Preferential Trade - Forgotten Books

PRE FE RE N T IAL TRADE

A ST UDY ‘

OF ITS ESOTERIC M EAN IN G

BENJAMINAUTHOR OF THE PROTE CTIONIST HANDBOOK “ AWHITE MAN '

S LAND"

“TWE NTY-FIVE YEAR S OF PROTECTION ”

AND OTHER E CONOMIC WORKS

LONDON

KEGAN PAUL , TRENCH, TRUBNER CO. LTD

DRYDEN HOUSE , GERRARD STREET, W.

1904

“BRARY

SETS

E

5

P R E FAC E

THOUGHTS of a thirty years’

growth are here . They have come

to me at all manner of times . In the hard grind of a daily

journalist ; in the reading and ponderings on books in the

c onversation of friends ; in the whirl of platform politics ; in

the waking hours of the night . I can trust to the ir soundness

all the more because they have been of slow and even tardy

development .

There was once a time when , in my earlier years , I was half

c aught by the fascinations of some of the Cobdenic theories . I

need not blush to admit it . Some of the reasonings of Mill andMarshall are excessively alluring . Even more of Henry George’s

specul ations,owing to the ir literary charm and ! their refreshing

frankness , are particularly seductive . One may very easily fall

into these intellectual pitfalls unawares .

This is really why I have written my book—to warn others

Off the quicksands and shallows of fallacy which were a some

time lure and somewhat of a danger to me . Fortunately for me

the profounder reasonings of the German school of economists

c ame as a corrective . And so it happened that even while

coquetting with the danger I never actually fell a v ictim to it .

There was in it certainly one beneficial result . It made me

tolerant of even the intolerance of the average Cobdenist . There

is no department of knowledge , I shoul d think , in which a little

learning is a more dangerous thing than it is in fiscal economics .Most certainly it is true respecting that study that

There shallow draughts intoxicate the brain,

And drinking largely sobers us again.

v i PREFACE

But a man mus t not drink too much and too constantly of the

same kind of intoxicant . Ruski n and Carlyle and List, diversi

fied by Henry Carey and Judge Byles’

s Sophisms , are a verysaving prophylactic when the mind is becoming a trifle hardened

in the ste rility of the English classical school of the last

half-century .

I have written very little that is original . But at this time

of day can anyone be original on such topics ? I have tried

rather to combine , compare , and analyse . I have not con

s ciously shirked any difficulty, though I have sometimes rather

indicated than fully stated the refutations of the less recondite

errors . Covering much ground , I have never lost sight of the

need of abridgment,and can only hope that I have not too much

sacrificed the argument to the imperious call for brevity

I had designed to call my book by another name . But the

opportune rev ival of sound opinions in England has determined

the name of Preferential Trade .

” In that name I recognise

the whole force and doctrine of Tariff Protection to National

Industry . National Trade is Preferential Trade , and the trade

Of every nation within itself is the first consideration for

statesmen to aim at. Imperial Preferences are good , but not

so good as domestic Preference . My work is therefore for

Preferential Trade in its widest signification of a national

policy of Protection .

THE AUTHOR .

MARINOOK ,

”KEW, MELBOURNE

December 30 , 1903 .

CON TE N T S

BOOK I

THE WANT OF A TRUE SCIENCE

LETTER I. -TO OPEIUS

THE ROOT OF THE TARIFF CONTROVERSYpac e

1 . Economic Science still a Riddle . 2 . The Tariffs of the World.3 . A Clue to a Solution. 4 . Deduction and Induction. 5 . OppositeMethods employed. 6 . Advantage of Modern Research

LETTER II.—TO THE R IGHT HON . LEONARD COURTNEY

CLEARING THE GROUND

1 . Theories which help and Theories which hinder. 2 . Is Pol iticalEconomy a Science ? 3 . The Doctrine of Selfis hnes s Uns c ientific .

Man a Multiform Being . 5 . Religious Motive s modify GainMotives . 6 . Mill ’s Mistakes of Definition. 7. Conflict in the Eco

nomic Camp. 8 . Pol itical Economy in Chaos

LETTER I I I .—TO SIR HIGGLER OF THE MARKET

CHEAPNESS—AN EW JUGGERNAUT

1 . The Free Trade Formula on Cheapness . 2 . Two Kinds of Cheapness . 3 . Cheapness les sens Wages . 4 . Cheapness of Productionbased on Cheap Labour. 5 . Cheapness not Abundance . 6 . Cheapness lessens Employment . 7 . Cheapnes s which chang es Wealthinto Poverty . 8 . Carlyle and Carey on Cheapnes s . 9 . Cheapnessdeplored as Ruin by Free Traders . 10. The True Formula

PREFERENTIAL TRADE

LETTER lV .—TO THE WAR SPIR IT OF COMPETITION

TRADE COMPETITION—THE GREAT DEMORALISERPAGE

1. The Deduc tionis t Doctrine . 2 . Defining Terms . 3 . Trade Compet ition not an E ternal Law . 4 . Trade Compe tition tends to Des troyits e lf. 5 . Trade Competition c o-exists with Monopoly. 6. Com

pe tition in Sal e of Commodities . 7 . Competition with the Mask off.

8 . Competition in Wag es . 9 . Trade itself not a Natural Law .

10 . The Was te of Trade Compe tition. 1 1 . Trade Competition of

Two Kinds . 12 . Compe tition when a Tonic and when a Poison.

13 . Nature of Trade Competition

LETTER V .—TO THE FRATERNAL SPIRIT IN MAN

CO-OPERATION—THE SOLVENT OF COMPETITIONl . A Halfway-house to Social ism. 2 . How Industrial CO-Operationbegan. 3 . The Social Condition it had to meet. 4 . The Traders ’Remedy . 5 . The Co-operators ’ Remedy . 6. The Firs t Growth .

7 . Early Te s timony. 8. The Doctrine of Ability . 9 . The Co

operative Whole sale . 10 . The Moral Achievements of CO-operation.

l l . Co-Operative Achievements on the Cont inent . 12 . E thicalTendency of Co-operation. 13. Subsidiary Means

LETTER VI .—TO LORD ROSEBERYTRADE—ITS TENDENOY AND NATURE

1 . Trade not Al truistic . 2 . Trade Idolatry . 3 . Tradewhich is Hurtful .4 . Trade Roguery and Adul te ration. 5 . A Review of Trade History.

6. Trade and Slavery . 7 . Commerce versus Trade . 8 . Where Tradeleads

B0OK II

TRADE VIEWED IN THE LIGHT OF E ISTORY

LETTER VII. TO MR . JOHN BULLBUILDING THE WORLD’

S WORKSHOPl . Eng land’s Early Social Condition. 2 . Early Policy of Protection.

3 . Englis h Wars for Monopoly. 4 . The Landed Interests ofEngland . 5 . Wag es and Food-cost at v arious Periods . 6. HowEnglandused the Competitive Sys tem . 7 . TradeWars . 8 . Englan

d’sWealth and Poverty . 9 . Eng land’s Trade Decline . 10 .

