HF 
 
 UC-NRLF 
 
 1920 
 
 5M1 533 
 
REPORT OF THE 
 
 PROCEEDINGS OF 
 
 THE INTERNATIONAL 
 
 FREE TRADE CONFERENCE 
 
 LONDON, OCTOBER, 1920 
 
 PUBLISHED BY THE COBDEN CLUB, BROADWAY COURT, 
 
 WESTMINSTER, S.W., AND 
 PRINTED BY CASSELL AND COMPANY, LTD., 
 
 LA BELLE SAUVAGE, LUDGATE HILL, LONDON, E.C.4. 
 1921 
 
 Price 2/6 net 
 
Report of the Proceedings of 
 
 The International 
 Free Trade Conference 
 
 Lon don , October^ 1920 
 
 PUBLISHED BY THE COBDEN CLUB, BROADWAY COURT, 
 
 WESTMINSTER, S.W., AND 
 PRINTED BY CASSELL AND COMPANY, LTD., 
 
 LA BELLE SAUVAGE, LUDGATE HILL, LONDON, E.G. 4. 
 1921 
 
PREFACE 
 
 THE International Free Trade Conference of 1920 was 
 called together on the invitation of a Committee of British 
 Organisations, consisting of representatives of the Cobden 
 Club, the Free Trade Union, the Scottish and the North- 
 Western Counties Free Trade Unions, and the Midland 
 and North of England Free Trade Leagues. It was 
 hastily summoned on account of the urgent need for a 
 pronouncement of Free Trade opinion on the economic 
 crisis through which the world is now passing. 
 
 In spite of the unavoidably short notice, Free Traders 
 from many lands responded readily to the invitation, and 
 as will be seen by the list of members printed in this book, 
 the Conference was fully representative of the International 
 Free Trade Movement. Equally gratifying were the 
 number and quality of the papers sent in and the general 
 interest taken in the Conference. Prominence was given 
 to the discussions by the Press, to which, notably to the 
 Westminster Gazette, the thanks of the Conference Com- 
 mittee are due, while reports and comments on the proceed- 
 ings of the Conference have appeared in numbers of 
 Continental newspapers. 
 
 We believe, therefore, that the Conference has fully 
 realised its primary object an advertisement to the world 
 of the Free Trader's answer to the international economic 
 problems of the day. A record of the proceedings of the 
 Conference, then, cannot fail to have permanent interest 
 for Free Traders, and it has been decided to publish the 
 papers contributed to the debates in book form. Unfor- 
 tunately it is not possible to include the many valuable 
 
PREFACE 
 
 speeches contributed to the discussions, and we are obliged 
 to confine ourselves strictly to the papers specially written 
 for the Conference, and to summaries of the introductory 
 speeches given by the various chairmen. Limitations of 
 space also prevent anything but a reference to the interest- 
 ing speeches made at the Hotel Cecil dinner, to which the 
 foreign members of the Conference were invited by the 
 British Committee. 
 
 In conclusion, we have to thank those who so kindly 
 helped us in entertaining the foreign visitors to the Con- 
 ference. To their kindness it is largely due that our 
 foreign friends seem to have enjoyed their visit. Lord 
 and Lady Pentland gave the proceedings an admirable 
 start by entertaining all the members at their house in 
 London. The very possibility of holding such a Confer- 
 ence, especially at such a time of international strain, 
 serves to show the value of the Free Trade idea in bringing 
 the peoples of the earth into more friendly relationship and 
 realising the ideal of the Cobden Club, goodwill and peace 
 among the nations. 
 
 After the Conference was over, the following letter was 
 issued by the officers of the Cobden Club to the Press : 
 
 "At the close of the International Free Trade Confer- 
 ence, we wish to express our gratitude to the Press for the 
 admirable and full reports given of its proceedings. We 
 feel assured that through the very full account of the dis- 
 cussions given in the British Press, the significant fact 
 that it has been possible in these times of national and 
 industrial stress to gather such an assembly of men and 
 women representing fifteen nations, and of many opinions 
 on other hotly debated questions, in amicable discussion, 
 as well as the matter contained in the various speeches 
 given, will become widely known at home and abroad. 
 
 "We would like, however, to draw yet further attention 
 
 vi 
 
PREFACE 
 
 to what is involved in the very fact that such a Conference 
 is possible. That this is the case marks as clearly as any- 
 thing could the moral difference between Free Trade and 
 Protection. When the Protectionists of all lands can 
 meet and discuss their proposals in a like spirit, and with 
 a like result, they too may have a message for a world 
 weary of conflict. Free Traders may safely challenge their 
 opponents to hold one. And as it would be impossible to 
 arrive at harmony in an International Conference of Pro- 
 tectionists, so we can never arrive at International friend- 
 ship in a world governed by Protectionist ideas. It is 
 Free Trade and not Protection that makes for the healing 
 of the world's wounds; Protection can only irritate and 
 extend them. Yours, etc., 
 
 "SHEFFIELD, Chairman, 
 
 "T. FISHER UNWIN, Treasurer, 
 
 "J. A. MURRAY MACDONALD, Hon. Secretary, 
 
 "F. J. SHAW, Secretary." 
 
 vn 
 
International Free Trade Conference 
 
 London, October, 1920 
 
 LIST OF MEMBERS 
 
 Australia 
 James, C. F. Kirkland, A. M. 
 
 Austria 
 
 Drucker, Dr. Adolf, Director of Hertz, Dr. Friedrich, Hofrat, 
 Commercial Museum, Wien. Writer on Economic Questions. 
 
 Fried, Dr. Alfred H. Meinl, Julius, Merchant, Manu- 
 
 facturer. 
 
 Belgium 
 
 Bollinckx, Arthur, Industriel. Lecocq, Jules, Gen. Sec. Inter- 
 
 Carlier, Jules, President du national Organisation of In- 
 
 Comite Industriel de Belgique. dustrial Employers. 
 Elewyck, Ernest van, Industriel. Stobbelaers, Paul, Commission- 
 Lambert, Henri, Maitre de * aire en Marchandises. 
 
 Verreries. Strauss, Louis, M.P., Repre- 
 
 Lambert, Paul, Silks Importer sentative of City of Antwerp. 
 
 and Exporter. 
 
 Canada 
 Crerar, Hon. T. A., President, United Grain Growers, Ltd. 
 
 Czecho- Slovakia 
 
 Sasek, Alois, Directeur du Bureau de Presse, Prague. 
 
 Finland 
 
 Linna, E., Editor. Suviranta, Br., M.A., Repre- 
 
 Sahlbom, Jalmari, Managing sentative of " Unsi Suomi." 
 Director, Finnish Co-opera- Tiirikkala, Lauri, Representa- 
 tive Wholesale Society. tive of Suomen Osuus kaup- 
 
 pojen Keskuskunta R.L. 
 Helsinke. 
 
 ix 
 
 I 
 
LIST OF MEMBERS 
 
 France 
 
 Aunet, G. Biard d' ? Ancien Min- 
 isiire ple.nipotentiaire. 
 
 Benin, G., Sec. de la Ste. Fran- 
 C,aise du Chemin de Fer sous 
 marin entre la France et 
 1'Angleterre, Docteur en droit, 
 Ingenieur au Chemin de Fer 
 du Nord. 
 
 Clamageran, W., Warehouse- 
 owner. 
 
 Follin, H. L. 
 
 Gilly, H., Chimiste-expert pres 
 les Tribunaux, a Boufarik, 
 Alger. 
 
 Jouanny, G. 3 Ancien Industriel 
 et Ancien Membre de la 
 Chambre de Commerce de 
 Paris, Tresorier de la Ligue 
 du Libre Echange. 
 
 Klotz, H., Membre Ste. 
 d'Economie Politique. 
 
 Krippleber, G. P., Merchant. 
 
 Meyer, Charles L., Ingenieur. 
 
 Moch, Gaston, Major, Author. 
 
 Paturel, Germain, Constructeur, 
 Me"canicien, Conseiller du 
 Commerce Exterieur de la 
 France. 
 
 Pierson, J., Mechanical En- 
 gineer, Manufacturer of 
 Patent Pierson Gas-Producer . 
 
 Raffalovich, A., Correspondant 
 de PInstitut de France. 
 
 Rau, H. A., Merchant. 
 
 Schelle, Gustave, Membre de 
 PInstitut, Vice-President de 
 la Ligue du Libre Echange. 
 
 Tautain, G. L., Redacteur en 
 Chef du "Monde Nouveau." 
 
 Van der Vlugt, Dr. E., Direc- 
 teur du "Monde Nouveau." 
 
 Yves-Guyot, President de la 
 Ste. d'Economie Politique de 
 Paris, Redacteur du "Journal 
 des Economistes," President de 
 la Ligue du Libre Echange. 
 
 Germany 
 
 Butzke, Erich, Exporter and Schwarz, Wolfgang, General 
 Importer. Secretary of German "Liga 
 
 Butzke, Hermann, Merchant. fur Volkerbund." 
 
 Marhefka, E., Member of Com- 
 mission of Restitution. 
 
 Hungary 
 
 Bernat, S. de, Vice-President of Hungarian Farmers' League 
 and Vice-President of Co-operative Union. 
 
 Italy 
 
 Bertolini, A., Professor and 
 Secretary of Chamber of Com- 
 merce, Bari. 
 
 Editor of "Economista." 
 Giretti, Dr. E., Silk Manufac- 
 turer. 
 
 Lega Antiprotezionista, Roma. 
 Salvemini, G., Deputato al 
 
 Parlamento Nazionale. 
 Scopoli, Contessa Lisa. 
 
 Japan 
 
 Kaneko, J., Lecturer of Tokyo Naito, A., Professor of the 
 College of Commerce. Tokyo College of Commerce. 
 
 Katsuta, S., Secretary to the 
 Bank of Japan. 
 
LIST OF MEMBERS 
 
 Jugoslavia 
 
 Kresic, Milan, Hon. Member of Miyatovich, Cheddomil, for- 
 Cobden Club. merly Serbian Minister to 
 
 Court of St. James. 
 
 Netherlands 
 
 Alderwerelt, D. de Roo, 
 Assistant at Commercial Uni- 
 versity, Rotterdam. 
 
 Beuningen, D. G. van, Gen. 
 Manager of the Coal Trading 
 Association, Rotterdam. 
 
 Buning, W.. de Cock. 
 
 Donker, A., Shipowner and 
 Shipbroker. 
 
 Dorp, Miss E. C. van, Dr. of 
 Law, Delegate of Dutch Free 
 Trade League. 
 
 Gijn, Dr. Ant. van, late Finance 
 Minister, Chairman of Dutch 
 Free Trade League. 
 
 Heringa, Dr. A., Professor of 
 Political Economy at the 
 Agricultural College, late 
 Secretary of Dutch Free 
 Trade League. 
 
 Mees, A. C., Manager Inter- 
 nationale Cr. and Tr. Cy. 
 " Rotterdam." 
 
 Mosch, H. R. du, Member 
 Chamber of Commerce, Am- 
 sterdam. 
 
 Nierop, Dr. J. S. van, Director 
 Amsterdamscher Bank. 
 
 Costing, P., Substitut-Officier 
 van Justitie. 
 
 Rossem, L. van, Member Cham- 
 ber of Commerce, Rotterdam. 
 
 Stuart, Dr. C. A. Verrijn, Pro- 
 fessor of Political Economy at 
 University of Utrecht. 
 
 Stuart, J. H. Cohen, late Man. 
 Director Netherlands Bank for 
 Russian Trade, Petrograd. 
 
 Tetrode, P. J. C., Managing 
 Director of the Netherlands 
 Bank. 
 
 Vereeniging "Het Vrije Ruil- 
 verkeer" Secretary, C. D. 
 Salomonson. 
 
 Poland 
 
 Janicki, Dr. S., Editor "Polish Economic Bulletin." 
 
 Russia 
 
 Ivanoff, S. S., Co-operator. 
 
 South Africa 
 Evans, S. 
 
 Sweden 
 Hedberg, Anders, Representing Co-operative Union. 
 
 Switzerland 
 
 Velleman, Dr. Antoine, Privat- 
 docent a PUniversite' de 
 ^**,.i, v^. Geneve. 
 
 Natural le Coultre, A. & Co. Welti, Dr. H. R., Delegate of 
 International Shipping Bourse Suisse du Commerce, 
 
 Agents. Berne. 
 
 Trumpy, J. W. Messleny, Man- 
 ager of "Journal Economique 
 European." 
 
 xi 
 
 Almerus, Ulysse, Editor. 
 
 Frey, J 
 
 Gallati 
 
 Frey, J. H. 
 llati. G. 
 
LIST OF MEMBERS 
 
 The United States 
 Dillard, James Hardy, Dr. Warner, Hon. J. de Witt, Coun- 
 
 .L/lllcti U j J clUiCS iArtluy, i>i. 
 
 Hancock, Hon. James Denton, 
 
 LL.D. 
 Lee, Ivy L. 
 Shepard, Harvey N. 
 
 Great 
 Aberconway, The Rt. Hon. 
 
 Lord. 
 
 Ainsworth, Sir J., Bt. 
 Allen, J. E. 
 Anderson, W. 
 Ashton, Lord, of Hyde. 
 Ashworth, Miss E. H. 
 Barrow, H. 
 Basnet, Miss. 
 Beach, J. W., J.P. 
 Beard, G. 
 Beauchamp, Rt. Hon. Earl, 
 
 K.G., K.C.M.G. 
 Self our, E. 
 Bell, Sir Hugh, Bt. 
 Bevan, C. 
 Bideler, Mrs. 
 Bisschop, W. R., D.C.L. 
 Bliss, Jos., J.P. 
 Bliss, Mrs. 
 Bloye, H. 
 Bonar, J., LL.D. 
 Bonner, Mrs. Bradlaugh. 
 Booth, C. 
 Bowring, F. C. 
 Bright, Miss A. 
 Brown, J., Jr. 
 Brunker, E. G. 
 Brunner, Sir John, Bt. 
 Byles, Lady. 
 Cadbury, G. 
 Carryer, A. D. 
 Carter, G. Wallace. 
 Chalmers, The Rt. Hon. Lord, 
 
 f f T4 
 
 Chalmers, W. B. 
 Champney, J. E. 
 Chivers, C. 
 Clerk, Sir Dugald, K.B.E., 
 
 D.Sc., F.R.S. 
 Collins, A. Ross. 
 Cooke-Taylor, C. R. 
 Cox, Dr. A. 
 Currie, Lady. 
 David, A. J. 
 
 sellor-at-Law. 
 Winch, Erving, Secretary, Anti- 
 Imperialist League. 
 
 Britain 
 
 Davies, Major D., M.P. 
 Dodgson, E. O. 
 Donald, R. 
 
 Donaldson, Major E. J. 
 Drew, R. S. J. 
 Duckers, J. S. 
 Duveen, E. J. 
 Eckhard, G. 
 Edwards, W. D., J.P. 
 Elliott, The Rev. M.J., D.D. 
 Emmott, The Rt. Hon. Lord, 
 
 G.C.M.G., G.B.E. 
 Farrer, Lord. 
 Fellowes, C. A. 
 Fitzgerald, M. O. 
 Fletcher, Lady. 
 Fordham, Sir G. 
 Forrester-Paton, A. 
 Fry, Miss A. 
 Gardiner, A. G. 
 Garnett, T., J.P. 
 Gibb, Sir G. 
 
 Glen-Coats, Sir T., Bt., C.B. 
 Grant, W. H., J.P. 
 Greening, E. O. 
 Gutteridge, M. 
 Haig, J. C. 
 Harris, H. 
 Harvey, A. G. C. 
 Haworth, G. C., J.P. 
 Henderson, J. 
 Hmdle, J. FJ. 
 Hirst, F. W. 
 Hirst, Mrs. 
 Ilobson, J. A. 
 Hooper, B. M. 
 Hughes, A. 
 Hunter, Miss D. M. 
 Isaacs, W. 
 
 Jackson, Rt. Hon. F. Huth. 
 Jacoby, J. 
 Jones, E. P., J.P. 
 Jones, Rt. Hon. Leif. 
 Lambert, F. H. 
 Lang, Dr. P. 
 
 xn 
 
LIST OF MEMBERS 
 
 Law, A. 
 
 Le Roy-Lewis, Col. H., C.B., 
 
 C.M.G., D.S.O. 
 Leaf, Miss. 
 Leaf, W. 
 Ledger, G. 
 Lee, E. H. 
 Leon, Sir H., Bt. 
 Leverhulme, Lord. 
 Lithgow, S. 
 Lochhead, Wm. A. 
 Lupton, A. 
 MacArthur, Mrs. 
 Macdonald, Rt. Hon. J. A. 
 
 Murray, M.P. 
 Maclean, J. G. 
 Maclean, Rt. Hon. Sir D., 
 
 K.B.E., M.P. 
 Maddison, F. 
 Manderfield, C. 
 Manton, Sir H. 
 Mason, D. M. 
 Massingham, H. W. 
 Mather, Rt. Hon. Sir W. 
 Mathieson, Geo. 
 Melrose, C. J. 
 Merriam, C. P. 
 Metcalfe, G. 
 Methuen, Sir A., Bt. 
 Michaelis, M. 
 Micklem, N., K.C. 
 Milnes, A., M.A. 
 Molden, J. W. 
 Molteno, P. A. 
 Murray, Professor Gilbert. 
 Newbould, J. F. 
 Nicolson, M. 
 Nuttall, H. 
 Ogden, H. J. 
 Oldmeadow, G. E. 
 Orr, G. 
 Paish, Sir G. 
 Parke, E. 
 
 Parker, C. E., J.P. 
 Parkinson, W. 
 Parmoor, Rt. Hon. Lord, 
 
 K.C.V.O. 
 
 Peel, Major the Hon. G. 
 Pentland, The Rt. Hon. Lord. 
 Petre, Miss D. M. 
 
 Pollard, F. E. 
 
 Powell, J. 
 
 Ramsay, Miss. 
 
 Rea, W. R. 
 
 Reckitt, Sir J., Bt. 
 
 Reid, Professor J. S. 
 
 Richards, R. C. 
 
 Roberts, C. 
 
 Robinson, A. 
 
 Rollings, G. W. 
 
 Rowntree, A. 
 
 Rowntree, B. S. 
 
 Schroeder, C. E. 
 
 Schuster, Dr. E. J. 
 
 Scott, A. H. 
 
 Scott, C. P. 
 
 Seely, Sir C., Bt. 
 
 Shaw, F. J. 
 
 Shaw, Mrs. 
 
 Sheepshanks, Miss. 
 
 Sheffield, Lord. 
 
 Smith, A. B. 
 
 Smith, J. 
 
 Smith, Sir G. H. Fisher, J.P. 
 
 Smyth, Mrs. E. C. 
 
 Spender, H. 
 
 Spender, J. A. 
 
 Stevenson, Sir D. M., Bt. 
 
 Stewart, R. 
 
 Storey, H. 
 
 Swanwick, Mrs. 
 
 Topp, Capt. A., J.P. 
 
 Treowen, Maj.-Gen. The Lord. 
 
 Trevelyan, C. 
 
 Tweedale, S. 
 
 Unwin, Mrs. Cobden. 
 
 Unwin, T. Fisher. 
 
 Villars, P. 
 
 Vivian, H. 
 
 Ward, Miss. 
 
 Watson & Philip, Ltd. 
 
 Weiss, C. 
 
 White, Capt. J. Bell, C.B.E., 
 
 R.N.R. 
 White, S. 
 
 Williams, A., M.P. 
 Wills, C. P. 
 Withers, Hartley. 
 Wood, W. H. 
 Wright, C. 
 
 Xlll 
 
CONTENTS 
 
 
 Session Subject Page 
 
 FIRST . THE WORLD'S EXISTING ECONOMIC POSITION : 
 HOW FAR CAN IT BE REMEDIED BY FREE 
 TRADE ? 3 
 
 SECOND . THE HIGH COST OF LIVING : How IT CAN BE 
 
 REMEDIED BY FREE TRADE 
 
 FINANCIAL STABILITY: How FAR IT CAN BE 
 
 RESTORED BY FREE TRADE 
 
 THE OPEN DOOR 
 
 THIRD . 
 
 FOURTH . 
 FIFTH . 
 
 SIXTH 
 
 63 
 
 FREE TRADE AS A NECESSARY CONDITION OF 
 
 AN EFFECTIVE LEAGUE OF NATIONS . .103 
 
 THE DANGER OF PROTECTION IN GREAT 
 
 BRITAIN 131 
 
FIRST SESSION 
 
 Tuesday, October 5 
 
International Free Trade 
 Conference 
 
 REPORT OF PROCEEDINGS 
 
 FIRST SESSION - TUESDAY, OCTOBER 5 
 Chairman-LORD BEAUCHAMP 
 
 SUBJECT : 
 
 The World's Existing Economic Position: How 
 far can it be remedied by Free Trade? 
 
 THE CHAIRMAN said : It is my first duty to offer to all the 
 delegates, whether from this or foreign countries, a very 
 hearty welcome to this Conference on behalf of the Cobden 
 Club. You will, I am sure, agree with me that the Cobden 
 Club were well advised in calling a Conference at this 
 time, when we are beginning to feel the full effects of the 
 chaos which fell upon the world with the declaration of war 
 in August, 1914. To-day there is everywhere a shortage 
 of commodities. There are some States which have too 
 much; there are a great many States which have not got 
 enough to export. There has been a complete collapse in 
 the method of exchange : this can only be put right by a 
 very much extended exchange of goods. There are six 
 
 3 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 heads under which the topics for discussion have been dis- 
 tributed. They are all interdependent. Our Conference 
 to-day is an international Conference. It is not a confer- 
 ence in which we are discussing whether Free Trade is 
 good for this country or not, because in this country we 
 are Free Traders, and we mean to remain Free Traders. 
 But it is not only of ourselves that we wish to talk or 
 think. The matter is one of especial importance in view 
 of the number of new States set up in Europe. There are 
 a great many more States than there were, many of them 
 small, therefore to some extent economically weak. There 
 will be a very real danger to those States if their founda- 
 tions are not well and truly laid, and if hostile tariffs 
 directed against them are set up everywhere. It is obvious 
 such tariffs must be a real danger to the future peace of 
 Europe. It seems to me very important that these new 
 States should not be encouraged to set up fresh tariffs, 
 making it still more difficult to export commodities. The 
 position of Vienna is one which comes specially home to 
 a good many of us in this country, and there is no greater 
 example of the danger of fresh tariffs than the position of 
 Vienna to-day. If we were to set up tariffs between Lanca- 
 shire and Yorkshire, or if America was to set up tariffs 
 between New York and Pennsylvania, we should think it 
 was exceedingly foolish. So long as there are tariff walls 
 set up between Poland and Hungary, it is really equally 
 reasonable you should set up these other tariff walls as 
 well. It is of very real importance that I should read in 
 the papers this morning that the International Economic 
 Conference at Brussels has passed unanimously a resolu- 
 tion in favour of general Free Trade. That appearing to- 
 day is a specially good augury for the success of our 
 Conference. Never since our civilisation assumed its pre- 
 sent form has it been in so much danger as it is to-day, and 
 if we are to return to anything like our pre-war prosperity, 
 
 4 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 if we are to continue our progress on ordered lines, then we 
 believe that it is to Free Trade we must chiefly look. We 
 are supported by arguments from all parts of the world. 
 We are fortified by the experience of years, and with these 
 to help us we believe we ought to be able to convince even 
 the Protectionist nations of the value of Free Trade. That 
 we may be able to do this, and that that may be one of 
 the results of our Conference is, I am sure, the fervent hope 
 of everybody here this morning. Now I have much 
 pleasure in calling upon Mr. Hartley Withers to read his 
 paper. 
 
 The Economic Situation and how far it can be helped 
 by Free Trade. 
 
 By Mr. HARTLEY WITHERS, 
 
 Editor of The Economist. 
 
 THERE is no need to dwell at length on the chief facts of 
 the present economic situation, because they .are .brought 
 home to all of us in varying degrees by the. discomforts 
 and distress of daily experience. In most countries most 
 people, nowadays, have to .go without goods and services, 
 necessaries, pleasures and amenities, which in former days 
 they were able to enjoy. In other words, scarcity of goods 
 and a lowered standard of comfort are the most obvious 
 marks of the present day economic situation. The reasons 
 for this state of things are also obvious, and have been 
 emphasised over and over again in the numberless publica- 
 tions that have dealt with it. The war has brought with 
 it and left behind it destruction, disorganisation and social 
 bitterness, which shows itself practically in the unwilling- 
 ness of the wage earners to work as hard as they worked 
 before the war, because the war has shown them that at 
 a time of crisis they were able to extort from the employing 
 classes an improvement in their standard, which was cer- 
 
 5 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 tainly long overdue. And many of them think that the 
 security of this standard, which they are rightly determined 
 to maintain, can be achieved by limitation of output. This 
 restriction, however, is by no means confined to the wage- 
 earning classes. The disorganisation and impoverishment 
 of some of the greatest nations of the world have produced 
 a great gap on the map of international commerce, and the 
 whole machinery of trade is out of joint owing to the loss 
 of what were once ready markets and active sources of 
 supply. In these circumstances the organisers of industry, 
 having been debauched during the war by the easy earning 
 of enormous profits, are tempted now to restrict output 
 rather than face the fall in prices and the lowered scale of 
 profits with which they are threatened by the limited 
 demand produced by the impoverishment of many of the 
 best buyers in the world's market-place. The combined 
 effect of these different causes, which react upon one 
 another, and increase their cumulative result, is that the 
 whole machinery with which the wants of man were sup- 
 plied is diminished, damaged and out of gear materially, 
 and works slowly and sluggishly owing to the psycho- 
 logical factors produced by the war. It is perhaps neces- 
 sary to note that the destruction and deterioration of capital 
 extends far beyond the actual material damage done in the 
 course of military and naval operations, though their effect 
 is quite appalling enough. Besides this, there have been 
 six years in which in most countries it has been difficult, 
 and in many it has been impossible, to maintain the equip- 
 ment of production and transport at its former efficiency. 
 In other words, the question of depreciation, a factor the 
 importance of which is not often grasped by the general 
 public, has had to be to a great extent neglected, because 
 it has not been possible to obtain the labour and material 
 required for purposes of maintenance. Anyone who has to 
 go on a railway journey, even in this country which is said 
 
 6 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 to be more fortunate in this respect than most of the nations 
 of Europe, finds that there are fewer trains to carry him, 
 that they are often disgracefully overcrowded, that they do 
 not run as fast as they used to, and that they are even more 
 unpunctual than they were. This is a mere matter of 
 personal inconvenience, but when we reflect that the same 
 causes also make the transport of goods by land a much 
 slower and more costly process owing to diminished and 
 worn-out rolling stock, deteriorated permanent way, and 
 a lowered standard of work by the human factor, we see 
 how important a matter this question of depreciation can 
 become if it is long enough neglected. 
 
 As to the disorganisation involved by the present state 
 of affairs, the enormous importance of its effects is at 
 once apparent. Before the war we had brought into being 
 an international economic machinery, which, by the inter- 
 change of capital, of goods and of services throughout the 
 world, had greatly improved the general standard of com- 
 fort at least, among more highly civilised countries, 
 though many of us believed that the way in which man- 
 kind's increased production was distributed required a 
 good deal of improvement, and that the power of further 
 expansion in production was almost immeasurable. Owing 
 to the war, this whole machinery has been disorganised. 
 Some of the richest producers have been so impoverished 
 that they have the greatest difficulty in securing food and 
 raw materials to supply the needs of their own popula- 
 tion, and so are more or less out of the international 
 market, not because they do not want things, but because 
 they cannot pay for them, and not because they are not 
 willing to produce, but because they cannot pay for the 
 machinery and materials that they need before they can 
 do so. And this purely economic factor has been accen- 
 tuated by political influences. The most obvious of these 
 is the delay on the part of the Entente Powers in fixing 
 
 7 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 the amount of the indemnity to be paid by their late 
 enemies; until this sum is agreed on it is obvious that 
 it is not possible for the Central Powers to make the 
 financial arrangements which might otherwise be open to 
 them, because possible- lenders do not know the extent 
 of the prior charge behind which they would have to rank. 
 But there is much more than this. The effect of the 
 war has been to call into being a number of new nations, 
 which have shown, perhaps naturally, a strong desire to 
 strengthen their position at the expense of their neighbours, 
 and this feeling has in some cases expressed itself in actual 
 warfare, but more often in the delusion that they can do 
 so by raising barriers against the passing of goods in and 
 out of their frontiers. Thus the creation of these new 
 national areas has had the effect of increasing the dis- 
 organisation due to the impoverishment caused by the 
 war. And more of the wheels of the pre-war machinery 
 have been put out of gear. 
 
