces in a , „ country are more fitted by nature for certain industries hinders than for others, so certain countries are marked out for diversity. S p ec j a l production. Cobden himself thought England was intended by nature to be the workshop of the world, and most other nations the providers of raw material for that shop. England in her Protectionist days treated her colonies in this spirit. Their manufactures were to be " crushed in the cradle." The means of crushing were found in unrestricted competition. It is manifest that if a nation whose manufactures are well established is to have free admittance into the markets of one which has scarcely begun that part of national growth, it will be found as impossible for the new industries to take root as for a tender plant to thrive in the full blast of a north-west gale. I don't know, sir, whether you have pondered at all on these words of Adam Smith : To found a great empire for the sole purpose of raising up a people of customers may at first sight appear a project fit only for a nation of shopkeepers. It is, however, a project altogether unfit for a nation of shopkeepers, but extremely fit for a nation whoso government is influenced by shopkeepers. ... To prohibit a great people, however, from making all they can of every part of their own produce, or from employing their stock and industry in the 218 PEEFEEENTIAL TEADE way that they judge most advantageous to themselves, is a mani- fest violation of the most sacred rights of mankind. Those words need to be particularly noted, because we shall have occasion to see, I think, that the monopoly which is at the root of free trade is chargeable with just this " violation of the most sacred rights of mankind." The grounds upon which this principle will have to be esta- blished are two — historical and logical. Few teachings are more 4. How to plainly written on the pages of history than is the proof prove the f this ; and deductive reasoning will be found to sup- f port the weight of the facts. diversity. i n the first place the greater the tendency amongst men towards combination and domestic interchange, the more rapid the diffusion of knowledge and the accumulation of wealth and power. That there may be combination and interchange there must be differences in pursuits and diversities of avocations. A nation of farmers or of bootmakers could have no inter- change. The nearer the place of exchange or conversion can be brought to the place of production, the greater will be the com- bination and commerce in society, and the less must be the loss in the process of distribution. When Mill wrote his " Essay on Liberty " he had little notion of elaborately laying down a premiss in favour of protection. Yet the whole intent and purpose of one part of that treatise is to illustrate the extreme danger of nations falling into a con- formity of type ; l and such uniformity must necessarily result in a country exclusively engaged in raising raw produce, or in making shawls, carpets, cutlery, or any other single occupation. A nation of shepherds and farmers would lack the friction of thought necessary for the generation of new ideas. The same thing would result in a nation of weavers. Every man would meet in his fellow man a being pursuing the same routine and thinking the same thoughts as himself. The world affords not a few examples of the manner in which a diversified industrial condition quickens the springs of human 5. Diver- invention. It has even an influence on the develop- s ** y , . ment of the whole character of man. stimulates ability. Guyot, in his book " Earth and Man," says : 1 J. S. Mill, Essay on Liberty, chap. 3. THE SCIENCE OF PKOTECTTON 219 The greater the variety of individualities and relations in a society of individuals, the greater also is the sum of life, the more universal is the development of life, the move complete, and of a more elevated order. But it is necessary not only that life should unfold itself in all its richness by diversity, but that it- exhibit itself in its utility, in its beauty, in its goodness, by harmony. Thus we recognise the proof of the old proverb, " Variety in unity is perfection." This is borne out by the facts of life so far as they have been chronicled. A writer in the Century for September 1891 made an exhaustive examination of this subject in America, where racial differences could not be present to disturb the result. He tabulated the circumstances of 14,000 distinguished and able American citizens. He found that the manufacturing States of the North furnished 75 per cent, of all those prominent for talent of any kind. Of the remaining 25 per cent, the slave- owning States had scarcely any. The writer was Mr. Cabot Lodge. He said : This is a most significant fact. It shows a wide difference between the two civilisations — that of the New England and Middle States on the one side, and that of the Southern States on the other ; for the surest tests of civilisation in any community are the amount of ability produced, and the variety of directions in which that ability has been displayed. The thirteen original States were with one or two variations settled, and they were controlled by men of the same race stocks, and of the like traditions. The cause of the wide difference in amount and variety of ability shown by these tables is a fresh proof, if proof were needed, of the pernicious results of slavery upon even the finest races. . . . No finer people ever existed than those who settled and built our Southern States, but when slavery became, in the course of the world's progress, and in a free country, nothing less than a hideous anomaly, it warped the community in which it flourished, limited the range of intellec- tual activity, dwarfed ability, and retarded terribly the advance of civilisation. This, sir, is quoted here in order to show that a state of society in which cotton and tobacco growing were pursued as the staple features of human industry gave very little stimulus to the higher conceptions of man. Slavery reduced the human worker 220 PREFEEENTIAL TEADE to the level of a " hand." Free trade, in stunting diversified employment, does the same. Its sole object being money cheap- ness, its perceptions do not travel beyond that horizon. There are economic reasons also why diversity is essential for the prevention of waste. Humanity, as we have seen, is not 6 n . framed mentally any more than physically in one sity is mould. Idiosyncrasies and corporal faculties are economic. e q Ua rj v various. A boy who might make an excellent shepherd will perhaps prove a very bad watchmaker. One who might become an excellent watchmaker or builder would fail as a shepherd or a sailor. I have told in another place the story of Sir Charles Dilke's Ballarat miner who said he would rather pay a higher price, if necessary, for his moleskins in order that his brother, who was too physically weak to work as a digger, might be able to earn a living as a tailor. The case is illustrative of the economy which exists in diversity. There should be fitting work in every State for the weak as well as for the strong, for the deformed and crippled as well as for the stalwart ; for the quick and the inventive as for the dull and the plodding. It must be as much the duty of rulers wisely to employ their people as their soils. We should regard as fatuous in the extreme a farmer who should sow his fields indifferently with tobacco, potatoes, and wheat without reference to the constituents of their soils and fertilities. It cannot be less foolish for a nation to limit its industries to two or three specialities without regard to the variety of talents in its citizens craving for opportunities of expansion. Besides this, there are climes where from the extremes of heat or of cold certain avocations can be pursued for only a few months in the year. If particular parts of Sweden, Russia, and North Germany had not indoor occupations for their farmers, seven months in the year would be passed in comparative idle- ness. Fifty years ago M. Tegoborski, a Russian, wrote '. In countries where the climate is temperate and the population dense, where there are a number of small towns, and the home trade is active, the peasant whose labours in the field last from the begin- ning of March into the month of November, will find little difficulty in turning his time to account during the three or four months of THE SCIENCE OF PEOTECTION 221 winter. . . . "With us such resources are very much more limited, while the labours of the field are interrupted for a much longer time. Now, what a loss of productive forces must arise, and what a cause of impoverishment must be in action, if, for want of any sort of industry, of the sixty millions composing the population of Russia in Europe, more than fifty millions should remain unoccupied during the six or seven months that the labourers of the field stand still. 1 Yet that would become a necessity if that extreme division of labour contemplated by Free Trade were ever to become established in the world. For all these reasons, then, may I not submit as a demon- strated doctrine that diversity of occupation is an absolute essential to every progressive people ? We now reach to a second proposition, which is that — No nation can cultivate this essential diversity under conditions of unrestricted trade. It was more than aught else a sense Trade °f the profound truth that underlies this teaching opposed to w bich finally drew Colbert, Daniel "Webster, Clay, Carey, divcrsitv * Greeley, and a host of others away from the false lights which lured Cobden. Cobden thought of nations as specialising their several pro- ducts, one growing meat and wheat, another tobacco and cotton, a third rice, and a fourth sugar, and so on. In the interest of trade the Cobdenist is always anxious to confine national production to the fewest possible varieties. He talks largely of "natural industries." He is for ever depreciating what he calls "artificial" ones. In Australia he has tried to con- fine production to the farm, the station, the orchard, and the vineya'd. In England he holds that the people should leave the farm, and make dress materials and special kinds of hardware in the cities. In China he would limit the producer to the growing of rice, and Mauritius to her sugar. The sailor should go amongst them all fetching and carrying. That is the essence of Free Trade economy. Very different is the precept of Commerce. She says to the Australian farmer : " Look first of all to your home market, and increase it as much as possible by the encouragement of all suitable trades. Grow hemp and flax for domestic manufacture 1 Tegoborski, Productive Forces of Russia, vol. i. p. 446. 222 PEEPEKENTIAL TRADE and beet for sugar. Grow mulberry trees to cultivate the cocoon in order to supplant the imported silk. Grow scent flowers for essences, and make them up amongst yourselves." In like manner Commerce would say to the Englishman : " Keep your land active at all hazards. Till every rood of it, even though the produce may cost a fraction of a penny more than that transported from America. Supply your own home market as far as you can. Do the same with your workshops ; and for your surplus, if any, let it have an outlet, even at surplus rates if necessary, in the neutral markets of the world." The foreign trader gauges a nation's prosperity by its volume of imports and exports. His statists measure trade only by foreign trade. Home commerce knows better than this. It smiles at complaints of half-deserted wharves, so long as domestic markets are busy. It knows that the most unprofitable of all exchanges is that which involves the maximum of transportation. You, sir, I hope, think of nations as utilising to the fullest all their natural resources. Lord Penzance was felicitous when he said : " Protection is the regulator of import duties in such a manner as to secure as much employment as possible for the people by inducing them to lay out their money in buying the produce of their country- men's labour in preference to that of foreigners." That is why all protection is preferential trade. Monchretien, who lived in 1615, is quoted by Soderini as asking : " Can that be a good administration which puts its hand into one's pocket to purchase what it might take from its own estates ; which, that it may make somebody else's land turn to account, leaves its own uncultivated ? " Free Traders dispute the utility of a nation doing for itself what it can get another to do for it more cheaply. They seek 8 Why ^° i m P a ^ e Protectionists on the horns of a logical not pro- dilemma, and to reduce the claims for diversity to a provinces re ductio ad absurdum. They ask why the bricklayer as well as should not make his own boots and save the expense countries . Q | em pi ovm g the bootmaker ? A favourite query of theirs used to be : "If it be wise to protect England against France, why not protect Sussex against Kent or the counties to the south of the Thames against those to the north of that THE SCIENCE OF PKOTECTION 223 river ? " That ridiculous non sequitur has been so fully exposed that it has fallen into disuse of late ; and yet I saw it recently disentombed by an unread free-trade advocate in Australia. The Protectionist answer is perfect. Protection contem- plates a national policy. It is for the building up of the nation, not of the province only. The people of the nation are a unit for defence, for expansion, sometimes for aggression. The whole nation it is which has to maintain its armies, its navies, its forts, against those of other Powers. To treat the trades of other Powers on the same plane as our own is giving as much sustenance to their armies and navies as to our own. Every separate government has a separate duty to its own people — to all its people ^equally. All the English counties belong to England — none of them to France. Therefore their commerce should be with one another before they go to France. Thus we economically protect England against France, but not England against herself. We thus protect Englishmen against French- men, but not against Englishmen. Because the nation is one there must be perfect internal commerce in it. The octroi is the most odious and mischievous of imposts, because it is a hindrance to that internal commerce, a block to the combination and interchange essential for the highest develop- ment of the national unit. We are thus compelled to draw the broadest distinction between home commerce and foreign trade. Shall we look a little into what that distinction is ? Home commerce merce always means more than a mere exchange of commodi- versus ties. It must involve a commerce of thought as well trade. as of kind. Home commerce promotes those move- ments, associations, and combinations in society which give life and circulation as opposed to languor and stagnation. When the local producer and the home consumer meet there is com- merce, there is life. In the market, the cattle yard, the mill, wherever the maximum of exchange can take place with the minimum of interposition from the middleman, that is commerce. Home commerce always enriches. If such be home commerce, in what does foreign trade so signally differ from it ? Henry Carey says : " The trader or dealer opposes obstacles to all commerce carried on without his aid, desiring everywhere 224 PREFERENTIAL TRADE to have a monopoly . . . his principle being to buy at the lowest price and sell at the highest. The mere trader is everywhere inimical to commerce." ' Home commerce means the dealing of citizen with citizen ; foreign trade is the instrument by which man seeks to grow rich through the mere process of exchange. Trade prices generally rise under the operation of the foreign trader, and decline with the diminution of his power. Home commerce is good in itself, and can be vitiated only by transactions which are anti-social, such as the traffic of the drunkard and the liquor seller. Foreign traders are instruments which commerce may some- times use beneficially, but only with the most extreme care, because the mere trader at best is but the parasite which grows around the tree of production. He has his uses, so long as he is not permitted to overrun and choke the trunk and branches of that tree. That, however, is his invariable tendency, just as the parasite of the forest kills the finest timber. Man should control and use the instrument of trade, but never allow the instrument to use and control him. Foreign trade is for ever tending to become man's supreme master. Wherever a nation depends on its foreign trade it is largely ruled by its own servants. Where it subsists mostly on its own production and internal commerce it is strong and independent. The greater a nation's home commerce the smaller the need for the mere trader. An indubitable sign of true national pro- gress is in the minimum of its foreign traders, and its maximum of diversified employment and internal commerce. With the Ishmaelites of old, the Phoenicians, the Sidonians, the Greeks, the Norwegian sea kings, the English Drakes, Hawkinses, and Cavendishes — war and piracy and foreign trade were ever in alliance. These three must ever have the same nature. They decline just as home commerce grows, and wax as commerce wanes. The Free Trader always seeks to make dominant the mere business of foreign exchange. The Protectionist looks primarily to production and domestic interchange. He cares for foreign markets only as the outlet for the surplus of his own. There is a sort of natural alliance between the soldier and the trader. Henry Carey thus describes it : 1 Carey, Principles of Social Science, vol. i. p. 210. THE SCIENCE OF PROTECTION 225 The soldier desires labour to be cheap that recruits may readily be obtained. The great landowner desires it may be cheap that he 10 The ma y ^ e enaD ^ e< ^ to appropriate to himself a large propor- soldier tion of the proceeds of his land ; and the trader desires it and the to \ )G cheap that he may be enabled to dictate the terms fer&dor • upon which he will buy, as well as those upon which lie will sell. The object of all these being thus identical — that of obtaining power over their fellow -men — it is no matter of surprise that we find the trader and the soldier so uniformly helping and being helped by each other. The bankers of Rome were as ready to furnish material aid to Cassar, Pompey, and Augustus, as are now those of London, Paris, Amsterdam, and Vienna to grant it to the emperors of Fiance, Austria, and Russia, and as indifferent as they in relation to the end for the attainment of which it was destined to be used. War and trade thus travel together, as is shown throughout the history of the world ; the only difference between wars made for purposes of conquest and those made for the maintenance of monopolies of trade being that the virulence of the latter is much greater than that of the former. 1 But it may be said that wars are the very evils that Cobden most sought to avoid. They claim as their motto ' Peace and goodwill to men.' They even base their cosmopolitanism on the plea that all men are brethren. Softly ! Cobden sought to subdue the trade of the whole world to a trade with England. Trade wars are as cruel and fraught with as much misery as those of the sword. And all foreign trade is war. Trade wars are not always bloody, though they very frequently lead to blood. But they reek with ruin, destruction, and death. The unrestricted competition which crushes factories and sends hundreds of helpless families into beggary, as did the ' clearances ' of the Highland crofters, is a ruthless destroyer of human happiness. The greater the obstacles between the producer and the con- sumer the greater is the trader's profit, the higher the prices of his 11 Th goods, and the lower the condition of man. The trader trader's always desires to increase those obstacles. It is his interests, business to prevent producers and consumers meeting except through his intervention. The more widely they are kept apart the greater is his power to reap profit at their cost. ' Carey, Principles of Social Science. 