A NationalDanger

CONTENTS a

LETTER VIII . -TO M ICHAEL DAVITT, ESQ.

FREE TRADE THE DESTROYER OF IRELAND

1. Ethics and Economics . 2 . Early Irish Manufactures. 3. Eng land PAGE

begins to destroy. 4 . J. R . Green’

s Opinion of it . 5 . The

Effects of Protection in Ireland. 6. The Death-blow. 7 . AsRuinous as War. 8 . The C onsequence of Free Trade Wisdom.

9 . A Terrible Fact . 10. The Doctrine of Sacrifice . 1 1 . Free Tradethe Mother of al l the Evils . 12 . Decline of the Population.

13 . The National Aspiration. 14 . Causes of Irish Decline

LETTER IX .—TO LORD CURZ ON

THE HINDOO AND THE TRADER

1 . India before the Trader. 2 . The British Trader in India. 3 . Idleness and its Waste . 4 . The Mutiny and its Cause

LETTER X.—TO PRESIDENT EMILE LOUBET

WHY FRANCE ABJURED FREE TRADE

1 . HerPol icy of War and Trade . 2 . Character and Policy of Colbert .3. The Relapse of France to Free Trade . 4 . The Revolution bring sback Protection. 5 . Agricul tural Progres s . 6 . France and Eng landcompared. 7 . Material Growth . 8 . Wonderful Recovery from the

War. 9 . French and English Weal th compared. 10. Pauperism in

France and Eng land. 1 1 . Concluding Reflections

LETTER XI .—TO PRESIDENT THEODORE ROOSEVELT

How AMERICA FOUND HER FISCAL FAITH

1 . The American Intellect . 2 . The Effects of Custom. 3 . The In

fluence of Slavery . 4 . The First Protective Tariff. 5 . The SecondProtective Tariff. 6. The Third Protective Tariff. 7 . The Free

Trade Tariff of 1846. 8. The Fourth Prote ctive Tariff. 9 . The FifthProtective Tariff. 10 . The Population Tes t . 11 . The Produc tive

Test . 12 . The Pauper Tes t . 13 . The Wag es Tes t . 14 . The Con

sumers’ Test. 1 5 . A Comparat ive Period Test . 16. Imports and

Exports . 17. The Cultivation Tes t

PREFERENTIAL TRADE

LETTER XII .—TO THE UNSPEAKABLE TURK

How THE FOREIGN TRADER BLIGHTED TURKEYPAGE

1 . Turkey ’

s Greatnes s .

'2 .Turkey’s Decline . 3 . Industrial Collapse.

4 .Agricul tural Decl ine . 5 . National Bankruptcy

LETTER XI I I.—TO THE PRIVY COUNC ILLOR M . DE WITTE ,

Err-Minis ter of Rus s ian Finance

THE R ISE OF THE MUSCOVITE MANUFACTURER

1 . Rus s ia in the Pas t . 2 . Rus s ia’

s Trial of Free Trade . 3 . Russia’

s

Start of the Protective Pol icy . 4 . Vital N eces sity of Manufac

tures . 5 . Slow Growth of Manufacture s . 6 . The N ew Protection.

7 . Cobdenis t Opinion of it . 8 . Profe s sorMendeléeff’s Official Report .

9 . M id -century and F in-de-s ééc le Critics agree . 10 . Cotton Growthand Manufactures . 1 1 . Siberia and its Economic Uses . 12 . Popula

tion andArea. 13 . The Russ ian Farmerand Low Prices . 14 . Rus sia’

s

Foreign Trade. 15 . Russ ian Internal Pol icy

LETTER XIV.-TO KAISER WILHELM

GERMAN ETHICS IN POLITICAL E CONOMY

1 . German Method of Inquiry . 2 . The National Method versus the

Cosmopolite Theory . 3 . The Leading Features of National and

His torical Schools . 4 . Lessons from German His tory . 5 . GermanAgricul ture . 6 . Return to Protection and its Resul ts . 7 . Free TradeExplanations of the Success of German Protection. 8 . CustomsTaxation in Germany . 9 . The Growth of the Col lectivist Idea

LETTER XV.-TO THE M IN ISTER OF THE INTERIOR OF THE

NETHERLANDS

THE HANSEATIC LEAGUE AND THE NETHERLANDS

1 . The Hanseat ic Traders . 2 . Their Great Success .

4 . Hanse Trade Decl ine . 5 . The Rise of Hol land . 6 . Her Energyand Riches . 7 . Dutch Supremacy chal lenged . 8 . Adam Smith on

the Carrying Trade . 9 . Rival Tariff Systems compared . 10 . Holland’s Failure . 1 1 . The True Les son taught

3 . U seful History .

CONTENTS xi

LETTER XVI .—TO DAVID SYME , ESQ. ,

Pioneer of Aus tralian Protection

WHY AUSTRALIA SHED COBDEN ISM

1 . Free Trade Energy. 2 . Reason of the Revolt .

“ GE

3 . Victoria in Riches .

4 . Victoria in Poverty . 5 . The Want of a N ew Colony . 6 . Prote otion in N ew Z ealand , Queensland, South Australia,

Tasmania, and

Western Aus tralia. 7 . N ew South Wales Tariff. 8 . ContributoryMotives . 9 . Population compared . 10 . Other Marks of Progress .

1 1 . Cost of Living

LETTER XVII .—TO THE R IGHT HON . JOSEPH CHAMBERLA IN

THE WORLD-WIDE EXPER IENCES OF FREE TRADE

1 . Free Traders admit their own Decadence . 2 . Instances of that Decay .

3 . Opinions of Bismarck, Schmol ler, and List . 4 . Po licy of Colbert ,Napoleon, and Thiers . 5 . A Galaxy of America’

s Intellectual Stars .

6 . Engl ish Thinkers and Statesmen

BOOK III

REACHING A CON CLUSION

LETTER XVI II .—TO SIR A . CONAN DOYLE

THE SCIENCE OF PROTECTION

1 . Word-worship an Ignis Fatuus . 2 . Diversity of Occupation a Neces

sity . 3 . What hinders Divers ity . 4 . How to prove the Doctrineof Diversity. 5 . Divers ity s timulates Abil ity . 6 . Divers ity is

Economic. 7 . Free Trade opposed to D ivers ity . 8 . Why not protectthe Provinces as wel l as Countries ? 9 . Commerce versus Trade .

10 . The Soldier and the Trader. 1 1 . The Trader’s Interes ts .

12 . Adam Smith on Foreign Trade and Home Commerce . 13 . HenryGeorge’s Attempt to answer Smith . 14 . Ricardo ’

s Failure to answerSmith . 1 5 . Comparative Volume of Home and Foreign Trade .