 With regard to the psychological factor, as. shown in 
 the attitude of the wage earner and the organiser of 
 industry, the desire for better wages, shorter hours., large 
 profits, and restricted competition are, of course, no new r 
 feature in the economic situation. What is new is the 
 bitterness in all classes which 'has been aroused during the 
 course of the war and the economic delusions which this 
 bitterness has fostered. There is, for example, a general 
 belief among the wage earners that because the various 
 Governments have raised enormous loans during the war, 
 most of the interest on which is paid to the well-to-do 
 classes, therefore the well-to-do classes have been greatly 
 enriched by the war. In this country at least, I think it 
 may safely be said that the well-to-do classes pay their 
 full share in taxation of the war loan interest that they 
 receive, and that one of the few satisfactory economic 
 results of the war has been a general improvement in the 
 
 8 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 standard of the working classes, especially of those 
 members of them who were worst paid before the war. 
 
 Among the well-to-do classes, on the other hand, there 
 is a common delusion that the wage earners are doing 
 something wicked when they try to secure for themselves 
 the best possible wages and the best possible conditions 
 of labour. It is surely not only the right, but the duty 
 of the wage earners, in the interests of the country as a 
 whole, as well as of themselves, to secure the best possible 
 share of the goods which they help to produce, and it is 
 only when they push their demands to a point which may 
 impair the productive efficiency of the community as a 
 whole that other classes have any right to question their 
 action. But it is not only with regard to their attitude 
 towards labour that the minds of many employers have 
 been warped by the experiences of the last few years. 
 During the war they had a practically unlimited market 
 for s.uch goods as they were able to produce. They had 
 not to consider the whims of fashion and changes in the 
 capricious desires of consumers, and they were relieved 
 from all fear of foreign competition. They consequently 
 find it difficult to reconcile themselves to a state of affairs 
 which robs them of these advantages and to make up 
 their minds to the lower rate of profit which seems to 
 threaten thenf if they get back to work on the old basis. 
 All these causes of bitterness and delusion, which have 
 so important an effect on the smooth working of the 
 economic machine, have been accentuated by the rise in 
 prices that has been so glaring a feature of the war's 
 economic history. The rise in prices has made the wage 
 earners believe that the well-to-do classes have been gain- 
 ing wealth, which Is, in fact, a mirage produced by depre- 
 ciated currency, and the well-to-do classes have also been 
 deluded by the theory that the wage earners have secured 
 an enormous improvement in their position ; while the 
 
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 wage earners themselves maintain that the advance in 
 their wages has not even kept pace with the rise in prices 
 of all that they have to consume. 
 
 From this brief and platitudinous review it is clear 
 that the present economic position is chiefly marked by 
 poverty due to destruction of capital, impaired capital 
 equipment, disorganisation of the machinery by which 
 goods were formerly produced and distributed, and bad 
 feeling between nations and between classes. And it is 
 an easy task to show that Free Trade, though it cannot 
 claim to cure all these evils, can do much to amend them. 
 When an individual or a nation, or a still wider com- 
 munity, finds that it is poor and unable to enjoy the 
 comforts which it formerly consumed, he or it will natur- 
 ally desire, if it thinks out its circumstances clearly, 
 to be able to make its purchases and sales in the widest 
 possible market. Anything like restriction of the area 
 in which purchases and sales can be made must necessarily 
 tend to make purchases dearer and sales less advantageous. 
 By Protection a country taxes itself in order to encourage 
 certain industries which it wishes to stimulate within its 
 own borders either for military reasons or because for 
 reasons of national prestige it considers that it ought not 
 to have to depend on other countries for the supply of 
 certain commodities. In other words, Protection is a 
 luxury which nations are quite entitled to indulge in if 
 they think it worth while to pay for it, but it invariably 
 costs them something. To avoid misunderstanding, it 
 must be acknowledged that certain countries have in the 
 past achieved great wealth under a system of Protection, 
 the most obvious examples being the United States and 
 Germany. But in both these cases the special reasons 
 which caused the prosperity are well known to all my 
 hearers. 
 
 In the case of Germany a united empire had taken the 
 
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 place of a number of smaller states, and by this means the 
 interchange of commodities had been greatly stimulated. 
 The United States is an area of unbounded possibilities, 
 able to supply itself with nearly all the commodities man- 
 kind can desire, and it is highly significant that Mr. 
 Boyden, the American representative at the Brussels Con- 
 ference, last week gave to divided and distracted Europe 
 a lesson from American history. "America," he said, 
 "after a frightful civil war, united herself so completely 
 that there is not even a customs house from end to end of 
 the continent. That union is the source of her strength and 
 her wealth." If Europe would listen to the voice of this 
 representative of a great Protectionist country and have 
 not even a customs house from end to end of the Continent, 
 she would surely find that in her case also this union would 
 be the source of strength and of wealth. When goods are 
 scarce and dear it ought to be unnecessary to emphasise the 
 fact that any nation which restricts their free entry into 
 its market only helps to make them dearer and scarcer, 
 and that any nation which throws down barriers is helping 
 to make goods cheaper and more plentiful. 
 
 Thus from the general poverty which is the result of 
 present economic conditions Free Trade can certainly be 
 claimed as an assistance towards alleviation. It cannot 
 immediately make good the destruction and disorganisa- 
 tion produced by the war or heal the bitterness between 
 classes or the acuteness of national jingoism, which are 
 symptoms of after-war hysteria. But in so far as all these 
 evils can be remedied by a freer supply of goods produced 
 in those countries where they can be grown and made most 
 cheaply and distributed without restriction into all the 
 markets where there are buyers, Free Traders can claim 
 that by the policy in which they believe these results can 
 be obtained. The lowering of prices which greater free- 
 dom of trade would bring with it would do much to cure 
 
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 social bitterness and the belief of the wage earners that they 
 are being exploited by profiteers; and freedom of com- 
 petition would be a most wholesome tonic for those em- 
 ployers and organisers of industry whose notions concern- 
 ing the profits that they can expect to earn have been 
 abnormally swollen by the war. When the war broke out 
 it will be remembered that the belligerents, in their eager- 
 ness to secure commodities, immediately abolished or 
 reduced their tariffs on imported goods. What the war 
 crisis compelled, the peace crisis also makes imperative. 
 All nations are in need of goods ; some of them are unable 
 to pay for them and consequently we see the symptoms of 
 glutted markets in one place along with acute scarcity in 
 others. But those who propose to remedy this state of 
 affairs by imposing further restrictions on production and 
 distribution are surely making a great mistake. If there 
 is a glut in one place and scarcity in another the cure for 
 this state of things is freer distribution by Free Trade and 
 by the granting of the credits the supply of which is at 
 present delayed owing to the failure of the politicians to 
 restore real peace. 
 
 And if Free Trade will be a help in the reconstruction 
 that is now necessary, it will also be a strong bulwark of the 
 enduring peace that we hope to establish henceforward. 
 Free Trade teaches every nation to buy from its neigh- 
 bours whatever they can produce more cheaply, and the 
 fear of consequent unemployment is a bogey that exists only 
 in fancy, because other nations do not give the goods to 
 the buyers but will only send them in exchange for goods 
 and services produced and delivered. In so far as nations 
 trade with their neighbours they become mutually depen- 
 dent and their prosperity depends on peace. The late war 
 has shown us that weapons of destruction are now capable 
 of such development that if we cannot maintain peace our 
 civilisation will crown its somewhat questionable achieve- 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 ments by destroying itself. If, then, Free Trade makes 
 for peace as it certainly does those who are working now 
 for Free Trade are working to save civilisation. 
 
 The debate was continued by Alderman Louis Strauss, 
 of Antwerp, who protested against the prominent place 
 given in the agenda to a German representative, Lord 
 Sheffield, Sir Hugh Bell, Mr/Arnold Lupton, M. Yves- 
 Guyot, Miss Dorothy Hunter, Mr. Charles Bevan, Sir 
 George Fordham, M. Raffalovich, Dr. Cock Buning, M. 
 Cohen Stuart, M. Henri Lambert, Miss Petre and Sir 
 George Paish. 
 
SECOND SESSION 
 
 Tuesday, October 5 
 
SECOND SESSION - TUESDAY, OCTOBER 5 
 ChairmanMr. J. A. SPENDER 
 
 SUBJECT: 
 
 The High Cost of Living: How it can be 
 Remedied by Free Trade. 
 
 The CHAIRMAN, in a few introductory remarks, intimated 
 that he would reserve what he had to say until after Dr. 
 Van Dorp had read her paper. He then introduced Dr. 
 Van Dorp. 
 
 The High Cost of Living : How it can be Remedied 
 by Free Trade. 
 
 By Dr. E. C. VAN DORP. 
 
 THE high cost of living, caused by the increased prices of 
 all commodities without exception, is a source of sorrow 
 and care to all who are not so rich that prices are a matter 
 of indifference to them that is, to the vast majority in 
 all countries. It is also the cause of much social unrest. 
 Now it is very easy to prove that Free Trade is a way to 
 reduce prices, for Protection has always been advocated 
 as a remedy for low prices, as it would increase them, if 
 not by the whole amount of the duty, at least by part of it. 
 But the mere mention of this indisputable fact would 
 not suffice to check the strong current in favour of 
 Protection caused by the war. In consequence of high 
 prices, wages are raised; in consequence of high wages, 
 unemployment is created. It is an ancient error that 
 
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 Protection improves employment; yet the means by which 
 it is attempted to exorcise the evil of social unrest is 
 Protection. W'hole districts have been devastated; 
 factories must be rebuilt from the foundations. Yet to 
 overcome the difficulties which those who have to do this 
 work encounter, they are surrounded by a wall of Customs 
 duties, prohibitions, and monopolies. 
 
 The troubles which many countries the Netherlands 
 among them experienced when importing cereals roused 
 the cry for "the independence of the national corn supply." 
 Yet the hollowness of this cry was clearly proved by the 
 fate of Germany, which for forty years had been com- 
 pelling her citizens to eat dear bread under the delusion 
 that she could thus be self-supporting during war. 
 Hatred and national egoism have been aroused to such a 
 degree that each country tries to keep all raw materials 
 to itself and deny them to others. 
 
 To meet these strong currents it is necessary to do 
 more than prove that Free Trade lowers prices by an 
 amount which, in the opinion of the Protectionists, is but 
 small. The purport of this contribution is, therefore, to 
 prove that without Free Trade prices will increase at a 
 constantly more alarming rate. What is more, a recon- 
 struction of the ruined world will be impossible, and, as 
 Mr. Lloyd George expressed it, "Civilisation may be 
 shattered into atoms." 
 
 The causes of the high prices are two : the one concerns 
 the goods, the other the money. 
 
 Prices -express in money the exchange value of goods. 
 Price implies, therefore, a relation between the value of 
 money and that of goods. In this way high prices may 
 mean solely that the value of money has decreased because 
 too much money has been put into circulation. It is 
 undeniable that in all countries part of the present increase 
 of prices must be ascribed to this cause. 
 
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 An increase in prices for this cause alone does not 
 prove that the world has grown poorer; if the additional 
 circulating- medium were distributed evenly, humanity 
 need not trouble about it at all. It does not matter whether 
 the cost of everything be increased tenfold, provided in- 
 comes are multiplied tenfold also. Unhappily, this is not 
 the case. The effect of expanded circulation is always 
 that the rich become richer and the poor poorer. Nor 
 can Free Trade remedy this cause of high prices ; the true 
 cure is a sound banking system. Here all countries, 
 without exception, failed, in consequence of the lack of 
 theoretical understanding among practical bankers. We 
 only mention this to prevent misunderstanding. The whole 
 of the increase in prices was not caused by the dearth of 
 goods only; while the more inequitable distribution of 
 incomes, which is the result of an inflated currency, (has 
 worsened from a social point of view the effect of the 
 scarcity of goods. 
 
 This scarcity is, of course, the main cause of the high 
 prices. Even if there were no more money than before 
 the \var, prices would have risen, although not in so serious 
 a degree. Not only have large stocks of commodities been 
 destroyed during the war, or used for the unproductive 
 purpose of provisioning the army, but, even now, pro- 
 duction cannot regain its normal level. There is too little 
 capital, and what there is of it is not used as profitably 
 as possible. 
 
 Whole regions have been used as battlefields, and will 
 in consequence not yield their produce within a measurable 
 space of time ; Russia is eliminated for the present as a 
 producer of corn ; millions of tons of shipping have been 
 destroyed, and only replaced at a much higher cost of 
 construction, so that all oversea transport of raw material 
 is immeasurably more expensive; entire mining districts 
 have been destroyed and factories wrecked. Finally, 
 
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 people work much less strenuously than before the war. 
 The eight-hours day has been introduced nearly every- 
 where, but at present it cannot be denied that it has not 
 resulted in the greater personal effort prophesied by a few. 
 
 All this does not fully explain the alarming decrease 
 in production. Something else must be kept in view : 
 
 It will only be possible to rescue the world from the 
 prevailing economic misery by restoring the free exchange 
 of commodities to the fullest extent: that is to say, by 
 guiding production into such channels that everything is 
 produced where it can be done in the most profitable 
 manner. This brings out clearly the value of Free Trade 
 as a means of fighting high prices. 
 
 The method generally pursued to combat high prices 
 is not only a mere apology for a policy; it is an ostrich 
 policy, which can only make matters worse. For the time 
 being it hides from the masses of the people the effect of 
 the conditions under which we find ourselves. Thus it 
 encourages wastefulness and prevents production from 
 returning into the right path by forcing it into artificial 
 courses. This fact is the most serious one. 
 
 By increasing wages, fixing prices, and impeding free 
 import and export, production is withdrawn more and more 
 from, its natural basis and pushed in directions it would 
 never have taken if allowed to develop naturally. 
 
 This pressure for increased wages originated in a 
 natural reaction after the privations endured during the 
 war; and it may be asserted that the pressure was 
 strengthened by the sympathy if not by the direct inter- 
 ference of Governments. 
 
 That wages must be fixed by supply and demand, 
 because they must remain in proportion to the results of 
 labour, is regarded as an antiquated theory, even if not 
 cried down as proving a lack of morality. Claims which 
 the workers at any given moment consider "reasonable," 
 
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 and which one does not dare to deny them a purely 
 arbitrary index serve as guides for fixing wages. 
 
 It is self-evident that where the gross profit of a trade 
 is only x, it is impossible to pay 2x in wages; so the 
 enforced increase of wages ruins every business working 
 with a narrow margin of profit, thereby reducing produc- 
 tion. But the evil does not stop here. In consequence of 
 the reduced production, prices rise again. From this 
 results a renewed demand for higher wages, and so one 
 finds oneself in a vicious circle. 
 
 Of course, interference does not stop at forcing up 
 wages. It also endeavours to prevent the increase of 
 prices, by fixing them. This policy of controlled prices 
 is the chief result of the narrow conception of " reason- 
 able " profits. A few people are seen to make huge profits, 
 and from this the conclusion is drawn that high prices 
 are caused by big profits, whereas such profits are merely 
 the unavoidable result of the unstable condition wherein 
 trade finds itself. Where circumstances alter con- 
 tinuously, huge losses will always be found by the side 
 of huge individual profits. 
 
 It is believed that high prices can be fought by pro- 
 hibiting these so-called "unlawful " profits. This would 
 not affect in the slightest degree the real cause of high 
 prices. The notion implied in the word "unlawful " is not 
 at all applicable to prices and profits. Everyone has a 
 right to sell at whatever price he can : that is the basis 
 of all trade. 
 
 And not only must the claim fail that the merchant 
 should renounce the price he can obtain, but also that, 
 generally speaking, this renunciation would be of advan 
 tage to the community. 
 
 Here we get to the heart of the problem at present 
 before the world. 
 
 As soon as prices are determined by other means than 
 
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 the free functions of supply and demand, the facts most 
 essential to the restoration of production on as economical 
 a basis as possible are hidden. 
 
 There is a French saying giving a very clear notion 
 of the value of supply and demand : "Le meilleur remede 
 centre la cherte est la cherteV' It sounds harsh, but it is 
 an inexorable truth. Only when fixing of prices cannot 
 influence production or import, where both are abso- 
 lutely impossible, can it work advantageously against high 
 prices of prime necessities. In all other cases, fixing of 
 prices will suppress production, and in that way keep 
 prices high. A policy like the one embodied in the 
 Profiteering Act is a sop to labour, but it works to labour's 
 disadvantage. 
 
 Here the truth is applicable that in a national com- 
 munity, built like ours on the free initiative of its citizens, 
 only prices can show to the man of business the way he 
 ought to go. Big profits in a certain sphere indicate big 
 demand, and show in which direction to extend production. 
 
 This was the fact under ordinary circumstances, but 
 it presses now more than ever. For the great difficulty 
 from which economical life suffers in present circumstances 
 is that the entire basis of international trade has been 
 pulled away from underneath it. Even if it were assumed 
 that the Netherlands, for instance, still produces under 
 the same conditions as before the war, it is nevertheless 
 out of the question that she can at present supply, say, 
 the same quantity of cheese in return for half the quantity 
 of coal which she received before the war. So, because 
 Germany can no longer supply the same, and therefore 
 can no longer pay the same as formerly, the entire pro- 
 duction of the Netherlands must be rearranged. Other 
 markets must be sought, or other goods produced. It 
 must be found out how much cheese can now be supplied 
 for a certain quantity of coal ; and this again determines 
 
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 both the quantity of cheese and coal to be produced, and 
 the market in which they shall be sold : the complete 
 dynamics of the price theory. Formerly proportions 
 changed slowly, always in the direction of greater pro- 
 duction. At present entirely new proportions must be 
 found, with entirely new quantities and entirely new 
 prices. It is a voyage of discovery into an unknown 
 country. 
 
 The whole of this procedure is hidden from view by 
 the interposition of money. If there were an actual 
 exchange of cheese for coal, everybody would see distinctly 
 what was happening. Because it is not seen, all sorts of 
 grounds for the difficulties are looked for. Amongst them 
 is the currency rate, which in reality occupies only a 
 relatively small place among the obstacles of trade, and 
 is again partly the result of these obstacles. It is thought 
 that the Netherlands cannot export to Germany because 
 the currency rate is so adverse : the fact is that Germany 
 cannot buy at prices which would pay the expenses of the 
 Netherland producers; Germany refuses to supply 
 sufficient coal in exchange for cheese, and therefore the 
 Netherlands has been producing too much of one kind of 
 produce. (I use these commodities only by way of illus- 
 tration, and do not imply that the difficulty is caused 
 by them.) 
 
 There is but one guide out of this labyrinth, as long as 
 we live in a community based on the free initiative of its 
 citizens : prices. A community may be socialistic or in- 
 dividualistic; production may be regulated by the authori- 
 ties, or left to private initiative. But all intermediate 
 forms are illogical. Whoever thinks that equal distribu- 
 tion must come in the first place must advocate a 
 socialistic state. Whoever thinks that such equality would 
 result in equal starvation cannot desire to give up private 
 initiative. But this manner of production allows of only 
 
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 one guide for that production : the purchasing power of 
 demand. As soon as interference removes that guide, the 
 producer is groping in the dark and loses the special 
 advantage of free production namely, that those com- 
 modities must be produced which best supply the wants 
 of the community. 
 
 There is a certain point in production where demand 
 and supply meet. It is of the greatest importance for the 
 community that this exact quantity be produced. If this 
 does not happen it means waste of outlay which might 
 have been applied more profitably. 
 
 Groping in the dark, producers must feel their way to 
 the new paths along which production must move. But 
 it is self-evident that this guidance is of no value if the 
 authorities by their interference disturb the proportion of 
 prices. And this interference is nowadays exactly the 
 basis of production. 
 
 Let us take as an example the British coal production. 
 Coal is not sold at the highest possible price, which would 
 place its production on an economically correct basis; and 
 wages have not been determined by demand and supply, 
 in consequence of which labour would be paid according 
 to its marginal value. But wages have been forced up by 
 the arbitrary claims of labour. In order to prevent in- 
 dustry from suffering in consequence, prices are fixed at 
 too low a rate in proportion to the cost. To balance 
 the account, prices for export are fixed at a much higher 
 level ; and the non-Free-Trader that is to say, one who 
 does not see through the money-screen thinks this to 
 be supreme wisdom. "For the foreigner pays the high 
 wages." Exactly in the same way as the Protectionist 
 fancies that "the foreigner pays the import duties." 
 
 The whole arrangement is, of course, nothing but 
 Protectionism in a slightly different form. And its advo- 
 cates overlook the fact that indeed it is to the foreigner's 
 
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 disadvantage, but also to that of Britain. For if without 
 this arrangement the foreigner would purchase more 
 British coal at higher prices than the home industry pays, 
 this means that the foreigner understands better than 
 Britain how to use coal to the best advantage for manu- 
 facturing products. 
 
 And in so far as Britain herself would import these 
 products to use them as half-finished or auxiliary goods 
 for her own manufactures, it is quite clear who in this 
 country suffer by the arrangement : the branches of in- 
 dustry which require these half-finished goods. These 
 suffer losses in favour of the miners. But even where the 
 relation is not so clear, even when Britain does not use 
 these half-finished goods, in some way or other British 
 prosperity will always suffer from the reaction of the in- 
 flicted disadvantage, because, in consequence of the inter- 
 nationalisation of trade, each country's prosperity is 
 important for that of every other. The more a country 
 produces, the more advantageous will be the terms of 
 exchange for other countries. 
 
 It is remarkable that truths like this are even 
 now not understood, when the reaction of the Ger- 
 man debacle is so distinctly felt. But politics are 
 constantly mistaken for economics, and it is not under- 
 stood that, economically speaking, there exist no enemies 
 but only friends. 
 
 If British industry be forced on to an artificial course 
 by this arrangement, the same influence is exercised in 
 countries where coal is made dear by artificial means. But 
 that is not all. Industry in those countries cries out that 
 it cannot exist if coal prices are not forced down, and 
 that the Government must come to the rescue. In this 
 way rates of prices are created of which Mr. Walter 
 Runciman has correctly said that they create "a terrifying 
 structure of false prices on a foundation of sand." And 
 
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 the most terrifying fact is that, unavoidably, production 
 must decline further. 
 
 If foreign Governments act upon the cries of distress, 
 this amounts to giving doles out of the taxpayers' pockets 
 to keep going necessitous concerns w:hich otherwise would 
 be ruined. Ultimately everybody would live by this 
 policy of charity, until the relief funds were exhausted. 
 It is high time that it is understood that adverse condi- 
 tions must be faced, that trade cannot exist on the same 
 footing as before the war, and that no trade has a right 
 to exist if it cannot pay its way without Government 
 assistance. 
 
 Such assistance is admissible only when a change of 
 the line of conduct abroad can be foreseen, and when it is 
 only a matter of keeping alive temporarily something that 
 will acquire new vitality. 
 
 The continuous insecurity of existence is undoubtedly 
 one of the greatest disadvantages of the constant inter- 
 ference in the conditions of production. What had 
 vitality yesterday loses it to-day, but recovers it to-morrow. 
 This means an immense waste of capital. Security for 
 existence is perfectly indispensable to the prosperity of 
 industrial life. 
 
 Before the war the choice between Free Trade and 
 Protection frequently implied this difficulty : a con- 
 solidated state of affairs had to be broken up, with the 
 unavoidable consequence of destruction of capital. Where 
 Protection prevails, introduction of Free Trade removes 
 the foundation of the existing condition as certainly as 
 the introduction of Protection would do in a Free Trade 
 country. It is conceivable that cautious people shrink 
 from the change, even if they consider Protection to be 
 wrong. 
 
 At present, as the result of the war, a consolidated 
 state of affairs is entirely out of the question. Everything 
 
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 is topsy-turvy, especially in consequence of the difficulties 
 of German industry, which may be considered to be com- 
 pletely destroyed. If ever, this is the moment for Free 
 Trade all round. And it is a dismal proof of govern- 
 mental shortsightedness that there is no question of this. 
 This is more particularly the case of Germany, who, more 
 than any other country, must expect her reconstruction 
 from Free Trade, yet tries frantically to hedge herself in. 
 
 That Germany tries to stop imports of luxuries is 
 comprehensible and defensible, although one cannot be 
 too cautious even there. What is a luxury to the one is 
 a vital necessity or a commercial commodity to the other. 
 One cannot prohibit everything not absolutely necessary 
 to keep people alive, unless one wants to risk the ruin 
 of all civilisation. And even if one adheres to this 
 principle, prohibition will ultimately be of little use. But 
 in the meantime it is to be feared that at the 
 present moment Germany already goes much farther 
 thari the real interests of her citizens require. A tax on 
 tea and cocoa, for instance, certainly goes too far as a 
 tax on luxuries. Nor will such a measure stamp out the 
 over-luxurious habits of the few; this result can only be 
 attained by slow, gradual civilisation. Import duties on 
 luxuries can therefore best be justified, not as a fight 
 against luxury, but as fiscal measures; however, in any 
 case they must be handled with the utmost prudence, like 
 all fiscal import duties. 
 
 The opinion that Germany is actually being wrecked 
 by "the gap in the West" ("das Loch im Westen ") is 
 sheer silliness. Indeed, if Germany could only be saved 
 by such tutelage of her nationals she would lack all real 
 inner vitality. Similar utterances rest upon the unwit- 
 ting mercantilism of the masses, which gives Protection 
 its principal strength. 
 
 Quite a different thing again are the surtaxes on 
 
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 adverse currency rates, levied by Germany, in cases where 
 German goods are sold abroad too cheaply, because not 
 all prices have adapted themselves to the low money 
 value : the so-called sales of stock. Nor is this measure 
 entirely out of place; but here also great prudence is 
 imperative. 
 
 Probably German goods will be sold abroad too 
 cheaply, because one is accustomed to think of money 
 as a fixed value, and the popular mind 'has not been able 
 to keep up with the extraordinary decline of that value. 
 If, for instance, a railway porter near the Netherland 
 frontier receives i florin for a job which is similar to that 
 for which his German colleague obtains 4 marks, this is 
 chiefly because 4 marks still possess a certain value in 
 the opinion of the people, which opinion is further 
 strengthened by the artificial reduction of prices of first 
 necessities. Therefore something may be said in favour 
 of this surtax on German prices in order to level them 
 up to the world's market price. But there is a danger as 
 well. 
 
 As is well known, trade depends on the difference in 
 relative exertions which various nations make in produc- 
 ing various goods. Even if a nation produces everything 
 in less favourable circumstances than some other nation, 
 it may yet be able to enter into commercial intercourse 
 with that nation, provided the differences between the 
 exertion needed for producing various goods in the two 
 countries vary. If this were not the case Germany would 
 not be able to trade with countries who are in every way 
 in more favourable circumstances. Suppose, for instance, 
 that it takes the Netherlands 10 days to produce com- 
 modity A, and 20 to produce commodity B, whereas 
 Germany produces A in 100 and B in 500 days, then 
 the Netherlands will start to produce B, and Germany A. 
 For by working 20 days the Netherlands will be able to 
 
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 supply Germany with the value of 5 A, and Germany by 
 working 100 days can supply the Netherlands with the 
 value of K B, and both will profit by the exchange. 
 