226 PEEFEEENTIAL TEADE A few examples will suffice to show the enormous leakage which takes place by the present system of middlemen. The same wine for which the French consumer pays 50, 60, or even 70 centimes a quart, is sold by the vignerons at 15 centimes. Again, when the French farmer sells his wheat at 18 francs the 100 kilograms, the consumer pays from 30 to 35 francs per 100 kilograms for his bread. The dearness of fish in Melbourne is a proverb amongst housewives. Fish are sold almost always at famine prices. Yet the earnings of the fishermen are extremely small even when their hauls are greatest. Take again the supply of oranges and lemons in Australia. Lemons sell at Is. per dozen. Yet the growers have a difficulty in getting 4d. a dozen. Quite recently threepence each was charged for Washington navel oranges in our retail fruit shops, while the orchardists were only receiving about the same price for them as for their lemons. The trader always regards the farmer as a mere instrument for his own enrichment. In his eyes the agriculturist grows crops only for sale and shipment, not for use. He would have the tiller of the soil live for ever at the mercy of the " bulls " and " bears " of a foreign market. But this, though the foreign trader's paradise, is a upas garden where home commerce dies. Let us see what the distinguished Scotch economist has to say on this point : The capital which is employed in purchasing in one part of the country in order to sell in another the produce and industry of that 12. Adam country, generally replaces by such operation two distinct Smith on capitals that had both been employed in the agriculture trade and or manu f ac ture of that country, and thereby enables them home to continue that employment. . . . commerce. When both are the produce of domestic industry, it necessarily replaces by every such operation two distinct capitals, which had both been employed in supporting productive labour, and thereby enables them to continue that support. The capital which sends Scotch manufactures to London and brings back English manufactures and corn to Edinburgh necessarily replaces by every such operation two British capitals, and which had both been em- ployed in the agriculture or manufactures of Great Britain. The capital employed in purchasing foreign goods for home consumption, when this purchase is made with the produce of THE SCIENCE OP PROTECTION 227 domestic industry, replaces, too, by every such operation, two distinct capitals; but one of them only is employed in supporting domi industry. The capital which sends British goods to Portugal and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital ; the other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but one half the encouragement to the industry or 'productive labour of the country. A capital therefore employed in the home trade will sometimes make twelve operations or be sent out and returned twelve times before a capital employed in the foreign trade of consumjition has made one. If the capitals are equal, therefore, the one xoill give four-ami-twenty times more encouragement and support to the industry of the country than the ot/ier. 1 Many modern economists are in the strangest conflict with this teaching, even while they profess to found their system on Adam Smith's doctrines. Hear him again : Without the assistance of some artificers, indeed, the cultivation of laud cannot be carried on but with great inconvenience and continual interruption. Smiths, carpenters, wheelwrights and ploughwrights, masons and bricklayers, tanners, shoemakers, tailors, are people whom the farmer has frequent occasion for. . . . The inhabitants of the town and those of the country are mutually the servants of one another. The town is a continual fair or market, to which the inhabitants of the country resort, in order to exchange their raw for manufactured produce. 2 McCulloch thinks that Adam Smith's cardinal mistake lay in his preference for the home trade. Bastiat and Chevalier teach the same. They hold that the middleman, the carrier, the absentee, and the intermediary are as much producers as the farmer and the manufacturer. Where the intermediary is a necessity that view is probably right. But where he can be dispensed with he is a drone in the indus- trial hive. Smith preferred internal commerce. The trader prefers foreign trade. He regards man as made for products, instead of looking on products as made for man. The eloquent author of " Progress and Prosperity " set Smith, Wealth of Nations, Book 2, chap. 5. 2 ibid. Book 3, chap. 1. Q 2 228 PREPEEENTIAL TEADE himself to answer that pregnant passage from the " Wealth of Nations." He says : We may obtain, with the same validity, such proposi- George's tions as this : If Episcopalians trade with Presbyterians, attempt to two profits are made by Protestants ; whereas when answer Presbyterians trade with Catholics only one profit goes to the Protestants. Therefore trade between Protestants is twice as profitable as trade between Protestants and Catholics. 1 That is the best answer he gives. He admits that in the foreign trade case there will be only one-half the replacement of home capital, but thinks that it is all right because one-half of the capital will remain at rest. A child can see that this gives up the whole case, since it is clear that if the trade were confined to Protestants it would be twice as profitable to those Protestants as when it is shared with Catholics. Ricardo tried by another plan to get rid of this inconvenient passage of Adam Smith. He says : Suppose that Scotland employs always a capital of a cardo's thousand pounds in making linen, which she exchanges for failure to the produce of a similar capital employed in making silks g n8 .Yj? r in England. Two thousand pounds and a proportional quantity of labour will be employed in the two countries. Suppose now that England discovers she can import more linen from Germany for the silks which she before exported to Scotland ; and that Scotland discovers that she can obtain more silks from France in return for her linen than she before obtained from England — will not England and Scotland immediately cease trading with each other, and will not the home trade of consumption be changed for a foreign trade of consumption ? But although two additional capitals will enter into this trade — the capital of Germany and that of France — will not the same amount of Scotch and English capital continue to be employed, and will it not give motion to the same amount of industry as when it was engaged in the home trade? 2 That is the best answer that Adam Smith's advocacy of home trade has ever received. And, yet, sir, I hope to show you that 1 Henry George, Protection or Free Trade, p. 117. 2 Ricardo, Principles of Political Economy, chap. 6. THE SCIENCE OF PEOTECTION 229 it is fatally defective. Ricardo assumes that at the same moment when Scotland loses the English market for her linens she finds a French market more profitable. But that is impossible in the very case stated, because England has found German linen cheaper than Scotch linen, and therefore France would do the same, and would not take the Scotch linen. Therefore since Scotland cannot find a market for her linens in France to compensate for that she has lost in England, her half of the former trade is lost. Even that does not exhaust the fallacy of Ricardo's illustration. If Scotland could obtain more silks from France than from England, so could Germany, and therefore Germany would not buy English silks. The case, therefore, stands good as Adam Smith stated it. Home trade is always twice as profitable to a country as foreign trade, since it makes a profit at both ends of each transaction. Sometimes it is many times more profitable. Such is home commerce. Such is foreign trade. Mulhall says : Internal trade is much more important than external trade, and presents the best gauge of a nation's industry and prosperity. 15. Com- • • • ^ e aggregate value of human industry — that is, of parative all products (excluding transport charges) — was in 1894 volume of near ly ten milliards sterling; that of ^oods interchanged home and J . . foreign between nations 1^- milliards ; from which it appears that trade. nations consume at home 85 per cent, of their products of every description, and barter 15 per cent, with their neighbours. In other words, the products of industry average £31,000,000 daily, of which £26,400,000 are kept for home consumption, and £4,600,000 exported. 1 There we have in a thimble the relative values in cash of the home trade and the foreign trade. When to this is added the fact — elsewhere proved from Adam Smith's reasonings, and from the refutation of Ricardo's and George's criticisms of them — that every pound spent in the home trade is worth at least two pounds spent in foreign trade, we are forced to admit that the home market is everything. Comparatively speaking the foreign market is a trifle. 1 Mulhall, Industries and Wraith of Nations, p. 10. 230 PREFERENTIAL TRADE We hear a great deal just now at both ends of the world about revenue tariffs as opposed to protective tariffs. One of 16. Reve- the most logical of the world's Free Traders has declared nue tariffs against revenue tariffs. Henry George quotes with free approval Henry Carey, who says : " Tariffs for revenue trade. should have no existence. Interferences with trade are to be tolerated only as measures of self-protection." Again, " Duties for revenue . . . are highly unjust. They inflict all the hardship of indirect and unequal taxation without even the purpose of benefiting the consumer." ' Commenting on these Mr. George says : " Those Protec- tionists are right who declare that protection is the only justi- fication for a tariff, and the advocates of a tariff for revenue have no case." I do not myself agree with either Carey, Thompson, or George, because I hold that indirect taxation is almost always to be preferred to that which is direct, and the Customs House is one of the least irksome of all means known to man of putting cash in the King's coffers. To say it is costly does not necessarily condemn it. All valuable things are costly. The taxgatherer is the most objectionable visitor who comes to every man's door. A direct tax is always a heavy burden. An indirect tax is paid without the consciousness of paying it ; and this one is often shifted on to the shoulders of the foreigner, and paid by him as a toll for entrance to the domestic market. A million pounds paid through the Customs House is far less irksome to the general body of taxpayers than a tenth of the sum paid to direct demand. That is human nature, and the theorist who quotes arithmetic against human nature is like Mr. Filer in Dickens's " Chimes," proving from statistics that a poor man should never eat stewed tripe. Still, George is consistent in arguing that a revenue tariff is a violation of free trade. Yet that is what our Cobdenist Free Traders clamour for. They are agreeable to any tax so long as it does not assist an industry. We see from these aspects of the controversy what a maze of contradiction the Free Trader becomes involved in. We see diversity of occupation to be an essential part of national well- Professor R. E. Thompson, Political Economy, p. 232. THE SCIENCE OF PROTECTION 231 being. We see that diversity to be impossible in a country which is open to the raids of the trade invader. A oatii m wit hout 17 Th diversity is a lop-sided nation. conciu- We therefore arrive at the following conclusion : — B10n ' I. The greatest possible variety of national indus- tries is an absolute condition of national prosperity. II. Free Trade, by insisting on the utmost division of labour, tends always to the specialisation and limitation of the number of trades in any one country. III. Therefore a permanent protective restriction on foreign trade is required to secure diversity and national prosperity. I may not dwell. There is so much more that needs saying. But here at least we have reached certitude. We are like the child in the law courts. The lawyer examining him said : " Now, boy, your father has been talking to you and telling you how to give your evidence, hasn't he ? " " Yes, sir," replied the boy. " I thought so," rejoined the lawyer. " Now, boy, just tell us what your father said." " Well, sir," answered the youthful witness, " father told me the lawyers would try and entangle me in my testimony ; but if I would just be careful and tell the truth, / could tell the same thing every timeP That is just what a Protectionist finds when he reads the histories of Free Trade and Protectionist tariffs. The facts " tell the same thing every time." This shall suffice us as to the science of Protection. 232 PREFEEENTIAL TEADE Letter XIX.— To The Right Hon. ARTHUR BALFOUR, Prime Minister of England the philosophy of protection How charming is divine philosophy ! Not harsh and crabbed as dull fools suppose, But musical as is Apollo's lute. — Milton. My dear Prime Minister, — I have never felt more than now the force of that Miltonic observation. The English-speaking world has just perused, sir, your " Economic Notes." uses of They are brief, but they are not unworthy of the philo- author of " Foundations of Belief." They induce me to inscribe this letter to you, treating as it does the philosophic side of the Protective doctrine. In reasonings such as these at present engaging us, it is well to test our steps as we proceed ; and in no way that I am aware of can we better check our scientific postulates, such as those in the preceding letter, than by an application of the philosophic method in this. We prove a sum in one arithmetical rule by testing it in another. So we may test science by philosophy, and philosophy by science. If they will not square, there is a factor astray somewhere. I read a passage some years ago in the book of a clever and brilliant but rather amateurish economist, 1 in which it was said that a certain position was philosophically true and economically false. I hold that statement to be a paradox. It is a position to which no man can be driven except under the stress of a false argument, since it is a contradiction in terms, and, if I may be pardoned, an illogical absurdity. Political economy may not be a true science. We know that both Carlyle and Ruskin derided it as a pseudo-science. The first was always girding at its " janglements," and Ruskin 1 Mallock, Labour and the Popular Welfare. THE PHILOSOPHY OF PEOTECTION 233 tells that " rogue manufacture by political economy has turned out a mad speculation." He describes Ricardo's theory of rent as '•' a very creditably ingenious work of fiction," and asserts that pure air, water, earth, hope, and love " are the chiefly useful things to be got out of political economy when it has become a science." It was the insistence on political economy being regarded ethically that made Yves Guyot assert that : The science of economics is essentially immoral. It troubles not itself about the character of the feelings, the needs and passions of men ; it registers with the same impartiality the worship of the blacks for bits of glass and of the whites for diamonds. 1 But then we have to take it as we find it, and try and winnow its falsities from its facts. Any way, so far as it is true, it must be always in accord not only with itself in all its parts, but equally in harmony with every other branch of true science, as well as with the teachings of true philosophy. To assert that a thing may be economically true and philosophically false, is to say that truth can contradict itself. As well might we say that the very same truth taught by Plato in his " Academy " is con- trary to the verities promulgated by Aristotle in his " Lyceum." Sir William Hamilton defines philosophy for us as " the science of the sciences." Had our classical economists borne this in mind, it would have saved them from some very curious lapses. Many of our writers have defined political economy as the science of wealth. 2 But those who agree in this, disagree in the definition of what wealth is. Jevons says that Mill 2. Politi- cai econo- made a huge mistake in treating the term " value " as my the something which does not need definition. In the science of happiness, same way Mill treats the definition when made by others not of as something supererogatory. And yet it cannot be denied that this loose use of economic terms has drawn both thinkers and writers into many contradictions. Ruskin denies that political economy is a science of wealth at all. He says : 1 Yves Guyot, La Science Economique, p. 46. 2 Senior, Introductory Lectures on Political Economy, p. 3G. Mill, Principles of Political Economy, p. 1. Jevons, Political Economy, p. 8. 234 PKEFERENTIAL TEADE Political economy is that science which teaches nations to desire and labour for the things that lead to life, and which teaches them to scorn and destroy the things that lead to destruction, ... by means of which a nation may consist of the greatest number of human beings, noble and happy. 1 Here we come upon a new train of thought, and one, too, which is well worth following. Instead of the " desire of wealth " being there treated as the master motive of man, we have sub- stituted the " desire of happiness." The superiority of this emendation is self-apparent, since when men seek for wealth or material possessions it is not usually for the wealth's sake, but for what they esteem the means of procuring happiness. These contradictions and inaccuracies in the " method of investigation " are cogently stated by Mr. David Syme in his closely reasoned treatise on individual science. He says : Wealth is not pursued for its own sake, but on account of the pleasures it may bring or the pains it may avert. The prospect of even an enormous amount of wealth will never impel to exertion, if it is believed its possession would not conduce to happiness. Wealth is pursued as a means, not as an end ; and the term " means " implies other modes of arriving at the same end, as the term " end " implies the subordination of means. 2 But, manifestly, if a desire for happiness and not the desire for wealth be what Mill calls " the main and acknowledged end " of man's industrial action, 3 this difference vitiates the whole of the reasonings based on the hypothesis of his being actuated solely by the desire of material gain. Yet if we use the inductive method of inquiry, forming our thesis upon observed facts instead of deductively interpreting facts by an arbitrary formula, we shall, I think, solve 3. Human ,, ,.„/ ... J motives au difficulties. for . For example, a youth chooses his profession in life. What are his motives in making his choice ? Wherever the power of choice exists, which is not always, it is almost invariably exercised because of some predilection which teaches 1 Ruskin, Fori Clarigera. 2 Syme, Outlines of Industrial Se?enre,p. 17. 3 Mill, Some Unsettled Questions, pp. 139-40. THE PIIILOSOPIIY OF PROTECTION 235 him that he will be happier in that walk of life than in any other. The artist follows art, the poet pursues letters, the musician takes to harmonics, the doctor to physiology — almost all of them with material gain as a secondary consideration, and not infrequently against the advice of those who look to what is mistakenly called " the main chance." Men settle in life often where they know remuneration is scant. They do so out of affection for friends, scenery, climate, health, indisposition for change. Many motives come before that of pecuniary gain. Some take to holy orders, where they know promotion is hardly to be looked for ; others voluntarily expatriate themselves from all the gains and graces of life in missionary service amongst uncouth savages. Father Damien amongst the lepers of Molokai is but an extreme type of what millions of men have done and are doing. A man incurs a debt. If material gain were his sole desire he would pay it only under compulsion, and even then as little of it as possible. But we know that a sense of duty often impels men to pay more than is asked of them. The public departments of the State and all great firms are constantly in receipt of conscience money from people in whom a love of rectitude con- quers the desire of gain. It frequently happens that insolvents, who have recovered financial prosperity, pay all the old liabilities from which they had, years before, been legally discharged. In these men self-respect stands far before the desire of wealth. The " single motive theory," therefore, is found too narrow to cover the facts of life. Whether we will or not, it must go. Indeed, Mill himself admits as much. 1 With that admission goes the entire superstructure on which it is built. In view of all these facts to lead us to it, let us take happi- ness as " the main and acknowledged end " of man's desires- The postulate is then very different. That formula seems to cover all. In the first place it indefinitely expands the signi- fication of the term " wealth." Wealth, then, means human nobility and spiritual and moral progress as well as matt 1 rial gain. The religious zealot finds his wealth in an ascetic life ; the scholar in his books ; the poet in his visions and his rhymes ; 1 Mill, Some Unsettled Questions, p. 140. 