16. Revenue Tariffs are not Free Trade . 17 . The Conclus ion

PREFERENTIAL TRADE

LETTER XIX—TO THE R IGHT HON . ARTHUR BALFOUR ,

Prime M inis ter o f England

THE PHILOSOPHY o r PROTECTIONPAGE

1 . The Use s o f Philosophy. 2 . Pol itical Economy the Science of

Happiness , not o f Weal th . 3 . Human Motives for Actions . 4 . Di

versity ofOccupa tion a Philosophic Truth . 5 . Philosophy inculcatesProtec t ion . 6 . Prote ction to the Boy and Man. 7. Protection to

the Tree and Flower. 8 . Parallel be tween the Individual and the

Nat ion. 9 . Primary Production insufficient . 10 . Protection a House

Father

LETTER XX . TO MR . JOHN BURNS, M .P .

THE COST or PROTECTION

1 . Free Trade Objections . 2 . N othing Good without Cos t . 3. Free

Trade Admis s ions . 4. Views of the Statesman and of the Counter.

5 . Method of E s timating the Cos t of Protection . 6. ConcreteExample s . 7 . Some Aus tral ian Examples . 8. An AmericanExample . 9 . Some Eng l ish Examples . 10. Who pays Cus toms

Duties ? 1 1. Cases where Customs Duties are paid by Consumers .

12 . Theories and Facts concur

LETTER XXL—TO THE GEN IUS OF THE COBDEN CLUB

THE COST OF FREE TRADE

l . The Agricul tural Debt . 2 . Cos t of Navy for protecting Transport .3 . Lo s s of Indus tries . 4 . Loss by Unnecessary Transport . 5 . Loss

ofMan’

s Time . 6 . The Cos t of the Soil . 7 . Loss in the Want of

Divers ity of Avocation .

LETTER XXII .—TO SIR FREDERICK HOLDER,

Speaker of the Aus tralian Parliament

THE FREE TRADE CASE SUMMARISED

1 . Focuss ing the Points Of Dispute. 2 . Why Free Trade ignores History .

3 . Some Free Trade Maxims . 4 . Henry George on Free Trade .

5 . Free Trade Me thods

CONTENTS xiii

LETTER XXI II .—TO W. D . BEAZ LEY, ESQ. ,

Speaker of the Victorian Parl iament

THE PROTECT ION IST CASE SUMMAR ISEDPAGE

1 . Want of a Science. 2 . Cheapnes s , Competition, and CO-Operation.

3 . Trade and its Tendency . 4 . His torical Resume—Eng land .

5 . Ireland’s Ruin. 6 . India’

s Ruin. 7 . The Fiscal Story of France .

8 . The Fiscal Story of America. 9 . Turkey ’

s Decline . 10 . Russ ianIndustrial Growth . 11 . The German Lesson. 12 . The Hanse Townsand Hol land . 13 . Why Australia is Protectionist . 14 . The World ’

s

Teaching . 15 . The Science and Philosophy of Protection. 16 . The

Cost of Protection . 17 . The Cost of Free Trade . 18 . Free TradeAdmissions of Protection

LETTER XXIV .—TO THE HON . ALFRED DEAKIN ,

Prime Minister of the Aus tral ian Commonwealth

REACHING THE GOAL

1 . Laissez fairs condemned. 2 . The State in Zoeo parentis. 3 . E thicsin Political E conomy . 4 . Divers ity of Avocation. 5 . But Trade ?6 . Who pays Customs Duties ? 7 . The Lessons from History .

8 . Preferential Trade : what it Means . 9 . The Conclusion

INDEX

PRE FE RE N TIAL TRADEA STUDY OF ITS ESOTER IC MEANING

BOOK I

THE WANT OF ATRUE SCIENCE

LETTER I .—To OPEIUS

THE ROOT OF THE TAR IFF CONTROVERSY

Wise men learn by othermen’

s mistakes fools by their own—Proverb.

MY DEAR HARRY ,—You and I have spent many an hour in

lively cracks over what Carlyle called the D ismal Science,

”

1 , EW without finding it in the least dismal . I always1

8

1

2230

08

arraigned you for holding the text writers too cheaply .

s til l 8, But in turn I have to confess that had Pope lived inriddle our day he might certainly have described Economi cScience as

The glory, j est , and riddle of the world .

A few men,such as Adam Smith

,R icardo

, Bastiat , Carey ,and Mill , have deemed the study of it a glory . To many— asto Carlyle

,Ruskin

,andArgyll—it has appeared a j est . To the

great mass of men it is still an unsolved riddle , too dismal toapproach the solution of .After all that you and I have said together, you will scarcely

ask me,as some might—Why add another knot in this tangled

skein of Sophistication You know that I am not unmindful ofthe Pythagorean wisdom , that we ought either be silent

,or

speak things that are better than silence . I cherish a hopeB

2PREFERENT IAL TRADE

that, inste ad of adding tothe tangle , I may, in part at least,

unravel it .All men are agreed that on the

question of a trade that is free

as against a trade that is restricted, theworld is still full of con

trov ersy,as it has been during most of the last century . States

men,economic doctors, and

thinkers have ranged themselves

on both sides . For the Restrictionists the mindmost readily

recurs to such names as Colbert,Napoleon , Pitt, Alex . Hamilton ,

Clay,List, Greeley, Webster, Carey, Bismarck ,

and Thiers . On

thesid

e of Free Trade we think of Adam Smith , as long as

peace lasted , McCulloch, Mill , Peel, Cairnes, Cobden, Bright ,

Fawcett, Bastiat , Say, and others .All of these have spoken

thoughtfully, some eloquently, and most of them have acted

as well as preached . Yet still the contest continues, without

exhibiting any very decidedindications that its end is defi

nite ly approaching . The statesmen of the world are as busy

as ever putting up tari ffs and pull ing them down .

I have got out for you a sort of classification of the nations ,

as they range at present, under the two banners . It is true

that customs duties exhibit all varieties, ranging from

the sternest prohibition to an almost imperceptible

impost.But

,taking in one group all those tariffs which

are levied purely for revenue purposes, and in another

those where the duties are levied with a view to foster industry,

the classification is as foll ows

State

Populat ion Square Miles

THE ROOT OF THE TARIFF CONTROVERSY

Protective TariffsState

Area inSquare MilesPopulation

Brought forwardFrance and ColoniesGermanyGreat BritainUnited KingdomBritish Crown Set

tlements in Europe ,Asia (includingIndia) , Africa,America 85 Oceana,exclusive of s elf

governing coloniesN ewfoundlandCanadaAustralianmonwealth

N ew Z ealandCape ColonyNatal

GreeceGuatemalaHaytiHolland and ColoniesHondurasItalyJapanLiberiaLuxemburgMexicoMontenegroMoroccoN epaul

Nicaragua

Com

1

Persia

PeruPortugal and ColoniesRoumania

RussiaSalvadorSan DomingoServiaSiam

Spain and Coloni e s

Sweden and Norway .