 This advantage will be shown in the prices. However 
 much German industry be out of joint, there will always 
 be goods which she can supply at a lower price, otherwise, 
 of course, there could be no trade. These differences 
 must not be wiped out. If this were attempted, the now 
 improving trade would continually be disturbed over and 
 over again, and the goal would never be reached. The 
 differences would always appear in other places; one 
 would, as it were, be running perpetually after them. 
 
 The exceptions which can be taken to Free Trade are 
 therefore of very slight importance, of considerably less 
 importance than is usually contended. 
 
 One may therefore assert that if formerly Free Trade 
 was useful and allowed trade to obtain its best results, it 
 is now a paramount necessity for the reconstruction and 
 even for the continued existence of the world in its present 
 form. 
 
 Free Trade has a much wider aim than the fight against 
 import and export duties. In its widest conception it 
 implies that trade and industry are the right agents to 
 decide which goods each country can produce best, and in 
 what quantities these goods should be produced. 
 
 Only by letting this thought penetrate can sound ideas 
 about the vital conditions of trade prevail. 
 
 To every clear-minded individual one device only is 
 possible : complete liberty to sell all goods where they 
 yield the largest profits. Narrow Jingoism and fear of 
 social unrest force on to a different course. Jingoism 
 is ever a mistake. If fear was always a bad counsellor, 
 it was never more so than at present. The constant re- 
 duction of production but brings the unrest in a form 
 gradually becoming more serious. This induces people 
 
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 more and more to take harsh measures instead of turning 
 away from the road leading to ruin and leads deeper and 
 deeper into the morass. 
 
 Free Trade has sometimes been denounced as a policy 
 of cold selfishness. Nothing could be less true. Its 
 paramount significance is as a moral agent. Protection, 
 with its distribution of doles, leads to general demoralisa- 
 tion. And before everything : Protection does not result 
 in war it is war. Free Trade, on the contrary, aims at 
 Peace and Goodwill among Nations. 
 
 The Chairman, MR. SPENDER, said : Perhaps it will be 
 convenient if I try to start the discussion on the admirable 
 paper that has been read to us. I think a careful study of 
 the economic conditions produced by the war is of the 
 profoundest importance to the student of economics, and 
 especially to those who are charged with the advancement 
 of Free Trade principles. In the war we have seen the most 
 perfect working model of the system which, in its full de- 
 velopment, Protectionism aims at. All countries, not merely 
 enemy countries, have found it necessary to restrict their 
 intercourse with each other to the positive minimum. That 
 has been brought about by rules, prohibitions, and tariffs, 
 some of them imperative and necessary, others, we think, 
 superfluous and ill-conceived; but during the state of war 
 we could raise no serious objection. What we do object 
 to is their continuance, under one excuse or another, after 
 the war. We are all aware that trading organisations, 
 which have grown powerful under the special conditions 
 of war, are all the time exercising a quiet, silent pressure 
 upon Governments to produce this result. We shall be 
 told that now more than ever, owing to modern armaments, 
 and owing especially to the submarines, it is necessary for 
 nations to be self-contained. If we are really to be driven 
 to that conclusion and to re-organise our system of life 
 on that basis, then, under the stress of this fear, we must 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 inevitably descend to a lower plane of civilisation. There 
 is scarcely one country France probably approximates to 
 it but with that exception there is scarcely one country in 
 Europe capable of producing even the necessaries of life, 
 let alone the commodities which the citizens of a modern 
 community have been accustomed to demand almost as 
 their right. If the self-contained ideal is deliberately to be 
 set up, considerable portions of the populations of all coun- 
 tries will be reduced to a lower level. At the present time 
 the situation is exceedingly complicated by a great many 
 causes which obscure and overlie each other. There is a 
 real scarcity caused by destruction in war and diversion 
 of labour to unproductive purposes. We have this 
 scarcity prolonged and continued by the cutting off of 
 Russia, and a considerable part of Central Europe, from 
 the pool of exchange upon which pre-war Europe depended. 
 We have these conditions aggravated by the great expan- 
 sion of credit and therefore of currency to correspond with 
 the vast loans raised by the various Governments for the 
 war. All these causes interact, but at the bottom is this 
 simple clue to seek to restore the free circulation which 
 goes with the highest production in the body politic of the 
 world. We have learned in this war that in a modern com- 
 munity, under modern conditions, the whole world is one 
 economic organism. You cannot atrophy one limb without 
 disturbing the whole body. All partial efforts to restore 
 broken exchanges between nations taken singly will prove 
 vain if we do not keep the unity of the whole in mind. 
 This is the message which the International Conference 
 ought to give to the world, and I hope and believe this 
 Conference will deliver it with the utmost emphasis, so 
 far as it can, throughout all the cities of Europe. 
 
 Messrs. D. M. Mason, A. Lupton, A. Raffalovich, C. 
 Melrose and C. James having spoken, the Chairman called 
 upon Herr Butzke to give his paper. 
 D , 31 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 The Free Trade Movement in Germany. 
 By HERMANN BUTZKE. 
 
 THE fact that somebody from Germany has come direct 
 from Germany shows that at last there are a few Free 
 Traders in our country. The number in Germany is so 
 small, and some of them have become Free Traders 
 through the war. We have said from the first day of 
 the war that the policy of Germany was a bad one, and 
 that the system followed by the men of trade was so bad 
 that it caused our trouble of to-day. I have not come 
 here to talk about the war, but to tell you how bad the 
 condition is in Germany now. The only word is 
 "bankruptcy." We have no longer any trade, not on 
 account of the war or the Treaty of Versailles, but because 
 Protection prevents trade. The trade is controlled by the 
 Government, and its control prevents any business at all. 
 It would be possible to start an agitation for Free Trade 
 among the people when they see what Free Trade 
 achieves outside their frontiers. The only time we heard 
 of Free Trade was on that unlucky day in August, 1*914, 
 when the Germans saw that Protection had not brought 
 so much food into the country as should have been 
 brought in. If the country could start again they would 
 find that prohibition in Germany was no argument 
 against Free Trade. We are a poor country now, and we 
 need the Protection of our working class and national 
 labour. We have, of course, to fight against these argu- 
 ments, and it is difficult. Professor Brentano has brought 
 out arguments against this Protection of national labour, 
 and I think it is necessary to bring it to the knowledge 
 of the Conference, and show them that we are not tired 
 yet. 
 
 The owner of an industrial plant, which is dependent 
 upon Government protection in order to maintain a com- 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 petitive standard, said : Those who follow Adam Smith 
 need only catch a glimpse of the conditions prevailing 
 in my line of trade, and they will realise that in actual 
 life things take entirely different aspects than in the mind 
 of a parlour philosopher. It is true, that on account of 
 the Protection granted me, the consumer has to pay a 
 higher price for my product than if the article were im- 
 ported duty free. However, on the other hand, I provide 
 the means of subsistence for hundreds of workmen. The 
 profits which I make, based upon the Protection I receive, 
 remain in the country. A line of trade is preserved for 
 the country, without which we would have to pay a tribute 
 amounting to millions annually to foreign countries. 
 
 That all sounds very patriotic, and whoever loves his 
 country will hardly find the courage to oppose this argu- 
 ment. Still we have no mind to be intimidated. The 
 objection raised above is valid only provided that the hun- 
 dreds of workmen who are, by artificial means, " drawn 
 into the protected trade, would not find lucrative employ- 
 ment without such Protection, and that the profits, which 
 the country would without this deviation draw from its 
 own capital, would not be far more extensive. To illus- 
 trate this, we will direct our attention to one example of 
 artificial Protection, in which foreign competition does 
 not come into consideration. 
 
 Westenrieder tells us that in Hochdor.f, not far from 
 the Lech, in the thirties of the eighteenth century, a 
 farmer by the name of Wank invented a threshing 
 machine. The machine had hardly been completed when 
 he was forbidden, in face of severe punishment, to put it 
 to use. "In fact, a commission came from Munich, in the 
 presence of which the farmer threshed out six stacks of 
 corn. The commission took note of the good results, 
 and was surprised at the man's cleverness . . . and finally 
 he was ordered to destroy the machine on the spot, and 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 to pay the expenses of the commission." The fate which 
 befell an inventor towards the end of the sixteenth cen- 
 tury was even worse. A man in Danzig had invented a 
 machine which simultaneously produced four to six 
 fabrics. In order to prevent any injury to the interests 
 of the weavers the Council secretly ordered the man to be 
 drowned; and as late as 1719 the Emperor Karl VI 
 renewed the prohibition of ribbon mills. Similar to that 
 was the fate of the inventor of the steamship in Marburg. 
 Papin constructed a small steamboat, which was propelled 
 by a wheel at the stern, and had the boat brought into the 
 Fulda, determined to sail down the Weser and across the 
 North Sea to England. The boat only got as far as 
 Miiiden, where it was destroyed by bargemen, who saw 
 in this invention a danger to their trade, and that was 
 the end of steamship traffic for a period of 125 years, 
 when it came to Germany from America. All these 
 measures were adopted .for the Protection of the employees 
 of the various trades. 
 
 We will keep to the case of the threshing machine. 
 Suppose you have an income of 400. Of this you have 
 hitherto spent 200 for 300 Ibs. of wheat, and 200 for other 
 things, which, for convenience' sake, we will assume to be 
 60 yards of cloth. The wheat was hitherto produced by 
 a farmer with the help of a farm-hand and a threshing 
 machine. The farm-hand received 100 wages. Now it 
 turns out that it is a necessity to increase the number of 
 persons engaged in agricultural work. Accordingly a law 
 is passed prohibiting the use of threshing machines. In 
 order to produce the required 300 Ibs. of wheat the farmer 
 is now obliged to engage two hands, each at a wage of 
 100. Consequently the price you have to pay for wheat 
 rises to 300, and that in the interests of agricultural em- 
 ployment. Your first answer will be that, while the 
 agricultural employment by this means gains 100, it is 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 indisputable that you thereby lose 100, and that you are 
 unable to see in that a national gain. 
 
 But supposing you, the consumer, who are losing the 
 100 in order to offer more people employment in agri- 
 cultural work, are a contemptible person, expelled from 
 human society, .for whom no one need have any considera- 
 tion ; in this case the loss of the consumer does not in 
 itself have any effect. 
 
 You had spent 200 on other goods, 60 yards of cloth 
 as assumed; of this 30 yards were produced by the cloth- 
 maker with the help of the newly engaged farm-hand and 
 the capital required for his pay. Now that you must pay 
 100 more for wheat, you can only buy 30 yards of cloth. 
 The clothmaker, therefore, loses your purchase amounting 
 to 100. Now somebody may protest that, in place of your 
 demand for cloth there would be a demand on the part 
 of the farmer, and to be sure he now receives for the 
 300 Ibs. of wheat sold to you 300 instead of 200. However, 
 as -he must pay 100 to the second hand, whom he now has 
 to pay instead of the clothmaker, your demand for cloth 
 cannot be compensated by an increased demand on his 
 part. The farm-hand and the capital which were hitherto 
 required for the manufacture of 30 yards of cloth are now 
 no longer at the disposal of the clothmaker; the demand 
 for cloth is now less by one-half ; the clothmaker can only 
 produce 30 yards instead of 60. Will he not now declare 
 that the 100 which, on account of the prohibition of 
 threshing machines, are turned in to the farmer, repre- 
 sent a loss of 100 to him? We, therefore, must come to 
 the conclusion that the gain in agriculture is confronted 
 by the loss of an equal amount on the part of the cloth- 
 makers. 
 
 What, then, has been gained? 
 
 If you, as heretofore, had given the farmer 200 for 
 wheat and the clothmaker 200, you would have received 
 
 35 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 for your money 300 Ibs. of wheat and 60 yards of cloth ; 
 if you now have to pay the farmer 300 for wheat, you only 
 receive 30 yards of cloth, and in addition to that the cloth- 
 maker forgoes 100, which you are obliged to give the 
 farmer. While agriculture has gained 100, the clothmaker 
 has lost loo and you also 100. The gain of 100 to one 
 person is confronted by a loss of 200 to two others. 
 
 The resulting revenue demonstrates to what extent, as 
 a whole, national production now profits by the Protec- 
 tion given to agricultural employment. The revenue had 
 hitherto been 300 Ibs. of wheat amounting to 200, and 
 60 yards of cloth at an equal value ; it now amounts to 
 300 Ibs. of wheat and only 30 yards of cloth. The 300 Ibs. 
 of wheat cost 300 and the 30 yards of cloth 100. The 
 aggregate cost of production of these commodities has 
 remained the same i.e. 400 but the quantity of such 
 commodities has decreased. Such is the method of in- 
 creasing national wealth by prohibition of economic 
 improvement ! 
 
 Just as with the prohibition of the threshing machine, 
 the drowning of the inventor of ribbon-mills and the 
 destruction of Papin's steamship, so it would also be if, 
 for instance, where there is a possibility of rendering 
 fertile soil in distant lands subservient to the needs of the 
 domestic populace, by extending railway connections, 
 such development were prevented by imposing tariffs and 
 duties, in order to protect the cultivation of unfertile land 
 at home. In both cases the exploitation of improvements 
 which would serve national development to far better effect 
 is prevented in the interests of individual circles. 
 
 The question of Free Trade is by no means settled, 
 and will never be laid aside. As long as it is under dis- 
 cussion we will win new followers of the Free Trade 
 principles. And this because those who think, and do 
 not belong to the few who seek their own profits from the 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 disadvantages of others, are bound to decide in our favour. 
 There are, in all political parties, men who place the 
 general welfare above individual interests, never- mind 
 how much they diverge in their various opinions. The 
 Free Trade men have become an important independent 
 party of no small numbers, and above all, strong in 
 fundamental principle. They suffer from no dissension in 
 theory and practice. What they have realised as the 
 truth they wish to establish as a truth. They do not fight 
 shy of the consequences of their teachings. Moreover, in 
 the accomplishment of their aims they prove the benefits 
 for which they aim. Free Trade alone offers a reliable 
 guaranty for the safety of property, as it alone maintains 
 as a consequence inviolable freedom in the exploitation of 
 productive sources. Free Trade alone leads to lasting and 
 secured peace, in that it renders the nations dependent 
 upon one another for reciprocal satisfaction of their re- 
 spective needs. It alone is able to expel the misery of the 
 masses, in that it dispenses with everything that hinders 
 industrial endeavours towards productive efficiency. 
 
 In the same measure in which others see their mis- 
 placed endeavours shipwrecked, they will join our own 
 ranks and strengthen our own endeavours towards estab- 
 lishing conditions which we all are eager to have. And 
 the only way of achieving this end is on the platform of 
 universal material and intellectual development, liberating 
 all productive endeavours. 
 
 Forward, then ! We have hoisted our banner, and 
 will gather around it to fight an intellectual battle which 
 has been forced upon us, a battle which we are determined 
 to fight to the end, confident that it will fly after many a 
 flag has fallen in the fray of party struggles, aye, after 
 the banner of national glory has been hung where the 
 monuments of history are stored away. Then the Free 
 Trade banner will be flying high up in the wind, a 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 messenger of peace, a conveyer of salvation from nation 
 to nation, as free as the wind which is bearing it out 
 across the seas. 
 
 I gave the above example because I wanted to show, as 
 I said before, that we are not willing to lay our weapons 
 down and refuse to fight against the Protectionists in our 
 country. It will be very hard to fight against them 
 because they are much stronger than we are. I came here 
 to ask you to help us in Germany to become another Free 
 Trade nation again. We have been Free Traders. We 
 ceased being Free Traders in 1878, and after that time you 
 know what happened. You know that the politics of 
 Germany since that date had something to do with this 
 war, but I don't want to talk about that. The reason I 
 came, as I said before, is to ask you to help us in Germany 
 to form a league of Free Traders for the benefit of all 
 nations. 
 
THIRD SESSION 
 
 Wednesday, October 6 
 
THIRD SESSION - WEDNESDAY, OCTOBER 6 
 Chairman SIR GEORGE PAISH 
 
 SUBJECT ; 
 
 Financial Stability: How far it can be restored 
 by Free Trade. 
 
 The CHAIRMAN, reserving his own paper, called upon 
 M. Yves-Guy ot to open the subject. 
 
 Financial Stability: How far it can be restored by 
 
 Free Trade. 
 
 By YVES-GUYOT. 
 
 THE object of Protection is to close the frontiers against 
 foreign products; and that assert its partisans in order 
 that the nation may be self-sufficing, may not allow its 
 gold to pass into foreign lands, and may not become 
 tributary to such foreign lands. 
 
 But the object of the blockade was identical : its pur- 
 pose was to close the frontiers of the blockaded countries 
 against foreign products, and consequently it obliged 
 them to be sufficient unto themselves, preventing them 
 from being tributaries to foreign lands. 
 
 If the blockade is a war measure, considered, by those 
 who institute it and by those who are subjected to it alike, 
 as injurious, then how can Protection, the purpose of 
 which is the same and which seeks to obtain the same 
 result, be considered beneficent ? 
 
 In spite of over four years of warfare, this very simple 
 reflection does not strike a number of persons who, never- 
 theless, have known the blockade, because they have called 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 for and practised it, or because they have opposed it and 
 been subjected to it. This is one more proof of the little 
 influence which experience exercises in political matters, 
 and of the danger of political intervention in economic 
 questions. It is an undeniable proof of the usefulness 
 of Free Trade. For, What is Free Trade? Free Trade 
 is the non-intervention of the State in trade agreements, 
 at home or abroad, between individuals ; it is the freedom 
 and security of private agreements. 
 
 What is Protection? It is the substitution, in the direc- 
 tion of trading contracts, of the will of leaders for the will 
 of private individuals. Aggressive Protectionism is 
 Economic Imperialism. 
 
 From August ist, 1914, to November nth, 1918, the 
 date of the Armistice, the Governments tried to replace 
 the economic activities of private parties by their own 
 activities, and they have continued since then, and are 
 still continuing to do so. 
 
 During the first period we were in the midst of war ! 
 To the disturbances directly resulting from the fact that, 
 in all the belligerent lands, the most capable men in the 
 full strength of their manhood were diverted from pro- 
 ductive occupations to destructive operations, must be 
 added others which always modified the conditions of 
 trade. 
 
 Because they were less prepared, the belligerent States 
 had all the more urgent need of foodstuffs, clothes, shoes, 
 and munitions. They were purchasers at any price. 
 Defeat would always cost more than the war expenditure ! 
 Such was the conviction of the statesmen who were deter- 
 mined to conquer, and they were right. Naturally, they 
 were surrounded by people always too ready to take advan- 
 tage of the vehemence of their wants. 
 
 All relations between cost price and purchase price were 
 upset. The Governments were not restricted in their prices 
 

 INTERNATIONAL FREE TRADE CONFERENCE 
 
 by fear of loss. They were not purchasing to re-sell ; they 
 were purchasing for consumption, and the greater part 
 of their consumptions were but destructions. 
 
 In exchanges between private parties, price is the deter- 
 mining factor; each man, whatever his need may be, suits 
 his purchases to what he believes to be his purchasing 
 power. He cannot exceed that amount under penalty of 
 failure. 
 
 The Governments had not that danger to fear. They 
 had no direct means of payment to foreign countries, except 
 England, who owned a share of the Suez Canal stock, 
 but she keeps them and she was not ready to sell them. 
 They had no capital invested abroad. All the Govern- 
 ments had debts. They were thus unable to pay with 
 resources which they might have had abroad. 
 
 They had no goods to sell. If some of them, like 
 England and France, wejre able to assist allies by supply- 
 ing them with certain goods, such transactions had no 
 commercial character. Many were mere loans which are 
 not yet repaid. 
 
 It may therefore be said that the Governments pur- 
 chased without having securities, goods, or gold to hand 
 to their purveyors. To obtain them, they were obliged to 
 call on private individuals by three means : taxation, 
 loans, and the issue of different forms of paper money. 
 In no country, not even in England, was it possible to 
 make the taxes cover the greater part of the war expendi- 
 ture ; it was covered by loans or by means which have 
 brought about the phenomenon called "inflation." 
 
 Prices are the barometers which register the relations 
 of the law of supply and demand. They are never stable; 
 they oscillate constantly between the two factors supply 
 and demand. The oscillations are the exact indicators of 
 the economic situation. They show the normal and ab- 
 normal conditions. They form the basis of forecasts which 
 
 43 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 every man is obliged to make in conducting his 
 business. 
 
 One of the great vices of Protection is that it falsifies 
 prices. It creates preference prices for articles which it 
 favours at the expense of other articles. It brings about 
 increases of price which result neither from the cost price 
 nor the purchase price, nor the needs or purchasing power 
 of consumers. It imposes these increased prices, and it 
 also creates illusions by making fictitious increases which 
 are detrimental to those who need the favoured articles 
 and to those other articles for which the power of purchase 
 is decreased. It teaches the manufacturer not to take into 
 consideration the cost price of his foreign competitors; 
 and then it impels him to "dump" in order that his pro- 
 ducts may not be forced beyond the frontiers where the 
 protective duties cannot follow them. 
 
 But when the State carries its intervention to the extent 
 of itself becoming purchaser, then the disturbances are 
 much greater. France, England, Italy purchased corn, 
 which they retailed at a loss; thus they caused a deviation 
 of all economic conditions. In France, it was the peasant's 
 interest to feed bread to the cattle. 
 
 The purveying system leads to the establishment of 
 two rates for means of payment, two legal tenders : the 
 home rate and the foreign rate. 
 
 Control was weak at home. When criticised or asked 
 for explanations, the Government invariably replied by 
 invoking the plea of salus populi. 
 
 Failing in the interior of the country, control was car- 
 ried on abroad ; the foreigner showed distrust ; this meant 
 a rise in exchange. 
 
 You need dollars to pay for your purchases from the 
 United States, pounds sterling to pay for your purchases 
 in Great Britain. What can you give in exchange ? Paper 
 money. That is to say, promises to pay not at any fixed 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 date, but when your Government shall have redeemed the 
 paper bills it is issuing by billions. When will that day 
 dawn ? And the holder of dollars or pounds sterling re- 
 quires that the man who needs them to pay for goods shall 
 hand him double or three times the number of francs repre- 
 sented by the par value, according to the weight and 
 standard of gold. 
 
 As a result, the French importer must pay twice or three 
 times the price the foreign goods are worth in their own 
 country. It is a situation quite opposed to that created 
 by the dumping system. Dumping was favourable to the 
 foreign producer who used certain German products, for 
 he obtained them at a better price than the national pur- 
 chaser. It is the contrary in all countries which have the 
 exchange against them. 
 
 Then the old bullionist system is resuscitated, the 
 balance of trade is talked about as in the days of Colbert. 
 All importation is an evil, all exportation a gain. 
 
 The heads of Governments take variable measures, 
 sometimes prohibiting the importation of such a product, 
 sometimes that of another product. Why? Because of 
 the exchange ! 
 
 But the said product is necessary for alimentary pur- 
 poses; or it is a raw material which is indispensable for 
 the production of such and such an article. Such is the 
 case with silk, the importation of which into France our 
 Government wanted to prohibit, though it is an indispens- 
 able raw material of several hundred millions of francs of 
 exportable goods. 
 
 This diversity of prohibitions could only be explained 
 by the intervention of private interests appealing to public 
 authority. The most insatiable protectionists should be 
 satisfied with the satisfaction given them by the rate of 
 exchange. But this does not suffice for them. They ask 
 either prohibition or, lacking that, increase of Customs 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 duties. In France they obtained the decree of July 8th, 
 1919, increasing the tax by adding to it the product of the 
 multiplication of the existing duties by coefficients fitted 
 to each of the goods. This operation results in increases of 
 loo, 150, 200 per cent, of the duties on certain qualities of 
 steel, copper, woollen goods, shoes, cow-hides, etc. The 
 exchange, while adding to the price of the goods, increases 
 the cost price of products in two ways : from the direct 
 point of view of the consumption of the goods themselves ; 
 and indirectly as regards labour, for it entails increase of 
 salaries. 
 
 The rise of Customs duties, increasing the cost price 
 which is already raised by the exchange, becomes prohibi- 
 tory to exportation. It therefore contributes to increase 
 the exchange. 
 
 The suppression of Customs duties whose object is not 
 merely fiscal but protectionist would be one of the most 
 important coefficients of a fall in the rate of exchange. 
 
 The prohibition against exportation of capital still 
 exists at least in France and in Italy; but, if I cannot 
 export capital, how do you expect me to pay? And then 
 how can I contribute towards the lowering of exchange ? 
 
 War is carried on between States : the political solution 
 belongs to the domain of Governments. 
 
 During the war we witnessed the economic incapacity 
 of all Governments. If this experiment were not sufficient 
 to prove the powerlessness of Socialism, the experiment 
 now being carried on by the Bolshevists gives a further 
 demonstration which cannot be denied even by their 
 apologists. 
 
 In free lands exchanges are made between private 
 individuals; the economic solution should come from 
 them. In the economic conferences which have taken 
 place, such as the economic conference of the Allies which 
 was held from June i4th to lyth, 1916, many subjects were 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 discussed, but the question of Free Trade was systematic- 
 ally neglected. 
 
 Nevertheless, there were men who called, with passion- 
 ate eloquence, for a single economic front; but such a 
 single economic front entails the suppression of customs 
 barriers; and the same men asked that such barriers bo 
 raised or that such arrangements be made as would have 
 resulted in prohibition of such and such an export from one 
 country to give the monopoly to another. Instead of being 
 a result of the free will of interested parties, the division 
 of labour would have become an act of governmental 
 authority. 
 
 But we have lately seen an evident truth set forth by 
 Mr. George E. Roberts, speaking with all the authority 
 conferred on him by his position as Vice-President of the 
 National City Bank of New York ; namely, the necessity 
 of importations for the United States. 
 
 " Europe's debt to the United States cannot be settled 
 in gold. The total production of gold in the world out- 
 side of the United States is less than $400,000,000; and 
 even if the debtor countries were able to send the United 
 States considerable sums in gold the effect would be to 
 cause a further inflation of prices in this country, which 
 would be to its disadvantage in foreign trade and injury 
 to it at home. 
 
 "Dollar drafts at a premium mean that American goods 
 cost more to foreign customers; a premium upon dollar 
 exchange is an obstacle to our export trade which we will 
 be compelled to reckon with." 
 
 Mr. George E. Roberts gives a striking example when 
 speaking of the relations between Canada and the United 
 States :' 
 
 "The balance in favour of the United States in trade 
 with Canada in three years has averaged over $300,000,000 
 
 per year. Canada has balances in her favour in trade with 
 E 47 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 other countries, but those countries also are in debt to the 
 United States, so that those balances cannot be used for 
 settlement here. The total gold reserves of Canada are 
 not much above $200,000,000. 
 
 "In February the premium was 15 per cent.; this pre- 
 mium is not fixed in the United States. It results from 
 competition in Canada for the means of payment in the 
 United States. It is not a situation caused by bankers or 
 that can be remedied by bankers. 
 
 "The premium is an inducement in the nature of a 
 bounty for Canadians to export produce to the United 
 States. The Canadian paper and pulp manufacturers are 
 making a handsome additional profit on their sales in the 
 United States by selling their American drafts at a 
 premium." 
 
 If in all countries the exchange is in favour of the 
 United States, the result is a premium to imports and 
 against exports to the United States. 
 
 All the monetary combinations proposed are based on 
 the error attacked by the Physiocrats of the eighteenth 
 century, resulting from confusion between monetary sym- 
 bols and abundance of goods and facility of service. 
 
 Trade is a barter between products, services, and securi- 
 ties, in which gold only plays a part as settling medium. 
 
 The purchasing power of every country is in its powers 
 of production. 
 