236 PREFERENTIAL TRADE the statesman in his statecraft ; the orator in the rapture of popular applause ; the merchant in his gains. All these are wealth, as are the discoveries of the laboratory to the savant. This train of reasoning compels us to the conclusion that political economy is a mental science built upon exceedingly complex motives. When the Divine Nazarene taught men that the richest of wealth is garnered by those who choose the cross and material poverty, there was an esoteric economy in His doctrine. Nor has that doctrine fallen flat. It is operative upon millions in modifying their business pursuits and transactions. I have tried to show elsewhere in this book that diversity of occupations in a nation is a demand of economic science — . D - that no nation ever did or ever can become prosperous sity of oc- unless the avocations of its people correspond with CUp hU° U the resources of the climes and talents of the people, sophic I want to urge upon you, sir, in this letter, that a philosophical view of the facts of life is equally insistent on the same point. It will, as I am persuaded, teach us the need of proportioning the avocations of the people to their conditions of life and to the variety of their natural aptitudes. You all agree most readily that there ensues an economic waste every time a square peg is. driven into a round hole. What, then, would be the awful waste were half a nation of artists and mechanical geniuses compelled to pass their lives in shearing sheep or hoeing turnips ? Yet if Cobden's great idea of the international division of labour were to become operative, that is exactly what must happen. National division of labour may be economic. Mostly it is so. It concentrates effort. It does not interfere with the widest diversity within the realm. International division of labour is a very different thing. Had England continued to be the world's workshop, American resources would have been permanently undeveloped, and the world at large would have been poorer. The Cobdenic doctrine teaches that each nation should do only those things which it can do better than can any others. Each separate people are to confine themselves to a few callings in which they can acquire superlative perfection. In that they THE PHILOSOPHY OF PROTECTION 237 are to find their economic gain. They will be the survival of the fittest, the fittest being the cheapest. But from the reason- ings here set forth we see that that economic gain would be purchased at the expense of the national character ; at the cost of stunting human nature ; at the wicked waste of God-given talents. We see that this freedom of trade, which under the iron law of competition would stamp out diversity, leads not to freedom, but to industrial slavery. In it we discover the greatest possible care for production — no care at all for man, the producer. It is against this exterminating law of competition that we raise up the shield of protection to national industry. We do 5. Philo- so because the law of competition is an unnatural law. fophy in- it is the exact contrary to the law of self-preservation culcates prorcc- which is the first law of Nature. tion Protection is self-preservation ; and I hope to show that it is based on a law, the operation of which underlies all human conduct. The whole life of man — from the moment when his infant eyes first open on the light, to the moment when they are closed in his last sleep — is guided by Protectionist principles. No such thing as the law of supply and demand, of unrestricted competition, of the " survival of the fittest," is per- mitted to intrude into that life, so far as human affection and watchfulness can ward it off. The new-born babe receives an affectionate welcome even in the largest family. There was no demand for it. The supply apparently was fully adequate. The new-comer involves in- evitable sacrifices. What matters ? The parents will care for it, suffer for it, rear it. That is protection to the potential source of native industry. In its first childhood the infant is furnished with the neces- sary mental equipment for its condition of life. When the boy expands into the youth, so far from being turned tion to the abroad, like lambs in a pasture, to shift for himself, he boy and j^g lavished upon him the means of gentle education. That is protection to native industry. Many parents will consider that a thousand pounds is a sum none too large to spend upon the mental, moral, spiritual, and physical equipment of a single son. Such outlay is a recognised 238 PREFERENTIAL TRADE part of human policy. The educated man in human society is so much more valuable than the uneducated one. Hence the present sacrifice is cheerfully made in order to reap the future advantage. That is protection to native industry. When the youth leaves his alma mater, the same policy is continued. Whether he be destined for a profession or a trade, he has to pass through an apprenticeship of some kind. During that novitiate he works hard for little or no monetary pay. He does so in order that he may acquire some specific knowledge that will be of future profit to him. That, again, is a policy of protection to native industry. What if some wise economist of the time were to approach such a youth and say : You have been foolish in expending all this time and money as you have done. Your years now reach twenty. It would have been much cheaper had you commenced ten years ago to earn wages. Had you done so, an average saving of £10 a year, with its accrued interest, would have placed a sum of £150 in your hands. Your father has spent upon you another £250. These two sums together, if now given you, would enable you to start life with a small useful capital of £400. Now you have nothing. The extremest Free Trader who ever chopped false logic would smile contemptuously at his own doctrines if they were presented to him in this form. Yet that is the Free Trade doctrine in its legitimate and logical conclusion. If we trace this youth further we shall find the protective policy unchanged towards him. The barrister spends several briefless years in " reading " ; the doctor buys himself a " prac- tice." Analyse the meaning of these two things, and we find that each of them offers a " bonus " for means of living. If the doctor be not wealthy enough to purchase this " prac- tice," or in other words buy this market for his talents, he has to go afield and " make " a practice for himself, working hard and living sparely, with an eye to the future. That, too, is fostering an industry at considerable cost, and it is protection to native industry. Identically the same principle works out in man's relations to inanimate nature. He will purchase plants and seedlings, and lavish on them some cost and the tenderest care. Some- THE PHILOSOPHY OF PEOTECTION 239 times years elapse before he has any return. The young tree must be shielded from the winter's blast and the summer's sun. And when it has grown into maturity it requires tiontothe no less watchfulness in the pruning of its roots and tree and branches, in spraying it against blight, and in the nutriment necessary for its sustenance. Without protection it would be lost. A man sows a field of corn. It springs into succulent her- bage. It attracts all the loose running stock and vermin from miles around. But for the fact that he has fenced it from their invasion it would be destroyed. So with a nation's industries. As Bismarck said : '•' The countries which are enclosed prosper, and the countries which are open are declining." The reason is manifest. The foreign traders are like the cattle attracted by the green crops ; they invade the country and eat up its industries by their competition. The Free Trader says that any industry which cannot stand alone is " artficial," and ought to die. Why should he not say the same of the tree and the flower ? If an industry is of more value than a plant, so is it more worthy of preservation and protection. Here we see, then, the principle of Protection running through the whole theory and practice of life. Are we to be told that while such a principle is eminently wise for the individual, and for the garden, the orchard, the farm, and the forest, it is foolish when applied to national industries ? Some of the profoundest philosophers who have ever written have found in the unit — man — a type of the society in which 8 Parallel man nves - They h°ld that just as the complex between machinery of the human body forms a single man, so viduai^ d° men m * ne multitude, with all their marvellous and the variety of character and will, form one social corpus, and that the principles applicable to the unit are equally apropos to the mass. Perhaps that might be, as Horatio has it, to " consider too curiously, to consider so." But we know from a greater authority than Hamlet or Horatio that all the units of society are " members one of another." The aggregate of citizenship forms one body under the guidance of one or more than one. Many units form a single tribe under one chief or patriarch. Several tribes form 240 PEEFEEENTIAL TEADE one nation ; but one law of being touches and pervades the whole. A band of frontier pioneers build a fort for protection against an irruption of savages, just as a government builds a tariff wall to prevent an irruption of trade invaders. Free Traders often reply to this and say that the trader cannot trade unless he has someone willing and anxious to trade with him. That is an apparent truth and an absolute fallacy. The courtesan and the saloon keeper find people willing to trade with them, but it does not alter the fact that their trade is evil. The trader comes unsought, offering apparent advantages in the guise of cheap- ness. It is a cheapness which kills domestic commerce. It gives a slight temporary advantage to the consumer, but cripples the well-being of the producer, who would be a consumer in turn, but that his power of consumption is taken away by the foreigner. The consumer falls into the temptation of a delusive competitive cheapness which destroys. This is the trade that kills — the " Free " Trade — the invader. Empires build armies and navies at vast expense. They maintain them at a cost only just short of what is ruinous. It is to protect themselves against invasion. If it be found true, as it has been a hundred times, as it is being found in England to-day, that trade invasions and the "dumping" of foreign goods are as devastating as the raids of the soldier, then protection against the one is as imperative a necessity as it is against the other. Singly, and in the mass, all men need protection. That law of the individual and of the nation is one. I am tempted here, sir, to reinforce this view by a short extract from a work with which I am sure you are familiar : The structure of human society, in so far as we can, by our own conscious work, help to build it up and shape it to a glorious use, is a structure resting on . . . the universal facts of human nature. They must be founded on the fact that society is in very truth an organism— with its own natural laws of life and growth, and with its own insuperable conditions for healthy working among a great variety of functional parts as members. 1 1 Argyll, Unseen Foundations of Society. THE PHILOSOPHY OF PKOTECTTON L'll In what has gone before we have seen that internal commerce is far more conducive to national prosperity than is foreign 9. Pri- trade. Both may be needed in different degrees ; but mary pro- the average home trade of nations is 85 per cent, of the insuf- whole, the foreign trade being 15 per cent. The home flcient. trade is the essential adjunct of the nation's life. Its foreign trade is accidental. Now, in all new countries, mining and the raising of raw pro- duce are the first sources of wealth ; and they are properly so. In childhood the most elementary work is the earliest. The boy weeds the garden plot which his father has sown. But just as it would be unwise to keep a youth permanently engaged at an infant's task, so national development demands higher and ever higher grades of industry. Possibly some advocates of unrestricted imports may assent to this, and reply that such industries will grow of themselves. But we must point to the proofs we have given that unrestricted foreign trade is often directed to stamping out domestic com- petition. Experience has been cited to show how this has occurred. England, it is said, has not added a single new industry under her system of free imports. She has lost a good many. It may readily be conceded that domestic industries would grow of themselves if there were no disturbing factors. The village would spring up in the midst of the agricultural area ; land cultivation would become scientific instead of rude ; and the farmer would find in the local blacksmith, bootmaker, and carpenter at once a consumer of his crops and a caterer for his needs. This would be commerce, and commerce of the most beneficial kind. But then there are disturbing factors, and many of them. The foreign trader comes on the scene from the " workshops of the world." He undertakes to furnish ploughs, boots, locks, bolts, doors, and sashes under the " law of the surplus " at a cost which cuts the village artificer out of produc- tive life. He uses his capital as a " great instrument of warfare " ; he crushes home commerce. The farmer in such a case, instead of producing for a home market, is taught to rely for one upon the foreign trader. He is soon in the miserable position of a slave to a dominating R 242 PEEFEEENTIAL TRADE tyrant. This is the disturbing factor which blasts industrial infancy and puts shackles on all progress wherever statesmen, who stand in loco 'parentis to the nation, neglect those provident safeguards for the State wnich the provident parent secures for his child. But 99 per cent, of the world's statesmen have taken the safeguards. They have framed protection tariffs, which pro- claim aloud from the statute books of almost all 10. Pro- tection a countries : father ^ e mus * guard our internal commerce against the ravaging raids of the trader ! "We must foster to the utmost diversity of industry ! We must treat our communities according to the Apostolic injunction, " as members one of another ! " We must make all necessary sacrifices to this great end. Protection, then, as we have seen, does for the nation what everybody at every stage of life does for those dependent on him. Doing this, it is a principle which has its sanctions in history, science, and philosophy. '243 Letter XX.— To Mr. JOHN BURNS, M.P. THE COST OF PROTECTION What costs nothing is worth nothing. — Proverb. There is an economy that sinneth. — T upper. For want of a nail the shoe is lost, for want of a shoe the horse is lost, and for want of a horse the man is lost. — Maxim. My dear John, — You have distinguished yourself as the true friend of your class, and yet you remain a firm adherent to the 1 Free doctrine of " free imports." I want you to spend five Trade ob- minutes with me over this open letter to enable me to jections. g e £ at w j ia £ j conce i ve to be your reasonings. So far as I have ever been able to learn, the sum of the objections which you Free Traders urge against protection may be centred in a single word — its " cost." Of course you enlarge on this in many ways. You speak of the Protectionist doctrine as being a " drag," a " burden," a " slavery," a " fraud," a " robbery," according to what flourish your humour dictates. But when all is analysed the kernel of your charges consists in the " cost of protection." It is, therefore, from that standpoint I would confab with you a little. Here in Australia we have grown accustomed to hear this accusation urged under many guises. We are told that not only are the consumers bled to the extent of customs charges levied on imported goods, but that local production also is surcharged to the amount of the duty, so that the many, it is said, are constantly but invisibly taxed for the benefit of the few. It will be really profitable if we can find out together how much of this, if any, is true. I have no intention of denying that in some instances the Protective doctrine may involve a sacrifice. But, then, in saying this I make no admission whatever to its detriment. I don't 214 PEEFEEENTIAL TEADE think you can name to me anything of worth which is costless. The most bounteous riches of the earth come to men only at the cost of toil and abstinence. The sea yields its good mg harvest to the fisherman, but not until hardship and without danger have been overcome in pursuit of its spoils. Knowledge is plucked from its cave by the man of science, but only at the cost of many vigils. Experience, the best guide to wisdom, has often to be dearly bought and paid for. To say, then, that sometimes protection may involve a temporary sacrifice is merely to class it in the common category of all useful things. We shall see by-and-by how stupendous is the cost of free trade. But of that anon. All commerce and all trade, of whatever kind and in whatever clime, are carried on at some permanent national cost. For example, the army which protects the trader on shore, and the navy, which convoys his argosies, are all examples of protection, and they all involve cost. But the cost we have to consider is the cost of a customs tariff — what that duty is and where it falls. Every advocate of free imports will admit the general principles stated above. I have no doubt that you will. But as a school you have a curious habit, in pursuing your reasonings, of letting these truths slip out of your mind, and of thinking of the " cost " of protec- tion as if it were sui generis, and not an attribute of every other national policy. However, there are some exceptions to this. The Duke of Argyll is such a one. He strongly believes in the principle of " free exchange between nations," but he frankly recog- Trade ad- nises that it is a question of expediency and not of missions. p rmc ip] e as to whether such trade should or should not be restricted. He says : It ought, I think, to be admitted that protective imposts may sometimes succeed in planting industries — valuable in a national point of view — where they would have been crushed out at once by exposure to unlimited competition in their infancy, but which, when once established, are able to defy it. The establishment of the beet-sugar cultivation in France appears to be a case in point. . . . Again, I think it ought to be admitted as a fact that there are industries which must be altogether extinguished in particular places by exposure to unlimited competition from without. More- over those places may be the whole area of a great country — the TIIE COST OF PROTECTION 245 home of a nation. Free Trade doctrines can say no more than this — that if any nation wishes to prevent such results it must consent to pay a price more or less heavy for the necessary restrictions. Economic science points out that the cost, may prove that it is much greater than it is supposed to be, and may even endeavour to estimate its amount. But it has nothing directly to say on the question whether the cost, however great, ought or ought not to he incurred in certain cases. 1 In that passage, as it seems to me, the noble writer gives up the whole of his Free Trade case. Certainly he cannot hold it as Cobden taught it, or as the Cobden Club holds it to-day, though he may still remain in the same school with Adam Smith. Protectionists agree with him that it is the duty of economic science to estimate the cost (if any) of all Protectionist duties. That is generally the purpose of this letter. But we do not hold with him that economic science has nothing to say on the question of whether the cost (if any) should be incurred, because its duty carries it further — to say what is the economic value of the industry also, as well as its cost. There is one other observation I am tempted to quote from the same work. It is : Again, some new facts have arisen in the development of capital, in its application through " rings " and " syndicates," and through individual great wealth, which open out some new sugges- f th ieWS tions as to the weapons by which small industries may statesman sometimes be injudiciously suppressed, and against which and of the ft m ight possibly be sometimes expedient to protect them on national grovvnds. Here we see the writer rising above his Free Trade environ- ments. He regards the question of cost with the eye of a states- man rather than with that of the man behind the counter. To the one it has wide issues ; to the other it is merely a matter of " tuppence ha'penny or tuppence." From the same elevated plane Edmund Burke viewed the question when he said : It is one of the finest problems in legislation what the .State ought to take upon itself to direct by public wisdom, and what it ought to leave with as little interference as possible to individual exertions. 1 Argyll, The Unseen Foundations of Society. 