SwitzerlandTurkeyU . S. AmericaUruguayVenezuela

Free Trade and Rev enueT arifi s

Area inPopulationSquare Miles

3

4PREFERENTIAL TRADE

Here , then , we find the facts summarised to stand thus

System

l’ro tc c ti

I am not going to predicate that this overwhelmingpreponder

ance of Protectionists is any proof against thesoundness of

free trade .

You used often to remind me of Oxenstiern’s

proverbial saying about the wisdom ofgovernment ; and he

but confirmed Pope’

s reflection : Thou little thinke st what

a little foolery governs the world .

” But all will concur that

ourfirst duty is to get a grip of the facts as they exist, and of

the forces which have to be reckoned with . I am quite aware

that this table needs discountn on both Sides . India’

s 2 90

millions are largely governed by the interests of Manchesterand Bradford . The myriads of China and Russia have almostas little voice in determining the policy under which they live

as has the Indian ryot . Still , the fact remains that , in most of

the State s of the world, minds of light and leading have guided

the national policy, whether on the side of R estriction or ofFreedom .

Consequently , the problem before us is bow ,

'

in the

light of knowledge , to decide the question on which so many

eminent doctors disagree .

I can well remember a remark of yours on the wisdom of

the sage , that talking comes by nature , silence by wisdom

3 , AClueand truly enough I do not forget that the fool shineth

igiiitionno longer than he holdeth his tongue . Yet , as I ampersuaded that I spy a clue out of the labyrinth , it

seemeth tome that I had better follow it a little .

The first step,I take it

,in order to find the path of truth ,

Is to afiix finger-posts on the by

-paths of error . Wherevereminent thinkers arrive at opposite conclusions there must have

been some false factor in the sum of their reckonings . Thaterror may have arisen in several ways . It may have come

from a defective method of investigation , or from a true methoddefectively treated ; or it may have arisen in errors both ofmethod and treatment . We have often together looked at the

methods employed,and what have we found 2 We discovered ,

https://www.forgottenbooks.com/join

6PREFERENTIAL TRADE

Here , then . we have the doctrines thatenlightened self

inte rest and“buying in the cheapest markets will create the

maximum of wealth . From these and some other general

propositions concerning the benefits ofcompetition , the Fre

e

Trade school has deduced all its generalconclusions . You Wl ll

see at once that all depends on the soundness of the propositions .

In this system the Deductionist school has followed a0

well

beaten path . For twenty centuries the world went on bui ldi ng

up the Ptolemaic theory of the universe . Every investigator

began with the Ptolemaic assumption of the geocentric system,

and squeezed all acquired knowledge into the compass of that

doctrine . At length Copernicus came , and instead of inter

preting known facts by a set of assumed formulae he challenged

the Ptolemaic theory itself, and that theory was found to have

led all the world wrong .

R ichard Cobden was a mere Deductionist , and a very sincere

but narrow visioned one at that . He saw that human intercourse

tends to break down barriers of exclusiveness . From this generalfact he formulated the proposition that unrestricted trade wouldprove a panacea for wars , poverty, and distress . His supreme

merit was that he devoted his immense energy to promulgating

the doctrine he sincerely believed . His demerit was his compressing all the facts of life into conformity with his unproven

formula . The Protectionist school have followed the contraryplan

. The advocates of a Nationalised Trade have“

proceededon the inductive method . They have Observed the Operation of

the actual facts of life , and reasoned from these facts to a generallaw

.That law regards Cheapness and freedom, and competition

in trade,even trade itself, as elements which require the most

careful regulation and restraint . But while they may claim tohave been more accurate in the interpretation of facts, theyappear to have been less constructively logical than their oppo

neuts .The Free Trade system may be pronounced perfect, pro

v ided only its premises are proven . The Protectionists , while

5 . 0ppositemore exact in the ir observation of facts, have failed

methods more than their opponents in giving scientific expresempl °y°d ' sion to the meaning of those facts .Such are the causes

,°

as it seems to me , which keep the

THE ROOT OF THE TARIFF CONTROVERSY 7

controversialists at arm’s length,and which render much good

writing and argument sterile . The economic student has nofair ground of complaint in this . We must accept things asthey are ; and we know that the patient process of inductivereasoning is one which is too Slow for ardent temperaments .Man in the mass will probably be always moved rather by idealsthan by the sober results of analysed facts .Leaders of thought are fully aware that truth often fails

to approve itself on its merits . There must always come in,

too,the personal equation .

” A typical English rector,a fervent

partisan of British politics,is reported to have said : I had

rather be damned with Derby than saved with Gladstone .

Even the most ingenuous of us have possibly a corner in ourcharacters where that spirit finds a lurking-place .

My obj ect now is,first of all

,to indicate what appears to

me the only sound method of investigation in the science Of

Political Economy. It will be shown , I think, that the doductive process is incapable of application to Political Economy .

If that be found to be so , inquirers will in future have to investigate the ir facts dispassionately ; and having gathered themcarefully from ancient and modern history, try their value , andweight

,and meaning

,by the process of induction . By this

means we may hope to arrive at a result which is at least sound ,if not unchallengeable . AS it is, we know that statements ofthe same truth bear to different minds different meanings . Forexample

,the

“industrious members of the Cobden Club zealouslyturn out every year a mass of statistical literature . Theirfigures are sometimes facts, and are always designed to provethe infallible wisdom of buying in the cheapest market andselling in the dearest one . These they proclaim as a revelationOf axiomatic truths .” You know that

What ardently w e Wish we soon bel ieve .

The advocates of Restriction , on the other hand, have filledinnumerable Blue -books with Reports,

” Statistics of Trade,

and Industrial Records,” purporting to demonstrate that

human progress is indissolubly bound up with protective tariffs .Even the latest Board of Trade figures seem to give comfort to

8 PREFERENTIAL TRADE

the Opposite schools . I myself at times have been a good deal

puzzled at this clash and j ar of alleged data . Yet the explorer,

rightly guided , ought not to find much difliculty .

The world has certainly amassed a good deal of experience

since Mr . Cobden first assumed the mantle of a fiscal prophet .

During the past sixty years our industrial archiveshave become great storehouses of scientific achieve

ments . Knowledge is abroad on the earth . Where

a former generation pioneered its way, we follow awell -worn track, charted with beacons to warn and guide .

AndyetI am persuaded that Political Economy, as a science ,

is still in its swaddling clothes . In this, as in other departments

of knowledge , science has to fight,not alone prej udice , but

self-interest also . Men come to a study of facts with a predisposition to magnify them or minimise them according as theytell for ,

or against their preconceptions . May I say, withoutpresumption, that it seems to me I have passed through thatstage and understand it ? Nevertheless we moderns have manyadvantages . From the high ground which overtops a century

of keen controv ersy we are now able to survey the fiscal battle

field,strewn as it is with the wrecks of shattered argument and

exploded errors .We may again

,as we have often done , take a walk amongst

this rhetorical (le’

bris,pick up and examine portions of broken

polemical shields,critically consider controversial spearheads ,

resurvey seemingly shivered and battered breastplates, and inthe light of the latest knowledge gather together those inv ulnerable argumentative coats of mail

,and those invincible

weapons of logic which appear to have come unscathed throughthe fire of battle . For we must hopefully believe that

Truth , crushed to earth,shall rise again

The eternal years ofGod’s are hers

But Error,wounded

,writhes with pain,

And dies among her worshippers .