 Mr. George E. Roberts rejects the old prejudice we 
 have seen come to light every time when there was surplus 
 production in any country. 
 
 "It is a mistake for the United States to advocate 
 foreign trade, as is sometimes done, on the ground that 
 we have so greatly increased our general productive capa- 
 city that we cannot consume the output of our industries. 
 The people of the United States could easily consume a 
 volume of production equivalent to twice the present 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 industrial capacity ut the country; but in some lines oi 
 production we have developed our capacity beyond the 
 demands of our people for those products, and we want 
 to exchange such products for other things of which we 
 are in need. We cannot dispose of them, or use that 
 industrial capacity, except on a basis of exchange. 
 
 "But no well supported argument can be made in 
 favour of trying to expand our exports without increasing 
 our imports." 
 
 The remarks which follow are perhaps not so forcible 
 as might have been expected from this conclusion. Mr. 
 Roberts speaks of importations of raw materials and ali- 
 mentary articles coming from South America, Asia, and 
 Africa ; but the largest amount of exports from the United 
 States are to Europe. During the fiscal year ending the 
 3oth June, 1913, they were $1,479 millions, on total 
 $2,466 millions, or 60 per cent. During the fiscal year 
 ending the 3Oth June, 1920, they were $4,864 millions, on 
 total $8, 1 1 1 millions, or 58 per cent. ; they will remain in 
 the same proportion. Consequently it is, above all, to 
 European products that Mr. George E. Roberts' conclu- 
 sions apply. 
 
 I borrow from Mr. J. W. Taussig, author of the 
 "Tariff History of the United States," a decisive argu- 
 ment: "International commerce w r ill yield profits to 
 American exporters which will be all the greater because 
 they will be able to purchase foreign goods at a cheaper 
 rate. But if an exporter sells any goods for 100 francs 
 and brings back other goods of equal price, then if the 
 Customs levies 50 per cent, on the imported goods the 
 exporter must sell abroad 200 francs to obtain an article 
 worth 100 francs. His profit is decreased by the full 
 amount of Customs duty. 11 
 
 Moreover, Americans desire to put capital into 
 European business. The Customs tariff of the United 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 States will affect them if (he products of such business are 
 intended to be imported into the United States or if they 
 desire to transfer a part of their profits into the United 
 States in the form of goods. 
 
 From this expose we must conclude : 
 
 Freedom and security of private contracts is the 
 great factor of progress : it includes freedom of labour 
 and liberty of exchange. 
 
 Protection has for its object to substitute, in the 
 direction of private business, the will of Government 
 leaders for that of private individuals Government 
 intervention can only be a disturbing element in trans- 
 actions undertaken at the risk and peril of private 
 parties. 
 
 The events which have occurred since August ist, 1914, 
 are a further confirmation of the disturbances brought 
 about and the importance of substituting a system of Free 
 Trade. 
 
 All economic history proves that the oscillations 
 of exchange are weaker in proportion as precious 
 metals play a smaller part in international trade. Gold 
 only being a settlement medium of business, the true 
 strength of banks does not depend on the relations 
 between their metal reserves and the amount of their 
 bill issues. It depends on their commercial portfolio, 
 and consequently any measure which restricts trade- 
 barters has the result of weakening the banks. 
 
 It is thus right to say : 
 
 The easier it is to exchange goods and services, the 
 smaller will be the part played by monetary symbols ; 
 in settlement, the more the variations of exchange will 
 decrease, and the greater will be the financial stability 
 between the various States. 
 
 YVES-GUYOT. 
 
 September %rd. 
 
 5 
 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 The CHAIRMAN then read the following paper : 
 
 Financial Stability : How can it be Restored by Free 
 
 Trade ? 
 By Sir GEORGE PAISH. 
 
 ON T E finds difficulty in realising the extraordinary change 
 in the world's financial condition since 1914. Prior to the 
 war financial stability was growing steadily greater and 
 hopes were indeed entertained that the financial crises, 
 which formerly recurred from period to period and which 
 brought severe trade depression in their train, would, as 
 the world's financial organisation improved, become less 
 and less acute and that progress would become more regular 
 and more rapid. The action immediately before the war 
 of the American Government in organising the Federal 
 Reserve Banks of the United States was in itself expressly 
 designed to obviate those banking crises in America which 
 from time to time threw international finance into disorder. 
 But until the great war no one imagined for a moment 
 that the financial condition of the world could change so 
 completely and so suddenly. In six years the financial 
 conditions have become completely reversed, and, instead 
 of stability, the financial situation has become so unstable 
 that nations which before the war were among the strongest 
 are now on the verge of bankruptcy, and great banking 
 institutions which before the war were of monumental 
 strength are, in common with the countries in which they 
 are situated, in danger of insolvency. Countries which be- 
 fore the war were creditor nations have now become debtor 
 nations, whilst debtor nations have become creditor 
 nations. 
 
 Nor is financial instability confined to nations and to 
 semi-Governmental institutions. The whole business 
 world is in serious danger from the inflation of credit 
 and of currency, which have created so much fictitious 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 wealth that the imagination is baffled to comprehend all 
 that it implies. Nearly ^50,000,000,000 of debt has been 
 created, which the persons who possess it regard as wealth 
 but which in the event of the bankruptcy of the crippled 
 nations will become practically valueless. Moreover, the 
 world's stock of merchantable goods as well as of build- 
 ings, plant and machinery are at a level of prices which 
 induces the owners to value their assets at gigantic totals, 
 but which at any moment may fall so heavily in price that 
 their possessors will be reduced from affluence to relative 
 poverty. Already a collapse of prices of non-essentials has 
 begun, and heavy losses are falling upon individuals in all 
 parts of the world. 
 
 Thus, not only are great nations and great institutions 
 in financial danger, but the affairs of the whole business 
 world are in such a condition of uncertainty and of in- 
 stability as has never before been witnessed. If the break- 
 down of credit, of commerce and of trade which is now 
 threatened becomes a reality it is clear that practically the 
 whole world will become insolvent. Unfortunately this 
 would mean not merely the disappearance of the war-made 
 and fictitious wealth but that more lives would be lost than 
 were destroyed in the war. It must be left to the imagina- 
 tion to visualise what would be the political consequences 
 of the insolvency of most of the war-stricken nations and 
 of their inability to buy the necessaries they require to 
 preserve their peoples from starvation and from pestilence, 
 as well as of the inability of the rest of the world to 
 sell the produce and goods it has available for sale in 
 foreign markets. Clearly, civilisation itself would disap- 
 pear. 
 
 That this picture of the financial instability of the 
 world at the present time is not overdrawn everyone in 
 touch with the international situation and everyone who 
 has followed the discussions at the Brussels Conference 
 
 52 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 will freely admit. Never has there been greater financial 
 instability throughout the world, and never has there been 
 greater financial, economic and political danger. 
 
 In normal times the danger of a financial crisis can 
 be more or less concealed, as the causes are frequently 
 obscure and the remedies are within the power of states- 
 men and bankers to apply without needing to alarm the 
 public. Indeed, public alarm merely intensifies the mis- 
 chief. To-day, however, financial instability is so obvious 
 that danger arises not from discussion but from failure to 
 discuss. The whole business world is in a state of anxiety. 
 Bankers and men of affairs in all countries desire to know 
 what steps are being taken to rectify the situation, and are 
 eagerly looking for any plans that will remove the danger 
 or that will even diminish it. As matters now stand the 
 very highest authorities express the conviction that nothing 
 can prevent a world breakdown. Probably no conference 
 that was ever held was of greater importance than that 
 which is now sitting at Brussels. To that conference the 
 business men of the whole world are looking for salvation. 
 Will it evolve any plan by which the threatened breakdown 
 of credit, of commerce, and of trade can be averted ? No 
 single remedy will be adequate, for many difficulties have 
 to be overcome, and unless all the necessary remedies are 
 applied the others must fail. 
 
 The resolution which has just been passed by the Com- 
 merce Committee of the Brussels Conference in favour of 
 universal Free Trade shows, however, that the Conference 
 is considering the most important factor which is helping 
 to bring about a \vorld breakdown, and which, if dealt 
 with, would greatly facilitate recovery. It is clear that 
 the world cannot recover from its present dangerous con- 
 dition until goods move freely from country to country and 
 world currents of trade are re-established. At the present 
 time the world's output of produce and of goods is in- 
 
 53 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 adequate to its needs, but in spite of this producers cannot 
 sell even what is available. Nations, for political and 
 racial reasons, are refusing either to sell their surplus pro- 
 ductions to neighbouring nations or to hold communication 
 with them. But the very act of refusing to sell to nations 
 in need of foreign produce renders the nations that refuse 
 to sell in turn incapable of buying from other nations which 
 would be able to supply them with the goods they them- 
 selves require. 
 
 How near to the breaking-point the world's commerce 
 has come is reflected by the fall in the values of European 
 currencies. The depreciation in the British pound has 
 now reached about 30 per cent., while the depreciation in 
 the French franc is nearly 70 per cent., in the Italian lire 
 nearly 80 per cent., in the German mark 90 per cent., and 
 in the Austrian kroner, Polish mark, and Russian rouble 
 nearly 100 per cent. 
 
 In large part, of course, the fall in the value of Euro- 
 pean currencies arises from inflation, but the depreciation 
 would not be nearly so great were it not for the inability of 
 Europe to pay for goods purchased in other goods, owing 
 in part to the barriers and hindrances which have been 
 erected to the free interchange of goods. Clearly, until the 
 nations can once again pay for goods and services pur- 
 chased from other nations in their own goods and services, 
 financial stability cannot be restored. Indeed, so long as 
 the existing situation continues and the nations are pre- 
 vented by political, economic or financial factors from 
 restoring their productive power and paying for goods with 
 goods, financial instability must grow worse. 
 
 But whether nations desire to have intercourse with 
 other nations or not, whether they desire to sell their own 
 goods to them or to refrain from doing so, whether they 
 are willing to purchase from those nations or unwilling to 
 purchase, it is essential for them to realise that the pressure 
 
 54 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 of circumstance, the pressure of necessity is becoming 
 rapidly greater, and that sooner or later every nation will 
 be compelled by reason of its own sufferings to consider 
 how it can promote the recovery of other nations in order 
 that it may itself recover. When that time comes it is 
 evident that nations will no longer refuse to sell to other 
 nations from any cause whatsoever, whether political, 
 racial, economic or financial. Under the stress of privation 
 nations will be compelled to buy freely from every nation 
 that can supply their needs and to sell their goods in pay- 
 ment wherever they can be sold. 
 
 Already the world is receiving object lessons of great 
 significance in what lies before it unless it observes sound 
 economic laws and endeavours to live in accordance there- 
 with. The deplorable condition of Germany is an object 
 lesson of what awaits other countries of the world if they 
 maintain their present policy. Germany is not starving 
 primarily because she is unable to export but because she 
 is unable to import. 
 
 Prior to the war Germany by her protective duties 
 endeavoured to restrict imports and to expand her exports. 
 The German people are now learning that imports are of 
 as much importance as, indeed under existing circum- 
 stances of greater importance than, exports. Italy is also 
 learning the importance of imports and of the value of 
 freedom of exchange. The adoption by the Italian people 
 of revolutionary methods comes from their inability to buy 
 abroad the food and material they so urgently need. It 
 is clear from the action of the Italian workmen that they 
 do not desire to be idle. Indeed, when the employers 
 locked them out they insisted on continuing their work. 
 They are willing to produce all that it is possible for them 
 to produce in order that they may be able to buy abroad 
 the food they need to keep them alive and the coal and 
 raw material they must obtain in order to work. 
 
 55 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Hitherto France has succeeded in buying all that she 
 required from foreign countries because they were willing 
 to supply her with the credit with which to buy, but the 
 power of France to obtain credit is diminishing, and the 
 French people are learning in a rough school the import- 
 ance of imports and that the power to buy things is of equal 
 importance to the power to sell their own goods. Unless 
 France can continue to import in spite of her inability in 
 her present condition to export sufficient to pay for what 
 she needs it is clear that the French people will shortly be 
 subjected to economic privation as great or greater than 
 that of Italy and possibly as great as that of Germany. 
 
 But America, too, is rapidly learning the disadvantages 
 of Protection, and that imports are as essential, indeed 
 fundamentally more essential, than exports. America, 
 in part owing to her unwillingness to purchase the goods 
 of Europe, is finding great difficulty in selling her own 
 goods and her own surplus supplies of food and raw 
 material. Already heavy losses have fallen upon the 
 manufacturers of America because Europe is not in a 
 position to buy, much as she needs American goods. The 
 trouble arises, not from America's power to export, but 
 from her failure to import. During the war, in order to 
 export, America has had* to purchase vast quantities of 
 European securities, and as she is no longer willing to 
 purchase these securities, as she has hitherto done, her 
 power to sell her own goods is rapidly declining. It is 
 obvious that America cannot continue indefinitely to sell 
 her produce and goods abroad unless she is willing to take 
 payment in a corresponding amount of goods and services 
 which the rest of the world is capable of selling to her. 
 Traders in America are learning, and are likely to learn 
 from bitter experience, that imports are as necessary as 
 exports, and that nations cannot permanently sell unless 
 they are prepared to buy. 
 
 5 6 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Canada also is learning lessons she never expected to 
 learn of the advantage of importing as well as of exporting. 
 At the moment Canada has a great crop which she desires 
 to sell in the European market, but inasmuch as Canada 
 purchases the greater part of the goods she requires from 
 the United States and not from Europe, and inasmuch as 
 the United States is not purchasing from Europe even 
 sufficient goods to pay her for her own exports, Canada 
 cannot be paid for the food she is supplying to Europe 
 through the United States. Of course, if America were 
 willing the matter might be adjusted for a time by sales 
 of European securities to America in order that Europe 
 might in that way pay for her purchases from Canada, 
 but such sales cannot indefinitely continue. Already the 
 debt of Europe to America and Canada is so great that the 
 interest cannot be paid because of the lack of exchange 
 arising on the one hand from the inability of Europe to 
 export sufficient goods to America and to Canada, and on 
 the other hand from the unwillingness of America and 
 Canada to buy the goods of Europe. 
 
 And what applies to America and to Canada applies 
 in greater or lesser degree to the other nations of the 
 world. Countries that are willing and able to take pay- 
 ment in European goods to the extent of their sales of 
 produce and goods to Europe can continue to do business, 
 but countries which refuse to buy either goods or securities 
 for the produce and goods they have for sale abroad cannot 
 sell them. The result is that great quantities of natural 
 products are piling up in all parts of the world because 
 they cannot be sold, owing to unwillingness to buy Euro- 
 pean products or European securities, as well as to the 
 inability of Europe to produce. 
 
 Hitherto the difficulties have been overcome by the 
 willingness and ability of the bankers of the world to 
 finance exports in the hope that sooner or later they would 
 
 57 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 be paid for in imports, and that the debts would thus be 
 liquidated. But inasmuch as bankers are discovering that 
 goods exported are not being paid for by imports and that 
 the debts which traders and merchants have incurred are 
 not being liquidated, they are not willing, indeed they are 
 not able, to expand their loans much further. Consequently 
 an increasing proportion of the produce of the world cannot 
 be sold, in spite of the fact that nations are starving because 
 they cannot obtain food and material. 
 
 The remedy for the existing situation is first of all the 
 recognition by each nation that it is part of a world 
 machine and part of a world economy, that its own welfare 
 depends upon the efficient working of that machine and 
 that political and racial considerations must be subordin- 
 ated either to feelings of common humanity or to regard 
 for its own economic welfare, which will be most seriously 
 injured if the world machine of credit, of commerce and of 
 trade comes to a standstill. 
 
 The second remedy which needs to be applied is to 
 enable countries whose productive power cannot be restored 
 without large purchases of foreign food and material to 
 obtain the credit essential so that they can produce the 
 things they need for the purpose of exchange. Unless 
 production can be re-established exchange cannot take 
 place and the financial situation cannot be readjusted. 
 
 The third step is to encourage every nation to exchange 
 any surplus of produce and of goods it is able to produce 
 freely for the produce and goods which it requires of other 
 nations. 
 
 Having applied these remedies, the nations must base 
 their future policy upon the indisputable fact that they 
 will only be able to purchase all they require from other 
 nations by sales of goods and services, and that nations 
 which are not willing to take payments for goods and 
 services in other goods and services will not be able to 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 dispose of them. Nations cannot continue to sell indefin- 
 itely without buying nor can they continue to buy without 
 selling-. In normal times temporary differences between 
 the imports and exports, both visible and invisible, can 
 be made good by the transfer of securities between the 
 countries, but this is possible only to a very small extent, 
 and goods must be paid for with goods. 
 
 At the present time the financial stability of the world 
 is threatened by Europe's loss of productive power, which 
 renders her incapable of paying for goods with goods, and 
 stability cannot be recovered until Europe's productive 
 power, including that of Russia, is re-established, and 
 every nation is again able to pay for what it buys with what 
 it sells. For the European nations to be able to consume 
 in future all they require they will need to have much 
 greater imports. Not for many years will it be possible 
 for Europe to recover her power to produce food in the 
 quantities she produced prior to the war. The loss of man 
 power, especially of the man power devoted to agriculture, 
 has been exceedingly severe. Force of circumstances will 
 compel the nations to economise their man power and to 
 secure as great an output as formerly by greater specialisa- 
 tion. This means that nations will become less and less 
 self-contained and more and more dependent upon the 
 free exchange of goods for their financial stability. The 
 ultimate effect of such specialisation will be an immense 
 expansion in productive power, both actual and in propor- 
 tion to population, which involves a greater volume of 
 international commerce. This means, in turn, that nations 
 will be more closely bound in one economic family, and war 
 will not only become more disastrous but more impossible. 
 With the disappearance of war and the freer exchange of 
 goods between the nations financial stability would become 
 much greater than ever in the past. Therefore, the restora- 
 tion of financial stability to the world greatly depends upon 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 the adoption by all the nations of a universal policy of 
 free exchange. The progress of the world in future de- 
 pends upon an international Free Trade policy which 
 will enable the nations to purchase the things they need 
 from other nations and to sell the things they produce 
 in return. 
 
 The discussion was continued by M. Raffalovich, 
 Messrs. A. Lupton and D. M. Mason, Miss Van Dorp, 
 Lord Sheffield, and M. M. J. Pierson. 
 
 60 
 
FOURTH SESSION 
 
 Wednesday, October 6 
 
FOURTH SESSION - WEDNESDAY, OCT. 6 
 Chairman LORD SHEFFIELD 
 
 ^ 
 
 SUBJEC7 : 
 The Open Door. 
 
 The CHAIRMAN read the following paper ; 
 
 The Open Door. 
 By LORD SHEFFIELD. 
 
 BY this heading I understand the desire to trade as widely 
 as possible both in our imports and our exports with all 
 who are willing to trade with us. It involves the most 
 absolute free trade in the sense that if duties have to be 
 imposed for purposes of revenue there shall be an equiva- 
 lent internal duty on producers to prevent the consumer 
 being at a disadvantage. It excludes any preference in 
 favour of our own Colonies or Dominions. It prohibits 
 any attempt to secure a colonial market for our own pro- 
 ductions at the expense of their possible trade with other 
 countries. 
 
 Any such preference is the closing wholly or partially 
 of the wide door of world-wide trade while opening the 
 comparatively small wicket-gate of our own dependencies. 
 It may be said that this is basing economic policy too 
 exclusively on financial considerations. It excludes such 
 ideas as fostering the progress of our co-nationals over the 
 seas, the prohibition of any ethical consideration such as 
 the exclusion of goods produced under uneconomic con- 
 ditions of artificial cheapness, such as prison-made goods, 
 
 sweated goods, the prevention of the competition of labour 
 F 63 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 unduly kept down, such as slave labour or the labour of 
 races whose conditions of life are so low as to enable them 
 to produce at a rate beyond the possibility of competition 
 where hours of labour are short and its remuneration and 
 standard of living are liberal. Formerly protection offered 
 liberal profits to the favoured capitalist. Now it drapes 
 itself in the economic disguise of generous sympathy with 
 labour. 
 
 Nearly a hundred years ago in this country we had 
 sincere anti-slavery champions who refused to use slave- 
 grown sugar, and the West Indian planters used this 
 ethical emotion as an auxiliary to their protective policy 
 such a policy broke down when slave-grown cotton was 
 used on a large scale and slave-grown sugar was resisted 
 on a small scale. 
 
 The bulk of the gold now produced in the world comes 
 from South Africa, where the native wages are a mere 
 pittance compared with the wages of white workers who 
 have no scruple in demanding the exclusive right to the 
 better-paid positions in the mines. 
 
 Most tropical or sub-tropical products such as tea, 
 rubber, etc., are produced by the labour of races whose 
 standard of living is far lower than ours. 
 
 In fact, to regulate imports by an inquiry into the social 
 conditions of the workers who produce them will be found 
 to be impracticable, and should these imports be raw 
 materials, the effect would be to deprive the excluding 
 country from the power of competing in the world market 
 unless all industrial countries joined in the policy. 
 
 Australia has attempted by legislation to raise the 
 standard of living for sailors taking part in her coasting 
 trade. The effect is to restrict the freedom of the Austra- 
 lian market and to raise the cost of goods to the Australian 
 consumer. But in this and in similar cases it will be found 
 that the philanthropic pretext is inoperative, but the in- 
 
 64 
 

 INTERNATIONAL FREE TRADE CONFERENCE 
 
 creased cost and the limitation ot commercial opportunity 
 is immediate. 
 
 But international trade in highly developed countries 
 such as Europe, the United States and the progressive 
 Republics and Dominions of European origin throughout 
 the world is so extended, so complicated, that the economic 
 prosperity of all countries is dependent on all making the 
 best of their own natural advantages and using to the 
 utmost what other countries can produce better and 
 cheaper. 
 
 Bishop Berkeley in his Querist dealing with the primi- 
 tive conditions of Ireland as he knew it, could recognise 
 that industry and energy applied to work at home was 
 the vital need, and given these he could ask wherein 
 Ireland would suffer if a brazen wall a thousand cubits 
 high shut her out from the rest of the world. But a 
 developed and industrialised country could not flourish, 
 indeed could barely live, if not a brazen wall but a 
 moderate wire entanglement were put up round its external 
 trade. 
 
 This is an International Conference, and each nation 
 must examine its own conditions as to which each has 
 more familiar knowledge than a foreigner. Perhaps the 
 United Kingdom is the most complete illustration of the 
 inter-dependence of the world and of the need for each 
 country to seek its prosperity through the co-operation and 
 prosperity of all other nations. 
 
 At any rate, I shall illustrate the need for the open door 
 in commerce from the conditions of this country to which 
 many other industrial countries are approximating. 
 
 An agricultural community can approach more nearly 
 to a self-contained existence than an industrial. 
 
 But an industrial community becomes more urban, and 
 we see that tendency in all the leading countries; not only 
 in this country does the urban population greatly out- 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 number the rural, but the same rapid growth of urban and 
 industrial centres is seen in Germany, in France, in Italy, 
 Switzerland, Holland, Belgium, in the United States, and 
 in the new colonial States springing up in Australia, New 
 Zealand, Canada, and elsewhere. But an industrial com- 
 munity must rely largely on imports for its raw material. 
 
 In the United Kingdom our chief industries rely on 
 cotton, wool and iron. In the case of cotton we imported 
 the whole from overseas, in 1913 over ^79,000,000. For 
 wool we depended chiefly on overseas importation, and in 
 the same year imported nearly ^38,000,000. In the iron 
 industry we imported iron ore and scrap iron to the extent 
 of half our make of pig iron. In the case of other metals, 
 copper, lead, zinc, tin, to say nothing of the rarer metals, 
 antimony, manganese, platinum, we are almost entirely 
 dependent on importation. But our industrial workers 
 must not only have the materials of their industry, they 
 must be fed and housed, and in 1913 we imported 
 ^290,000,000 of food and tobacco, which represents 
 probably from two-thirds to three-quarters of the consump- 
 tion of the country. For timber for housing and for other 
 industrial purposes we imported nearly ^40,000,000, 
 which represents far the larger part of the timber used; 
 we also required other raw materials, making our total 
 imports of food, drink, tobacco and raw materials over 
 ^570,000,000, but in addition, of articles classed as manu- 
 factured, we imported over ^55,000,000, which for pur- 
 poses of our industry were really raw materials such as 
 unmanufactured iron and steel, copper, tin, lead, zinc, 
 leather, oilseed cake and other matters. Thus of our 
 total imports in 1913 of nearly ^770,000,000 at least 
 ^645,000,000 were needed to feed, house or equip our 
 industrial activity, leaving about ,125,000,000 which 
 might possibly be considered as not essential to our great 
 industrial activity, and this is a great over-statement of 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 the case, for of the imports which we can fairly classify 
 as manufactures many are really used in making the final 
 industrial product. Thus paper, chemicals, dye-stuffs, 
 painters' colours enter into further production. 
 
 In 1913 there were twenty-seven kinds of manu- 
 factured products imported into this country, totalling 
 about ; 1 1 7, 000,000, none amounting to less than 
 ;i, 000,000, and in the same classification our exports 
 amounted to ,314,000,000; thus these imports were only 
 37 per cent, of the same class of exports, showing that 
 generally we had no reason to fear their competition with 
 our industrial production. 
 
 The mental inability which we experience, which makes 
 it difficult to impress on some people the necessity for 
 mutual dependence between nations, as opposed to separate 
 self-containing resources, is due partly to the lamentable 
 result of the war. It has left an atmosphere of suspicion 
 and resentment which makes men apprehensive that what 
 with new methods and new ferocity in waging war we 
 may be in danger for our national existence, if we look 
 beyond our own limits for the means of subsistence. I 
 think I have made it clear that this country cannot possibly 
 subsist and maintain a population of forty-five millions 
 unless it relies on the co-operation of the world. 
 
 It is not the danger of hostility from one nation or from 
 a combination of nations that we have chiefly to fear. We 
 have to fear that if we refuse international co-operation in 
 peace we may find ourselves not only isolated but reduced 
 to serious economic straits. 
 
 Take the case of grain we now rely on the harvest of 
 the world. 
 
 In 1913 we imported nearly 200,000,000 cwts. of grain 
 and more than 18,000,000 cwts. of flour. 
 
 The principal quantities were imported from the follow- 
 ing countries in round numbers : 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Grain and flour cwts. (ooo's) 
 
 Argentina 60,000 28 per cent. 
 
 U.S.A. ... 54,000 25 
 
 Canada .... ... ... 30,000 14 ,, 
 
 India 22,000 10 ,, 
 
 Russia 16,000 7 ,, 
 
 Australia 14,000 6 ,, 
 
 Germany 6,000 3 ,, 
 
 202,000 93 per cent. 
 
 Thus we see how widely our sources of supply were dis- 
 tributed, how independent we were of any local failure of 
 harvest, about one-third of our imports being drawn from 
 the Southern hemisphere and one-third from our Colonies 
 and Dependencies. 
 
 If we take wheat and wheat flour which are the principal 
 breadstuffs consumed here we have the following results : 
 
 Total wheat and wheat flour imported : 
 
 
 1913 
 
 1917 
 
 1918 
 
 1919 
 
 Cwts. ooo's. 
 
 1 18,000 
 
 105,700 
 
 83,000 
 
 89, TOO 
 
 U.S.A. 
 
 ... 44,600 
 
 62,200 
 
 42,700 
 
 42,000 
 
 Canada 
 
 ... 21,500 
 
 22,400 
 
 21,500 
 
 23,500 
 
 India 
 
 ... 18,800 
 
 2,800 
 
 700 
 
 
 
 Argentina 
 
 ... 14,900 
 
 6,700 
 
 14,500 
 
 6,900 
 
 Australia 
 
 10,400 
 
 i r,ooo 
 
 3,600 
 
 16,500 
 
 Russia 
 
 ... 5,000 
 
 
 
 
 
 
 
 Chile 
 
 750 
 
 
 
 
 
 
 
 Germany 
 
 550 
 
 
 
 
 
 
 
 116,500 105,100 83,000 88,900 
 
 If ever a severe strain could be put on any country in the 
 matter of food supply, the conduct of the war with its sub- 
 marine campaign and the demands on our shipping for the 
 general needs of our Allies, with the curtailment or cessa- 
 tion of many of our previous sources of supply, imposed 
 such a strain here during the war and at its close. 
 