246 PBEEEBENTIAL TEADE In that sentence we may perceive the modest diffidence of wisdom. It is the very antithesis of the pert certitude that marks the productions of the Cobden Club, where the principle of seeking the cheapest market covers everything, and infallibly dictates the doctrine that the State has no proper place in the domain of industry. I remember some few years ago reading an article in the National Review written by Mr. Frederick Greenwood. There is one passage in it that strikes me as quite ad rem to what we are now considering. He said : Believing that every kind of native talent and national aptitude should have their chance for the common good, Australians and Americans decline the benefit of free trade, and do their best to cherish all varieties of industries at home. Hence "protective duties " — duties protective of particular industries while they are young. And when the Cobdenite asks whether these growing States are blind to the prodigious fact that they are paying more for scores of articles of consumption than there is any need to pay, they reply in effect that they are not. They are quite aware of the tax they impose on themselves ; but feeling able to afford a present loss for the sake of future advantages, they sink the money. "When told that they are mistaken i.i imagining that they can afford the loss, they answer that with them it is a matter of experience rather than of imagination. In fine, their object is one which, while it includes material profit in the long run, transcends that consideration at various points. That passage does not quite correctly voice Protectionist ideas, because it takes for granted that there is more cost in a Protectionist tariff than the facts give warrant for. But Mr. Greenwood is right in saying that the Protectionist ideal is one that transcends the question of immediate cost. It might be " cheap " for a boy to remain ignorant rather than spend ten or fifteen years at school, but it would be an evasion of cost that most Free Traders would consider disastrous. It is clear that if we would get correct views on this subject 5. Method ^ wn l De futile to pursue the a priori course customary of estima- to the foreign trade advocate. These people simply ting the . . cost of pro- a dd the duty to the customary price of free importa- tection. tions, and say : " There ! That is the cost of protec- THE COST OF PEOTECTION 217 tion on that hat, on that coat, on these boots." The result is always a fallacy. They leave out two factors in the sum — the effect of internal competition and the chance of the foreigner paying the duty in order to secure the market. And yet, John I hope to show you that both causes constantly operate. We have known locally made boots selling in the Melbourne market at less than the amount of duty on this class of goods, and far cheaper than the old importing price. We crete have known a duty of 3s. per cask on cement causing examples. a ^\ [ n the price of the imported article from 18s. per cask to 10s. The vendor of the foreign article simply gave up an extortionate profit and reduced his price below cost in order to crush the local maker. This is done in varying degrees in almost all trades, and therefore the initial assumption that a protective duty is always an addition to the consumer's cost is an error in fact. Nor will it be any more scientific to take a few articles here and there and show that they have been increased in cost by protective duties. The result of twelve months' working may show increases here and decreases there, so that one list is a fair offset against the other. The true method is a tedious one. It is to take the whole list of consumed articles and compare their prices in neighbouring States, under like conditions ; or in the same State under free trade at one time and a protective tariff at another. The world has abundant data for this. Fortunately it has been collated. I begin here at home in Australia. For five years the six Australian States of Tasmania, South Austra- Australia, Western Australia, Victoria, Queensland, lian and New Zealand were living under tariffs which gave an average of customs revenue of £2 14s. 5d. per head. At that time New South Wales was a free-trade State, with a tariff levied only on stimulants and narcotics, yielding 19s. lOd. per head. The Government statist of New South Wales, himself a Free Trader, in his " Seven Colonies " gave a table of the " cost of living " in those States as a whole, and as compared with the same cost in New South Wales. The comparison is strictly of like with like, because he was careful to say and to show " the 248 PEEFEEENTIAL TEADE conditions of life and standard of living are much the same in all the colonies." l Under these conditions Mr. Coghlan gives us the following table : Food and Non-alcoholic beverages . Fermented and spirituous liquors Tobacco ........ Clothing and drapery ..... Furniture ........ Rent or value of buildings used as dwellings . Locomotion ....... Fuel and light ....... Personal attendance, service and lodging . Medical attendance, medicine and nursing Religion, churches, education (not including State expenditure) ...... Art and amusement ...... Books, newspapers, &c. ..... Postage and telegrams (not incidental to earn- ing the incomes) Direct taxes, not falling on trade Household expenses (not included elsewhere) . Miscellaneous expenses ..... Total per head per annum K S. Wales Australasia per Inhabitant per Inhabitant £ .1. d. £ s. d. 13 15 2 12 15 11 3 4 2 2 19 8 16 10 15 7 5 10 3 5 2 7 11 10 3 4 8 10 4 2 7 1 7 5 1 5 1 10 1 1 8 1 1 17 5 1 14 1 3 5 1 1 9 14 7 13 6 17 2 15 11 12 5 11 6 4 5 4 2 11 4 10 6 1 11 1 8 10 19 5 18 3 39 14 11 36 19 5 Assuming that table to be accurately compiled (and it has never been questioned), it shows that the extra customs duties levied in the Australian States did not increase the cost of living, seeing that, the standard of living being the same, the cost was £2 15s. 6d. per head more under a free-trade tariff than under a protective one. An independent estimate made for New Zealand in 1894 showed the cost in that colony to be £35 6s. Id. per head. I may add here that since October 1900 there has been a tariff operating to give New South Wales £2,000,000 a year additional revenue, and that it has not made one sixpence addition to the cost of living in that State. In like manner, when the free- trade tariff was brought into operation on January 1, 1896, it remitted duties amounting to £800,000 a year, but no one found the smallest diminution in household expenses. The traders pocketed the cash. 1 Coghlan, Seven Colonics, p. 419. THE COST OF PROTECTION 249 The first McKinley tariff, with its high duties, came into operation on October 1, 1890. It was a measure which had 8 An been long pondered over. The Finance Committee oi American the American Senate had spent five years in studying example. -^ -g j; twenty years there had been no adequate re- vision of the American tariff. In the interval there had grown up many industrial changes. Most men recognised the need of tariff revision. During the passage of the measure through Congress its critics exhausted themselves in prophetic warnings concerning it. It would infallibly increase the cost of living, and just as certainly reduce wages. Many readers of this page will recollect the vaticinations of the time. When the McKinley tariff had been eighteen months in operation, the Senate Finance Commission went to work on an exhaustive examination of the results. The report extended over seventy-nine industries, and showed " that the cost of living of a family in ordinary circumstances was 044 per cent, less on September 1, 1891, than it was on September 1, 1889." The report added that in three representative cities — Fall River (Massachusetts), Chicago (Illinois), and Dubuque (Iowa) — " there was a further decline in the cost of living on May 1, 1892, as compared with September 1, 1891, of 2*1 per cent, and as compared with 1889 of 3 - 4 per cent." The high duties of that tariff had not been added to the cost of living. Employment had been increased and wages had not declined. The corn duties were abolished in England in 184G. There was no decline in the price of wheat for thirty years after. The 9 g following table shows the prices of wheat before and English after the abolition of corn duties : examples. Average Price of Wheat. Price pur quartet *. d. Before repeal of corn duty, 1841-5 . 51 !) After repeal of corn duty, 1846 . . 54 8 >» » 55 1853 . . 53 3 55 55 55 1860 . . 53 3 » 55 55 55 55 55 1866 . 1872 1 . . 50 11 . 57 National Review, Sept. 1903, p. 23 250 PEEFEEENTIAL TEADE In 1902 a shilling per quarter was put on wheat as a war tax. It brought in £2,500,000 a year. It did not cause the smallest increase in the price of bread. Wheat in England from 1851 to 1870 averaged 250 marks per ton, free of duty. In France, with a duty, the average price was 228 marks per ton. In Prussia, plus a duty, it was 207 marks per ton. Sir Edmund Monson has reported officially from Paris to the English Board of Trade that the higher duties imposed by France on imported food since 1892 have not affected prices. Beef, on the contrary, fell in the interval to the extent of \d. per pound, while mutton remained stationary. The extra food duties imposed by France, says the report, are paid by the foreign producers. Mr. Robert Harper, of Melbourne, quotes London price lists, showing that the export price ranges about 25 per cent, under home prices, proving that the exporter in all the cases pays quoted pays the duty. As an illustration, Colman's Customs starch is quoted in London at 34s. per cwt. ; it is listed for export to Australia at 22s. This enabled the Mel- bourne grocer to buy his starch made under 66 per cent, protec- tive duty more cheaply than London grocers buy theirs in a free-trade country. But this does not usually apply to exports when they are sent to a country where there is no local production. If the dutiable articles imported are such as are largely pro- duced in the country, the foreign producer always pays a large part of the impost. In such cases foreigners actually contribute to the revenue of those governments whose markets they enter. This is just, because otherwise they would have the benefit of the foreign market for nothing. How is this proved % In several ways : 1. The cost of living in highly protected countries is less than it is in free-trade England. 2. The cost of living in the protected States of Australia was £2 15s. 6d. less per head than it was in free-trade New South Wales, the standard of living being the same. 3. By the number of cases we have shown in which the duty did not put up the price. 4. The experience of merchants and manufacturers of the United States is summed up in these words in Bliss's " En- cyclopaedia " : THE COST OF PROTECTION 201 The duty is never added to the price except when the people are dependent on foreign supply. When they are not dependent, the duties on goods sent there to compete are paid by the foreignei in the form of lower profits. This is not only admitted by exporters to protective countries, but it is proved by prices, most of which are as low as those abroad, all of which are lower after than before protection, and many of which are actually lower than the duties themselves. 5. Mr. Williamson, the author of " British Industries," sent a circular to 350 merchants and manufacturers of Great Britain asking a set question. It was this : " When you send goods into a foreign protected market and sell them there, have you been able to recoup yourself the duty you have had to pay before the goods could go into consumption ? " Every one of these merchants and manufacturers gave him an emphatic " No " for an answer. 1 6. Mr. Firth cites the instance of the Dingley tariff in America. Before its introduction, the Wilson tariff made wool free. The Dingley tariff put a duty on it. In another eighteen months foreign producers dropped their prices so that it could be landed, duty paid, at the same price as under free wool. Mr. Firth says : " That is a clear instance, and I can give you many similar cases in which the duty has come off the price of the goods exported ; and that those goods are not costing American con- sumers any more, notwithstanding the Dingley tariff." I take it, therefore, that these examples, so numerous and so emphatic, are positive proofs that no law can be laid down that a customs protective duty is always added to the price paid by the consumer. I do not conclude that customs duties are never paid by consumers. Indeed, I know that they sometimes are. These cases should be clearly discriminated from the others. where 56 ' Customs duties are very often paid by consumers customs w hen they are merely revenue duties — that is, when duties are , J • < i ,■,• paid by they encourage no internal competition. con- The reason i s fairly obvious. A duty on tea levied in England or in Australia, where there is no domestic production of the article, may sometimes remain an addition to 1 Williamson, British Industries. 252 PREFERENTIAL TRADE the cost incurred by the foreigner in reaching the consumer in those markets. If the foreigner has had a monopoly of the market, he can still retain it after the impost as before, and can add the duty to his price without any competitive inter- ference. Of course, under the spur of private interest, he will do it, unless the enhanced price tends to limit his sales and his profits more than would his paying the duty. But this is not invariably so. The last Federal Parliament took away 3d. per pound from the tea duty, and it did not make any difference in the price paid by the general consumer. If the foreign exporter of tea to England and Australia has had many competitors in his trade, he will probably pay a part of any new or increased tea duty under the stress of competition with his rivals, always assuming that he had not previously reached the bed-rock of the lowest possible profit consistent with the solvency of his business. Even on revenue duties, therefore, it sometimes happens that the foreigner pays a part or the whole of them as a toll for the privilege of entering an already prepared market. There are, however, some kinds of protective duties which he does not pay. We may give as an example, say, a duty levied on motor-cars or special brands of bicycles in Australia, where there are no manufactories of those articles. The machine may be worth £500 or £50, and the duty at 20 per cent, may be £100 or £10. That duty will be paid by the local purchaser in every case except where there is very keen competition amongst foreigners to get an entrance to the Australian market, or where some special firm is willing to incur a temporary loss in order to open up what he hopes to make a profitable future trade. In that case the foreigner quotes a lower price for export to cover the duty, as we have seen in the case of starch and other things. Other cases may be cited where protection may entail a tem- porary cost. When the Victorian Legislature devoted £50,000 to paying bonuses on the export of butter, that money was voted out of the Treasury, and cost the taxpayers about Is. per head all round. The first money cost was undoubted. But the con- sumer was very soon more than repaid in the abundance, cheap- ness, and better quality of his butter in the local market, while THE COST OF PKOTECTION 253 the producer soon had an export trade of a million sterling a year. The stock tax is another case. It was levied on stock crossing the Victorian border from the other States of Australia. It was a first charge on that part of the Victorian meat which came from beyond the State. It may, in part, have been added to the market price of stock. True, no one was ever able to see where the buying price was raised by it ; and the probability is that it was mostly paid as an entrance fee to the Victorian market. But a portion of the impost may have reached the consumer. It prevented great rushes and gluts of foreign stock, and so acted as an encouragement to the raising of home-grown stock. We may take other examples. The moneys voted to agricul- tural societies and national shows have been a first direct cost to the taxpayer. But, in so far as they have stimulated the production of superior stock and grain, they have made more plentiful the supply of meat and wheat, and the consumer has been recouped for his outlay. All this, in principle, was present 112 years ago to the mind of America's great thinker and statesman, Alexander Hamilton, 12. Theo- the Secretary to the Treasury in George Washington's nes and administration, when he wrote : facts concur. Though it were true that the immediate and certain effect of regulations controlling the competition of foreign with domestic fabrics was an increase of price, it is universally true that the contrary is the ultimate effect with every successful manufacture. When a domestic manufacture has attained to perfection, and has engaged in the prosecution of it a competent number of persons, it invariably becomes cheaper. The internal competition which takes place soon does away with everything like monopoly, and by degrees reduces the price of the article to the minimum of reasonable profit on the capital employed. 1 Those words really contain the whole science of the incidence of protective duties. If the protective duty creates a local monopoly, it is a charge until that monopoly is broken down. If it creates a brisk internal trade, it is no charge, but a relief from costs. I will quote to you, John, only one more testimony to this. 1 Alex. Hamilton, Treasury Report, Dec. 5, 1791. 254 PEEFEEENTIAL TEADE A Victorian Tariff Board made an elaborate report in 1895. Inter alia, it said : On the vexed question of whether goods have been made dearer or cheaper by the imposition of protective duties, we have a deal of evidence. It is an established ftict that such goods are as a rule cheaper to the public than they were before the imposition of such duties, and the recent increases of rate have not, except in isolated cases, been followed by corresponding increases in price to the public. Various causes have no doubt combined to bring about this result, but the most potent factor has undoubtedly been the breaking up of rings or monopolies of importers. The report continues : Many instances have been brought under our notice where the establishment of a local factory has at once brought down the price of the article produced in a remarkable degree. All calculations based upon the price at which goods could be sold if the import trade were not restricted or prohibited by duties, are valueless in face of the direct evidence before us that when such duties are not imposed the goods are not sold at the anticipated low prices. The net result of the facts which have been elicited is to show that only in a few instances do protective duties involve a cost ; that in some of those cases where the cost is quite cer- tain, it is more than compensated by ultimate gain ; and that only in exceptional cases where there is danger of Protectionist monopolies and rings can the Protectionist duty degenerate into an absolute cost. On the contrary, protective imposts, in the vast majority of cases, result in real cheapness by breaking up the extortion of importing firms and saving to consumers the charges of transportation. If, my dear John, you will permit me a final word of plea- santry, I should say that you Cobdenists, in too much counting the " cost " of protection, remind me of a certain over-thrifty business man. He had a pressing invitation from a wealthy friend to marry that friend's daughter. The invitation ran : " Be sure to come ; my daughter is an acknowledged beauty, and will be sure to please you." The man of thrift wrote back : THE COST OF PROTECTION 255 " I am willing to come ; but suppose she does not please me ? Will you pay my travelling expenses home again ? " The Free Trader has the verdict of all history that protection is sure to please him, and that in nineteen cases out of twenty, or perhaps forty-nine out of fifty, it costs nothing and yields much. But he fears for the odd chance, and wants a guaramVr against it. 256 PREFERENTIAL TRADE Letter XXI. To THE GENIUS OF THE COBDEN CLUB THE COST OF FREE TRADE Failure is success to thee if thou couldst read all the truth. — Tuppee. Knowledge humbleth the great man, astonisheth the common man, puffeth up the little man. — Axiom. Most Sublime Self-confidence, — I would ask you in the words of Antony to " lend me your ears." You have talked to me a great deal about the " cost of protection." Will you let me give you a sober catalogue and account of the " Cost of Free Trade " ? It is indeed a very long account, and a very true account, and I am persuaded I can prove it at the bar of the Court of Reason, and get a verdict against you upon it. The first item to which I will invite your attention is one that you will not dispute. Indeed, you have already confessed judgment upon it. It is the loss which free trade has 1 The . agricul- inflicted upon the British farming industry. Sir J. tural Caird, in his evidence before the Depression of Trade Commission, said that the English farming industry between 1876 and 1886 lost £42,800,000 a year, and that £20,000,000 of this loss had fallen on the farmers, £20,000,000 on the landlords, and £2,800,000 on the farm labourers. Your sometime president, Lord Farrer, quotes this evidence, accepting it, though he tries to throw some of the blame for it on " bad seasons," which Sir J. Caird does not. On the contrary, Sir J. Caird proved as the principal causes for it the facts that the English wheat supply had fallen from 69,000,000 cwt. in 1852 to 39,500,000 cwt. in 1883, and that the imports had risen from 18,000,000 cwt. in the first year to 84,000,000 cwt. in 1883. Another expert witness before the same Commission, Mr. THE COST OF FREE TRADE 257 W. J. ILarris, generally agreed with Sir J. Caird, and said thai the depression in English trade was very largely caused by these enormous losses in English agriculture. He said : " I believe that the production of £50,000,000 from our own soil is equal in importance to the working classes to the export of £80,000,000 sterling worth of manufactures to foreign countries." He was asked if he could give a reason for that opinion, and he said : " An export of £80,000,000 worth of manufactured goods would require an import of more than £30,000,000 of raw material, on the average, and would therefore leave only £50,000,000 to the benefit of this country, whereas the production of £50,000,000 worth more food in the country would lead to the proceeds being spent in the country, and would therefore be equivalent to the other sum." ' Whatever may be the claims of the Free Trade policy in other directions, it is now generally conceded that agricultural decay in England is its immediate work. Mulhall shows that agricul- ture in 1841 employed 37'8 of the population of the United Kingdom, and in 1891 only 15' 1, "a much smaller ratio of people than in other countries," the acreage also being less. Mulhall thinks that this may be accounted for by the use of machinery ; but he himself supplies the answer to that surmise when he says : £ Value of land, United Kingdom, in 1880 . 