A man might be all the more encouraged to undertake thistask , because in some lands the clang of arms is still fierce .

Democracy itself is divided in the conflict,and is but slowly

THE ROOT OF THE TARIFF CONTROVERSY 9

working its way out into clear v iews . In spite of the warpof mistaken views and the woof of vested interests, it will alwaysremain true that the maj ority of men seek for what they deem

These are they who will leaven and shape the world’sOpinions . It is for these alone that it is worth a man’s while towrite .


LETTER II .- To THE R IGHT HON . LEONARD COURTNEY

CLEAR ING THE GROUND

Avoiding oppos itions of science fal sely so called—1 Timothy.

By the g lare of fal se science betrayed—BEATTIE .

MY DEAR SIR .

—YOU. have long been a light in the Cobden Clubbut has it ever occurred to you that before we can hope fully

to know Truth we must be able to identify Error“4 You

1 . Theorieswhich and I and everyone else lose labour when we endeavour

$3138" to investigate material facts without having first climi

which nated certain disturbing falsities . Theories are likehinder.

finger-posts . They may direct our quest rightly or

wrongly . The traveller would be very unwise who Should takehis way through a strange country under the direction of irresponsible road guides . Equally unfortunate is he who sets outin search of knowledge freighted with

,and guided by

,a number

of unproven theories . With theses and theories,as such

,we can

have no sort of quarrel whatever . They are sometimes greathelps towards the apprehension of truth . They are objectionable only when put forward as axioms .The scientific mind will naturally be wary of affirmations

which are loosely labelled “ natural laws and fixed principles .”

In the same way there are few things more liable to mislead thedeductionist than defective syllogisms . The syllogism is themost natural weapon alike of the logician and the sophister .Truth may be verified by it

,but Error may lurk in it in the

very likeness of Truth, as, according to the proverb , falsenessOften lurks beneath fair hair .” Theorie s framed and used inthis spirit are hindrances, not helps . They become the tyrantsof the j udgment which collapses under their domination .

It is really a matter of doubt as yet whether Political Economyhas any valid ground on which it can claim inclusion amongst the

CLEARING THE GROUND 11

sciences . Mr. Ruskin contemptuously denies those claims .1 Hesays that we find the defiance of every modern law of human

2 Is P011.relation by modern Political Economy .

” M . Comte

6 03 1 1300 holds that Political Economy should fail to rank as a110301? a

,science , because it has shown itself so far incapable

8018 1109

of predi ction—a faculty of all true sciences . Professor Marshall, who has certainly shown a great advance inclearness of vision on his predecessors, doubtingly concedes itsclaims

,but unhesitatingly pronounces on the crudity of the

present condition of the science .

2 Mr . David Syme d eclaresthe very term Political Economy to be e ither meaninglessor misleading . Next we have to fall back on the term Wealth

to indicate the subject matter ; but this is neither inaccordance with its etymological nor its popular meaning . Surelyno science was ever so unfortunately placed for want of a propervocabul ary .

” 3

Great discrepancy in Opinion ex ists amongst the professorsof this so -called science . Professor Jevons contends that peoplewho would study human nature in connection with PoliticalEconomy

,quite misunderstand the purpose of a science like a

Political Economy,

” 4 because it treats only of wealth . Milltakes the same view when he defines Political Economy as ascience which does not treat of the whole of man’s nature asmodified by

‘

the social state , nor of the whole conduct of manin society. It is concerned with him solely as a being whodesires to acquire wealth 5 He recurs to this definition inanother place

,and says Political Economy c onsiders mankind

as occupied solely in acquiring and consuming wealth . Not thatany political economist was ever SO absurd as to suppose thatmankind are really thus constituted, but because this is theonly mode in which science must necessarily be studied .

” 6 Seniordefines Political Economy as the science which states the lawsregul ating the production and distribution of wealth .

” 7 But

1 J. Ruskin,Fore Claviyera,

Letter 85 , p. 2 3.

2 Alfred Marshal l , Princip les of E conomics , p . 773 David Syme , Out lines of Industrial Science, p. 6.

Jevons , P olitical E conomy, p. 8.

5 J. S. Mill , Some Unsett led Questions, p. 137.8 J. S. Mil l , System of Logic , Book 6 , ch . 8 .

Senior, Introductory Lectures on P oli tical E conomy, p. 36.


he goes much further than this in another place, where hesays

Ne ither sympathy with indigence , nor disgus t at profusion or

avarice—neither reverence for exist ing inst itut ions, nor detestat ionof exist ing abuses— ne ither love of popularity, nor of paradox , norof systems, must deter him (the economist) from stating whathe believes to be the facts ; or from draw ing from those facts whatappear to him to be the leg itimate conclusions .1

From which we infer that, in estimating the consequences ofcertain actions , the political economists must carefully abstractall these considerations, building only on the theory that menin the pursuit of wealth are uninfluenced by them . In this ,however, they are in sharp collision with other writers . Pro

fessorMarshall says

It is said that the scope of economics is limited to '

a considerat ion of those motives which are governed by self-regarding , if notby selfis h mot ives . This v iew seems to be mistaken . Even the

most purely business relat ions of l ife assume honesty and goodfaith . While many take for granted , if not generosity, yet at

leas t absence of meanness . Just as a racehorse or an athl ete

strains every nerv e to get in advance of his compet itors, and

delights in the strain,so a manufacturer or a trader is often

st imulated much more by the hope Of victory over his rivals thanby his desire to add something to his fortune . The act ion of suchmot ives as these must be studied carefully by economists ; and theallowance required to be made for them will in some cases be SO

great as to alter percept ibly the general character of theirreasonings.2

Mr . Ruskin declares such a basis of selfishness to be entirelyunscientifi c . Political Economy

,he says

,is the science which

3 . The teaches nations to desire and labour for the things

2231311

8; that lead to life . There i s no wealth but life—lifeness um including all its powers of love

,and j oy

,and admira

BCientifi c tion by means of which a nation may consist ofthe greate st number of human beings

,noble and happy.

” 3

The Duke Of Argyll thus deals with Professor Jev ons ’sSenior, Outlines of P olitical E conomy , p. 130.

2 Alfred Marshal l, Princip le of E conomics , pp. 78- 80.

2 Ruskin, Fors Cla/vigera .


desire of gaining wealth . Man, say these professors, may haveother motives in relation to other things but with these motivesPolitical Economy has nothing to do . This method would bequite j ustifiable had its basis been first proved instead of assumed .