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INTERNATIONAL FREE TRADE CONFERENCE 
 
 Thus in 1917, in spite of the complete loss of wheat 
 from Russia, Germany and Chile, amounting to nearly 
 seven million hundredweights of wheat and flour, or 6 per 
 cent, of our total imports, and to a loss of wheat from 
 India, Argentina and Canada of about eighteen million 
 hundredweights, a total loss of more than 21 per cent, of 
 our imports, the supplies received from the U.S.A. reduced 
 our loss to about 10 per cent. In 1918 our total imports of 
 wheat and flour were about 84,300,000 cwts., a shortage of 
 nearly 34,000,000 cwts., or a falling off of 29 per cent, on 
 our imports of 1913. This was a much more serious loss 
 and was largely due to the great falling off of shipments 
 from the U.S.A. During the five years of the war we 
 received on an average from the U.S.A. 53 million cwts. 
 of wheat and flour; thus 1918 fell short by 10 million cwts. 
 of the average, and had we received the same amount as 
 in 1917, namely, 62 million cwts., we should have suffered 
 on the whole no very serious reduction of our pre-war total 
 importation of 1913. If we examine the fluctuations of our 
 other principal sources of supply, we find that Canada, on 
 the average of five years, 1914-18, sent us 25^ million cwts. 
 of wheat and flour, and in 1918 fell short by 4 million 
 cwts. Argentina sent us on an average nearly 9 million 
 cwts., and in 1918 sent us 14^ million an improvement 
 in the average of 5j millions. On the other hand, India, 
 which sent an average for the five years of 6.7 million 
 cwts., only sent 700,000 cwts., a falling off of 6 millions. 
 Australia, whose average export to this country was 6.3 
 million cwts., sent us 3.6 million cwts. in 1918. But, on 
 the whole, the fluctuations of the various sources of supply 
 tended to balance each other, and the wide area from which 
 we drew averaged the loss. 
 
 If we turn to the overseas supply of meat during the 
 war we find that in 1913 we imported about 23,600,000 
 rwts., of which the following came from these countries : 
 
 69 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 ooo's cwts. Per cent. 
 
 Argentina 8,700 ... 32.6 
 
 Australia 3,8oo ... 16 
 
 U.S.A. ... 2,700 ... 11.4 
 
 New Zealand 2,500 ... 10.6 
 
 Denmark :.. 2,500 ... 10.6 
 
 Uruguay 550 ... 2.3 
 
 Canada 340 ... 1.4 
 
 21,090 ... 85 p. c. 
 
 In 1918 we imported about 25,200,000 cwts., of which 
 the following quantities in round numbers were received as 
 follows : 
 
 ooo's Per cent. 
 
 U.S.A 14,160 ... 56 
 
 Argentina 4,230 ... 16.7 
 
 Canada 2,470 ... 9.8 
 
 New Zealand 1,690 ... 6.7 
 
 Australia 1,240 ... 4.9 
 
 Uruguay 700 ... 2.8 
 
 24,490 ... 97 p.c. 
 
 Thus we see that while there was a considerable shifting 
 in the proportions which various countries sent us, yet, 
 apart from Denmark, which was seriously affected by the 
 war, the other countries still kept the lead and sent us 
 97 per cent, of our overseas supplies. It may be safely 
 asserted that in the case both of cereals and of meat, had 
 not this country by the policy of the open door practised 
 on the most liberal scale and with its consequent develop- 
 ment of ocean shipping fitted up for refrigerating meat, 
 and of capital applied in countries like Argentina to cattle 
 ranches and mutton-producing, the Allied nations would 
 never have stood the strain of the war. Not that I should 
 wish to advocate the open door policy with a view to 
 security against possible future wars, a policy which treats 
 
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 industry and commerce as defences against war, and not as 
 extended pledges for universal peace. Such a policy is, 
 in my opinion, the result of a faulty estimate of the probable 
 future relations of the world and of the moral and intelligent 
 considerations which should guide our actions. 
 
 Great as I believe the economic advantages of a Free 
 Trade policy, I consider its moral advantages as leading 
 to the recognition of international solidarity and as break- 
 ing down the barriers of national selfishness to be the main 
 arguments on which we should rely to bring about that 
 general acceptance of reciprocal national obligation which 
 is far more operative for the future harmony of the world 
 than any paper League of Nations, which does not carry 
 with it the sympathetic goodwill of the GoA^ernments and 
 still more of the whole brotherhood of nations. 
 
 Mr. J. A. HOBSON then read his paper on 
 The Open Door. 
 
 THE term "Open Door " is sometimes used to express the 
 general policy of free commercial and personal intercourse 
 between nations. But by modern usage it has also ac- 
 quired a special meaning with regard to the economic rela- 
 tions between dominant States and the backward or less 
 developed countries over which the former exercise political 
 control as colonies, protectorates or spheres of influence. 
 
 The old colonial system of Spain, Holland, France, 
 Britain, and other colonising countries was frankly based 
 upon monopoly and the "closed door," an exclusive or 
 preferential control over import and export trade, the ex- 
 ploitation of mining and other natural resources in the 
 primary interest of the ruling country, navigation laws to 
 secure a monopoly of colonial shipping, and an enforced 
 subjection of native labour to the profitable ends of the 
 Imperial Government or its concessionaires. This close 
 
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 system partially broke down in the later eighteenth and 
 the nineteenth centuries. France, Spain, Portugal and 
 Holland lost the greater part of their seventeenth-century 
 empires, partly by process of political liberation, as in the 
 case of Spanish America, partly by absorption into the 
 bodies of the British Empire and the United States. The 
 continual enlargement of the British Empire during the 
 nineteenth century made for broader and freer commerce 
 between the countries passing under her control, even be- 
 fore the adoption of a definitely Free Trade policy. During 
 the latter half-century the British Imperial policy was in 
 form and substance one of the Open Door. But the new 
 competition for colonial empire which began in the 
 'seventies and became increasingly severe in the 'eighties 
 and 'nineties, primarily stimulated by the rapid industrial 
 development of European countries with the increasing 
 demands for profitable export trade and for areas of lucra- 
 tive investment, revived in many quarters the policy of 
 close colonial possession. The active prevalence of Pro- 
 tectionist doctrine led the Protectionist states to endeavour 
 to secure special preserves in the tropics and elsewhere 
 from which to draw exclusive supplies of foodstuffs and 
 raw materials, and into which to pour their surplus manu- 
 factured goods, with the attendant opportunities for profit- 
 able employment of their national savings in countries 
 within their own political system. Since the number of 
 favourable opportunities was restricted, many of the 
 choicest countries being already secured, the rivalry for 
 colonies, protectorates or spheres of preferential trade in 
 Africa and Asia began to press dangerously on foreign 
 relations. It was then that the principle of "The Open 
 Door " first figured openly in international policy, in the 
 Berlin Congress of 1884-5, f r settling the conflicting 
 claims and interests of European Powers in the Congo 
 Basin. The following applications of the principle were 
 
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 made : trade was to be free to all natives in the Basin of 
 the Congo and in certain territories east and west to the 
 Indian and Atlantic Oceans; free access to ports and to 
 the Congo and its affluents ; equal navigation fees to cover 
 costs of improvements; no import duties, no commercial 
 monopoly or privilege; foreigners to have the same rights 
 within each region as the citizens of the sovereign power ; 
 the execution of these provisions to vest in an international 
 commission. This commission was never appointed, and 
 later on, in 1890, the Brussels Anti-Slavery Conference 
 sanctioned a 10 per cent, import duty for the Congo zone. 
 But this Act brought a large section of tropical Africa 
 within the operation of this equal policy. 
 
 Other treaties between several European nations have 
 adopted the principle, the leading cases being the extension 
 of the African policy by agreement of England and France 
 in 1898, and the Algeciras Congress in 1906. In this latter 
 application of the policy to Morocco a low uniform import 
 tariff applicable to the goods of all nations, equal arrange- 
 ments for foreign contracts and concessions, and a State 
 bank under international control were the chief provisions. 
 This policy, never effectively carried out in Morocco, has 
 now been abrogated, Morocco passing into the French fiscal 
 system as a colonial possession. But the most important 
 assertion and adoption of the principle was in the case of 
 China, when in 1899 Mr. Hay, Secretary of State for the 
 United States, wrung from the other reluctant Powers 
 their consent to abandon the policy of political and eco- 
 nomic grab. The story may best be told in the following 
 passages from Thayer's "Life of Hay":* "After the 
 Japanese defeated the Chinese in 1894 China lay like a 
 stranded whale, apparently dead or dying, and the chief 
 Powers of Europe came, like fishermen after blubber, and 
 took here n province and there a harbour, and were callous 
 * vol. ir,*p. 240-243 
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 to the fact that their victim was not dead. They not only 
 seized territory, but forced from the Chinese concessions 
 for mines, railways, commercial privileges and spheres of 
 influence. From the time that Hay became Secretary he 
 strove to keep intact the political integrity of China and to 
 persuade all the Powers to maintain there the policy of the 
 Open Door." . . . "Not one of the Governments concerned 
 wished to agree to it, each saw more profit to itself in ex- 
 ploiting what it had already secured and in joining in the 
 scramble for more. But not one of them after Hay had 
 declared for the Open Door dared openly to oppose the 
 doctrine. It was as if in a meeting he had asked all those 
 who believed in telling the truth to stand up; the liars 
 would not have kept their seats." 
 
 Thus was secured a pledge from the nations holding 
 "spheres of influence " in China to maintain the Open Door 
 with reference to customs, harbour dues and railroad rates. 
 Japan and Great Britain, in the preamble to their treaty of 
 1902, further asserted their interest in "securing equal op- 
 portunities " in China and Korea "for the commerce 
 and industry of all nations." 
 
 How .much of this Open Door in China now stands in 
 face of the demands of Japan forced upon China during 
 the Great War, the concessions to Japan in the Versailles 
 Treaty and the admission of "special interests " for Japan 
 in the Lancing-Ishii Treaty, lies outside the limits of my 
 paper to discuss. But it appears as if the door were closed 
 in Eastern Inner Mongolia, South Manchuria, Fukien and 
 Shantung, not only for trade but for mining, railroad and 
 other developmental work. 
 
 So much may be said by way of historical introduction 
 to the problem which confronts us. It is, as we see, not 
 exclusively a colonial policy that is in question, for China 
 is neither colony nor protectorate, it is the economic policy 
 of civilised nations in their treatment of backward nations. 
 
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 Nor is it only a question of commercial intercourse. In- 
 vestment of capital and developmental work play a more 
 dominant part in the direction of this policy than does 
 ordinary commerce. The growing dependence of the 
 populous Western countries upon the rich and various pro- 
 ducts of Africa, Asia and South America to feed their 
 people and supply their factories and to furnish markets for 
 their surplus manufactures and capital is the largest single 
 factor in modern world-politics. For in addition to the 
 commercial and financial aspects upon which I have 
 touched, it is the main directing influence in those flows 
 of immigration for -permanent or temporary settlement 
 which are redistributing so rapidly the population of the 
 world and stirring such acute racial and social problems. 
 
 Now there are three conceivable attitudes to be adopted. 
 The first is that of simple laisses faire, the old Cobden 
 doctrine of non-intervention. Let traders and investors in 
 foreign lands trade and invest at their own risks, with no 
 right to call upon their Governments to assist them in 
 getting trade or in safeguarding their investments. Trade 
 and investment are matters of private business, and 
 Governmental interference is only mischievous. The logic 
 of this argument appears at first incontestable, but the 
 policy of non-intervention is both impracticable and un- 
 desirable. It is impracticable because an effective agree- 
 ment of all civilised Governments to such non-intervention 
 involves too violent a departure from accepted sentiments 
 and policies, while any country which adopted it without 
 such general agreement would appear to put its nation at 
 a disadvantage. It would be undesirable because experi- 
 ence shows that traders and investors, thrown on their own 
 resources with a free hand to push their profitable interests, 
 have frequently pursued a policy of plunder, enslavement 
 and even extermination in pursuance of quick gains, thus 
 wasting the natural resources of the countries and stirring 
 
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 sentiments of hatred and hostility in the native populations 
 which endangered amicable relations with all foreigners. 
 
 Non-intervention being thus ruled out, can any safe or 
 equitable policy, an Open Door, emerge from the separate 
 conduct of the several civilised States? Great Britain, 
 Germany and Holland were the only countries with 
 large colonies which professed this liberal principle. Ger- 
 many's colonies have now been parcelled out among coun- 
 tries, none of which, except Great Britain, profess to keep 
 an Open Door. And recent administrative action of our 
 Colonial and India Offices, to say nothing of the preferen- 
 tial tariffs of our self-governing Dominions, has closed the 
 Door for certain important lines of trade by levying export 
 taxes on palm kernels, raw cocoa and jute, to be remitted 
 when these products are exported to other parts of our 
 Empire. Apart from the dangers of an early reversion to 
 a general policy of protective tariffs for this country and an 
 extension of Imperial preferences, there are the more subtle 
 proposals for the exploitation of our Imperial resources in 
 Africa and elsewhere by financial syndicates marketing 
 their products exclusively or preferentially within this coun- 
 try. To some considerable extent the principle of the 
 Open Door has, in every country professing it, been evaded 
 or qualified by such subterfuges. But the adoption of such 
 an avowed policy by this country in control of one-fifth of 
 the habitable globe would be a reaction of the most danger- 
 ous moment, imperilling the cause of pacific international- 
 ism more than any other event. 
 
 The Open Door can only be obtained and secured by 
 directly international agreement and co-operation. Now, 
 having regard to the part which the rivalry in colonial 
 policy for economic purposes played in the under-causation 
 of the Great War, it was anticipated that in any substantial 
 settlement the preventive virtue of an Open Door must 
 obtain clear recognition and be expressed in the arrange- 
 
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 ments lor dealing with the derelict territories of the German 
 and Turkish empires. This expectation found firm, 
 though not sufficiently precise, expression in those Points 
 and Conditions of peace laid down by President Wilson 
 and offered by the Allied Governments to the enemy as the 
 basis of the peace terms. "The removal so far as possible 
 of all economic barriers and the establishment of an equality 
 of trade conditions among all the nations consenting to the 
 peace and associating themselves for its maintenance " 
 stands as Point 3, while number four in the Five Condi- 
 tions of September 27, 1918, reads thus : "There can be no 
 selfish economic combinations within the League, and no 
 employment of any form of economic boycott or exclusion, 
 except as the power of economic penalty by exclusion from 
 the markets of the world may be vested in the League of 
 Nations itself as a means of discipline and control." 
 
 Now since the Covenant of the League is the first formal 
 attempt to enrol the nations in the common cause of inter- 
 national equality and co-operation, it was to be expected 
 that a serious and systematic attempt would be made to 
 adopt and apply this healing and uniting economic policy. 
 And the document itself contains clear indications of an 
 endeavour towards this end on the part of some of those 
 responsible for drafting it. Among the general provisions 
 for the conduct of the League is one which declares that 
 the League "will make provision to secure and maintain 
 freedom of communications and of transit and equitable 
 treatment for the commerce of all members of the League." 
 This provision, having chief regard to inter-European 
 trade, could not perhaps be expected to adopt the full form 
 of an Open Door. But I cite it because it contains two 
 sinister qualifications which we shall see impair the appli- 
 cation of the principle in dealing with the mandatory areas. 
 One is the use of the slippery term "equitable " instead 
 of the term "equal." The other is the implied exclusion, 
 
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 even from this equity, of nations not admitted as members 
 of the League. 
 
 But the signal failure to apply the principle appears in 
 the conditions for operation of the mandates. It will be 
 remembered that the German and Turkish territories dis- 
 tributed under mandates fell into three classes. The first 
 contains countries formerly under Turkish rule which are 
 to be reorganised provisionally as independent nations sub- 
 ject to "administrative advice and assistance " by a man- 
 datory Power. Here there is no reference either to equal 
 or equitable trade relations with other members of the 
 League, and apparently it would be competent for these 
 quasi-independent Governments to give exclusive or prefer- 
 ential treatment to members of the mandatory power in the 
 way of import duties or concessions, or to make any other 
 discriminating arrangements they liked, with (or without) 
 the assent of the mandatory power. 
 
 "Other peoples, especially those of Central Africa," are 
 formally brought under the Open Door policy by an exten- 
 sion of the provisions of the Berlin Act. It is explicitly 
 asserted that these provisions "will secure equal oppor- 
 tunities for the trade and commerce of other members of 
 the League." The third class, including South-West 
 Africa and the Pacific Island colonies of Germany are 
 simply handed over "to be administered by the laws of 
 the mandatory as integral parts of its territory, subject to 
 the safeguards above-mentioned in the interests of the in- 
 digenous population." Now "equal opportunities for trade 
 and commerce " are carefully distinguished from these safe- 
 guards of native interests. These countries are simply to 
 pass into the protective fiscal systems of South Africa, 
 Australia, New Zealand and Japan. Australian statesmen 
 lost no time in asserting this claim. The net effect of this 
 disposal of German colonies is a reduction of the Free 
 Trade area in the world by taking countries from an Open 
 
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 Door policy to put them under a protective and discrimina- 
 tive system. 
 
 As regards the one class of mandates where " equal 
 opportunities " are asserted, it will be observed that they 
 are confined to members of the League, thus excluding and 
 driving into a hostile economic and political alliance the 
 ex-enemy countries and Russia, and that no provisions are 
 laid down for equal opportunities for investments, public 
 contracts and concessions in these undeveloped countries. 
 Moreover, unless direct control of the administration of 
 the import and export trade of these mandated areas be 
 vested in an International Commission, there can be no 
 security against concealed preferences and other obstacles 
 to equality of trading, which will certainly be practised by 
 mandatories whose own domestic and colonial systems are 
 based upon Protection. And there is no proposal for the 
 establishment of such an International Commission. 
 
 If the mandatory policy of the League is to be made 
 conformable to the principle of the Open Door, it must 
 secure, by some effective international control, first, that 
 all mandated areas are safeguarded against preferential 
 trade and exploitation by the mandatory Power; secondly, 
 that these markets for trade and investment are open upon 
 equal terms not only to "other members of the League " 
 but to all outside peoples. 
 
 So far I have treated the issue from the standpoint of 
 the rights and interests of the advanced nations with a 
 view to the fullest participation of the outside world in 
 the resources of backward countries and the prevention of 
 the dangers arising from Imperialistic rivalry. But the 
 mandatory policy is expressly urged in the Covenant upon 
 the ground that "the well-being and development of such 
 peoples form a sacred trust of civilisation," that is to say, 
 that while there are three distinguishable interests, viz. 
 that of the mandatory Power, that of the general body of 
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 nations in the League, and that of the people of the man- 
 dated country, the interests of the last should form the first 
 consideration. Now it is manifest that the Open Door 
 policy, consistently applied under international supervision, 
 forms the best security for a weak and backward people 
 against those dangerous practices of spoliation and virtual 
 enslavement which history, ancient and modern, has shown 
 to be attached to colonial Imperialism in the hands of 
 every Imperial Power, ruling by its own right and 
 under the powerful pressure of financial and commercial 
 nationals. It is a vital interest to the natives of these 
 countries that they are allowed to trade freely and on equal 
 terms with all the outside world, and that the development 
 and operation of their mines, railways, ports, plantations, 
 etc., shall not be profitable preserves for nationals of the 
 mandatory Power, but shall be open to the freely competi- 
 tive enterprise of the whole outside world. Only thus can 
 the aborigines be protected against sweating or enslave- 
 ment, only thus can they develop and market their national 
 products to the best advantage of themselves. 
 
 The Open Door is thus the best safeguard against a 
 recurrence of the crimes and cruelties, the slavery, war and 
 waste which have blackened every page of the history of 
 Africa during the centuries of contact with civilisation. 
 
 There is one other aspect of the Open Door policy 
 which I approach with diffidence because it cannot be 
 ignored. If the best and most fruitful development of 
 backward countries for the good of the inhabitants and of 
 the commercial world is the substance of this policy, it 
 involves not only the equal rights for trade and investment 
 but for immigration and settlement where the develop- 
 ment of the country requires such help from outside. No 
 country with rich undeveloped natural resources which its 
 people is unable or unwilling to exploit has any natural 
 right of absolute ownership which justifies it in excluding 
 
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 labour which desires to come in from outside in order to 
 work these neglected resources. No such national indivi- 
 dualism or absolute self-determination can be maintained 
 as against the general needs and interests of mankind. 
 But if this is true of a rich backward country under its 
 own independent Government, it is equally applicable to 
 such a country under the political control of an advanced 
 country. The latter can claim no right to refuse reasonable 
 access to outsiders who seek settlement either as traders, 
 prospectors, engineers, business managers, or labourers. 
 The free admission of outside labour as well as of outside 
 capital is often essential to the development of such coun- 
 tries. The chief episodes in history have been the move- 
 ments of populations from poorer or densely peopled lands 
 into rich or more sparsely peopled, and the resistance to 
 such flows has generally been the chief cause of conflicts. 
 If the Open Door is to be an efficacious policy for peace 
 and productivity, it must contain measures for the reason- 
 able regulation of this immigration. It may well prove 
 the most difficult aspect of that policy, involving, as it 
 must, powerful interests and sentiments outside the purely 
 economic sphere. The term "Asiatic labour" has a 
 passionate import throughout our Dominions and the 
 United States. And I do not here discuss the policy of 
 virtual exclusion exercised by these white men's countries. 
 But the more rigorous such policy of exclusion becomes, 
 the greater the pressure from these large storehouses of 
 migratory labour for access to tropical and other lands 
 which white nations control but do not occupy. The 
 direction of such voluntary immigration into countries 
 which require such labour, the conditions of the contracts 
 under which they work, the arrangements for their settle- 
 ment or their repatriation, their relations with the natives 
 of the countries, should certainly be vested not in the 
 hands of a mandatory Power but in those of an Inter- 
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 national Commission. But such reasonable liberty of 
 immigration, as a plank of the Open Door, involves a more 
 enlightened economic policy than has commonly prevailed 
 in Governmental supervision of Imperialist States over the 
 schemes of indentured labour in their remote colonies and 
 protectorates. 
 
 Indeed, in certain influential quarters there is a disposi- 
 tion frankly to accept in theory that view of the proper 
 place and function of the lower races which has usually 
 prevailed in practice, viz. to make these lower races the 
 hewers of wood and drawers of water for a world aris- 
 tocracy of white peoples. Here is a plain suggestion from 
 the pen of Dr. E. J. Dillon :* 
 
 "The continuity of human progress depends upon 
 labour, and it is becoming more and more doubtful whether 
 the civilised races of mankind can be reckoned on to supply 
 it for long on conditions akin to those which have in 
 various forms prevailed ever since the institutions of 
 ancient times. If this forecast should prove correct, the 
 only alternative to a break in the continuity of civilisation 
 is the frank recognition of the principle that certain inferior 
 races are destined to serve the cause of mankind in those 
 capacities for which alone they are qualified and to adjust 
 social institutions to this idea." 
 
 Now if the principle of the Open Door is to prevail, it 
 will have to do battle with various forms of servitude and 
 parasitism which may even claim the sanction and assist- 
 ance of international Government, unless the League can 
 be taken right away from the control of the old diplomacy 
 and its reactionary attitude towards lower races. 
 
 One word in conclusion regarding the scope of the 
 application of the principle we are discussing. Though it 
 comes to the front at the present time with particular refer- 
 ence to mandates of the League, there can be no just reason 
 
 * The Peace Conference, p. xii 
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 for confining it to the countries changing hands under the 
 peace treaties. Every equity and expediency of the Open 
 Door is equally applicable to the case of all backward 
 peoples under the political control of any white Power. 
 Under the existing system of separate competing empires, 
 practising selfish and oppressive economic policies, there 
 can be no security for the peace, good order and sound 
 development of large areas in which the whole world is 
 closely interested. The extension of the Open Door and 
 the supervision of that policy by an international authority 
 are the only adequate safeguards against present waste 
 and future conflicts due to the selfish and shortsighted 
 government of backward countries. Great Britain, which 
 has long practised the Open Door policy in her colonies 
 and protectorates, might well set an example in inviting 
 the Commission of the League responsible for supervision 
 of the mandates to extend their control over our tropical 
 possessions. Unless the whole of tropical Africa is 
 brought under this uniform control much trouble must 
 necessarily arise in securing the conditions laid down in 
 the Covenant for the protection of the interests of the 
 natives and for equality of trade. 
 
 The Open Door should be generally admitted as the 
 first condition of all sound intercourse between civilised 
 and backward peoples. Through that door should pass 
 freely, from all quarters of the earth, goods, capital, know- 
 ledge, skill and enterprise under the best safeguards that 
 can be devised by an impartial international body. 
 
 Dr. J. C. Kielstra read a paper on "The Open Door 
 Policy in the Colonies." 
 
 The Open-Door Policy in the Colonies to Increase 
 
 World Production. 
 By Dr. J. C. KIELSTRA. 
 
 FREE TRADE and Open Door are, on the same grounds, as 
 desirable for a colony as for every country. To produce 
 
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 that which circumstances are most favourable to, to buy 
 in all other cases where commodities are cheapest and best 
 obtainable, to acquire means for the working of the 
 natural resources of a country and, if necessary, to get 
 them where they are to be obtained on the best terms, is, 
 for a colony, as profitable as for any other region. If 
 there were no special points of view in this matter, there 
 would hardly be any reason for treating the open-door 
 policy for the colonies in a separate paper. 
 
 When, however, the question is connected with the 
 idea of the possibility of increasing the world production 
 in general, there is reason for looking into it more closely. 
 There is, in fact, a certainty that the produce of those 
 territories that form the colonial dominion of different 
 powers can be made to attain greater results than have 
 been attained up to now, if only the co-operation of the 
 natives were obtainable. It is a well-known fact that they 
 do not even try to make use of every available opportunity 
 to increase production, and only restrict themselves to the 
 supply of their natural and daily wants under existing 
 conditions; in any case not to much more than that. And 
 now that different reasons, such as the destruction of the 
 means of production during the War, the loss of com- 
 mercial relations as resultant causes, or the revolutions 
 arising therefrom, the mentality of a great part of the 
 working population, seem to check production in the old 
 world, an inquiry into the means for increasing it in 
 younger countries appears to possess some real value. 
 
 The superficial observer who sees that native popula- 
 tions, as a rule, neglect to make a full use of their 
 economical opportunities soon finds an explanation. For 
 him is it simply " native indolence " that prevents increase 
 of production: the solution of the problem is found in 
 this characteristic, in this dogmatic, assertion. 
 
 But why should one be obliged to admit the general 
 
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 acceptance of such "indolence" among the native 
 population ? Perhaps on the ground of their environment 
 in which the luxurious nature of the tropics, owing to its 
 climate and its wealth, causes such immediate wants as 
 house room, clothing, house-warming to be less acutely 
 felt? On the other hand, there is the fact that the in- 
 habitants of the temperate zones, when transferred to the 
 tropics, do not seem to feel that influence. The needs of 
 the European and his family are different in such surround- 
 ings to those in his native country, certainly not fewer, as 
 is well known to anyone who has visited tropical lands. 
 