2,080,000,000 „ 1895 . 1,686,000,000 Decrease .... 400,000,000 "Landowners and farmers have lost £450,000,000 of capital since 1880— that is, an average of £30,000,000 yearly." - Machinery will not explain that. Mr. W. J. Harris, a landed expert who had personally valued all the land in the United Kingdom, gave his report as follows : £ Land value in 1885 1,694,000,000 „ 1895 1,024,000,000 Decline . . . 670,000,000 1 Third Report Royal Commission, p. 81. 2 Mulhall, Industries and Wealth of Nations, p. G4. 258 PREFERENTIAL TRADE For my present purpose I am not very anxious to decide which of these authorities is more accurate. Another authority in the National Review, Mr. Palgrave, estimates the loss during the last twenty years at £800,000,000. The loss in either case is prodigious, and has to be set down to the debit of free trade. This is beyond doubt, because the value of land in France and other protected countries has appreciated in the same period. This shows the ruinous depreciation in England to be the effect of unchecked foreign competition. The enormous imports of foreign foodstuffs and the decay of home productions make England dependent for her daily bread on keeping her supremacy of the sea. Hence the cost navy for °f ner navy has doubled in twenty-five years, while in protecting the same period her foreign trade has not risen more than about 15 per cent., and in Europe has actually declined. That outlay is a consequence of the fiscal policy. It is an expenditure as an insurance fund to prevent England being starved in case of war. It is a free-trade tax that has reached to at least £200,000,000 in twenty years. A writer in the British Trade Journal gives five separate items of national loss in this connection : 1. The heavy taxation for protecting food convoys. 2. The danger of coalition amongst foreign States supplying England with food. 3. The loss to the home manufacturer of a home market for his products. 4. The loss to the national physique from the decay of farm labour. 5. The deterioration to the town from the deterioration in the country. 1 There are various industries which have been injured in England by the system of free importations. Amongst these _ may be mentioned the chemical industry, the paper of indus- industry, the silk industry, the linen industry, the bottle tries. industry, the sugar-refining industry, the watchmaking industry, the tinplate industry, and the steel industry. In all these England has suffered from the " dumping" of foreign goods. 1 Quoted by J. 1. Young in Protection and Progress from British Trade Journal, March 1898. THE COST OF FEEE TRADE 259 At one time the United Kingdom stood first in them all. Now she is not so in any of them. Our brief history has shown the losses from free trade which the industries of other nations have suffered. It is a self-evident proposition that every ton of goods which is carried an unnecessary mile is an economic loss to the world. While facility of transport has greatly conduced to the unneces- development of industries the process of " carrying sar y coals to Newcastle " is an admitted waste of effort. t r £1 11 s d o r t Mulhall estimates that there are 8,600,000 persons in the world engaged in the carrying trade ; that they earn £1,173,000,000 every year, or an average of £135 each. The bulk of goods carried now is seven or eight times as great as it was thirty years ago. There are four carriers in the world to ninety other workers, and they employ 11 per cent, of the aggre- gate capital employed in industry. The capital employed by carriers averages £900 to every hand employed ; to other workers only £320. The average earnings of carriers are £135 ; of other workers only £52 each. 1 We see, therefore, that the transport trade is a very profitable one ; and it is always tending to extend itself beyond the needs of other industries. By just so much as the trader and carrier can prevent the growth of domestic industries, and concentrate production in given places far apart, transport becomes necessary, and the carrier thrives. There was a time when American farmers had to sell their grain at 16 cents per bushel at home, while it brought a dollar in London. Cotton was once abundant in India, and its weaving was a standard industry. The East India Company, in the interest of the carrier and of English trade, taxed every Indian loom. In twenty years Indian cotton-weaving was killed, and the natives were compelled to sell their raw material at a penny a pound to be sent to England, woven there, and returned in the piece. That meant 20,000 miles of useless transport. In Australia your Sublimity has always aimed at the same thing. Wool, hides, and tallow used to be the staple products of Australia. Free Traders have always contended that the raw wool should be sent to England or Germany, manufactured 1 Mulhall, Industries and Wealth of Nations, pp. 38-9. 260 PREFERENTIAL TEADE there, and returned in piece goods ; that the crude tallow should be exported, and returned in the form of soap and candles ; and that the same process should be repeated with our hides. All that signified 30,000 miles of useless transport. Over that question the fiscal fight has raged and still rages. Protectionists have insisted on establishing and protecting domestic woollen mills, candle and soap factories, and tanneries. Free Traders have denounced every such effort as a robbery and a fraud. They wished to perpetuate the unnecessary carriers, every one of whom earned an average of three times as much as other workers earn. We get here a pretty fair insight as to why shippers and carriers, the world over, tend to free trade. And we see equally well why it is the interest of producers and consumers, who work for an average of £52 per annum each, to minimise trans- portation in which the workers take a toll of £135 each. In these heavy transport charges we have an explanation of why it is that the cost of living under free trade is greater than under protection. We learn here why, when the Protectionist duties were taken off in New South Wales, prices were not lowered to the consumers ; and why, when they were put on again, prices were not increased. The taxpayers in New South Wales are now getting £2,000,000 a year in the Treasury which they did not get before, and without any cost to themselves. That was a loss they suffered from free trade. It is not easy to ascertain what proportion of transportation is useless. The total money said to be spent annually on the carriage of goods or persons is £1,173,000,000. If we estimate that one-fourth of this transport is unnecessary, that gives us a rough idea of the aggregate waste — a sum of £293,000,000 a year. I have no hesitation in saying that Cobden's pestiferous conception about " world's workshops " specially located, and the international division of labour, is responsible for a large proportion of that economic waste in useless transport. It has been well said that of all prodigality that of time is the worst. Of this the free-trade carrier thinks little. And yet there has been a disastrous loss of time in every of man's phase of the industrial decline in agriculture and in the time ' useless transport we have spoken of. That annual displacement of £42,800,000 worth of agricultural produce in TIIE COST OF FREE TRADE 2G1 England must have thrown thousands of men into idleness, with all the attendant evils of unemployment. Then there is the misuse of those thousands of sailors and ships which are necessarily employed under present conditions in the British navy and in the transport service, but whose ser- vices might be productively utilised were they not required as an ' : insurance fund " for the transport of England's food which could be grown at home. What thousands and tens of thousands of people have been sent to swell England's prodigious pauper ranks, drafted from the industries shut up by " dumping " ! The sum is beyond accurate computation. Every day's time spent in unnecessary transportation of men and things is another economic waste of time. Protection is by its nature always guarding against such waste, while free trade necessarily encou- rages it. Of course, in so far as the carrier is a mere toll-taker, he cannot be expected to do other than encourage transport. Few people who read of the billions of bushels of wheat carried across the Altantic ever give a thought to the extent to 6 „, which this drains one country of its fertility and sends cost of the it to another. Yet this is what it does. It was found formerly to be true of the cotton-growing States of America, and was proved before the Geographical Society of New York. It has been true in the case of Ireland, Poland, Turkey, Portugal, Jamaica, and India. Sometimes artificial manures have partially remedied the evil, but never removed it. It recalls the story of the landlord and his gardener. " George, the time will soon come when a man will be able to carry the manure for an acre of land in his waistcoat pocket." The gardener answered : " I believe it, sir, but he will be able to carry all the crop in the other pocket." Henry George fully recognises this when he writes : Trade, as it is carried on to-day, does involve much unnecessary transportation, and producer and consumer are in many cases needlessly separated. Protectionists are right when they point to the wholesale exportation of the elements of fertility of our soil, in the great stream of breadstuffs and meats which pours across the Atlantic, as reckless profligacy, and Fair Traders are right when they deplore the waste involved in English importations of food while English fields are going out of cultivation. Both are right 262 PREFERENTIAL TEADE in saying that one country ought not to be made " a draw farm " for .another, and that a true economy of the powers of nature would bring factory and field closer together. 1 What is singular about this is that Mr. George does not see that it is the policy of free imports which is mainly responsible for this " reckless profligacy." Of course his remedy was land nationalisation, but at least he frankly admits the great loss in this unnecessary transport of the land's fertility. Experts have estimated that the United Kingdom could easily feed 27,000,000 to 30,000,000 of her people, instead of, as now, about 15,000,000. Yet Free Traders have declared that if English agriculture cannot accept the British Free Trade system it must perish. This I shall merely mention here because it has been fully argued in previous Letters. Still, it cannot be omitted by any- 7. Loss in one wno desires to sum up fairly the disadvantages the want w hich have to be debited to the policy of free imports, sity of So far as I know there is no dispute about this item in avocation, the account. The Free Trader generally admits, what Cobden proclaimed, that he desires to make each country a specialist in some particular branch of production. So far as such a ridiculous policy could be successful, it would necessarily stunt and limit human capacities, inasmuch as it would dwarf the very race itself by depriving men of the quickening impulse to invention and the play of thought. To me this seems to be a terrible bill of indictment. The agricultural decline of England, with its hundreds of millions of proved and admitted losses ; the insatiable demand of the navy for more and more ships for protecting the food supplies of the nation ; the vast sums spent in the unnecessary carriage of goods ; the number of useless carriers employed, and the loss of their time ; the drawing of one country's fertility for the benefit of another ; and the injury done to the mental status of the unprotected people — the sum is inexpressible in mere figures ; but when presented in detail as we have presented it in this Letter, it accounts fully for the historical fact that free trade has been the deterioration of every nation which has pursued it. 1 Henry George, Protection or Free Trade, p. 175. 263 Letter XXII.— To Sir FREDERICK HOLDER, Speaker op the Australian Parliament the free trade case summarised Laugh where we must, be candid where we can, But vindicate the ways of God to man. — Pope. Dear Mr. Speaker, — I have always observed in you what seems to me the virtue of a most frank sincerity, and yet I think that you have leanings towards Cobdenism. I should like in this letter to you to present the Free Trade case in as strong a light as you yourself would put it in the same limited space. I would desire to omit nothing that a Cobdenist regards as of real importance. 1. You start by saying that trade is a beneficent thing in itself, and that as such it ought to be unhampered — " as broad and general as the casing air." In answer to that 1 sing the as k your perusal of Letter VI. points of 2. You are in the habit of regarding cheapness in money price as something to be placed in the forefront of economic effort. Will you peruse Letter III. ? 3. Cobdenists speak of the principle of competition with the reverence due to the Decalogue. I ask your attention to Letter IV. 4. You quote the marvellous expansion of British trade under " free imports." Your statements are mainly true, but always the record of one side only of the shield. Please read Letters VII., VIII., IX., and X. These will show the reverse of the Free Trade shield in England and the success of Protection elsewhere. 5. Free Traders have said that Australia has thriven best under unrestricted trade. Letter XVI., I think, treats this phase of the subject with fair impartiality. 264 PKEFEKENTIAL TEADE C. Classical and literary authority, it is sometimes said, greatly preponderates on the side of free trade. May I ask you for a candid perusal of Letter XVII. ? 7. Free trade is sometimes described as the true scientific flscalism — as the logical doctrine par excellence. I ask special attention to Letter XVIII. ; and I would add Letter XIX. also. 8. But protection, you say, however theoretically good, is a robbery of the consumer — of the many for the few. I venture to invite a candid study of Letter XX. 9. Free trade can claim the great merit that it injures no one and taxes no one. Well, I think Letter XXI. places that contention on the defensive. 10. Then, in addition to these positive virtues of free trade, you urge that protection, if consistent, would protect one side of the street against the other as much as it protects one country from another ; that it encourages monopolies, trusts, and com- bines against the general welfare of the people. There is a doctrine of the Ricardian school which was for a long time very much esteemed. It was : " Take care of the imports, the exports will take care of themselves." That has been so entirely falsified by events that it is mostly given up. There is another still in use even in the present controversy. It is that " the best way to fight hostile tariffs is by free imports." This also stands contradicted by the facts of German, American, and British experiences. These points are mostly embraced in the treatment of one or other of the topics already mentioned. I have been listening to Free Trade debates in Parliament for twenty years, and I have read most of the books of the Cobdenists available to me, and I do not recall any other main points urged in your Free Trade apologetics. Of course, I frankly confess that the points mentioned have been treated amply in hundreds of volumes ; but I think no injustice will be done to you in saying that not one of your writers has ever made a serious effort to investigate free trade historically. There is, of course, a reason for this. The free-trade FreeTmde doctrine, in its very nature, stands above history. It ignores i s built upon theses which, if true, would be true in spite of history. Your own Professor Jevons may, I trust, be taken as your exponent of those theses — that men THE FREE TRADE CASE SUMMARISED 265 pursue the creation and acquisition of wealth apart from all othei emotions and influences ; that all men will in similar circum- stances act in the same manner; that they will always labour for the largest money profit, obey the laws of supply and demand, buy in the cheapest market and sell in the dearest one, choose the apparent good, reject the apparent evil, and strive to yield a minimum of labour for a maximum of pay. McCulIoch further postulates for you that the labour of transportation is as profitable as that of production ; and there you have formulated a code of doctrines which, if accepted as true to start with, places you beyond the need of historical inquiry. My present object is to focus your contentions. Most of them are ostensibly reasonable ; but none of them are demon- strable, and few, if any, are true. I say, therefore, that you never had any warrant for adopting these premises as a substi- tute for historical investigation. I concede most readily that if the Cobdenist have his premises allowed, his general conclusions will follow logically enough. But no true science can afford to ignore the records of the world's facts. I think that, in addition to Jevons, already quoted, Lord Farrer and Henry George are not unfair expositors of the Cobdenist doctrines. Farrer disclaims any special liking for „ g cheapness, but at the same time is content to sacrifice Free Trade English agriculture rather than put on a corn duty ; maxims. an( j a jj p ree traders oppose protective duties on the score of cheapness alone. Then, on the question of trade, Lord Farrer states: " All duties are impediments to trade. The fewer the duties, the fewer the impediments." There it is merely assumed that impediments to trade are evil. Why should trade not have impediments ? There is an anecdote telling us that soon after Mr. Frederic Lucas, who was reared a Quaker, had joined Rome, John Bright met him and inquired : " Well, friend Lucas, how dost thee like thy new superstition ? " " Why, friend Bright," retorted Lucas, " I like it better than I did our old hypocrisy." Now it is not necessary to suppose that the Free Trader has any hypocrisy about him ; but his new superstition that trade is something good, per se, has led him a very ignoble dance. The Free Trader 266 PEEFERENTIAL TEADE thinks of trade, speaks of it, reasons about it, as something in itself beneficent. Yet it would be impossible to demonstrate that the mere act of buying and selling ever increased the sum total of the world's wealth by a single maravedi ; whilst it is easy to show that this rage for buying and selling has often injured production. Now for one or two other contentions of Lord Farrer ■ No tariff is an absolute barrier ; and a free country has such advantages in production that it can compete with a Protectionist country even for the home market of the latter. If Lord Farrer had understood what is now known as the " Law of the Surplus," he could not have written the above. " Dumping " often takes place at prices below the cost of pro- duction, and it dislocates home trade most disastrously. (a) There are many free and neutral markets, and in all of them a free trading country has advantages over a Protectionist rival. The answer is contained in the fact that Germany and America are both cutting England out of neutral markets. (b) Protection has not, so far as we can judge, advanced trade and manufacture in France, Germany, or the United States, but the reverse. A reference to my historical letters will show the details given in which protection has built up those countries when free trade had failed. (c) The trade of a country depends on many things besides free trade. Free trade only removes impediments. What can be claimed for free trade is that a country is better with it than without it. The prosperity of the United States does not affect the question. The impediments to foreign trade are the very things needed in order to promote internal commerce and production. (d) Every man knows better what he wants to buy and sell than his government can possibly know for him. He will buy and sell to the best advantage if left free to buy and sell as he chooses. Every man will always act for his immediate interests or desires, but those interests or desires may be opposed to the THE FREE TEADE CASE SUMMARISED 267 interests of the whole people. It may be good for me to buy my clothes at half-price. It is bad for the tailor and for the tailor's creditors. (e) Every one who buys, sells at the same time. His purchase is really an exchange. The money he pays for the goods which he buys is really an order given to the seller for other goods. Tho more buying the more selling. Trade and commerce are not barter. It is not true that the more a man buys the more he sells. England constantly in- creases her imports and finds her exports stagnate. She buys £500,000,000 worth and sells only £280,000,000. Therefore people who buy do not sell at the same time. {f) As regards dealings between inhabitants of the same si reet, the same village, the same town, the same country, no one thinks of disputing these truths. But they are just as true as regards dealings between inhabitants of different countries. There is a vast difference between domestic commerce and foreign trade. Every home transaction gives a profit at both ends of the bargain — two profits to the country. Foreign trade gives only one profit instead of two to the country — one profit sometimes to the country's enemy. (g) No one who is master of these simple and obvious truths will be misled by Protectionists' sophisms. We see, then, that those " simple and obvious truths " are all disputed and disputable. Now what, sir, are we to think of an economic system built on a basis such as that ? Henry George, while he disclaims Cobdenism as such, because it does not go far enough, claims to have carried the Cobdenite arguments a stage further. " I have sought," he says, " to George discover why protection retains such popular strength on free m spite of all exposures of its fallacies." He scouts the trade. " mere revenue tariff" of the Cobden school, " miscalled free trade." In twenty chapters he has built up his case against. protection with quite admirable dialectic skill, showing, step by step, that if we only lived in Paradise, surrounded with perfect laws of being, free trade would be found there amongst the other good things of that beatific state. 