But instead of testing their assumptions before adopting them ,

this school of economists have endeavoured to work deductivelyfrom unproven theories . Nor is it too much to say that they

have followed one another in almost slavish subserv ience to thetyranny of this dominating idea . To Speak of such a methodas scientific is a misapplication of terms , because it is clear thatno accurate conclusion can be thence derived . Man is movedto important social actions , and is influenced in ordinary businesstransactions by a multiplicity of motives . The desire to acquirematerial wealth is only one among many . Man’s nature iscomplex

,and is stirred by love of what he conceives to be abstract

j ustice,truth

,patriotism

,pleasure

,and virtue . Many men with

little or no desire of gain have engaged in business from a loveof action and a distaste for idleness . Man is equally movedin business pursuits by vanity

,ambition

,pride

,love of honour

,

and family affection . Under any one or all Of these motiveshe will often sacrifice material riches .A Political Economy, therefore , which deals with man, in

the words of Mill, solely as a being who desires to obtainwealth ,”

4 . Man a making an entire abstraction of every other humanmul tiform passion or motive ,

” is not science but nescience . Alfredbemg ‘

Marshall fully perceived this fundamental error in Mill’steaching , and tried to minimise it by pointing out that Millhad been better than his own principles . This is true . Butit ev inces the confusion of thought which pervade s Mill’s reasoning , and justifies Ruskin

’s caustic comment in Fors Clavigera,

that Mill is most reasonable where he is most inconsistent withhis own principles, and never utterly wrong except where hisown conclusions are in consonance with his premises . It is inone of his appendices to the same work that thi s same writertells us why modern “ Political Economy is of the devil .” It isbecause it teaches I . That good things are only good if theycan be turned into money .

” II . That all human prosperitymust be founded on vices of human nature

,because these are

the essential powers of human nature , and its virtues are acci

CLEARING THE GROUND 15

dental and impotent. In another book Ruskin gives us anillustration of a science which studies man by leaving out Ofcount every human passion or motive except gain .

” It is,he

says,like a science of gymnastics which assumed that a man

had no skeleton . Modern Political Economy stands on a precisely similar basis .

” 1

The Founder of Christianity had also a system of PoliticalEconomy . He condemned selfishness as the root of direct evil .

5 Rel iHis teaching is in the sharpest contrast with that

gros s we have considered . One or the other is false . As a

$331

5? qualifier -of men’s actions this fact cannot be ignored .

gain The political economist says he can consider man onlymotives . as a being stimulated by the desire of gain . The Christian Founder teaches man that that desire , if fully gratified ,would make it almost impossible for him to enter the kingdomof heaven . Here

,then

,is a point at which religious motives

in many men touch gain motives,and modify them with

tremendous force . Which fact proves conclusively that thedoctrine that selfishness is the sble motive power in business ,being based in error, vitiates all conclusions which are deducedfrom it .Alfred Marshall must have had something of this feeling ,

reticent as he usually is ; for on this point he recommends hisreaders to study David Syme ’s Outlines of Industrial Science ,

”

which denies that Wealth is the true basis of inquiry, and affirmsthat Industry ought to be substituted for it .Syme shows

,moreover

,that Mill has fallen into quite a

maze Of contradiction in his attempts to define the position of

6 . M i,“Political Economy amongst the sciences . He quotes

mistakes Mill as followsof defini

tion.

The laws of the product ion of the Objects which con

stitute wealth, are the subject -matter both of polit ical economy,and of almost all the physical sciences . Such

,however, of these

laws as are purely laws of matter,belong to phys ical science , and

to that exclusively. Such of these as are the laws of the humanmind

,and no others, belong to pol it ical economy, which finally sums

up the result ofboth combined .

Ruskin, Unto This Last .


{Fl On this he Observes

It would be difficult t o put together statements more irre

conc ilable with each other than those contained in the three

s entences I have just quoted . The laws of the Objects which con

s titute wealth, we are told in the first sentence , are the subjectmatter of pol itical economy, in common with all the physicalsciences ; in the second , w e are informed that only such of theselaws as are the laws of human mind belong to this science and in

the third , notwithstanding that w e hav e just been informed thatpolit ical economy has to deal with only a port ion Of these laws , it isstated that it finally sums up the results of both combined . One

thing only is certain—that all three statements cannot be correctfor if polit ical economy has to deal w ith the laws of matter, itcannot be a mental science ; if, on the other hand , it has to dealwith both, it cannot be exclusiv ely e ither the one or the other.

1

He is scarcely less successful in showing the inconsistencies of

Professor Cairnes .Clearly

,then

,our estimate of Political Economy as a science

must be a good deal qualified with misgivings . Its doctors

7 , Con. are in profound disagreement concerning its basic

{1

112211

3principles . Some of them teach that it is founded only

nomic in the instinct of man to cheat his neighbour. Mi llcamp says that it is purely a deductive science . Syme saysthat it is impossible to treat it except by the inductive process .In all investigations of which man is the subj ect

,the only

proper method of treatment is by induction .

” 2 Alfred Marshallis unable to make up his mind about it

,and therefore favours

both methods,saying that economists must make use of all

sources Of knowledge .

3 Carlyle , as we have seen, condemnedPolitical Economy as a “ dismal science

,and sterile as dismal .

And Ruskin said Now I tell you,once for all

,Carlyle is the

only living writer who has spoken absolute and perpetual truthabout yourself and your business ; and exactly in proportionto the inherent weakness of brain in your lying guides will betheir animosity against Carlyle .

” 4 Even Fawcett, one of the

Syme, Outl ines of P olitical Sc ience, p . 8 .

2 Syme , Outlines of Industria l Science , p. 2 8 .

3 Alfred Marshal l , Princip les of E conomics , p. 79 .

Ruskin, Fors Clav iyera , Letter 10 .

CLEARING THE GROUND 1 7

frankest of them all , lays down on no more solid basis whatmay be regarded as his root principle . He uses such preliminaries as : It is natural to suppose

,

” etc .1 But where wouldbe the science of geometry if it were merely natural to supposethat the three interior angles of a triangle are together equa lto two right angles .When we reflect that the Whole doctrine of Free Trade has

been deduced from a so-called science which is in this state ofa, pan. unphilosophic chaos

,a regard for accuracy will compe l

“calm“ us to prove all things and hold fast only that which isnomy inchaos . found to be sound and true .

Fawcett , Manual of Political E conomy, p. 105 .


LETTER III . TO SIR HIGGLER OF THE MARKET

CHEAPNESS -AN EW JUGGERNAUT

The devil was fairly voted out , and of course the devil ’s gone ;But s imple folks w ’

d l ike to know who carries the busine ss ou.—HOUGH.

MY DEAR SIR HIGGLER ,—You have been consistent in ever

making Cheapness the chief deity in your economic temple .