 " Indolence "" might only then be admitted as a racial 
 characteristic for the nations inhabiting the colonies; one 
 might think of something, like Oriental tendency to con- 
 templation, to a peaceful life above material prosperity, 
 coupled with exertion. And yet facts can be mentioned 
 contrary to this supposition, namely, the case that, in tem- 
 perate zones, there are regions of which the inhabitants 
 have, during years, remained indifferent to the brisk 
 economic life outside their environment, and at a given 
 moment are drawn into it, and thereafter feel themselves 
 immediately and fully at home in it. An example of this 
 is to be found in the writer's native country in the "hinter- 
 land " of the provinces of Overyssel and Guelder, where 
 the peasantry lived in a condition bordering on that of the 
 Middle Ages, and only a short time ago turned, in a very 
 short period, to modern farming with excellent results. 
 And to admit "indolence " as a racial characteristic with 
 colonial races, owing to their apparent inertia, seems 
 hardly permissible in view of such ascertained facts. 
 
 For anybody who wishes to pierce to the root of the 
 matter, and seeks an explanation of an economic 
 phenomenon on economic grounds, it is evident that this 
 "indolence" is the result of certain causes. On closer 
 observation one notices first of all that the native is really 
 
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 inclined to exert himself for production, if it is only for 
 the obtaining of goods that he considers absolutely neces- 
 sary. Hence we may conclude that there is an economic 
 cause, at least beside, but probably instead of, a personal 
 or a racial characteristic, to account for the disinclination 
 to increase production farther than is done. This cause 
 would therefore have to be found in the fact that no 
 further wants require immediate satisfaction than those 
 provided for, those known, or those felt. 
 
 To account for this negligence one must further con- 
 sider the method of production utilised by the native 
 population, which, in great measure, has the character 
 of a society in which self-producers are self-consumers. 
 The most typical form of this kind now met with is this, 
 that certain groups which may be considered as economic 
 units (family, tribal, or village ties) cultivate on a mutual 
 principle what they require as food, manufacture clothing 
 such as they wear, build the needful dwellings, defences, 
 and whatever else they desire. Those who form part of 
 such an economic unit use and consume their productions. 
 As the producers merely have in view the immediate use 
 of the produce of their group, it is clear that with respect 
 to the amount produced they are guided by the considera- 
 tion of what the unit requires in food, for instance, till the 
 next harvest, of house-room solely for the number of the 
 members of the family, of clothing as to what is worn, and 
 so forth with regard to what is produced. No other motive 
 is felt for continuing further production when for this 
 economic unit or group the limit of requirement has been 
 reached. - 
 
 This form of production is not decisive with regard 
 to the prosperity prevalent among the said tribes. If on 
 the one hand isolated tribes are found living in a deplor- 
 able condition, there are, on the other hand, instances to 
 be seen of greater prosperity on the same system of pro- 
 
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 duction. This is dependent only on the resources existing 
 in the parts inhabited. A fruitful soil will yield richer 
 harvests, whatever the means of production may be, than 
 a barren one ; good woods allow of better working ; metals 
 are present or not in the soil, no matter what the means 
 of production employed. But be this as it may, as a rule, 
 these resources will not be worked any further than is 
 necessary for the wants of the producers. Besides, one is 
 limited to the local resources found on the spot. New 
 wants, for the satisfaction of which other goods would be 
 necessary, cannot, under such circumstances, arise. They 
 will not be felt. Under favourable circumstances a more 
 plentiful or a more refined production of some articles can 
 be noticed the handsome weapons and dwellings of many 
 a primitive tribe point in that direction but of an effort 
 to exert oneself to the utmost, there is no question ; neither 
 directly nor indirectly is there a trace of improving the 
 means of existence by an intenser production from an 
 economic point of view. And from what has been observed 
 among existing tribes, under similar conditions, one is 
 led to expect that they have long lived in somewhat the 
 same economic state. 
 
 Should there be some whose prosperity is comparatively 
 great, yet from the point of view of world-production, 
 seeing it is restricted to the group itself, this prosperity is 
 of a rather insignificant kind. There remains a more or 
 less large amount of available productive power unem- 
 ployed, which might be of use for world-production. 
 
 This form of political economy is, if it exists anywhere, 
 in a pure form, very rare. Necessity to provide them- 
 selves with indispensable means of existence, especially 
 salt, drove the isolated inhabitants of the interior to the 
 coast, and if other tribes were found there, it brought them 
 into contact with those inhabitants. And it was only 
 with their co-operation, either active through exchange 
 
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 for other goods, or passive by allowing the natives of the 
 interior to extract salt without let or hindrance, that these 
 can obtain the necessary supply of salt, which liberty was 
 often only to be obtained against indemnification. 
 
 This contact often led to the exploitation of the primi- 
 tive inhabitants of the interior by those of the coast. But 
 this contact compelled them in their own productions to 
 bear in mmd the desirability of their producing more 
 goods than were needed for their more immediate wants. 
 The islanders thus came somewhat into contact with world- 
 production, although it was probably only in a small way. 
 
 Besides, the colonial trade of the Western Powers 
 aimed at obtaining the products of foreign countries, and 
 for this reason sought to come into contact with tribes 
 in regions from which the coveted goods were to be got. 
 This contact led during a 'number of years to exploitation 
 being practised on the native population. The monopoly 
 trade, or the forced supply of goods either without pay- 
 ment or with a one-sided fixed indemnification and such 
 like, benefited exclusively the colonising States or the 
 companies privileged by them. But hereby an infringe- 
 ment could also be made on the aforesaid system of self- 
 producers being self-consumers. Compulsion was 
 exercised to bring about further production than was 
 necessary for consumption by the producers themselves. 
 And contact was obtained with other nations, other goods 
 were seen, and even sometimes some object or other was 
 parted with in exchange for another object. 
 
 For world-production this method of colonisation is 
 of much more importance than the above-mentioned con- 
 tact with other tribes. The European markets came, at 
 small sacrifice, into possession of valuable articles, and 
 though the method of production used did not by any 
 means yield what might have been obtained by other 
 methods, yet the supply was greater than before. 
 
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 However, there is no reason for entering into this side 
 of the question any further. These colonising methods 
 have been entirely forsaken, and from a Dutch point of 
 view they will not find a single defender. They have only 
 been mentioned to show how contact with outsiders, how- 
 ever singular, gave an impulse to a higher application of 
 productive power than was necessary for actual self- 
 consumption. 
 
 Attention must not be drawn to the way in which 
 contact was obtained, but to the fact that it was obtained. 
 Thereby an increase of production was brought about 
 which has been of importance to the markets of the world. 
 
 There was, however, in principle a mistake, which 
 consisted herein, that there was no interest for the natives 
 in the colonies to enlarge production ; they only did this 
 as long and as far as they were compelled to do so, but 
 otherwise production remained what it had been viz., the 
 care of providing for their own wants. For the application 
 of further productiveness there arose in their midst a 
 reason. The system, apart from the serious moral objec- 
 tions to it, was, from an economic point of view, objection- 
 able, because the application required labour from 
 European countries for work which in itself was non- 
 productive, work of compulsion and supervision, but work 
 that was not unprofitable for these countries; unproductive, 
 however, from the point of view of world-production. 
 
 All this, however, belongs to the past. Colonial pro- 
 ducts for the world markets are now obtained without 
 compulsion. We may distinguish two methods of reach- 
 ing that object : 
 
 The first is that of pure trading. Goods, which the 
 natives cultivate or collect, are bought, and the trader who 
 thus obtains them, exports them, and conveys them to the 
 most promising market. The native is encouraged, by 
 the prices paid, to cultivate or collect products, and to sell 
 
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 them. He is absolutely free to do so or not. The other 
 method is that in which the European planter undertakes 
 the production of produce either cultivated or manufac- 
 tured under his own supervision, and afterwards puts it 
 on the market. 
 
 The first method is not always serviceable. It can only 
 be applied for products that the natives have cultivated, 
 of which the production requires little or no technical 
 ability, or that have to be collected from nature. 
 
 The second is used for goods that require the employ- 
 ment of technical knowledge or capital of the kind and 
 amount that the native community cannot provide itself 
 with ; this is also the case with respect to the above-named 
 products, with the object of obtaining either a certain 
 quantity of such products at stated times, or products that 
 answer to certain requirements, for instance, of equivalent 
 value for further manufacture, or for the demands of the 
 market in other places. 
 
 The native community lends its assistance in this case 
 by providing unskilled labour in general, and sometimes 
 by the temporary cession of ground. This assistance is 
 only obtained by the prospect of earning wages, or being- 
 compensated for the use of ground; this co-operation is 
 entirely of a free kind. 
 
 It was to be expected that, seeing the basis on which 
 the assistance of the natives is obtained namely, the profit 
 offered, that they would apply themselves cheerfully and 
 industriously to obtaining it. Experience, however, teaches 
 otherwise. Complaints arise on all sides from the colonies 
 that this profit seems to be coveted only very partially, 
 that even then economic possibilities are neglected, that 
 by no means all the productive labour available is forth- 
 coming. 
 
 When these complaints refer only to the collecting of 
 produce they are about exploitation of the best territories, 
 
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 about love of ease that shuns further exertion, and thereby 
 causes the loss of disproportional profit. If the complaints 
 refer to the delivery of products cultivated by the native 
 population, then there is a want of due care for the pro- 
 ducts, or there is no certainty of regular delivery or of the 
 quality required, while the rise of prices sometimes invites, 
 as it were, a fall of supply instead of provoking a rise. 
 Finally, in unskilled labour the output, if not sharply 
 watched, falls beneath expectation, and in this case the 
 rise of wages diminishes the stimulus to production. 
 
 The explanation of this phenomenon if the idea of 
 "indolence" be eliminated can be found in the process 
 of production of the native population. 
 
 The following considerations must be borne in mind. 
 Neither trade nor participation in the productive enter- 
 prises of Europeans can bring about an immediate change 
 in the production of native communities. 
 
 To arrive at exchange or purchase it will be necessary 
 that what colonial trade offers to native communities should 
 be something that arouses their interest, so that they may 
 be inclined to collect produce found on the spot, or to plant 
 something they cultivate or can cultivate. It is thus not 
 very likely that this offer should consist of goods in daily 
 use, such as foodstuffs, building materials, and suchlike. 
 The economic groups will probably continue to produce 
 these articles themselves, even if commercial transactions 
 are no more the exception. If anything is to reach them 
 to replace their own products, which in clothing, for 
 example, can very well be the case, then the supply must 
 be large and regular, so as to induce the native producer 
 to stop making those goods himself and to produce some 
 other article in order to obtain what he wants in a suffi- 
 cient quantity. With respect to what are indispensable, 
 common foodstuffs, it is not likely that this will soon, if 
 ever, occur. So a state, of things arises in which the 
 
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 economic groups produce goods that their members use 
 in daily life, thus those most indispensable to them for 
 direct consumption, and that the proceeds of the further 
 trouble taken are for the provision of additional wants, in 
 any case for less pressing ones than those provided for 
 by their own production in the locality. But is it reason- 
 able to suppose that, under these circumstances, they will 
 make use of their whole productive powers? Is it to be 
 expected that in the providing of these less pressing wants 
 more, or even the same, trouble and exertion will be taken 
 as for the obtaining of indispensable goods ? Being accus- 
 tomed to see in concrete form before them the immediate 
 results of exertion and trouble of production, they will 
 also do so with that part of the products that they want 
 to put on the market. They have an object in view, and 
 direct their exertions and trouble towards it. That is just 
 the reverse with our productions, in which the benefits are 
 first obtained, and out of which the most indispensable 
 goods are first acquired and afterwards, as far as circum- 
 stances permit, the less indispensable ones. 
 
 The same thing occurs when a native works in a Euro- 
 pean manufactory, or in a plantation. In this case, too, 
 wages are only a means for providing certain wants, repre- 
 sented in a concrete form, but not indispensable. Here 
 less exertion is required than for products of one's own, 
 needed for self-consumption, and thereby indispensable. 
 Neither does the labour supply nor the prestation rise in 
 proportion to the wages offered, but only in relation to the 
 immediate end in view. There is therefore great chance 
 that just as wages for certain sorts of work rise, the object 
 aimed at by the intending purchaser, namely the satisfac- 
 tion of certain concrete wants, is sooner reached, and thus, 
 contrary to what the European employer expected, the 
 labour supply and the willingness to work decline. 
 
 A change in this can only take place when producing 
 
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 and willingness to work are liberated from the idea of 
 satisfying any concrete needs of the workers, when the 
 connection between the two which in the production of 
 self-consumers and self-producers is direct becomes in- 
 direct. As a consequence of such a change the considera- 
 tion of the benefits acquired can only alter in such a way 
 that in thought they are no more divided according to the 
 wants they have to provide for, whether direct by earning 
 them in kind, or indirectly by exchange, but from the 
 place they occupy as a whole, out of which whole can be 
 drawn according to want or wish, in order to obtain what 
 is coveted. Only then do these views suggest automatic- 
 ally, as it were, that more wants may be satisfied, more 
 wishes gratified, as the benefits increase. Then it is con- 
 ceivable that full satisfacion or gratification begins, though 
 as in our society in general it is never reached, or seems 
 likely to be, need we count upon it being the case in an- 
 other mould than ours is. 
 
 And we shall have to count less upon that idea of satiety 
 and turn more towards what we see in our own society, as 
 the consideration thought of is only possible when there is 
 a general certitude that the most indispensable goods will 
 always be obtainable everywhere. As long as this is not 
 the case, the economic units forming the society on the 
 spot must continue to produce these indispensable goods, 
 under penalty of experiencing exceedingly dangerous 
 crises at every disturbance of any kind. And this will leave 
 its impress on the society, will arrest the full development 
 of productive labour, just as it has done here and there 
 in European countries we may refer the reader to the in- 
 stance of Holland quoted afore. 
 
 Taking all this into consideration, we now reach the 
 conclusion that, in the colonies, the full application of the 
 dormant native productive labour at present lying useless 
 will only be obtained wtien they are included in inter- 
 
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 national traffic, when trade not only export and import 
 trade, but also inland trade shall have been so developed 
 that, at least in normal circumstances, one is sure that 
 every market can provide for every want felt. It must 
 not be thought possible that a shortage can occur; should 
 such a thing be threatening, supplies must be at hand in 
 due time. This, in usual circumstances, is the case in our 
 society. It is our wide-spread trade that fulfils this duty. 
 Such an organisation must first be developed in the 
 colonies before they can put forth all their strength. 
 
 The way that leads to a growth of world production 
 by the development of the fullest productive powers lurk- 
 in the colonies is through the gradual development of trade 
 traffic in those regions. For that purpose that traffic will 
 at length have to penetrate through the whole of colonial 
 society, will have slowly to embrace also all goods that 
 must be produced for their own consumption, as well as 
 imports and exports. Then only can one reckon upon the 
 word "indolence " disappearing, a word expressing non- 
 usage of productive powers by the native population. 
 
 Then only can it be expected that these regions too will 
 be able preferably to apply themselves to the production 
 of those commodities for which natural circumstances are 
 most favourable, of which, with equal exertion, the largest 
 proceeds are to be expected, and to obtain by exchange the 
 necessities of life for their own consumption. 
 
 As was noticed before in this paper, it is not to be 
 supposed that the native population will give the first 
 impulse to this development. It must come from the out- 
 side, and colonial society must slowly see the importance 
 of the change in the aforesaid direction. 
 
 One must therefore be mindful of encouraging 
 exchange with the colonies and within them. The former 
 is at first only possible as the work of those traders and 
 trading companies outside the colonies that penetrate into 
 
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 the economic life of the natives, and lake a fixed place 
 there in order to create or develop barter in native com- 
 munities. Besides these traders, the opening up of planta- 
 tions and the establishing of other undertakings under 
 European supervision will co-operate to the same object. 
 Accompanying the supply of all kinds of goods by trade, 
 commercial undertakings, by the earning of an income, 
 satisfy wants created by supply. 
 
 If these two do not go hand in hand, no satisfactory 
 development can take place. Trade with the natives cer- 
 tainly admits of great extension, but for exports one re- 
 mains dependent on the relation of the natives towards each 
 other. Yet in addition to such trade business undertakings 
 which by improved methods make produce and quality 
 certain are necessary to give trade the security it requires. 
 Such undertakings alone, on the other hand, are not more 
 likely to attain that result. They will always meet with 
 difficulties owing to the small inclination natives have for 
 work, and they will remain dependent on costly labour from 
 elsewhere if growing trade does not bring about a disposi- 
 tion to differentiation of work in native society, and in con- 
 sequence the question does not arise, on all sides, whether 
 it is not easier and more profitable to turn to new forms of 
 production. Should, then, men of enterprising spirit be at 
 hand, it will be found that labour is also to be got. 
 
 At this point the subject treated in this paper touches 
 the question whether Free Trade or Protection is the best 
 means for obtaining an increase of world-production. In 
 the interest, both of the required conciseness of this paper 
 (the arguments for and against Free Trade or Protection 
 being esteemed sufficiently known), and as the question 
 only occurs practically in this form, nothing else can be 
 required of the writer than a treatment of the subject from 
 both points of view, especially colonial ones. 
 
 These points of view are the following : 
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 The first is that of protection of trade, or traders, by 
 the Motherland, either by monopoly or differential levies, or 
 by support to home shipping- by bounties, differential levies, 
 or limiting the shipping trade to the national flag only. 
 
 This is thus pure Protection, though in a particular 
 form, as it does not fall to the share of the trade or industry 
 in the area of production, but to a group, not politically 
 but economically strange to it. 
 
 The second point of view is somewhat different. Nearly 
 all Colonial Powers have been obliged to take measures 
 for preventing native society, in their colonial territories, 
 from being dislocated, or seriously shocked by sudden, 
 complete inclusion in international traffic in its fullest 
 extent, whereby without preparation they would find them- 
 selves opposed to European traders, or manufacturers, 
 intent upon obtaining the largest profits for themselves. 
 This has nothing to do with pure Protection, but is support 
 in international traffic to a weaker group, over against a 
 stronger economic one. 
 
 The first point of view gives rise to the following 
 observations : 
 
 The colonial trade, especially if it does not restrict 
 itself to exports and imports, lays claim to very special 
 knowledge. Ordinary commercial knowledge is not suffi- 
 cient : familiarity with local conditions and relations, 
 with native languages, with manners and customs, with 
 economic relations in colonial society, all these are neces- 
 sary, especially if from trade, influence, such as I have 
 denoted above, is to have any effect on exchange with the 
 natives. In fact, practically this retail trade penetrating 
 everywhere in the colonies is generally in the hands of 
 certain groups, mostly natives or Chinese, who entertain 
 business relations with European commercial houses. 
 
 There is less reason for taking the trouble to form 
 such connections in proportion as trade sees a chance 
 
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 of acquiring profit without them. The favouring 
 of national trade has a tendency to make trade apply 
 itself less to penetrating into native production than when 
 it has to make head against competition. The result of 
 this is again that native production will not so soon 
 develop produce for exchange as otherwise might have 
 been expected. The tendency of trade to secure itself a 
 place everywhere in native society will be smaller. 
 
 The same holds good in the limitation in the numbers 
 of plantations and factories as a result of the exclusion of 
 foreign capital and foreign enterprise. Those manu- 
 factures that, under these circumstances, find a place in 
 the colony, will only require a certain number of hands. 
 When these are found the state of the remaining field 
 of native society will remain unchanged. The continual 
 demand for workers that causes, among natives, a 
 tendency to seek occupation under European guidance is 
 weaker. And the social differentiation that might be the 
 result of the fact that such enterprises withdraw workers 
 from native production for self-consumption and make 
 them take part in general exchange for the supply of their 
 wants remains only possible on a limited scale. 
 
 The influence of Protection on home shipping is felt in 
 the same way. There is also, in this case, a possibility 
 that subsidised shipping will, in the long run, seek in a 
 lesser degree to accommodate itself to local circumstances, 
 as they know that support will still be granted them. And 
 Protection works worse in such a case when foreign ship- 
 ping is excluded. Then the national shipping lines can 
 leave out accommodation altogether, as one is entirely 
 dependent on them. 
 
 The consequences of this will also be felt on the 
 development of produce for exchange in the colonies. 
 Cheap freight, choice of connection in all directions, are 
 a stimulus for enterprising men to settle in the colonies 
 
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 and to work their resources, because this increases the 
 chances of profit. Trade, too, can export and import in all 
 directions, where this can take place to the greatest advan- 
 tage. There will also be an increasing chance that trade 
 will lay itsdf out for the arduous and trying work of 
 penetrating into native social life. 
 
 Every violation of the open-door policy arrests, as it 
 were, automatically, the development of produce for ex- 
 change in the Colonies. It retards thereby change 
 of production, which must be carried into effect 
 before the native population will put forth its full pro- 
 ductive powers, and in this way prevents increase of world 
 production, which w r ould be the result of the expansion of 
 labour till then unemployed. Such a protection of home 
 trade and shipping is thus to be condemned, seeing its 
 direct economical results. Besides, there are the possi- 
 bilities that arise owing to the exclusion of other nations 
 on political grounds, and these increase the objections to 
 exclusion from colonial territory. The struggle for expan- 
 sion of economical relations, which is almost sure to exist 
 in countries with abundant capital or a growing popula- 
 tion, will not lead so easily to political friction when, in 
 the colonial territories of other nations, use can be made 
 of such capital or such a population. Then, on the con- 
 trary, it is to the interest of every one that such expan- 
 sion should take place in the most peaceful manner, and 
 this can only be to the advantage of new economical 
 relations. 
 
 As the expansion tendency, such as is here meant, will, 
 owing to its nature, easily and even preferably find its 
 way in the direction of unopened territory, i.e. colonies, 
 the acceptance of the open-door policy will strongly con- 
 tribute, in the future, to the elimination of political friction, 
 not to speak of armed conflicts, between nations. This 
 will certainly be for the good of human welfare, which, 
 
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 during a war, experiences, tor years, the reaction thereof 
 in the form of diminished production, in the destruction of 
 goods, leaving out of count moral detriment owing to the 
 breaking off of relations, loss of confidence, and such like. 
 
 And now a few words on the subject of the measures 
 denoted above, in the second place, namely, those to pre- 
 vent dislocation of native society. 
 
 In the Colonies two forms of production are met with : 
 the native, based upon the needs of consumption, the Euro- 
 pean, for the market. The methods of the European are 
 full of commerciality, of an inclination to obtain, out of 
 every transaction, as large a profit as possible. Besides, 
 the natives are far behind Europeans in development in 
 every respect. 
 
 Just as in our society at present, economic groups of 
 the population are protected by law from exploitation by 
 other groups they regularly come into contact with, so will 
 the economic units of the native population have to find 
 in measures coming from government support against 
 abuses in produce for exchange. No colonial power that 
 has taken the interests of its colonial subjects to heart has 
 neglected this duty. Territories set apart, to which no 
 European trader is admitted, are found; on requests being 
 made for concessions, inquiries are set afoot as to how 
 far an increase of establishments is desirable with a view 
 to the interests of the natives; an economic information 
 service has often been established on behalf of the native 
 population, to train it for the new demands made upon it 
 by produce for exchange; certain regulations about the 
 making up of labour and other contracts with the natives 
 restrict more or less freedom in their conception. 
 
 The use or the necessity of such measures needs hardly 
 to be brought to light at the present time, neither does 
 other social legislation. It is necessary, however, to warn 
 against one danger, aamely, that native production should 
 
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 be prevented from giving way to a tendency to change or 
 to an adaptability for new relations. Should one prevent 
 native production entirely, or partly, within certain limits, 
 from coming into contact with other productive methods, 
 then one limits its field and leaves untouched part of its 
 productive powers, and it thus remains stationary at 
 the same level of prosperity. In principle everything in 
 native production remains as it was. And yet it is this 
 change in principle in the native system of production that 
 is necessary in the interests of world-production. 
 
 Measures such as are here meant will have therefore to 
 keep in view that, in no case, the maintenance of existing 
 systems of native production, even on a limited scale, 
 may be the object in view; on the contrary, adaptation of 
 the natives to new relations must be aimed at. Therefore 
 no isolation of native groups, but inclusion in produce for 
 exchange, and protection only to prevent their losing 
 ground by that inclusion, and so doing, lose the small 
 productive powers they possess, and protection, too, to 
 prevent their being exploited, and thus their having no 
 reason to adapt themselves as soon as possible and co- 
 operate in world-production with all their dormant powers. 
 
 If all colonial powers were pervious to these principles, 
 and made their colonies adapt themselves by means of the 
 general open-door policy, as soon as possible, to the more 
 efficacious European methods of production, and if they 
 made the native population feel the stimulus of their own 
 interests in fully applying its productive powers, then, in 
 the opinion of the writer of this paper, a by no means 
 unimportant increase of world-production might, in the 
 long run at least, be the result. And one has only to keep 
 in mind the real state of things after these years of war to 
 understand how this object is well worth attaining. 
 
 The discussion was continued by Mr. Arnold Lupton 
 
 and M. Pierson. 
 
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FIFTH SESSION 
 
 Thursday, October 7 
 
FIFTH SESSION - THURSDAY, OCTOBER 7 
 Chairman-Professor GILBERT MURRAY 
 
 SUBJECT: 
 
 Free Trade as a Necessary Condition of an 
 Effective League of Nations. 
 
 MR. CHARLES ROBERTS, having an important engagement, 
 the CHAIRMAN reserved his own remarks and called upon 
 him to read his paper. 
 
 Free Trade as a Necessary Condition of an Effective 
 
 League of Nations. 
 
 By CHARLES ROBERTS. 
 
 MR. CHARLES ROBERTS, formerly Under Secretary for 
 India, said he had been asked to speak on " Free Trade as 
 a necessary condition of an effective League of Nations." 
 The following is a summary of his remarks. He did not 
 claim that the League of Nations in its existing form would 
 guarantee perpetual peace. It was not yet, as it should be, 
 all-embracing, and many of its powers and possibilities 
 , were not yet developed or defined. The vision of states- 
 men had its limits, and the menace of future wars was 
 not averted. But the Conference would accept the League 
 as a real step towards international unity and the main 
 hope for a distracted world. How far did Free Trade work 
 in with that idea? The existing League consisted mostly 
 of Protectionist States, and clearly universal Free Trade 
 was not an indispensable condition for a league of some 
 kind. Nor did he think that the League could in practice, 
 or ought in theory, to join in a crusade against the Pro- 
 tectionist views of its members. 
 
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 Tariff policies were recognised as the domestic concerns 
 of individual States, and if the League intervened in 
 domestic concerns it would suffer the fate that befell the 
 Concert of Europe which was established in 1815 as a 
 safeguard for peace. An attempt was made by the in- 
 genuity of statesmen to pervert that Concert into a Holy 
 Alliance for intervening in the domestic affairs of indivi- 
 dual States, and indeed the two ideas became confused in 
 the popular mind. Even if practicable, he doubted if such 
 a crusade as had in fact been suggested to them would do 
 much for Free Trade, and it would doubtless wreck the 
 League. But Free Trade was the expression in the 
 economic sphere of the same order of ideas as in the 
 political sphere was embodied in the Covenant of the 
 League of Nations. Moreover, it was clear that the neglect 
 of Free Trade principles was going to increase the difficul- 
 ties of the League of Nations. Instancing the state of 
 Austria, surrounded by Protectionist new States, he said 
 that tariff wars, commercial jealousies, and economic dis- 
 tress would help to ripen those seeds of war which it was 
 the business of the League of Nations to eradicate. The 
 danger of explosion might have been averted if the states- 
 men of Versailles had had more thought of Free Trade. 
 