268 PREFERENTIAL TEADE But George had a mind too clear, it would seem, to be im- posed upon by even his own sophistries. Everyone who has read his book to the end knows how, in the closing chapters, he has ruthlessly demolished his own handiwork by proving what a sham, as applied to daily life, is this same free trade which he had been developing as a theory of truth. He admits at p. 240 that, in view of the practical facts of life such as those which we have been developing, there is a hopeless " inadequacy in the arguments which Free Traders rely on." Contemplating his own work, he asks : But what have we proved as to the main issue ? Merely that it is the tendency of free trade to increase the production of wealth. . . . But from this it does not follow that the abolition of protection would be of any benefit to the working class. The t endency of a brick pushed off a chimney top is to fall to the surface of the ground. But it will not Ml to the surface of the ground if its fall be intercepted by the roof of a house. The tendency of anything that increases the productive power of labour is to augment wages. But it will not augment wages under conditions in which labourers are forced by competition to offer their services for a mere living. ... In this is the invalidity of the Free Trade argument, and here, and not in the ignorance of the masses, is the reason why all attempts to convert working men to Free Tradeism, which would substitute a revenue tariff for a protective tariff, must, save under such conditions as existed in England forty years ago, utterly fail. This is the language of a man who was the world's foremost Free Trader. He proceeds to show that " protection has sur- vived long and wide discussion," and that it has arisen spon- taneously in such free lands as America, Canada, and Australia, and then expressly admits : The real question is whether the reasoning on which Free Traders rely takes into account all existing conditions? What the Pro- tectionist means . . . when he talks ... of the difference between theory and fact is, that the free trade theory does not take into account all existing facts. And this is true. ... It would be as rational to expect any thorough treatment of the social question from the well-to-do class represented in the English Cobden Club ... as it would be to look for any thorough treatment of the subject of personal liberty in the controversies of the slave-holding Whigs and slave-holding Democrats of forty years ago. THE FEEE TRADE CASE SUMMARISED 2G9 Now, sir, when a Free Trader writes in this way, what have your " revenue tariffists " to reply ? Though some kind of Free Traders may deeply differ from Henry George, they are not likely to invalidate his right to Bpeak as to the merits of their cause, and this is the manner in which he speaks of the free trade as taught in the school of Manchester by men like Lord Farrer : Even from the total abolition of protection, it is impossible to predict any general and permanent increase of wages, or any general and permanent improvement in the position of the working classes. Here is the weakness of free trade, as it is generally advocated and understood. The working man asks the Free Trader : " How will the change you propose benefit me ? " The Free Trader can only answer : " It will increase wealth and reduce the cost of commodities." But in our own times the working man has seen wealth enormously increased without feeling himself a sharer in the gain. He has seen the cost of commodities greatly reduced without finding it any easier to live. He looks to England, where a revenue tariff has for some time taken the place of a protective tariff, and there he finds labour degraded and underpaid, a general standard of wages lower than that which prevails here, while such improvements as have been made in the conditions of the working classes since the abolition of protection are clearly not traceable to that, but to trade unions, to temperance and benefit societies, to emigration, to education, and to such acts as those regulating the labour of women and children, and the sanitary conditions of factories and mines. 1 I have reproduced these passages here because they go more to the root of the free-trade case than most Free Traders have done. The same writer adds : American reformers delude themselves if they imagine that protection can now be overthrown in the United States by a movement on the lines of the Oobden Club. The day for that has passed. . . . Instead of the abolition of protection in Great Britain being followed, as was expected, by the overthrow of protection everywhere, it is not only stronger throughout the civilised world than it was then, but is again raising its head in Great Britain. 1 George, Protection or Free Trade, p. 241. ■ Hid. pp. 247-8. 270 PBEFEEENTIAL TRADE To justify this summing up of the merits of the fiscal ques- tion, Henry George gives a reason which he has emphasised in another work, in these words : " Free trade has enormously increased the wealth of Great Britain without lessening paujierism" ' In the above we have the views of two typical Free Traders as to what Free Trade is expected by them to accomplish. Lest we might come short of what you consider an adequate state- ment of your case, let us see what Cobden's " workshop " theory really aimed at. It may be stated in the language of Brougham and Hume, two Protectionists who were earlier intent on the aims which Cobden later developed. Brougham said, in 1815 : " England could afford to incur some loss on the export of Eng- lish goods, for the purpose of destroying foreign manufactures in their cradle." And Hume, ten years later, in the same place, said that " the manufactures of the Continent should be strangled in the cradle." Such, I think, is a fair statement of the Free Trade case, with- out, of course, the arguments stated at length that support that „ „ case. It is interesting to see by what methods Free 5. Free ° . . , Trade Traders generally commend their teachings and meet methods. Protectionist arguments. If we call Lord Salisbury as a witness, he tells us: " Whenever the evil of the present state of things is pointed out to them [Free Traders], they, instead of replying, call us lunatics, or beat the great tom-tom of free trade in order to drown our voices." Both English witnesses testify to the same thing. Mr. Frederick Greenwood, speaking of the disposition of Cobdenists to abuse their opponents rather than argue with them, says : They maintain that the free trade system proceeds upon certainties as clear and inevitable as any that proclaim a law of nature ; that its observance at every point is essential to the welfare of every human society at every stage of its existence ; that no consideration that is or that can be advanced is sufficient to justify deviation from it; that every deviation from it calls down a punishment for which adequate compensation is impossible ; that though hundreds of millions of men in all parts of the civilised world declare that, trying the deviation, they don't feel the penalty, ' George, Progress and Poverty, p. 180. THE FREE TRADE CASE SUMMARISED 271 oi* do find adequate compensation, thoro is nothing in it — all such states and persons being; under delusion too palpable t>> inn upon anyone who understands arithmetic; tli.it no matter wli.it the supposed perceptions and sensations of these people may be, the free trade loaf is not only very good broad, but a leg of mutton too — yes, and by heaven, a bottle of wine into the bargain, " Look ye, gentlemen," cries Peter in a rage, "to convince you whal a couple of blind, positive, ignorant, wilful puppies you are, I will use but this plain argument : By G — d, it is fine, good natural mutton as any in Leadenhall Market, and G — d confound you both eternally if you offer to believe otherwise." — (Swift's Tale of a Tnl>.) With a ferocity not less than Peter's are these doctrines upheld in our little corner of the world, which yet is so much the home and refuge of toleration in matters of opinion. Of course, temper rises in the natural man upon direct and violent opposition ; but these are philosophers, and the choler in them does not wait for opposition. Hint but a doubt, do but ask a question, approach them for a little fresh oil wherewith to renew your lamp of faith, and out they start on you with all the cruelties of scornful innuendo and savage contempt. Listen ? They will not listen. Answer ? They will answer no further, except in terms of evasion or ironic abuse. Thus it happens that a vast body of apprehension — innocent if fallacious, but warranted by many a portent from farm and factory, and even by the account of them which the sturdiest Free Traders are compelled to give at last — hardly dare to speak. I think it would be a pity to close this phase without giving a specimen from America. I read in the New York World how Champ Clark, described as " one of America's great free-trade guns," delivered himself thus : Any industry that depends upon the tariff is a pauper industry. It's contrary to nature. (Applause.) God Almighty never intended us to hog everything. If He had He'd have made us with snouts. ("Wild laughter.) God could have made this world, if He had wanted to, with exactly the same climate and soil all over it, so that each nation would have been entirely independent of every other nation. But He didn't do that. He made this world so that every nation in it has got to depend for something upon some other nations. He did that to promote kinship among the different peoples. Let us drop this unnatural business and return to the rules of sanity. There is no end to the ingenuity of man. You can fix up a scheme, if you want to, for raising oranges in Maine, but a barrel of those 272 PREFERENTIAL TEADE oranges would make William Waldorf Astor's pocket-book sick. (Laughter.) You can raise elephants in the jungle of Vermont, but it would take all the inheritance tax on the Gould estate to pay the cost. (Laughter.) You can raise polar bears on the equator if you spend money enough, but it would take a king's ransom to do it. (Laughter.) Whom the gods destroy they first make mad, and that's what's the matter with the Protectionists. Your greed grows by that on which it feeds. You refused the Morrison Bill with its little reduction. You rejected the Mills Bill with its small changes, and now you are kicking at the moderate Wilson Bill. You may beat this Bill by the help of the assistant Republicans. (Laughter.) But if you do, you will build a Free Trade party, and the men with brains and hearts and love of humanity will rend the Temple of Protection till not one stone remains upon another in that robber's roost. (Laughter.) There is such a Free Trade flavour about this that it would be an injustice not to have given it a place. That disclaimer that the trader does not want to " hog everything " is exquisite, since we have seen that his whole aim has ever been to crush out all rivals. In Australia Protectionists have met with precisely the same treatment. Free Trade orators take the platform and make up in strength of epithet for their weakness of argument. One, for example, calls us Protectionists " dolts," " loafers," " ignorant asses," and describes their arguments as " bosh," " rubbish," and " idiocy." Another eminent Free Trade barrister thinks the most effectual way of silencing dissent is to call hisopponents" pudding- heads," and he winds up a Free Trade lecture with a gem like this : Free Trade is the policy of education and enlightenment. Protec- tion is the policy of ignorance. All men of high educational acquire- ments, university professors, supreme court judges, barristers, doctors, clergymen, et hoc genus omne, are Free Traders to a man. Protection- ists are made up of Trades Hall loafers, ignorant asses, and idiots. Such are Free Trade doctrines, and such the methods of their propagation. The samples given are, I think, varied and typical. In the next letter I hope to examine them in the light of Protectionist methods, and then we shall see clearly, I trust, why it is that Free Trade has failed utterly to make any impression on the intellectual world. 273 Letter XXIII.— To W. D. BEAZLEY, Esq, Speaker of the Victorian Parliament the protectionist case summarised Who ever knew Truth put to the worse in a free and open encounter ? — Areiypagitica. Our history now arrives at the confines, where Truth and daylight meet us with a clear dawn Milton. Dear Mr. Speaker, — I can safely assure myself of your entire sympathy in the matter of this Letter. Truth to say, I could not think of anyone to whom I could more appropriately address it. You have presided over many meetings of the Protectionist Council of this State, and I may say without the least suspicion of flattery that you have always adorned the debates with some- thing better than the flourish of words — with sound counsel and suggestion. I know, therefore, I shall have an indulgent, though possibly a critical listener, while I summarise the case for Pro- tection as presented in the foregoing Letters. The plan of my work was first to clear the ground of some fallacies. We saw on the testimony of the free-trade economists them- selves that there is no agreement amongst them. While some l Want Deueve all human motive can be reduced to a formula of a based on selfishness, others introduce some elements science. Q £ e ^y cs yj e established, as I contend, the fact that any treatment of the fiscal science by deductionist methods must fail ; and that induction is the true mode of procedure. We devoted a good deal of space and effort to destroying the false notion that cheapness measured in coin is a desirable end 2. Cheap- to strive for. A true conception of cheapness is an ness, com- essential preliminary to the study of political economy, and co- ' We found that there are prevalent equally loose and operation, sloppy views concerning competition. When permittei 1 unrestricted operation it is a blighting and destroying influence T 1Z74 PEEFEEENTIAL TEADE — cruel, remorseless, and relentless. We found that when applied in a restricted manner to domestic commerce it may be beneficial, i.e., if employed as is emulation in the deeds of virtue ; that it is like some poisons which may be used as medicines in infinitesimal quantities. Discussing what shall take the place of competition, we showed that co-operation may in many cases act as an efficient substitute ; and that where competition enters into the domestic economy of the nation it must be regulated by such safeguarding laws as those of trades unions, the " minimum wage " principle, compulsory arbitration. We devoted some considerable space to this subject. We found it quite useless to proceed with our inquiry until we got „ _,, , clear views concerning the nature and tendency of and its trade. Men are so commonly prone to accept trade tendency. ag some thing good per se, that it is clearly impracticable to intelligently discuss free trade or restricted trade without an accurate conception of trade itself. We found trade to be the very reverse of beneficent. Its tendency, when free, is to stunt, not promote, production — to play the tyrant, the oppressor. Its nature is like that of fire and water, to be good under restraint, bad when unimpeded. If these views be correct it is therefore false economy to remove impediments from trade. On the con- trary, trade without impediments is maleficent. Having thus cleared the ground of confusing misconceptions, we went straight to history. Our object was to try how far the records of various climes and times would bear out our cai re- data and reasonings respecting cheapness, competition, sume— co-operation, and trade. We found that Great Britain England. . . . is an eminent example of a btate which grew into abso- lute industrial pre-eminence under trade restriction the most rigid that the world ever saw. We found that when she had arrived at a stage where she was superior to all rivals she adopted a policy of free imports, hoping that the rest of the world would follow her example. That expectation was not realised. The nations grew more and more protective. They flourished under that proctiteon so much as to overtake her and challenge her in neutral markets, so that she has lost a great deal of her Euro- pean trade, and is every day losing more. It is shown that Great Britain has become prodigiously wealthy, but not pro- THE PEOTECTIONIST CASE SUMMARISED 27u sperous, if prosperity consists in the fair diffusion of her wealth — that she has a "Submerged Tenth" in her population, ami a needy Third. Few things are more clearly traced in history than the con- nection between the national decline in Ireland and the system 5 x of free imports enforced upon her by England. Her land's industries of the sixteenth and seventeenth centuries ruin - W ere ruined at the instance of the dominant partner ; and when, in a short-lived period of protection instituted by the Grattan Parliament, she had set the country upon her industrial feet again, the gradual destruction of protection after the Union threw her back again to her old dependence on the soil. This is a repetition of the history of Ireland. The facts are not in dispute. They cannot be. The cotton-weaving indus- 6. India's tries of India were deliberately taxed out of existence ruin - at the bidding of England, and the raw cotton of India was carried to England to be returned in piece goods. The Indian ryot was thrown into enforced idleness, and famine after famine desolated the land. The traders' sins in India cry up from the soil. They were vicariously punished in the Great Mutiny. Here, too, the evidence is overwhelming against " free imports." Colbert's first experiment was a grand success. He removed internal taxation and placed it at the borders of the 7 The . fiscal country against the foreigner. The effect was a Euro- story of pean obiect-lesson. The lapse to free trade after his France. . . death was tragical, and was an indirect hastener of the Revolution, which was a remedy. The fiscal protection which came with Napoleonic wars gave the country a new industrial life. France has been Protectionist ever since, save for a brief period in the Third Empire. She