Now,I want to have a few words with you on that article of your

adoration.I am mindful that he is not the best carpenter who

maketh the most chips ; and, despite Horne Tooke’s dictum

that the world is governed by words,” I hold that superfluous

words are verbal chips . But we cannot build until our founda

tions are level . To that end I would invite you to reconsiderwith me some current notions about Cheapness . Men have atendency to make idols out of ideas . I want you to think outwith me the question as to W hether Cheapness is not one ofthese false gods , and amongst the very falsest of them . Iventure to predict that even you , Sir Higgler of the Market,wedded to a competitive Cheapness as you are , will find it avery hollow tin deity. The Japanese have a proverb that afog cannot be dispelled by a fan . But in this case a very fewblows on the sconce of this particular idol will make his godship rattle and shake and betray all the evidences of his imposture .

This fetish Cheapness has issued three commandments asfollows

1 The1 . It is economically wise for all buyers to buy in

F

'

reed ethe cheapest markets . Thus shalt thou do .

“m umon 2 . Restrictive tariffs are a hindrance to buying in theCheapness .

cheapest markets . Therefore thou shalt have noneof them , thou , nor thy son, nor thy daughter .

Wherefore , to all buyers, freedom of exchange is to bepreferred before restrictive trade . Leave thou the competitionof the trader perfectly free .

CHEAPNESS—ANEW JUGGERNAUT

The very first step in examining into this doctrine of cheapness necessitate s a classification . There are two distinct kinds

2 , Twoof cheapness, or rather cheapness is something which

kinds of springs from two distinct causes . There is a cheap°h°3pness ' ness which is entirely beneficent . It springs out ofmechanical discovery . We are living in times of wondrousingenuity. The genius of invention is abroad . Almost everyinvention has a labour-saving element in it . Electricity carriesour messages to and fro upon the earth . Steam

,linked with

machinery,performs with multiplied efficiency and cheapness

what man could do only by greater e ffort and higher cost .The circular saw rips a forest into planks with a celerity thatnever entered the dreams of the old pit-sawyer . The Nasmythhammer is a docile giant, each of whose blows, obedient to thewill of a single operator, does the work of a hundred brawnyhuman toilers . The diamond drill pierces into the secrets ofmother earth’ s bosom with more speed than could the picksand Spades of a hundred expert workmen . All this

,and a

thousand things besides,tend to cheapness and to abundance

to a reduction in the labour cost and money cost of commodities .It means much produce for little labour . It is a most legitimate and beneficent cheapness , since it arises from the triumphof man over nature—not from the triumph of man over man .

With this kind of cheapness you, Sir Higgler of the Market ,have nothing to do . It is a blessing outside your sphere . Therewe will gladly leave it while we pursue our inquiry into theother kind of cheapness . This - other kind is peculiar to you .

It is trade cheapness— competitive cheapness—the cheapnesswhich comes from the struggle of man against man

,and the

victory of money over man .

The cheapness which we have to deal with is a cheapnesswhich invariably lessens wages, or which has a tendency to

lessen them . It is quite true that this tendency of3. Cheapness cheapness to dimini sh the wage rate i s counteracted

5339

6

3

8

5 by other movements . But the tendency is always8 there . The fruit-laden branch

'

of my apple tree has atendency to droop to the ground ; but I c ounteract that tendency by the use of artificial supports . There are some factsvery frequently quoted which appear to make against the

c 2


tendency of cheapness to diminish the wage rate . Looking overlong periods , we find that wages have improved whi le prices ofcommodities have fallen . A review of the century shows thi sto be undeniably true , at least in union

-protected trades . But

this fact, when taken in connection with two other facts, doesnot in the least contravene one aspect of R icardo

’

s iron law,

”

or the law that the struggle for cheapness of goods is one for the

degradation of the labourer .When we inquire into the causes which have contributed to

the simultaneous cheapening of goods and the raising of wages ,

we shall find two Opposite processes to have been in operation .

The age has been remarkable for organisation and combinationamongst workers . By means of trade unions those workers have

waged a perpetual warfare against the law of supply and demand ,and have thus maintained wages above the rate which wouldhave ruled in The higgling of the market.

” That struggle isstill going on with unrelaxed fierceness . Employers still make

a determined stand for the right of private contract,” which

is the right to hire men at the lowest market rate . Employés

are fiercely contending for a minimum or living wage—thatis

,

‘

the abolition of competition of labourer against labourer .This conte st between the wage earner and the wage payer isone carried on often at the expense of life and . liberty . The

issue of the conflict is always in doubt . Victory leans now toone side

,and anon to the other . But the net result has been to

stem the law of unchecked competition and maintain wages ata higher rate than that which would have resul ted from the lawof competitive cheapness . Henry George expressly asserts this .“ Increased emigration, the greater diffusion of education , thegrowth of trades unions

,sanitary improvements

,the better

organisation of charity,and governmental regulation of labour

and its conditions have , during all these years, directly tended toimprove the condition of the working classes .” 1

Al ong with these factors which have helped the workman tomaintain his wage rate against the downward tendency ofcheapness there has been the abundance which has sprung fromthe triumphs of mechanical invention . When we make the

Henry George , Protection or Free Trade, p . 2 5 2

2 2 PREFERENTIAL TRADE

all c losed , English looms stopped, and English forges extin

guished.

In the presence , then, of this universal free-trade demandfor cheapness it is incumbent that we examine it and findout exactly what it means . What, for example , do you, SirHiggler of the Market, mean by it ? When we thoroughlyknow all this a good many things will change their complexion

to us .We have generally looked upon the terms Cheapness and

Plenty as meaning the same thing . That is a cardinal error ,as we shall see . They are very different—often thenegation of each other . We cannot purchase a single

abund' bargain ” until some poor working producer hasance '

been sweated in order that we may get it below itsvalue . Behind the cheap coat there must stand the cheapman.

If I buy my 4-lb . loaf of bread for 4d. the wheat grower orthe baker or both are sweated in producing it . That is a cheapness which makes famine in the houses of the farmer or thebaker . But the farmer and the baker are both buyers of mybooks . In times of famine they can buy books no longer .Their poverty reacts upon me, and helps to make me poorer .My income decreasing, I have less to spend with the tradesman ,the builder, the parson, the teacher, who again, in turn, haveless to spend with me .

Hence we have a vicious circle , in which cheapness, insteadof breeding plenty

,breeds poverty. Want of employment

lowers demand, decreased demand creates cheapness, cheapnessmostlymeans low reward of labour

,low reward of labour means

small spending powers, and that again means want of employment .

I therefore challenge the maj or premise of your free -tradesyllogism . It is not always Wise to buy in the cheapest market .We know that most men are sellers as well as buyers ; thatselling cheaply is a disadvantage

,and that as no man can buy

cheaply without another selling cheaply the advantage of thebuying consumer is the disadvantage of the selling producer .Therefore , as most men are producers as well as consumers,cheapness is no economic advantage

,since what the consumer

CHEAPNESS—ANEW JUGGERNAUT 2 3

gains in cheapness he more than loses as producer . A breakfasttable free from taxes i s theoretically an excellent thing ; butnot so when through the non-employment of the bread-winnerit is also free from food .