 There was one sphere of the League's operations where 
 it could be said with absolute truth that Free Trade was 
 an indispensable condition of its proper working. As 
 Free Traders they must urge with the utmost tenacity that 
 all mandated territories must be regulated on a Free Trade 
 basis on the principle of the open door. To this argument 
 a French critic would say, "Palm kernels." It was true 
 that by differential export duties our Government tried to 
 monopolise in West Africa the oil seeds produced in our 
 Colonies. The French, in retaliation, reserved to them- 
 selves the oil seeds produced in French West Africa. A* 
 an English Free Trader he appeared in a white sheet. It 
 
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 was a had system, both for the African producer and for 
 the British consumer, and was a violation of our traditional 
 methods of Colonial government. But these duties were 
 not to be in force in our mandated territories. The term 
 44 mandatory," though novel in the political jargon of the 
 day, was an old term in Roman law. We must remember 
 that it was of the essence of the idea of a "mandatory " 
 that he should act gratuitously. Any attempt to exploit 
 the mandated territories either by economic duties or by 
 setting up a system of military training for the benefit of 
 the mandatory itself would show that the conception of 
 the system of the mandates had been imperfectly under- 
 stood. Equal opportunities for the trade of all nations was 
 expressly stipulated for in the case of mandated territories 
 in Africa. But it would be a violation of the mandatory 
 principle if the tariffs of mandated territories anywhere 
 were manipulated in the interests of any mandatory. 
 
 The CHAIRMAN then made the following remarks : 
 It seems to me I may be of more use this morning to the 
 Conference if, instead of expressing at length my own 
 devoted adherence to the doctrine of Free Trade, and my 
 conviction that it was never more potently and obviously 
 necessary for the welfare of Europe than it is now after 
 the war, I try to put before you exactly the situation 
 of the League of Nations, as bound by the covenant, to 
 this question of Free Trade. 
 
 I think we must recognise the fact that Free Trade 
 can be regarded in two aspects : First, the purely 
 economic aspect of letting trade find its own level and 
 letting supply meet demand. As far as that goes, I think 
 the League of Nations has nothing particular to say. But 
 the doctrine of Free Trade has another aspect. Every pro- 
 tective tariff is an injury, great or small, to some other 
 nation. Protection is a modified war, the beginning of a 
 
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 process of which the logical end is war. From this point 
 of view Free Trade is a principle of international policy, 
 and on this the League has a good deal to say, because 
 the League is definitely intended to deal with every 
 tendency which leads to war between nations. I will 
 venture to read to you a memorandum which I drew up 
 for the International Conference of League of Nations 
 Societies : 
 
 The principle of economic solidarity among all the 
 members of the League, and thereby among all the nations 
 of the world, is implied in the ideal of the League of 
 Nations, but can at present only be made operative to 
 a limited degree. 
 
 1. Certain definite obligations involving some degree 
 of economic solidarity are undertaken by all signatories 
 to the covenant. 
 
 (a) In Article XVI. members agree "mutually to 
 support one another in the financial and economic 
 measures to be taken under this Article in order to 
 minimise the loss and inconvenience resulting." 
 This implies a certain pooling of the losses and in- 
 conveniences, so that they shall not fall unfairly on 
 any one member. 
 
 (b) In Article XXII. mandatory powers have to 
 guarantee "equal opportunities for the trade and 
 commerce of other members of the League." (This 
 restriction, however, does not apply to Mandates C, 
 the Pacific Islands, where the Australian delegates 
 insisted on keeping their hands free to impose any 
 tariff they pleased.) 
 
 (c) In Article XXIII. members agree to "secure 
 and maintain freedom of communications and of 
 transit and equitable" not equal "treatment for the 
 commerce of all members of the League." 
 
 2. In mandated areas the principle of economic 
 
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 solidarity is completely accepted. The mandatory is de- 
 puted by the League to carry out "a sacred trust of 
 civilisation." For example : Suppose there are important 
 oil wells in the territory of a backward race which cannot 
 develop them itself nor yet control their development by 
 foreign companies. The League puts in a mandatory to 
 develop these oil wells in the way that is best for civili- 
 sation as a whole. Any separate national profit which 
 the mandatory may make should only be in the nature of 
 wages for the service it renders. A mandatory may not 
 exclude or hamper the trade of any member of the League 
 by tariffs, nor yet keep the oil for the exclusive use of 
 itself or its friends. 
 
 3. In territories not mandated as a result of the war, 
 but otherwise similar to the mandated territories, such as 
 the pre-war possessions of various States in tropical Africa, 
 it may be taken that, while the covenant is not binding, 
 the rules laid down by the covenant for mandated areas 
 are recognised as good rules, to which approximation 
 should be made as circumstances permit. 
 
 4. Among the independent members of the League, 
 protective tariffs are not forbidden, though any tariff which 
 is not "equitable " is definitely condemned, and any tariff 
 that approached towards a "tariff war " would obviously 
 be a cause of action by the League. Communications also 
 must be definitely "free." 
 
 5. But while the economic injury of one State by 
 another is thus forbidden, no special rule is laid down 
 enjoining mutual help in economic matters. Consequently, 
 while the stabilising of exchanges and the social and 
 economical reintegration of Europe is urgently desirable 
 on grounds of self-preservation as well as of humanity, 
 such a policy must mainly be advocated on its own merits 
 and not as definitely prescribed 'by the covenant. 
 
 It may, however, be urged that freedom of communica- 
 
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 tions is definitely guaranteed in the covenant; that "the 
 mitigation of suffering throughout the world " is recog- 
 nised as coming within the League's activities; that the 
 refusal to help another nation because it is an "enemy " 
 is entirely inconsistent with the spirit of the League, and, 
 if the nation in question is a member, explicitly contrary 
 to its letter ; and lastly, that the machinery of the League 
 is expressly provided for operations of this sort, i.e. for 
 common consultation and common action by all the 
 civilised nations for dealing with any danger which 
 threatens civilisation anywhere. If the financial and 
 economic condition of any part of Europe constitutes a 
 common danger and no one can deny that it does 
 it is just to deal with such common dangers that the 
 Council and the Assembly have their meetings. 
 
 On the theory of mandates he would add just one quota- 
 tion to those given by Mr. Roberts. When the German 
 delegates made their protest against the arrangements of 
 the peace at Versailles, they raised a question about the 
 debts of the old German colonies, saying it was unfair these 
 debts should be thrown back upon Germany, and they 
 argued that the powers who took over the territory should 
 take over the debts also. In answer to that contention the 
 Allies and Associated Powers, in an absolutely authori- 
 tative document, say that it would be unjust to make the 
 debts of the colonies rest upon the mandatory powers, 
 "which, in so far as they may be appointed trustees 
 by the League of Nations, will derive no profit from 
 the trusteeship." So we have there the definite word 
 of the Allied and Associated Powers given in that solemn 
 way in answer to the German protest, that the mandatory 
 powers will derive no profit from these territories. 
 
 In territories not mandated, what is the League to do ? 
 The League can do nothing, because these territories do 
 not come before it. The treaty could only deal with the 
 
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 territories which were transferred in consequence of the 
 war. It can do nothing directly, but what it could do 
 I think it did. It laid down the right course. I think 
 it would be exceedingly difficult for any nation to go on 
 running protective duties or raising armies by conscription, 
 or anything of that sort, in one African colony because 
 it was an old possession, whereas in another African 
 colony next door it could not be done because it came 
 under the Treaty of Versailles and had been forbidden by 
 the covenant. The League of Nations had set an 
 example; it could not do more. 
 
 In regard to the principle of economic solidarity they 
 had agreed in the League of Nations mutually to help one 
 another in economical matters, and I think we are all 
 agreed that the European countries have reached a condi- 
 tion in which mutual help is becoming an absolute neces- 
 sity. I think we can say that such policy is definitely 
 prescribed by the covenant of the League, and I think it 
 may be urged that freedom of transit and communication 
 also would bring considerable relief to Europe, and if it 
 had been applied at the beginning directly after the war, 
 might have had an enormous effect in diminishing- the 
 distress which has occurred. 
 
 I think we must be quite clear in our minds that the 
 distinction between nations that are friends and nations 
 that are enemies is entirely foreign to the spirit of the 
 League. Any action against a nation that has once been 
 admitted to the League will be contrary not only to the 
 spirit of the League but to the letter as well. The Prime 
 Minister, in his remarks this morning, said that the ex- 
 tension of the League to embrace all countries of Europe 
 was a primal necessity of civilisation. I agree. 
 
 Lastly, I would point out that there is hardly any per- 
 fectly clear-cut pledge in the covenant. It is all a question 
 of representatives of nations meeting in council and thresh- 
 
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 ing things out. There is the one central pledge to use 
 force or the economic boycott against a State which makes 
 war in breach of the covenant. Apart from that, there 
 is hardly a single definite pledge, except the pledge to 
 meet to discuss and thresh things out, always keeping in 
 mind the good of the world. So, if we turn our attention 
 from Free Trade in the strict sense to this extension of the 
 spirit of Free Trade, which asks the co-operation of the 
 nations of Europe in trying to bring about the restoration 
 of credit, the reintegration of society, the stabilising of 
 exchange, the League of Nations can at least say, " If the 
 opinion of the world is ready to undertake a task of this 
 magnitude, we, the League, have at least put in your 
 hands the machinery machinery that was never there 
 before." 
 
 M. Bertin read a letter on the subject of the Channel 
 Tunnel, and the discussion was continued by M. Jouanny, 
 Lord Sheffield, Lord Farrer, Dr. Hertz, Dr. Redlich, M. 
 Raffalovich, Mr. Maddison, Mr. Law, Miss Maud Petre, 
 Mr. C. Bevan, Mr. Rawlings and M. Pierson. 
 
 The following papers were written for the Conference 
 on this aspect of the question, but, Dr. Fried and Herr 
 Bernstein not being able to be present, could not be read. 
 
 Free Trade as a Basis of the League of Nations 
 87 Dr. ALFRED H. FRIED 
 
 THE Free Trade movement is a pacifist concern. Cobden's 
 personality has already proved that. This originator of 
 the Free Trade idea was also one of the pioneer protagon- 
 ists of pacifism in Europe. Since its commencement the 
 international peace movement has also stood for Free 
 Trade. At the first European peace congress, which took 
 place in Exeter Hall in London in 1843, and in which 
 Richard Cobden took part, Free Trade was even indicated 
 
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 in a resolution,, as the best guarantee of peace. Also the 
 later world peace congresses between 1889 and 1913 were 
 extremely occupied with this question. The congress at 
 London (1890) demanded the reduction of import duties 
 as the first step towards Free Trade, and the Congress of 
 Monaco (1902) declared its sympathy with all endeavours 
 undertaken to advance the cause of Free Trade. In 
 particular the Congress of Rouen (1903) was greatly 
 agitated by this important problem. It congratulated the 
 Free Trade societies on their endeavours, and demanded 
 the help of Pacifists for that movement. They ought to 
 work for the construction of international agreements, it 
 declared, which should lead to a gradual and simultaneous 
 reduction of Protectionist tariffs. In order to organise 
 more intimate relations between Free Traders and Pacifists, 
 the attendance of Free Trade delegates was demanded at 
 all peace congresses. Also a desire was expressed for the 
 creation of parliamentary Free Trade groups in all 
 countries. 
 
 The most important expression of this idea is embodied 
 in the preamble to the resolution passed in Rouen. It runs 
 as follows : 
 
 " As the removal of all international customs duties 
 is one of the most important factors of national- 
 solidarity and pacification, it must have the same 
 effect in the cause of international unity. If the search 
 for a solution to international differences is a worthy 
 object, it is still better to favour a development of an 
 international state which shall prevent them." 
 This paragraph contains the essentials of modern paci- 
 fism. Modern pacifism is different from old-fashioned 
 pacifism in this respect, that it does not concern itself with 
 the removal of symptoms, but searches for the cause, and 
 actively combats it. Causal pacifism has taken the place 
 of reform pacifism, (Vidi : "Die Grundlagen des Ursach- 
 J in 
 
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 lichen Pazilismus," second edition, Zurich, Orell Fiissli, 
 1916. The Fundamentals of causal Pacifism.) So far as 
 causal pacifism is concerned, war is a consequence of the 
 anarchy at present existing between States. To put an 
 end to all war, it should not concern itself with the creation 
 of judicial institutions (arbitration, etc.) which are sub- 
 stitutes for it. Conflicts born of anarchy are so often 
 threatening for the single State so that they eventually 
 lead to the adoption of force. It is only possible to end 
 war by modifying its causes, by erecting an inter-Statal 
 organisation. Even then, the conflicts between States will 
 not cease, but they will then no longer threaten their exist- 
 ence, as they then arise from an orderly regime. These 
 conflicts, when they are so profoundly changed in all essen- 
 tials, will become solvable by rational institutions. No 
 courts of arbitration will remove war, not even these well- 
 meant prescriptions and regulations, destined for the 
 moment when the conflicts of dissentients have already 
 become acute. Not only the solution of differences 
 must be regulated, but still more the normal commercial 
 life of nations is to be developed, their active co-operation 
 to be strengthened so far as common action for common 
 interests is concerned, their economic interdependence to 
 be increased, so that common interests will prevail over the 
 particular, and so that an organisation will arise which will 
 surmount the welter of anarchy of to-day. 
 
 It is this which is so excellently expressed in the resolu- 
 tion of the peace congress of 1903, when it declared that 
 "it is better to favour a development of an international 
 State which should prevent all wars " than to search for a 
 solution of international problems and remain unconcerned 
 regarding its causes. 
 
 The League of Nations Covenant of 1919 does not con- 
 form to this conception. It permits the causes of war to 
 remain, and confines itself only to the task of hindering 
 
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 its outbreak by setting up obstructionist clauses, which are 
 to be observed by the adversaries in the moment when 
 hostilities threaten to break out. That may render good 
 service in a few isolated cases, but it is not a radical means 
 of ending war in general. It would be too late to bring 
 a conflict into focus if it already imperilled the mainten- 
 ance of peace. If war is ever to be surmounted, the conflict 
 must be attacked at a stage when it is not yet menacing. 
 Elihu Root, the well-known American statesman, said 
 once: " There are no international controversies that can- 
 not be settled peaceably, if both parties really desire peace- 
 ful settlement, while there are few causes of disputes so 
 trifling that they cannot be made the occasion of war, if 
 either party really desires war. The matters in dispute 
 between nations are nothing; the spirit which deals with 
 them is everything." That must be considered the first 
 principle of the prevention of war. The spirit of peace 
 must be created. But we shall not create it by permitting 
 every savage desire for increased power and possession to 
 remain unrestricted, by preserving the spirit of subjection 
 and spoliation, and by desiring to restrict such desires for 
 war only at the moment of the impending explosion by 
 prescriptions for peaceful, arm-chair discussion. We shall 
 bring this spirit into being by strengthening the present 
 mutual dependence of States through an increase of 
 common effort, by subduing the normal external and 
 internal intercourse of the nations to a sane, healthy routine 
 instead of attempting to mitigate the conflict itself, so that 
 these controversies may lose their threatening character 
 because of the strengthening of the spirit of communal 
 intercourse by reason of the common interests involved, 
 which in the case of conflicts fanned into flame by the 
 anarchy of to-day always degenerate into a struggle for 
 existence. It is international co-operation which will lead 
 the nations to this communal organisation, which may be 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 the granite foundation for the idea of a league of peoples. 
 This international co-operation was already developed to 
 a very great extent before the war. 
 
 World intercourse and world trade produced directly an 
 ever-growing net of relations and interests between the 
 nations. These material connections involved a develop- 
 ing common spirit growing stronger every day. Public 
 and international law was evolved. Scientific, social and 
 ethical questions were studied and regulated internationally. 
 All these necessities created their own institutions. The 
 number of international offices, central bureaus, congresses 
 and mutual activities grew from day to day. The begin- 
 ning of an international administration could be clearly 
 recognised, and there developed, in a very decisive manner, 
 a sort of spiritual community throughout the world as a 
 natural consequence of a progressive information tech- 
 nique, a super-national manner of reflection and perception. 
 All these developments would have had a greater signifi- 
 cance for the peaceful evolution of international relations if 
 this self-evolved co-operation had been consciously re- 
 quired by humanity and completed in every detail of its 
 organisation. As this did not happen, anarchical tendencies, 
 with their consequent struggle for supremacy and expan- 
 sion, together with the growth .of imperialistic and militar- 
 istic ideas, dominated the situation. These tendencies ad- 
 ministered the coup de grace at a critical moment. 
 
 A conscious demand for international co-operation, 
 above all things, would have commenced to remove simul- 
 taneously those limitations which hinder the exchange of 
 commodities and of the produce of labour. All agreements 
 for the facilitation of trade and intercourse must lose some 
 of their significance so long as the means of trade are 
 fettered by tariff barriers. Free Trade is the fundamental 
 principle of international co-operation, and international 
 co-operation is the hypothesis of an organisation of States 
 
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INTERNATIONAL FREE TRADE CQH&E&EtiCE 
 
 which would be able to abjure all war and solve controver- 
 sies in a rational manner. Free Trade is consequently the 
 foundation of the peace of the world. 
 
 An institution which will found a world peace must 
 therefore demand an increased concentration on all pro- 
 posals tending to regulate an orderly, common life. It 
 must consider carefully, therefore, how to bring Free 
 Trade into universal practice. It must first of all take 
 care to provide all the nations with the necessary raw 
 materials for existence, to regulate and distribute them 
 internationally. It must be no less careful to keep clear 
 the road to the markets for the manufactured materials. 
 
 If such a free distribution of commodities is effected 
 under the authority of an international regime, one of the 
 principal incentives to conquest and annexation falls to the 
 ground. Humanity will then develop first in a proper 
 manner those institutions which shall serve the organised 
 life of the community of the world and thereby construct 
 that world in which war will find no place. 
 
 Free Trade, which secures an existence to all, is peace. 
 
 It is an important omission of the League of Nations 
 of 1919 that it has not made Free Trade and co-operation 
 the basis of its constitution, but has confined itself to 
 resolutions which can only be useful in a symptomatic 
 treatment of international ailments. 
 
 To explain this omission it is asserted that the covenant 
 came into existence as a consequence of the most horrible 
 war which humanity has ever seen. But it bears not only 
 the impression of a constitutional misconstruction in the 
 form of a peace treaty which has made the work of re- 
 conciliation more difficult because of dissatisfaction and 
 hatred, but by the creation of a number of little States 
 envious of one another because of their newly won inde- 
 pendence. The League of Nations has also to suffer from 
 the after-effects of the war, which paralyse the movement 
 
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 towards co-operation, formerly so manifest. All the happy 
 plans for the organisation of peace are sabotaged and in 
 many cases destroyed. The mechanism of the world 
 appears to-day like the works of a watch which have been 
 disarranged by unskilful hands. 
 
 The theoretical possibilities remain of course, but every- 
 where the war has made their employment and utilisation 
 very difficult, and often, indeed, entirely problematical. 
 Everywhere frontiers have become unwieldy, every- 
 where countries are closing their doors to foreigners, 
 to foreign goods and foreign ideas. Foreign conceptions 
 have again received a significance such as they only pos- 
 sessed in long past historical periods, in times when inter- 
 course was completely undeveloped. This ultra-national- 
 ism appears so strongly implanted that even nationals of 
 the same State are regarded as foreigners outside their own 
 birthplace or place of residence, and as such are expelled. 
 Province opposes province, community opposes com- 
 munity, the country is in opposition to the town, and often 
 the suburb opposes the central authority. Inland the short- 
 age of houses and provisions has been the cause of this 
 insularity ; between the States which have been at war there 
 exists a hatred which forbids intercourse; between the 
 former belligerents and the neutrals lies the fear of an in- 
 vasion of the countries which have remained intact by the 
 hungry and destitute inhabitants of the war areas. The 
 shortage of coal, wagons, locomotives and ships consequent 
 on the intensive consumption of the war period has pro- 
 duced a paralysis of all possibilities of inter-connection in 
 the world, which is increased by material impoverisation, 
 by the weakening of the power of production, and by an in- 
 crease in the power of consumption. Express trains still 
 rush through the Continent, liners still sail the seas, but 
 their number is less, and smaller is the number of those 
 who possess the means of using them. And apart from 
 
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 the material need, the use of the means of intercourse still 
 available is made difficult by circumstantial formalities. 
 Foreign and inland travel permits are necessary, which are 
 not given to everybody. Nearly every two hours a double 
 frontier crops up where humanity and its luggage is "con- 
 trolled " to a painful extent. Where hatred does not bar 
 the way, the depreciation of money in most of the countries 
 involved in war forms an insuperable barrier in trade with 
 those countries which can maintain their exchange at par. 
 Therefore the League of Nations as it has been evolved 
 from the Treaty of Versailles is only a beginning. The 
 most important fact is yet to be carried through. We dare 
 not rest content in the belief that we possess the League of 
 Nations and that now we are protected against war. No; 
 the League of Nations of to-day is not at all self-sufficient, 
 but it is everything when regarded as a starting-point. It 
 must first remove the tremors which the war has left in its 
 train and once more bring the confused business of the 
 world into full blast again. This it can only do by means 
 of an international institution which will introduce Free 
 Trade and intercourse and maintain it entirely supreme. 
 
 Commercial Policy and Peace. 
 By EDOUARD BERNSTEIN, 
 
 Member of the German Reichstag. 
 
 Written in 1916. 
 
 WHEN children separate after a quarrel they may always be 
 heard crying out to one another : " I will never play with 
 you again." No grown-up person takes the announcement 
 seriously, knowing well that on the very next day the little 
 ones will be contentedly playing together again. 
 
 Similar threats are exchanged to-day between the great 
 nations which are waging the most murderous war which 
 the history of the world has ever chronicled. But these 
 threats relate, not to future play, but to the future exchange 
 
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 of goods. The more intense the bitterness of feeling 
 aroused on either side by the increasing brutality of the 
 methods of warfare, the more numerous and vehement 
 grow the voices which, in every nation or group of allied 
 nations, urge the future closing of their markets to their 
 opponents. 
 
 To what extent are these threats likely to be fulfilled ? 
 
 That is a very grave question ; for it is one which is 
 closely bound up with, if, indeed, it does not lie right at 
 the heart of the whole question of the future relations 
 of the peoples of Europe. For in our age the extent of 
 the trade between nations fundamentally influences 
 the character of all their other relations. Disputes over 
 questions of trade policy have repeatedly exercised the 
 direst influence on the whole political relations, and, in 
 the highest sense of the words, on the whole civilised inter- 
 course of nations. We need only recall, in this connection, 
 the effect exercised by the Franco-Italian tariff-war of its 
 day on the relations of the two Latin nations. To how 
 great an extent has not Austria-Hungary's commercial 
 policy toward Servia contributed to produce that ill-feeling 
 between the Dual Monarchy and her little neighbour, 
 which, if it did not cause, at least offered the occasion for 
 the frightful catastrophe which is now devastating Europe ? 
 If it would be incorrect to attribute all national antagon- 
 isms exclusively to economic causes and incitements, if 
 questions which are only very indirectly connected with 
 economic antagonisms, such as the lust of power, religious 
 quarrels, a sense of injustice, may set nation against nation 
 and drive them into war, still it is a fact that either real, or 
 popularly considered real, antagonisms of economic interest 
 almost invariably excite political prejudices and hatred. 
 
 This is why, in all countries, the bulk of the manufac- 
 turers of armaments belong to the Protectionist party. 
 Very often there has even been identity of material interests 
 
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 between them : the Protectionist industrial magnates have 
 had a financial interest in the increase of armaments. In 
 certain countries the beneficiaries of agrarian protection 
 form the majority of the military caste which is directly 
 interested in the continual growth of armies. Of great 
 significance also, on account of the influence it exercises on 
 the minds of those who have no material advantage to gain 
 by war, is the intimate connection between the ideals of 
 war and of Protection. The policy of Protection, except- 
 ing where it is merely used as a means of abolishing 
 internal tariffs by establishing a single national customs- 
 tariff in their stead, or where it is designed only for the 
 encouragement of infant industries, is always inspired by 
 the theory of a permanent antagonism between the 
 economic interests of nations. The Protectionist literature 
 of the present day is, universally, a Chauvinist national 
 literature, which exaggerates the conflict of national 
 interests and minimises, where it does not absolutely 
 ignore, all community of interest between them. It treats 
 the nations as individual rivals, where the gain of one is 
 the loss of the other, and latent enmity is their normal rela- 
 tion. The policy of Protection always has in the back- 
 ground the tariff war, and a tariff war may always de- 
 generate into actual war. In Germany, the constant re- 
 ferences in the Protectionist Press to the conflicts which 
 were likely to arise out of the impending necessity for 
 renewing her commercial treaties, contributed very 
 materially to produce that state of tension in the popular 
 mind which was just what the promoters of war required 
 in the summer of 1914. The kinship between the spirit of 
 Protection and the spirit of war may be seen even within 
 the Socialist movement. To speak of Germany only, we 
 note that that Socialist monthly which systematically 
 preached Protection for years before the war is now emulat- 
 ing the sworn advocates of the war. 
 
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 And as Protection makes for war, so war makes for 
 Protection. Politicians who energetically opposed the 
 latter before the war, now that their views with regard to 
 the war have changed, are beginning also to alter their 
 views with regard to commercial policy, and are preparing 
 to join the Protectionist camp. 
 
 If we turn to the political influence of Free Trade, its 
 intimate connection with the peace movement is so well 
 known that it should not be necessary to dwell upon it. 
 Nevertheless, so many misconceptions on the subject are 
 now current that it seems essential to make a few plain 
 statements as to the actual facts. 
 
 It is often pointed out that the one Free Trade country, 
 England, has waged more wars than the countries which 
 have not adopted Free Trade. And if those who make this 
 assertion do not go so far as to attempt to show that Free 
 Trade has been responsible for these wars, yet they deduce 
 from the circumstance the theory that Free Trade is in- 
 capable of obviating wars. This method of argument 
 proves as little as did the celebrated contention that a cer- 
 tain cure for consumption could have no efficacy because 
 it had been proved that a youth who had taken the cure 
 had afterwards failed to pass his examinations. 
 
 The wars which England has waged since she adopted 
 Free Trade in the middle of the nineteenth century have 
 not been the outcome of her commercial policy, but the out- 
 come of a Colonial and Imperial policy which the Free 
 Trade party always opposed. The only European war 
 which England has waged from that time until the outbreak 
 of the present war the Crimean war against Russia had 
 the advocates of Free Trade, Bright, Cobden, and their 
 sympathisers, as its strongest opponents; these men pre- 
 ferred to stake their popularity and to forfeit their seats in 
 Parliament rather than to vote a penny towards the prose- 
 cution of the war. Naturally a distinction must be drawn 
 
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L FREE TRADE CONFEKKM I 
 
 between convinced Free Traders and opportunist Free 
 Traders. The victory of Free Trade in England was 
 brought about in the middle of the nineteenth century by 
 the fact that Robert Peel and his followers, after they had 
 subscribed to the Repeal of the Corn Laws in 1846 on the 
 ground of expediency, were thereupon compelled, as a 
 natural sequel, to make further concessions to the doctrine 
 of Free Trade without, however, necessarily accepting it 
 in all its bearings. Further, the England which then em- 
 barked upon the policy of Free Trade was hampered with 
 the inheritance of a commercial and colonial policy 
 governed by the mercantile system, and the liquidation of 
 this inheritance was no simple matter which could be 
 settled in a day. It is no cause for wonder, then, if the 
 practice of Free Trade in the economic sphere has not been 
 immediately followed, in every respect, by its natural 
 political consequences. This was the less possible in 
 that the individual State can no more be independent of 
 its neighbour States than the individual man can be inde- 
 pendent of his fellow-citizens : both can only raise the level 
 of their conduct above that of their fellows to a limited 
 extent. 
 
 But apart from all this, the Crimean war, which was 
 anything rather than a war dictated by considerations of 
 commercial policy, was, till 1914, the only war which Eng- 
 land has waged against a European State. At most the 
 Boer war might be added, since, though not waged against 
 a European State, it was directed against a people of Euro- 
 pean extraction. But the responsibility for this war, on 
 the English side, lay with a politician, Joseph Chamberlain, 
 who already represented a reaction against Free Trade, 
 and it occurred, moreover, during a period of growing 
 Protection. When, in 1906, the party of Protectionist 
 Imperialism was beaten in England, the F"ree Trade party 
 which entered into power made amends for the wrong done 
 
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 to the Boers, and restored to them the lull rights of a sell- 
 governing nation. How this affected England's position 
 in South Africa recent events have shown. 
 