has thriven so much that her prosperity converted Bismarck from free trade to protection. There is not a more informing record in the universe. Begin- ning with the War of Independence, she has had no fewer than half a score of oscillations between restricted imports fiscal 6 and free trade. Without a single exception every story of experiment in free trade has been followed by depres- sion, and every return to protection has been marked by a buoyant recovery. For thirty-three years past, save for one unfortunate lapse between 1892 and 1896, she has followed T 2 276 PEEFEEENTIAL TEADE a consistent course of high and almost prohibitive tariffs. She has overtaken Great Britain and passed her in productiveness and manufacturing prosperity. The chronicles show that Turkish trade decline is easily- traceable to the influx of foreign goods, under a reci- key's procal trade treaty, coming in and killing off the Turkish decline. manufactures. The lesson in Russia is not by any means so obvious as in other cases. But if looked into with a student's eye it is quite as significant. Russia tried protection at the imperious sian in-" bidding of Napoleon. Having no local industries, the dustrial hardship resulted in smuggling, and when Napoleon fell, the Russian Empire reverted to free trade for seven years, from 1815 to 1822. She was reduced almost to beggary. She framed a protective tariff, and her internal industries gradu- ally expanded. By the middle of last century she began to lessen her protective duties, and by 1877 she found herself in great industrial trouble. She then reverted to protective duties, increasing them ever since. Her industrial condition to-day shows as much relative progress as that of any nation in the world save America. In Germany we have a literature on the fiscal question that is worthy of the philosophic intellect of the Teutonic race. The German classical economists are diametrically opposed German to those of England on the root principle of all true lesson. political economy having an ethical basis. The German mind has been led irresistibly to the protective doctrine, and the country has thriven under it to an extent which is in the sharpest contrast to its failure under free trade. This story is told for quite another purpose. Both these powers set out to achieve opulence as carriers, not as manufac- 12. The turing nations. They both succeeded, just so long as Hanse they could hold mercantile naval supremacy. The an( i Hanseatic League had at length to strike its flag to Holland. Holland as Holland had to England. The serious lesson deducible from this is that England is now in the same process of relative declension as Holland was, and from the same causes. As other nations begin to do their own transport work the world's carrier declines. THE PEOTECTIONIST CASE SUMMARISED 277 All the colonies of Australia began their history with leanings to free trade. They sent all their raw produce to England and received back payment in manufactured goods. But Austraifa tnev found their people often idle for want of employ- is Pro- ment in the few primary industries, and that while the goods were imported which they ought to have made for themselves. Victoria first became Protectionist under the stress of her gold decline. She had a far larger population than any other State in the group. She must either lose it or find means of employing it. She chose protection. It succeeded marvellously. She retained most of her population, which is now three times as dense as that of any Australian State. One by one all the other States followed Victoria's example, having found the universal testimony of nations to be true that " coun- tries which are enclosed prosper, and they which are open decline." We have devoted one Letter to the evidence supplied by the world at large, ancient and modern. It contains some exceed- 14 The m §ty cogent testimony. The indolent may pass it by. world's The prejudiced may misread it. The wise man who teaching. desires t reacn the goal of safety should study it as closely as any other portion of the book. I venture to think, sir, that in the two Letters on these sub- jects you will find more that interests you than in any other 15 The P ar ^ °^ ^ ne D00 ^- There we have striven to reach to science the sure grip of science. We find in protection the and phi- underlying principle which governs the world in all its of pro- great undertakings. In the principle of diversity of tection. avocations, as there expanded and enlarged, we find an essential of national and racial progress ; and we find that while free trade is the natural enemy of diversity, protection always aims at it. In the twentieth Letter we have examined in detail the question as to what amount of burden in the way of taxation the protective policy imposes on a protective people, cost of 6 I venture to think the result is a little striking. While protec- it is true that in a few cases a protective duty raises the cost of the protected article, in the great majority of examples its effect is an almost immediate cheapening of the goods 278 PREFERENTIAL TRADE so protected. Examples are given of the cost of living in various countries under protection and under free trade. The result is invariably in favour of protection. No amount of theorising as to what ought to follow the imposition of a duty can override these wide demonstrations from history to which the Free Trader shuts his eyes. In this Letter, the twenty-first, we have virtually the climax of my argumentative system. It is the corollary of much that has gone before. It shows why living in a country of cost of f ree imports is more expensive than in one where the free Customs duties are high. The question of transport is dealt with in detail, and it is shown that transport services are, per worker, more than twice as costly as are pro- ductive services. This brings out the view of the economic waste that goes on in a country which produces raw materials for export to have them returned again to her in manufactured goods. Some attempt has been made to estimate the mere money cost to England of the futile attempt to make her the workshop of the world. We have given in various places some striking admissions that a protective policy, under given circumstances, may be 18 Free necessary. I may as well add here the well-known Trade ad- passage from John Stuart Mill's earliest edition of his SproTec- " Political Economy." He says : The superiority of one country over another in a branch of production often arises only from having begun it sooner. There maybe no inherent advantage in one part or disadvantage in the other, but only a present superiority of skill and experience. A country which has this skill and experience yet to acquire may in other respects be better adapted to the production than those which were earlier in the field ; and besides it is a just remark that nothing has a greater tendency to produce improvement in any branch of production than its trial under a new set of conditions. But it cannot be expected that individuals should at their own risk, or rather to their own certain loss, introduce a new manufacture, and bear the burden of carrying it on until the producers have been educated up to the level of those with whom the processes have become traditional. A protecting duty continued for a reasonable time will sometimes be the least inconvenient mode in which a country can tax itself for the support of such an experiment. THE PKOTECTIONIST CASE SUMMARISED i!7'J This is on the same plane as the teaching of Adam Smith t hat navigation laws, however severely protective, may be wise from the aspect of a national policy which transcends mere buying and selling. I know that with all this you are quite familiar. I doubl if you will find one thought that is novel to you. But I am sure you will find many which you accept as the expression of ripe truths, and I am persuaded that you will not consider them unwelcome connected in this form with your name. 280 PKEFEKENTIAL TKADE Letter XXTV.— To The Hon. ALFRED DEAKIN, Prime Minister of the Australian Commonwealth reaching the goal Plato is my friend, Socrates is my friend, but Truth is more my friend. — Maxim. My dear Prime Minister, — Even as I pen the closing words of this book you are spending freely of your eloquence in defence , T . of the doctrines contained in it. To no one, therefore, 1. Laissez _ _ ' _ ' faire con- can I more fittingly address this Letter. I would fain demne put into it the essence of forty years of fiscal study- Certainly, it carries with it my heart as well as my intellect. I am deeply persuaded that the school of laissez faire has been the exponent of a sad and blighting error. Your whole political record shows that in this you are at one with me. When dear old Sam Johnson wrote : How small of all that human hearts endure That part which laws or kings can cause or cure ! he taught a very pernicious doctrine. On the contrary, good government is the first factor in all national prosperity. Bad government is the deepest and darkest curse with which the gods can afflict us. Wise rulers and benign laws can convert the barren rock into fertility, whilst oppression in high places may pervert a paradise to a wilderness. Labour, we are told, should be left free to flow into its own natural channels. Free trade, it is asserted, leaves it so, while protection diverts capital from its legitimate course to the pro- tected course. I say that in this assumption, that labour and capital left to themselves will flow into the most productive channels, we have one of the most astounding examples of Free Trade nescience. The words seem to have been adopted parrot- EEACHING THE GOAL I like, without an effort to look abroad and square them with facts. Let us look at the distribution of the population in England. Some parts of the map are black with density. Others are white and unpopulated. Why? Simply because things have been permitted to drift unregulated. While English fields are left untilled, the cellars and garrets of great cities are choking with the pestiferous stench of an idle and congest ei I population. That is laissez faire. These noisome dens want breaking up and the people require planting on the land. They will not break up of themselves, or "by leaving capital an. I labour to their natural channels." Millions of English and Irish acres await the husbandman, and the husbandman gasps for the acres and cannot reach them. Ireland might support ten millions of people in prosperity if labour and capital had not been left to drift without guidance. And even where population has emigrated, how has it emigrate* I '. Mr. Chamberlain has recently shown us how it has gone to foreign governments instead of to British colonies. It has been lost to the Empire where it would have been most valuable and wealth-producing. What has scourged the emigrants out of the United Kingdom of Great Britain ? The furies of want and famine, of misery and idleness. Every man and woman of them was worth solid gold to the Empire, and they were huddled away pell-mell to the United States. Even in new countries the evil soon begins to assume the same features. Great cities grow congested, and the lands are half tilled — all the result of this insensate doctrine that labour and capital can best provide for themselves, and have an infallible instinct for the most profitable outlets. And what is true of land and population is equally true of industry. The governments which protect and foster production have it in abundance. The government which lets it alone loses it, as every free-trade country on earth has lost it, or is losing it. Ireland was well adapted to the linen and woollen industry, but foreign trade diverted capital and industry from those natural channels. But if the State is to be constant and ready in action, in what capacity should it stand towards its children ? Unless my 282 PREFERENTIAL TEADE efforts have been wasted, we have reached to the conclusion that every State government ought to be a general housefather. The citizens of the State are but children in the bodv 2 The ... state in politic. Each of them is pursuing his isolated and loco private aims. The wisdom of the wisest of them is often but as foolishness contrasted with the deep though often dim perceptions of the great aggregate, stretching out in pathetic dumbness towards a distant dawn. The greatest tribune that ever raised his voice in a parliament of mediocrities was never so wise as the sum total of the bucolic intelligence which he influenced. There never yet was an orator so inspired but he learned more from others than he taught them. Had Michael Angelo been born in a tribe of Hottentots, he could never have painted the " Holy Family." Had Shakespeare, with all his gifts, seen the light amidst a tribe of Australian natives, he could never have conceived Hamlet or King Lear ; and even if the conception came to him it must have fallen still- born. The greatest of men owe more to the State than the State owes to them. But if great geniuses can develop their faculties only in the society of the State in which are included the mute millions who seem fit only to toil, suffer, and enjoy, they owe their best gifts to the State which evolved them. From this we deduce the conclusion that the State's duty is not to stand high above and apart from its people, merely holding a balance of cold law amongst them. It is to enter as minutely into the interests of its concomitant parts as an intelligent father would amidst the designs of enterprising sons and daughters. The father will not be a deus ex machina, reducing his family to pawns and ciphers, as the Socialist-communists would have it in the State. But he will advise, contrive, and assist at every turn where advice and assistance are effective for good. That is amongst the very foremost of the deductions which I would wish to have drawn from the studies of this book. Another leading principle of our political economy in poiiti- i s that it cannot be divorced from ethics except at the cal cost of its own emasculation. The theories of Jevons, Mill, Bagehot, and others — that a true political economy can be constructed based on man as a being actuated only by REACHING THE GOAL a desire of gain— stand, as we aflirm, Belf-condemned, jn would a physical science which ignored friction as a factor in the working of a machine. The Germans have carried their conception of sound political economy to a much higher level than have the English classical economists. The Germans recognise that there can be no true political economy divorced from a rigid aense of duty. The State, just as it claims the duty of its citizens, owes no lesa a duty in return. That duty is to provide the be^t means <»f evolving happiness, not merely of producing wealth. On this question of the State in the domain of ethics, Bismarck said : " Herr Richter has called attention to the responsibility of the State for what it does. But it is my opinion that the State can also be responsible for what it does not do." He then con- demned the doctrines of " Manchesterdom in politics," and said that he wanted to see the State " penetrated to some extent by the principles of the religion it professes." Mr. Syme, in his " Outlines," points out that moral questions extend into every relation of life, even into men's relaxations and amusements, and that therefore it is contrary to all human analogy to omit them in the speculations of political economy. Nor can there be any violation of this principle without the evil extending indirectly to all. An injury to one industry has ramifications permeating the entire body politic. In exactly the same way the fostering care and attention bestowed on one class of industry fructifies in scores of others. A well-known American, Mr. Roscoe Conkling, expri this truth in a great speech in New York twenty-three y< ago, when he said : From the wheat fields of Minnesota through the pastor* Texas there is not an acre whose fertility does not benefit New York, nor could she profit by the misfortune or poverty of a hamlel in all our borders. Amongst the great truths which this book is intended to „ ^. elucidate is that of the extreme importanee of diver- 4. Diver- . r . sity of sity in a nation's industries. One ol the cardinal avocation. em)rs of the Cobdenist lies just here. Postulating "the desire of wealth," as the great master-motive <>[ mankind, he 284 PREFERENTIAL TRADE naturally reaches the conclusion that the quantity of that wealth is the goal to be aimed at. The Cobdenist accordingly deprecates what he calls " arti- ficial trades," on the ground that they are less wealth-producing, head per head of the workers in them, than are some others. From his own standpoint he is quite correct. A little reflection, however, ought to teach a man that there is not in the world a trade which is not artificial. If the mere bulk of pro- duction in a State were the tiling to be most considered, it does seem to follow that a few staple callings conducted on a mam- moth scale would be more likely to effect that object than would a multiplicity of minor avocations. There are, however, considerations which render even that conclusion doubtful. Want of employment is the great drawback to all society. The day in which a workman stands idle is for him and for the State for ever lost economically, never to be regained. The more a nation tries to carry all its eggs in one basket, the more danger it incurs of periods of alternate glut and famine. In every period of glut the artisan stands idle and starves. There is another cause tending towards this same end. The society whose industries are confined to a comparatively few staple employments cannot hope to offer suitable labour to the various capacities of its people. That is another enormous cause of economic waste. There are people fit only for indoor employment, and others adapted for outdoor labour. A purely pastoral or agricultural country has no scope in it for the man possessed of artistic and constructive talents. Are all those talents to rot or rust ? The Cobdenist replies that they are of minor consequence, as compared with the greater maximum production of wealth. That seems to the Protectionist the point at which the foreign trade advocate breaks down most cruelly in his theorisings. His doctrine is one that ignores human wants and human capacities. It makes no account of the character of the race or its training. It treats every man as a wealth-producer of the same precise type, and would squeeze him through the same mould and crucible. It stands to reason that just as the most perfect instrument or product of any kind is that which is most varied in its parts, so the most perfect society is that in which diversity is carried to its greatest develop- EE ACHING TIIE GOAL 285 ment. A piece of fine silk in its production may call into activity qualities which would otherwise be entirely lost to the nation, and which are of the greatest use to other branches of industry. In the same way a nation which employs artificers in the fashion- ing of fine gold provides customers for those engaged in silk and linen weaving. Each promotes internal commerce, and in doing so creates a new wage fund, which multiplies itself even in the spending. Of all the people of a nation agriculturists reap most benefits from the diversity of employments. This may be seen in a country which is almost purely agricultural, like Ireland 01 India. A failure or partial failure of the crops casts the land into a condition of famine. In times of abundance the farm* possibly as badly off as in seasons of scarcity. If he has to depend entirely on a foreign market, his prices may be ruinously low- even when his yields are most abundant. There can be no commerce where there is no diversity, and where there is no commerce there is no true national life. Are we to shut our eyes to the manifest evils that spring from the business of the mere trader and transporter ? It is, 5. But °f course, admitted that the carrier and trader are Trade? useful in their sphere. But it has been shown that they are a tax and an imposition on the producer immediately they step beyond that sphere. The most economic and profit- able kinds of all production and all exchange are those in which no transport at all is needed. But it must happen that foreign trade is sometimes necessary owing to the products of the Equator being impossible of indigenous production in the frigid zones. But in these cases the efforts of the race would be well expended to reduce such trade to its minimum. Horace Greeley has suggested one method by which this might be regulated. It is that the exchanges should take place along lines of longitude rather than along lines of latitude : ' This, then (he says), is our position respecting commerce . . . that it should interchange the productions of diverse /.ones and climates, following in its trans-oceanic voyages lines of Longitude oftener than lines of latitude. 1 Greeley, Political Economy, p. 3'J, quoted by Henry George in Protection or Free Trade. 