 Free Trade, as to its political tendency, may confidently 
 submit to the test, "By their fruits ye shall know them," 
 when that test is reasonably applied. That is to say, a 
 distinction must be drawn between the effects of its in- 
 fluence and its material results, and in appraising the latter 
 the strength of opposing forces must not be overlooked. 
 Free Trade is no magic word which causes iron-bound 
 doors to fly open at a blow. It is a social force which 
 works by example, and its results depend upon the 
 persistence with which it is applied. 
 
 The main lines of national policy are determined by the 
 play of many forces, whose relative strength changes with 
 the relative power of different classes of society and under 
 the influence of external circumstances. No one force, 
 therefore, can be held responsible for its transformations. 
 What can be done, however, and what as politicians we 
 ought to do, with regard to each individual force, is to 
 trace its particular part and operation in this general play of 
 forces. In the case of Free Trade, considered as a political 
 force, we can only do this by studying the history of the 
 Free Trade parties. And this history shows us these 
 parties everywhere as Peace parties, and, indeed, the more 
 consistently they applied the policy of Free Trade the more 
 energetic and consistent champions were they of the policy 
 of Peace. A demonstration of the truth that a Peace Policy 
 is the necessary outcome of Free Trade. 
 
 They who desire to tear down the tariff walls between 
 nations must also attack the inequalities in the privileges of 
 States and Peoples, which furnish the occasion for wars 
 and make them appear profitable to the victor. Where 
 there are no tariff walls the striving for the acquisition of 
 foreign territories loses its power of popular attraction, 
 
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 except where the liberating of oppressed fellow-peoples is 
 in question. 
 
 In his famous speech on Free Trade, delivered in 
 Brussels on January Qth, 1849, Karl Marx mockingly 
 quotes the exclamation of an English Free Trader : " Free 
 Trade is Jesus Christ Jesus Christ is Free Trade." The 
 exaggeration of these words is obvious, nevertheless they , 
 contain a germ of truth. To those men to whom Free 
 Trade was more than a temporary gain to English manu- 
 facturers, to those to whom it was a permanent principle 
 of world-policy, it appeared as a measure by which could 
 be realised the ideal of harmony in all international rela- 
 tions, and this ideal corresponded to the religion of "Go 
 ye and preach the gospel in all lands." Only, as Free 
 Trade did not affect the great class-antagonism between 
 the propertied classes and the modern proletariat it did not 
 suffice, alone, to establish harmony among the Peoples, 
 and this Karl Marx shows in a very striking manner in 
 the speech to which we have alluded. But apart from this 
 the speech condemns Free Trade too much, in the light of 
 the time, as a self-interested movement of manufacturers 
 and their supporters, for us to accept all its statements to- 
 day as a just estimate. When Friedrich Engels re-pub- 
 lished the speech in 1884, he made the well-considered 
 comment in his preface, that it belonged "to the same 
 period in the author's development as his Poverty of 
 Philosophy." A clear indication that it was not to be 
 regarded as the last word on the subject. 
 
 If the Free Trade movement of the first half of the 
 nineteenth century in England was led in the main by 
 manufacturers and great merchants, and the majority of 
 its influential representatives were also advocates of the 
 doctrine of laisses-faire in social policy, this temporary 
 coincidence might, at the time, make Free Trade appear to 
 be a matter with which the middle classes alone were 
 
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 essentially concerned. But this is only true to this extent, 
 that Free Trade is not a specifically working-class interest. 
 It is not the special interest of any particular class of 
 society, though, regarded as a measure of domestic policy, 
 it may sometimes advance the interests of particular classes 
 rather than that of others, may injure the peculiar interests 
 of certain classes, and may be a matter of indifference to 
 certain others. But it is not merely a measure of domestic 
 policy. It is a principle of world-policy, and as such 
 it transcends the interests of individual classes. It 
 aims at continually enlarging the commercial relations 
 between nations, at developing closer and closer ties be- 
 tween People and People, at the better organisation of the 
 international division of labour, and for these reasons it is 
 of necessity a Policy of Peace. It is due to this essential 
 connection between the two policies, that in no other 
 country has the Peace Movement been so powerfully re- 
 presented, both in respect of the number of its adherents 
 and the influence of its ideas, as in England, where Free 
 Trade was first introduced. Those Parliamentarians in the 
 England of to-day who, even during the present war, speak 
 the language of Peace with an intrepidity which is unknown 
 on the Continent, W. P. Byles, Leonard Courtney (now 
 Lord Courtney), Robert Reid (now Lord Loreburn), and 
 others, are distinguished spokesmen of the English Free 
 Trade party. 
 
 It may seem a paradox that in England, which has had 
 Free Trade for six decades, it should have been necessary 
 to have a Free Trade party at all in recent years. Yet an 
 opposition movement has raised its head there at different 
 times, and under the most various forms, against which it 
 has been necessary to defend Free Trade. Thus, in the 
 eighties of last century, as a result of increased tariffs in 
 the United States and in several of the Continental States 
 of Europe, and of the trade depression from which Eng- 
 
 124 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 land was then suffering, a timid Protectionist movement, 
 disguised as a movement for "Fair Trade," was a good 
 deal to the front. At that time 1887 tms sentence 
 which has been successively quoted, as characteristic of 
 the English spirit, by German authors who would wish to 
 be classed as responsible is said to have appeared in the 
 Conservative Saturday Review: that it was "an unques- 
 tioned fact that if Germany did not exist every Englishman 
 would be so much the richer." 
 
 The Saturday Review which enjoyed a considerable 
 political influence in the time of Lord Beaconsfield has long 
 since lost it. All the same, in 1887 it was still a paper 
 which was not edited by idiots, and it is therefore more 
 than doubtful whether this was an editorial pronouncement 
 or was merely contained in some communication of a kind 
 to which English weeklies open their columns with a rather 
 large hospitality. In any case, it could only have pro- 
 ceeded from the brain of a man whose mind had been dis- 
 ordered by the wild demonstrations of the unemployed in 
 Trafalgar Square in 1887, which had led to the destruction 
 of many shops and finally to looting. At any rate, the 
 Fair Trade Movement fell to the ground, and, after an 
 interval of some years was succeeded by the movement for 
 an Imperial British Customs Union, which again was a 
 tentative movement towards Protection, for England could 
 only enter into a customs union with her self-governing 
 colonies if she herself established a Protectionist tariff. 
 But this time the agitation was carried on with such a vast 
 expenditure of money and by pamphlets of such compelling- 
 dialectic force that the triumph of the political coalition 
 which supported it did not lie beyond the bounds of possi- 
 bility. However, at the election of 1906 this coalition 
 suffered a crushing defeat, brought about by the unanimous 
 opposition of organised labour throughout England. The 
 Liberal party, which had inscribed the maintenance of Free 
 
 125 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Trade on its banner, returned to power with an over- 
 whelming majority, and one of the first acts of the new 
 Campbell-Bannerman Cabinet was the reduction of the 
 Naval Estimates by about .2,000,000, a measure which, 
 it was hoped, might lead to a general limitation of world 
 armaments. Although this result was not attained, a few 
 years later the Liberal Government, in face of fierce op- 
 position from the House of Lords, carried the Lloyd- 
 George Fiscal Reforms, one object of which was to close 
 the door for ever on Protection. But a tragic irony of fate 
 decreed that, under this very Government, England 
 entered, in August, 1914, into the world-war which was 
 let loose by the Protectionist Continent, and which, as it 
 proceeded, has aroused such intense bitterness in both 
 camps that it now threatens to become the foster-parent of 
 Protection. 
 
 In both camps we meet with serious preparations to 
 follow the war with arms, which must some day come to an 
 end, with an interminable tariff war. While in Germany 
 and Austria conference after conference is held to establish 
 a Central European customs union, which Bulgaria and 
 Turkey should be obliged to join, in the circle of the so- 
 called Alliance of the Four Powers, a settlement is being 
 considered under which each Power would bind itself not 
 to enter, without the previous consent of the others, into 
 any commercial treaty with the Central Powers. As two 
 of the Allied Powers are decidedly Protectionist, this, in 
 itself, would force England into the way of Protection. 
 But even in England the Protectionist movement has been 
 greatly strengthened, not on account of economic considera- 
 tions, but rather, we must say in this case, in opposition 
 to all economic considerations. The driving-force now is 
 not pressure of competition for England's exports during 
 the last decade before the war had shown a brilliant in- 
 crease -but passion ; the conviction which has taken pos- 
 
 136 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 session of the public mind that, even after the end of the 
 war, for many years a friendly interchange of goods with 
 Germany will be an impossibility. Therefore in the fore- 
 front of the Protectionist movement we see an endeavour to 
 render England independent of Germany with regard to 
 certain articles, in the supply of which, thanks to her high 
 development of the particular industries, Germany had 
 hitherto enjoyed a virtual monopoly; and, consequently, 
 the proposal to levy import duties after the war on certain 
 goods of German origin is being seriously considered. 
 
 It would be beyond the scope of this article to discuss 
 the economic reactions which would result from this and 
 similar projects. We are only dealing here with the influ- 
 ence which they would exercise on the political and general 
 relations of the peoples. That this influence would be 
 extraordinarily pernicious is beyond doubt. These projects 
 would long delay and hinder the moral process of healing 
 which ought to begin at the close of the war. They would 
 mean the prolonging of the war under another form, they 
 would be widely regarded as a transition stage to some 
 fresh war, and in each group of nations they would set up 
 the work of poisoning the public mind against the peoples 
 of the other coalition. They would place all manner of 
 restrictions in the way of the resumption of the international 
 intercourse of the representatives of science, art and litera- 
 ture, an intercourse which had been developed to so high a 
 point just before the outbreak of war. And they would 
 inspire anew old prejudices which, before the war, had, in 
 some cases, disappeared from the world, and in others sunk 
 into insignificance. 
 
 Therefore all those who see in the intimacy of inter- 
 national intercourse a powerful lever for the progress of 
 civilisation must raise a warning voice against these pro- 
 posals. They must not allow themselves to be deceived by 
 glowing pictures of the advantages which will ostensibly 
 J 127 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 result from these projects, but must teach those who incline 
 to support them that any such advantages would only 
 benefit a small minority of the fortunately situated classes, 
 while the majority of the people could expect nothing but 
 material and social injury. 
 
 No time must be lost in calling into being a counter- 
 movement to these schemes, but it is not too late to do so. 
 For all the decisions which have as yet been reached in 
 their favour are, after all, only provisional. The final word 
 will only be spoken at the Peace negotiations. However 
 regrettable the postponement of these may be from all other 
 points of view, for the question under discussion it is an 
 advantage that there should still be time to enlighten men's 
 minds as to its far-reaching importance. 
 
 May this time be well utilised, and in particular let us, 
 on either side, endeavour to impress upon our own people 
 that any departure on the part of one group of nations 
 from the principles of fair exchange inevitably provokes a 
 corresponding movement on the part of the opposite group, 
 and that commercial policy will, for a long time, exercise a 
 profoundly important influence upon all international 
 relations. 
 
 128 
 
SIXTH SESSION 
 
 Thursday, October 7 
 
SIXTH SESSION - THURSDAY, OCTOBER 7 
 <ChairmanSir HUGH BELL, Bt., C.B. 
 
 SUBJECT; 
 The Danger of Protection in Great Britain. 
 
 THE CHAIRMAN : Our meeting draws to its conclusion, 
 and a couple of hours hence the International Free Trade 
 Conference of 1920 will have come to an end. I don't 
 think we can regard it as having been other than a very 
 valuable proceeding which was initiated by the Cobden 
 Club in inviting Free Traders of Europe to assemble here 
 in order to confer together. 
 
 For a matter of six years you may practically say there 
 has been no such thing as economics. The conditions of 
 warfare have overridden all those principles of economics 
 which were accepted, I think you may say universally. 
 We have had to put up with a state of siege, which is 
 very different from the order of economic life. We used 
 to think that it was extremely desirable that the revenue 
 of a State should suffice for its expenditure. We aban- 
 doned that in 1914, and we are very far from getting back 
 to that happy position. We have destroyed millions of 
 wealth; if I should say forty thousand millions I should 
 not be far off the mark. There is only one way, in my 
 judgment, in which we can retrieve the position from which 
 we have drifted, and that is by proceeding as rapidly as 
 possible to reintegrate the wealth which has been destroyed. 
 
 We Free Traders must have read the proceedings of 
 the Economic Conference in Brussels with almost un- 
 divided satisfaction, for almost every speaker abounded 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 in our sense. It is not inopportune, then, that those of us 
 who hold that free intercourse between man and man is 
 the best method of obtaining the object which we have in 
 view, should hold this Conference now. It would be much 
 to be regretted if we allowed it to rest where it will rest 
 when this afternoon's proceedings are over, and I am glad 
 the suggestion has been made that when the position of 
 affairs will be more clearly perceived we shall meet again 
 to consider once more where the economic world stands. 
 
 No one is going to pretend that Free Trade is a 
 panacea to cure all our evils. No one is going to say 
 that if to-morrow the whole world abolished all tariffs 
 and custom houses and let goods come in from one 
 country to another without let or hindrance, all our 
 troubles would be at an end. No one would say that. 
 But I think we all would say that if these obstacles were 
 removed it would be a much more easy task to bring about 
 that intercourse which we all so heartily desire. If the 
 Conference has brought this home more completely to the 
 minds of those who have taken part in it ; if it has made 
 the world at large aware that a considerable number of 
 thinking men and women have given great attention to the 
 problems which call for solution; if that has been the 
 effect of the Conference ; then indeed we have not met in 
 vain. I hope we shall go back to our places each one of 
 us satisfied that on further examination of our beliefs we 
 are more firmly convinced and more resolved to the best of 
 our ability to bring home to our fellow countrymen the 
 force of these truths, upon which we believe will ultimately 
 rest the well-being of mankind. 
 
 There is one great satisfaction that Free Traders can 
 feel, and that is that not only do their beliefs square 
 with economic truth, but also that they are founded on 
 a sound ethical basis. I think we may proclaim louder 
 and more persistently the truth of the motto, which unless 
 
 132 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 my memory deceives me, adorns the paper of the Cobden 
 Club, "Free Trade, Peace, Goodwill among Nations." 
 
 British Free Trade: Present and Future Dangers. 
 
 By Mr. F. W. HIRST. 
 
 I WAS asked by my colleagues on the Committee of 
 the Cobden Club to give you a brief sketch of the 
 dangers which menace Free Trade in its island home and 
 fortress. What are they, and what is the atmosphere 
 in which Free Trade as a doctrine, a policy and a system 
 finds itself now that a state of peace, involving a renewal 
 of commercial intercourse, is officially declared to have 
 been established? 
 
 Let me first of all distinguish between Free Trade in 
 the broad and in the narrow sense. 
 
 By Free Trade in the broadest sense is meant complete 
 freedom of commerce and intercourse in so far as roads, 
 railways, ships, and other facilities permit, not only 
 between all countries, but between all individuals in all 
 parts of the world. This is the principle of the division 
 of Labour, the basis of the new philosophy of Free Trade 
 (as discovered to the world by Adam Smith in the year 
 1776), carried to its logical conclusion. That is the ideal, 
 a world free from passports, tariffs, or any other govern- 
 mental interference, except of course legitimate regulations 
 for the prevention of accidents, discord, and for the 
 protection of health. Combinations by employers (e.g. 
 owners and managers of tea plantations) to restrict pro- 
 duction in order to raise prices and profits, or combinations 
 of workmen to raise prices and wages, or combinations of 
 both to raise prices, profits and wages, offend against the 
 general doctrine of Free Trade and competition, and are 
 adverse to the principle of the greatest happiness of the 
 greatest number both in the country where they are 
 practised and in those with which it trades. 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Owing perhaps to the state of bankruptcy or semi- 
 bankruptcy brought about by the war, we have at this 
 moment the remarkable spectacle of a sort of partnership 
 (a very quarrelsome one, it is true) between Government 
 and Capital in particular industries, sometimes with the 
 concurrence of Labour. I wish we had a Lettish Free 
 Trader here from Riga to describe the combination of 
 flax growers with the bankers and the Government for 
 the purpose of fleecing foreign manufacturers of flax. But 
 I have no doubt that other illustrations will occur to many 
 of those present. 
 
 The most important and oppressive example is, 
 however, I am sorry to say, furnished by Great Britain. 
 Among other economic shorrors which have grown up 
 like mushrooms or rather toadstools in the war soil are 
 controllers of all sorts and kinds controllers of pigs, 
 ships, bacon, wool, &c., &c. Some have been abolished, 
 others are still trying to justify their existence by speeches 
 or by regulations interfering with free markets and free 
 exchanges. Most of their devices are primarily injurious 
 to this country. But one of them deserves special atten- 
 tion, for it is not only a flat violation of Free Trade 
 principles, but it is also contrary to the spirit of English 
 law and even to the comity of nations. I mean the arrange- 
 ment, or compact, between the British Coal Controller 
 and the Coal Trade, by which the price charged for bunker 
 and export coal is more than double the price charged to 
 British consumers. Under this system coal exports are 
 restricted to a quarter or a third of their normal amount, 
 the demand for coal for bunkers and foreign countries is 
 unsatisfied, and the huge profit (say 100 per cent.) goes 
 to swell the Excess Profits Duty. The claim of the miners 
 was that the Treasury had no right to tax the coal trade 
 in this special manner. They did not ask for the abolition 
 of control and of discrimination, but claimed that the 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 t 
 
 booty should be divided between the coal miners (an extra 
 two shillings a day in wages) and the domestic consumer 
 in a reduction of the price of domestic coal which last 
 would have made the international injustice even more 
 glaring. At the Brussels Financial Conference last 
 Thursday, Signor Quartieri (one of those who recently 
 saw his mills occupied by his employees) denounced the 
 rich nations (he should have said the unscrupulous govern- 
 ments of impoverished nations) for attempting to lighten 
 their own Budgets by imposing almost insupportable 
 burdens on the Budgets of poorer countries through 
 discriminatory prices and restrictive export duties on raw 
 materials. It was a case, said Signor Quartieri, of the 
 rich man taking the bread out of the mouth of the poor ; 
 and one of the first tasks of the League of Nations ougtit 
 to be to devise means of countering the construction of 
 these artificial barriers and the exploitation of monopolies 
 by countries fortunate enough to possess them. There was 
 a wave of selfishness passing over the world, and the 
 business of the League was to withstand it. 
 
 Mr. Wilson Harris, the Daily News correspondent at 
 Brussels, says there is only one opinion among foreign 
 delegates on British profiteering in export coal, which is 
 putting almost insurmountable obstacles in the way of any 
 recovery for famished or half-famished countries like Italy 
 or Austria, and is also, of course, hampering the whole of 
 our foreign and export trade, besides introducing ill- 
 feeling into our relations with France, Scandinavia, 
 Holland, and many other countries which were always 
 accustomed before the war to rely upon us for coal. 
 What would Lancashire think and say if the cotton 
 growers of the Southern States charged Lancashire double 
 what they charged the home manufacturers for raw 
 cotton ? 
 
 This brings me to the public policy and practice of the 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 present Government arid Parliament. Before the war 
 Free Trade in the technical sense seemed quite secure in 
 this country. On a few fiscal articles like beer and cigars 
 produced both at home and abroad the Customs and Excise 
 duties nearly corresponded. On the vast majority of 
 imported articles food, raw materials and manufactures 
 no tax was imposed. The Liberal Government was re- 
 garded as absolutely orthodox on Free Trade. There 
 was a large majority for Free Trade in the House of 
 Commons. The Conservative and Unionist party had 
 been three times defeated since Mr. Joseph Chamberlain 
 raised the Tariff Reform issue in 1904. There was no 
 popular enthusiasm for Colonial Preference, and the Tariff 
 Reform League had lost most of its supporters. Cobdenites 
 like Lord Welby were far more afraid of the growth of 
 armaments and public extravagance than of any direct 
 attack upon fiscal orthodoxy. Some of us thought even 
 then that the policy and expenditure of Mr. Asquith and 
 his Chancellor of the Exchequer, Mr. Lloyd George, 
 represented a dangerous mixture of ill-disguised Im- 
 perialism and half-baked Socialism. 
 
 The Great War came in August, 1914, and by May, 
 1915, in order to get rid of Opposition criticism, Mr. Asquith 
 formed a Coalition. He dismissed half his colleagues 
 and put Unionists in their places. It was openly stated 
 that neither party abandoned its principles, but that all 
 domestic controversy was to be suspended during the war. 
 
 This understanding was not carried out. As the strain 
 and bitterness of war increased all the forces of reaction 
 grew. The Unionist Ministers became more and more 
 eager for the suppression or restriction of personal liberty 
 and for the imposition of Protectionist embargoes on trade. 
 Mr. Asquith tried hard to propitiate this sentiment at the 
 expense of Liberalism. He had previously introduced 
 Dora, which deprived citizens of the benefits of Habeas 
 
 136 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Corpus. After the first Coalition he -.\plaiiir<l thai hr 
 had no fixed principles forbidding him to apply Conscrip- 
 tion or Protection, and before he was finally ejected from 
 office at the end of 1916 he had imposed Conscription for 
 the first time in English history, and had introduced and 
 carried three high Protectionist duties on motor-cars, 
 clocks and watches, and matches. These new Protective 
 import duties, the first imposed since the abolition of the 
 Corn Laws, still remain, and are of course very embarrass- 
 ing to Free Traders, many of whom out of party loyalty 
 supported the Budget of 1916. 
 
 I don't despair of the future of Free Trade in this or 
 in other countries. Otherwise I should despair of justice, 
 honesty, truth, and science. But even believers in 
 progress have to recognise that, though physical science 
 and mechanics advance uninterruptedly, human society 
 has many ups and downs. Moral and political standards 
 rise and fall. Moral and political energy accumulates or 
 evaporates. Even economic invention is by no means 
 secure. In spite of mechanical progress a bad Govern- 
 ment may in a few years reduce a flourishing nation to 
 bankruptcy. To-day half Europe is starving, and most 
 of the remainder is on the verge of bankruptcy. We 
 have learnt that representative institutions do not 
 safeguard the most intelligent peoples, because even 
 the most intelligent are very stupid, and easily misguided 
 by unscrupulous politicians. A successful demagogue 
 can do as much mischief as an autocrat. A tariff skilfully 
 managed supplies a huge corruption fund. The sale of 
 customs duties and embargoes is as lucrative as the sale 
 of titles. Here you have one of the main reasons why 
 so few democracies enjoy Free Trade. The self-governing 
 British Colonies which pride themselves on being more 
 democratic than we are have all adopted Protection. 
 
 Apart from corruption the two chief dangers to Free 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 Trade in this and (I suppose) in other countries are 
 Imperialism and Socialism, which may easily combine in 
 the form of a Bureaucratic State. To the individual who 
 loves his liberty and asks for freedom to live and work 
 as he pleases to go where he likes to sell to whom and 
 to buy from whomsoever he likes it matters little whether 
 the Bureaucratic State has an Emperor or a President. 
 In many of the new democratic republics (including Soviet 
 Russia) there is less personal liberty and less freedom of 
 business and trade than there was in Czarist Russia or 
 Imperial Germany before the war. 
 
 The Liberal Party in Great Britain never faltered on 
 the question of Free Trade from 1846 to 1914. It is now 
 divided into three sections. The first, which includes a 
 large number of Coalition M. P. 's, takes its policy from 
 Mr. Lloyd George. The second, including most of the 
 so-called "Wee Free " Liberal M.P.'s, acknowledges Mr. 
 Asquith as its leader. The third section, consisting of 
 most unofficial Liberals, adheres as firmly as ever to Free 
 Trade and denies the right of official Liberal leaders to 
 compromise this or any other of the causes with which 
 the historical Liberal Party has been associated. 
 
 After the Armistice and the General Election of 1918 
 it was expected that Mr. Lloyd George would ripen into 
 a full-blown Tariff Reformer ; and for a time most of the 
 embargoes and monopolies started by the Board of Trade 
 during the war were continued. But in the spring and 
 summer of 1919 these embargoes were sharply attacked as 
 contravening the Common Law and Statute of Monopolies; 
 and they were successfully challenged in the courts. Mr. 
 Lloyd George thereupon withdrew nearly all of them, but 
 announced an Anti-dumping Bill and a Key Industries 
 Bill for the protection of such industries as from time to 
 time his Administration might desire to favour and foster. 
 He has also acquiesced in the principle of Colonial Prefer- 
 
 138 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 ence, which was embodied in the last Budget. The result 
 of these betrayals is that the United Kingdom can no 
 longer boast of the complete system of Free Trade which 
 it enjoyed from 1860 to 1914. It is also threatened by a 
 Ministerial project of administrative interference with 
 imports, which would be even more mischievous than a 
 tariff. 
 
 On the other hand there are some considerable grounds 
 for hope. In the first place, all classes except the richest 
 of the profiteers are up in arms against the high prices 
 caused by war scarcity, by the inflation of credit, the 
 debasement of the currency, and by the heavy taxation 
 of sugar, tea, coffee, tobacco, matches and other articles. 
 They know that it is the object of Protection to raise 
 prices at home. 
 
 Secondly, almost all business men are furiously opposed 
 to Government control of trade, and are therefore more 
 appreciative than ever they were before of the enormous 
 advantages of freedom. Thirdly, many of our staple 
 trades, including of course the cotton and woollen indus- 
 tries, depend so largely upon exports and upon a low 
 cost of production, that they can hope for nothing but loss 
 from the introduction of a protective tariff. Con- 
 sequently there are, I am certain, more Free Traders 
 in the Conservative Party than before the war. 
 With the exception of the glass workers, practically all 
 the Trade Unions are for Free Trade, and the same may 
 be said of all the local Liberal Associations. 
 
 The other day I asked one of the largest merchants 
 in the City whether the City was more favourable to Im- 
 perialism and Protection than before the war. His reply 
 was: "We are all sick of Imperialism because of the 
 enormous expenditure and taxation which it involves. .'As 
 to Protection, its experience of Government control has 
 made the City more favourable than ever to Free Trade." 
 
INTERNATIONAL FREE TRADE CONFERENCE 
 
 This of course does not mean that the present Govern- 
 ment could not carry an Anti-Dumping or Key-Industries 
 Bill through the present Parliament, or that they could 
 not add to the number of protective and preferential duties 
 in the next Budget. 
 
 If there is widespread unemployment they may do any 
 of these things; for when there is trouble a demagogue 
 politician usually adopts a quack remedy which will aggra- 
 vate the disease. So far, however, as revenue goes every- 
 body who understands finance has come to see that the 
 huge sums required to pay for war debt and pensions 
 must be raised mainly by direct taxation. The graduated 
 Income Tax and Death Duties, which were the means of 
 establishing and preserving our Free Trade system, have 
 now been transplanted to many countries which ten years 
 ago knew little or nothing about them. Rich men who 
 want their taxes reduced are beginning to realise that they 
 have far more to hope from public economy than from a 
 customs tariff. 
 
 The Contessa Lisa Scopoli, Sir George Gibb, Mr. 
 Henry Vivian, Dr. Clarke, Mr. J. C. Haig continued the 
 discussion ; Mr. Hirst replying at the close. 
 
 Lord Sheffield then put the following resolution to the 
 Conference, and it was carried unanimously : 
 
 "That this Conference, in view of the serious and even 
 critical economic situation of all countries throughout the 
 world, affirms the urgent necessity of universal Free Trade, 
 and presses upon those countries which are not prepared 
 for such a policy to recognise at least the need for a large 
 relaxation of the present fiscal and other obstructions to 
 international free commercial intercourse, which is one of 
 the most vital necessities of the economic rehabilitation of 
 the world." 
 
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