286 PBEFEBENTIAL TKADE There is more in this than meets the eye at first. The same latitudes, soils, and rainfall ought to be adaptable to the same class of industries, and transportation accordingly along parallels of latitude may be said generally to be an economic waste of effort. It may be, of course, that great mineral deposits, or copious water-power or water-supply, may cause an exception to this rule ; but as a rule it may be laid down that the carriage of grain across a continent to be consumed in the same latitude in which it is grown has been very frequently a waste of human power. Along the lines of longitude it is different, and Professor Thompson recognises the validity of this distinction in his " Political Economy," where he says : " Legitimate and natural commerce moves rather along meridians than along the parallels of latitude." But even in this trade along meridians vigilant observation has to be kept upon the trader and carrier to see that neither pushes his own unproductive business at the expense of local resources. It is this which caused Blanqui in his " His- toire de l'Economie Politique" to say that " experience has already taught us that a people ought never to deliver over to the chances of foreign trade the fate of its manufactures." George quotes Greeley as saying that as he bought his iron- work and machinery, not with money ultimately, but with his newspapers, he could better afford to pay 70 dollars to the readers of his papers than 50 dollars to the foreigner who never bought his papers. George seems to think that he has refuted Greeley when he says that "the ability of certain persons to buy American newspapers does not depend on their making presses, but on their making anything at all." Newspaper presses, he says, are not bought with newspapers, nor are newspapers bought with presses. If (says George), instead of making iron, the men to whom Mr. Greeley refers had made something else which was exchanged for British iron, Mr. Greeley's purchase of this foreign iron would have been just as truly an exchange of his product For theirs. I venture to observe that George's answer assumes several things to be true which are not true. His first error is that the American workers in iron could at will get other profitable work EE ACHING THE GOAL to do if Greeley bought his machines in England. This ifl a very common and exceedingly fallacious Free Trade assumption. It is made in the teeth of all experience. All economic history shows that employment is the one thing which all workers find more or less precarious. George's second unwarranted assumption is that if his American workers found something else to produce as profitably as iron they could always find a ready English market fur it. This matter of markets is a perpetual difficulty of trade and commerce both. For an economist worth the name to assume that a market is always ready is the veriest of nc He assumes a third thing which is absolutely untrue — that the market with England, if found, would be as profitable to America as the market at home. Adam Smith has most effectually dis- posed of that fallacy, and I have fully dealt with it in the Letter on the science of Protection. It is this loose Free Trade reasoning which has so effectually damaged the Cobdenist cause in the minds of thinking men. There is another topic on which the advocate of foreign trade is equally unhappy. According to his wont, he assumes that consumers always pay Customs duties. Now, no pay S scientific writer or thinker has any right to make any Customs gu^h assumption. He may say, as he does, that the thing is self-evident. But that is mere argumentatn e slovenliness and indolence. It is true that on the face of tin- matter it looks reasonable to say that any duty will be added by the trader to the original price of the article. But in trade, as in other things, there are scores of things which appear pro- bable and which are not borne out by experience. Most cer- tainly this question of who pays Customs duties is one of them. The Free Trader is hopelessly astray in this from the mere fact that he has pursued the deductionist method and argued from an assumed principle, instead of gathering data from the actual experiences of life and business. We have seen elsewhere, in Letter XX.. section the tenth, that in the great majority of cases the consumer enters a domestic market is compelled to pay the Customs 288 PREFERENTIAL TRADE as the toll of his entrance. Prices did not rise in America after the passage of the McKinley tariff. 1 British manufacturers sold more cheaply to America in order to hold their markets. This is why importers are always hostile to protective duties, because those duties are almost always paid by them, or by the exporting house, or shared between them. That is the experience of exporting manufacturers all the world over. Curtiss quotes an English tinplate maker as saying, when America raised her duty on tinplates, that English manufacturers would have to reduce the cost of produc- tion if they were to maintain their hold of the American trade, and he knew no other source from which relief covdd be got than the rate of wages. Indeed, Mr. Gladstone himself is cited as having laid down this doctrine in a speech in the House of Commons in " Hansard," vol. lxvi. p. 503. I have treated this subject so fully in its proper place that I will not further dwell on it here, and only mention it now as forming one of those fatal lapses in the Cobdenist argument which have vitiated the soundness of the whole superstructure. I am sure, my dear Prime Minister, that you feel with me that there is nothing on which we have a greater right to arraign the free-trade advocates than on their ignoring the 7 The . . lessons teachings of history. To me that fact appeared an from incredible one until I perceived that it springs directly out of their use of the deductionist method of argu- ment. Nevertheless it ought to be enough to convince any dispassionate thinker that an industrial science which ignores history is a priori in error. Sir John Macdonald, when in London, discussed with an English Free Trader this fiscal question as it affected Canada. The Englishman was quite ready to prove to Sir John that free trade must of necessity be the more profitable system for Canada. The Canadian Premier replied : " I know Canada. You do not. I know the marvellous change which has occurred since she adopted a tariff." It was a question of theory versus experience. 1 Curtiss, Protection and Prosperity, p. 320. REACHING THE GOAL John Bright once boasted that free trade would raise wages. Lord Masham asked him : " How can the importation of French boots possibly raise the wages of a London shoemaker I If yon will reply to this I will distribute some 100,000 copies of youi answer." It is needless to say that John Bright never venture I on the perilous feat of a reply. Curtiss points out an early English experience. Protection was introduced into England under the leadership of Lord Bacon. The country had been filled with tramps and begs out of work. A population of unskilled, ignorant, and dependenl people was transformed under the stimulating influences of protection into skilled artisans, industrious, enterprising, and ambitions citizens. Flourishing manufacturing centres sprang up in every pari of the realm, and England entered upon a career of industry, thrift, enter prise, and grandeur which lifted it above all other nations. On this phase of the value of the teaching of experience, Mr. Frederick Greenwood once wrote very aptly in the National Review : Trade in every variety is carried on elsewhere than in tin- British Islands. It is the grand pursuit of all civilised nation-, and of every offshoot from them, in new countries; yet none of them accept free trade. These various nations and communities are not all in one stage of commercial growth, nor subject to identical economic conditions, nor bred in the same habits and prejudices. < >n the contrary they are very different in these particulars; 1 >i it though it does happen that some are circumstanced almosi precisely as we are in relation to commercial affairs, yet none of them aoo free trade. The forms of government also vary in these differenl communities: absolute autocracy in one place, something less auto- cratic in another, elsewhere various degrees of democracy down to the most extreme; but no matter what the form of government may be, no matter whether the decision is made in the undisturbed cabinet of a czar, or in the roaring tumult of street politics, then no acceptance of free trade. The most frequent answer of I Traders to all this is that they have heard it before, which is true . but when are they going to account for it? It is time for them to begin upon that business, for, as surely they must know, universal u 290 PEEFEEENTIAL TEADE repudiation of their grand dogma affects the general imagination in England very much. 1 The practical man will always refuse to ignore the lessons of experience. Mr. Richard Pearson, one of the superintendents of the Bridgeport factory, is quoted by Mr. Curtiss as saying : I used to be a Free Trader at home. I believed in it ; but when I found that Germany was sending velvets into England, and practically shutting us out of the business right at our own hearth- stone, I got tired of free trade. 2 And now, what is the true meaning of preferential trade ? I shall not profess, much as I admire the courageous action of 8. Prefe- Mr. Chamberlain, that I mean by the term exactly rential what he does. With me protection to national indus- What it tries is preferential trade, and preferential trade, in its means. nrs t an d most important meaning, is protection to national industry. Henry George himself, Free Trader as he is, has declared : " Those Protectionists are right who declare that protection is the only justification for a tariff." :; In preferential trade we have enunciated the principle that lay at the root of List's " National System." It is that the first duty of every community is to itself. In Australia it takes the form that the Australian tariff must take primary note of Australian industrial requirements. With Mr. Chamberlain it means that the Empire at large is to take first care of itself. The root principle is the same in either case ; but with Mr. Chamberlain it is less scientific than it is with us in Australia. If List's principle of the "National System of Political Economy " is a true one, the unit of protection must always be the government of the State. In Australia the Commonwealth is the unit of protection. In the United States it is the Federal area. In Great Britain the unit is the United Kingdom and the Crown-governed dependencies. The reason is obvious. Each autonomous authority is intrusted with the safeguarding of its own people as against all other people. When that has been done in Canada, at the Cape, and in Australia, by such a tariff as will give the first preference to domestic production, it is 1 National Review, 1893. 2 Curtiss, Protection and Prosperity, p. 687. 3 Geoi'ge, Protection or Free Trade, p. 87. REACHING THE GOAL consonant with the theory of Empire that the second prefer* should be given to the people of the Motherland before ti of any other part of the world. The Free Trade dictum that all mankind are equally brel is not only not true, but demonstrably false. The Qernian, the Russian, or the Frenchman may be our ally to-day and our deadly enemy to-morrow. If we enrich them at one end of our trade in order to enrich ourselves at the other, when we mighl turn that stream of opulence into inter-imperial channels, it ie manifest that we are strengthening the possible foe who mar use his strength against us. For this reason the theory of cosnu >■ politan free trade utterly breaks down, and when Mr. Leonard Courtney says that he would rather see the British Empire crumble than that free trade should fail, he is simply an example of exalted fanaticism. , One of the objections urged against preferential trade is that protected manufactures always remain sickly. Thousands foreign trade advocates will repeat this statement without ;i suspicion of its being the very opposite of the truth. Then not a great industry existing to-day in the world which had not its origin in a protective system. Indeed, almost e\ industry carried on under a free-trade system becomes callow and sickly. English agriculture is a case in point ; so are the silk trade, the cotton trade, the tinplate trade, the glass-botth- trade, even the woollen trade of England. It was in the palmy days of English protection that British industries reached to the supremacy of the world. It has been under free trade thai they have fallen from that eminence. Are the industries of France, Germany, and America sickly ? Certainly they are all protected, and very highly protected. But they are strong enough to cut down British industries one by one. The hard- ware of the " sickly " protected industries of two of those coun- tries finds its way into Birmingham and Sheffield. Belgium U the very paradise of protected industries. Does il show symptoms of sickliness? The fact is a man may search the world in vain for an industry that has not been or is not pro tected. Ireland and Turkey are the lands of sickly industries and these industries have been made sickly by free imports. If then these things be so, what are we to deduce from 292 PEEFEEENTIAL TEADE them ? We have examined competitive cheapness and found it to be something not to be sought for, but sedulously conclu- avoided. We have looked into the nature of unre- sion. stricted competition and proved it to be fraught with the most merciless injustice and oppression. We have studied British classical political economy and shown that its professors are at war on first principles. We have seen that laissezfaire is a fallacy, and that the State owes a very real and ethical duty to its children. We have examined the trade history of the world at large and found that it teaches one consistent story, punctuated at every turn with proofs of the destructiveness of free trade. Indeed, we have analysed trade itself and found its methods to be as deadly to human happiness as war ; that it is no more fit to be free than fire and water ; that, like those elements, it is a necessity of human progress ; but that it requires as strict a regulation and confinement as either of them ; that the best of trade is a preferential commerce within the domain of each separate government ; and that the next best is a preferential trade carried on between the units of empire. The worst of all trade is that which is carried on between distant foreign coun- tries, where a single profit at each end is secured at the cost of great expenses of transport. We have seen that in these cases foreign producers have almost always to pay customs duties to the countries whose markets they exploit, and that in that respect it is always possible to make the foreigner provide a part of the national needs in finance. But above all we have proved that any people who neglect to establish amongst themselves a wide diversity of industrial production, even though it entail great cost, lay an embargo on the national expansion of human talents and capacities, and so stunt and cripple their own higher qualities. With all these cumulative proofs of the errors and falsities of Cobdenism, it is not too much to hope that the world will soon see the end of what has been to it an economic blight as deadly to many countries like Ireland as the Black Death. When that truth has thoroughly seized upon mankind as a scientific certainty, based upon evidence repeated a millionfold, we may expect to see realised even in England the lesson taught by List a half -century since of a " national system of political economy." INDEX Ability, 55, 136, 218 sqq. Acland, 46 Agriculture, 84, 85, 94, 95, 124, 125, 139, 149, 178, 256 — and Protection, 109 sqq., 167 — , decline in England, 88 sqq., 256 sqq. — and prices, 105, 106 America, Free Trade in, 136 sqq., 275, 276 — , her statesmen, 211 sqq. — , Protection in, 139 sqq. — , Production, 144 Aquinas, Thomas, 36 Argyll, Duke of, 12, 240, 244, 245 Arnold, Matthew, 61 Athenians, 37, 65 sqq. Augustine, St., 36 Australia, Free Trade in, 194 sqq., 277 — , Protection in, 200 sqq. — and gold, 194 sqq., 203 Bastiat, 31, 34 Beaulieu, Leroy, 24 Beckett, Sir E., 34, 60 Bismarck, 130, 179, 209 Blanqui, 121 sqq., 283 Bright, John, 39, 64, 65, 265 Burke, Edmund, 29, 213, 245 Cairnes, Prof., 62, 63 Canada, 207 Carey, Henry C, 28, 48, 76, 83, 98, 99, 106, 109, 120, 137, 138, 140, 150, 153, 223, 224 Carlyle, Thomas, 1, 13, 28, 43 Carthaginians, 37 Chatham, 213 Cheapness, 18 sqq., 273, 274 — , true and false formulae, 18, 30 China, 208 Clay, Henry, 211 Clive, 110 'sqq. Cobden, 6, 158, 216, 221 Colbert, 120, 210 Commerce, 75, 76, 223 Competition, 31 sqq., 27:!, 127 1 — in sale and wages, 39 iqq. — , suicidal, 36 sqq. Conservatism, 57 sqq. Consumers, 146 Co-operation, 57 sqq., 273, 274 — , moral effect of, ".77 sqq. Cost of Free Trade. 266 sqq. — of living, 85, 205. 217 sqq. — of Protection, 'J I:; sqq. Cotton, ] 65 Counter, views of. 2 15 Courtney, Right Hon. L., 10 Cromwell, si, 21 I Curtis, G. B., 162 Danger, 91 Debt, 125 sqq., 147 Deduction and induction, 1, 6 Defoe, 78, 84 Denmark and Sweden, 208 Diversity, 202, 216 sqq., 238 283 sqq. Dupin, 121 Duties, Who pay ! 250 sqq., 281 Edict of Nai i i -, 122 England, 70, 80 sqq., 126 — , Protection in, 271. 27.". Ethics, (io sqq., '.'■';. 282, 28 I Exports (see Imports) Fanaticism, 7. 181, 270 sqq. Farrer, Lord, 21, 2-, 29, 31, 10J L79, 211, 266 Fawoett, Henry, 1 7, 31 Fluctuation, 1 '17 France and Fr» 1 rade, 1 1»'> .«/•., and Erotection, 1 L6 sqq. 294 PREFERENTIAL TRADE France, Colbert, 120 — compared with England, 124 sqq. — , losses by war, 128 sq. Franklin, B., 5, 212 Free Trade, 1 sqq.,158 sqq., 194,263 sqq. — , fanaticism of (see Fanaticism) — , losses from, 207 sq., 256 sqq., 267 sqq. — , cost of, 256 sqq., 278 Froude, 95 George, Henry, 20, 30, 98 sqq. 115, 228, 230, 261, 262, 267 sqq. Germany, 172 sqq., 276 Gladstone, 54, 207 Gold, 194 sqq., 203 Grattan, 96 Great men's opinions, 209 sqq. Green, 94 sqq., 110, 120, 189 Greenwood, Fred., 214, 246, 270 sqq. Guyot, Yves, 218, 233 Hamilton, Alex., 136, 213, 253 Hamilton, Sir W., 233 Hanse Towns, 185 sqq., 276, 277 Happiness, 12, 233, 234 Harris, W. J., M.P., 130 Harrison, Fred., 44 Hastings, Warren, 110 Hearn, Dr., 32 History, 64 sqq., 187, 264, 265, 288 Holland, 188 sqq. — , rise and decline of, 188, 191 sq. Holyoake, G. J., 62 Home trade (see Trade) Hughes, Thos., Q.C., 52 Huguenots, 122 Idleness, 112 sqq., 260, 261 Imports and exports, 109 sqq., 127, 148, 151, 152, 167 sq., 179 sqq., 197 sq., 226 sqq. India, 108 sqq. — , wrongs of, 108 sqq., 276 — , mutiny of, 115 sq. Ireland, 93 — , ruin of, 93 sqq., 276 — , population of, 103 sqq. Jefferson, Thos., 212 Jerrold, Douglas, 216 Jevons, Prof., 11 ICincsley, 43 Laissez faire, 217, 237 sqq., 242 280 sqq. Lecky, W. E. H., 58, 59 Leo the Great, 36 Leo XIII., 42 Levi, Leone, 145 Lilly, W. S., 39, 64, 93 Lincoln, Abraham, 211 List, Prof., 82, 172, 174, 176, 210 Living wage, 63 Living, cost of (see Cost) Macaulay, Thos., ill, 189 Maine, Sir H., 35 Man, 11, 34, 237, 238 Manufactures, 86, 87, 94 sqq., 152. 259, 260 Markets, 75, 76, 89, 90, 223 sqq. Marriage, 110, 111 Marshall, Prof., 11, 16, 33 McCulloch, 81, 114 McKinley, 143, 212 Michelet, J., 115 Mill, J. S., 11, 15, 32, 35. 103, 218, 233, 234, 278 Monopoly, 82, 83 Motives, 15, 234 sqq. Mulhall, 126, 229, 257, 259, 260 Mutiny, 115 sq. Napoleon, 123, 127, 210 National system, 222 Navigation laws, 82 sqq. Newman, 31 Opinions, 209 sqq. Paley, Dr., 53 Pauperism, 88, 89, 99 sqq., 134, 144 Peruvians, 65, 70 Peter the Great, 156 Phillips, Willard, 211 Philosophy, 232 sqq., 277 Pitt, W., 96, 97 Plunkett, 97 Political economy, 8, 12 Pope, 4 Population, 2. sqq., 103,104, 143*£., 166 Portugal, 209 Poverty, 7, 8, 9 sqq., 26, 88, 89, 97, '. 18, 112 sq., 118 sq., 151 sqq., 196 Protection and wages (see Wages) — authorities, 4, 162, 172 sqq. — , benefits of, 64 sqq., 280 sqq. — , cost of (see Cost) [NDEX Protection, philosophy of, 232 sqq. — , science of, 96, 97, 117. L79, 216 sqq. QUEEN Elizabeth, 150 KiOLlGIOUS motives, 15 Ricardo, 228 Rogers, Thorold, 31, 62, 81 sqq. Rome, 208 Roosevelt, Theodore, 212 Ruskin, 11 sqq., o7, 136, 217. 233, 234, 276 Russia, 156 tqq. Say, J. B., 42. 121 Science, 1 sqq., 11. 215 tqq., 277 Selfishness, 12 Senior, 5, 11 Siberia, 166 Slavery, 70 sqq., 137 Smith, Adam, 5. 33, 111. 122. 160, 190, 213, 217, 226 Smith, Sydney, 101, 110 Socialism, 51, 183 Society, 12 sqq., 27, 39 tqq.. 57 sqq., Msqq., 217 sqq.. 239, 240, 280*??. Soderini, Count. 41, 216 Soldiers, 225 Spain, 72, 209 Spencer, Herbert, 214 Starvation, 109 sqq., 118 Stock tax (see Taxation) Sugar beet, 182 Swift, Dean, 102 Syme, David, 11. 15, 16, 37. 41. It. 234 Darifvb oi the ■• ' Id, 2 . duties "i (set I >u1 Taxation, 109 tq . L21 tq . 1 16, 162 L67 .«/