It was remarked to Dr . Johnson that several eggs migh t behad for a penny in the Hebrides . The doctor answered : Itis not that eggs are plentiful, but that pennies are scarce .

” We

are all familiar with the Irishman in N ew York, who , seeing someluscious-looking apples exposed for sale , inquired the price .

Sixpence the half-dozen .

” Sixpence the half-dozen,is it ?

Why I could buy a basketful in Ireland for Sixpence .

” Whydid you leave so admirable a place Faith

,I couldn’t get

the Sixpence there to buy ’

em . That was a cheapness of eggsand apples quite useless to the average consumer . It meant ,not plenty

,but famine . When flour sold for £ 4 per bag in

Victoria everyone had abundance . When it fell to 103 . per bagtens of thousands were hungry . It is quite possible to haveplenty without cheapness

,and cheapness without plenty . We

rarely have both together . Plenty we must always desire ;cheapness we are quite indifferent about so long as we haveplenty . You will not

,therefore

,deny that a thing may be

cheap without being accessible very low in money price withoutbeing attainable . Where , then, is the merit of this much desiderated cheapness per 36 ? As soon as the prices of commoditiesfall the labourer is generally informed that his wages must suffera corresponding decline . In the Melbourne City

'

Council,some

time ago,the low price of liv ing was pleaded as a reason for

reducing the hire of a man and horse and dray to 4s . 11d. per

day .

When , therefore , you say, as you sometimes do , that cheapness makes the labourer’ s sovereign go further

,there are two

6. Cheap replies, and both are equally e ffective . (a) Cheapnessness compels the labourer to do more work before he canl essens

employ . earn the sovereign ; (b) cheapness tends to lessen thement~ amount of work which there is for him to do . Anycheapness

,therefore

,accruing to the worker by the importation

of goods made by pauper and prison labour is a ruinous thingto that labourer. It is like importing for him the plague or thefamine .


M.Paul Leroy Beaulieu puts this view very lucidly where he

says :

The depres s ion in price in foreign goods, the l ike of which wecannot produce ours elves , is very advantageous , and does not bring

anyharm. Our consumers gain thereby without our

producers los ing anything . This is all to the adv antage of

Europeans . The greater part of the ir income remains at d isposalafter having satisfied the ir own needs ; or with that same part of

income they can purchas e a greater quant ity of foreign produce ,whose price has lowered , and the like of which they do not possessin the ir own country. The same cannot be said for the lesseningin price of such art icles of produce which at the very t ime that theyire be ing only part ially introduced from abroad , already find theirlike within our own borders.

The depres s ion in price on such produce is not an unm ingled

good ; nay, at times , is an ev il. Economists who praise up suchdepression are mere parrots who repeat a lesson they have learned .

It can,in fact

,happen that the depression in quest ion may be such

as to discourage producers and slacken the sp irit of enterprise .

‘

When the English markets in the last years of the fortieswere filled with cheap Indian corn and Russian wheat the labourerhad less of cheap bread than previously he had had of dearbread . Bread is now

,in 1903, 7-1

2-d. per loaf in Victoria . Some

years ago it was 4d. per loaf . Yet the average man is no worseoff now than then

,because he has a greater demand for his

labour. It is quite easy, of course , to quote the case of a poorand large family with a small fixed income , and show that theincreased price of bread to that fami ly means a decrease ofcomfort. But that case

,so presented

,is misleading . There is

no such thing as a fixed income . Our civ il servants, withsalaries guaranteed by law

,have found that out . Bad times

are certain to bring decrease of salaries . Undue cheapnessbrings bad times . The family which bought bread at 4d. per

4-lb . loaf did so to the detriment,and almost the ruin

,of every

wheat grower in the land . It can never be economically wisethat any single family

,or number of families , shall have the

power of buying bread at rates which bring ruin on the wholeclass of bread producers .

Journal des E cononzistes , April 1888.


Besides this,the cheap loaf is not truly cheap if the labourer

has not the means to buy it . Before much bread can be soldfor little money the farmer who grows the wheat has to sell hiscr0 p at very low prices

,pay a low rent for his land, low wage s

to his ploughmen and harvesters, buy his implements cheaply,and be content himself with low money profits . It also meansthat the miller must receive small money profits for grinding hisflour

,pay his men small wages

,and that the carriers who convey

his flour to the baker shall be equally content with small remuneration. The same chain of low-money payment extendsthrough all the work of turning the flour into the loaf and delivering it to the consumer . In all this

,then, we find that the cheap

ness of this loaf is achieved only by the cheapness of the labourof man at every turn

,and the corresponding dearness of money .

Cheap commodities mean dear money,and dear money means

cheap humanity. The terms are perfectly convertible .

Here arises a fact which is too little considered . In all production there are two capitals—the capital which is spent andthat which is created . Now the capital which is spent or consumed—as in the purchase of a dinner

,a coat

,or an implement

-creates a market foro

other produce , and therefore in the actof consumption it potentially reproduces itself . It thereforefollows that the new capital created is really dependent on thatwhich is consumed . In the same way every act of exchange hastwo ends, as when the farmer sell s a horse and buys a buggy .

The carriage-builder needed a horse which he coul d not afforduntil he had sold the buggy. The community which makes aprofit at both ends of this exchange is twice as rich as thatwhich makes a profit only at one , as when the farmer buys hisbuggy from the foreigner . If the farmer sells his horse in Mel

bourne and buys his buggy in London,only one profit is made

in Australia . But if he sells in Melbourne,and buys the buggy

there, there are two Australian profits instead of one . A doubleset of labourers and a double set of wage-earners are employed,creating markets for other wage-earners .But this does not complete the Operation . If it be true that

every act of production involves two capitals—that is,the old

capital spent and the new capital created—then there were fouroperations of capital before the farmer sold his horse and bought


his buggy. The carriage-maker spent one capital while making

the buggy, and created a new capital in doing so . The farmerspent one capital while breeding his horse , and produced anotherin the animal which he sold . The want of a ready market to

e ither of these would have been fatal . Money cheapness in the

horse and buggy was a matter of little concern to the individual ,and is absolutely of none to the community wherever the ful l

exchange is locally completed . Hence we see that the cheapness which arises from foreign competition always lessens the

activities of local capital and local industries .Out of this fact—a most important one—arises the truth

that the greater the store of wealth in the world , the greaterbecomes the poverty of those who produce it . Thenit is that what is now called over-production causescheapness ; cheapness causing low wages ; low wages ,low purchasing power, and low consumption ; lowconsumption

,gluts

,idleness

,and want . Hence it is

true,as Hyndman says

,that the times of greatest

distress for the mass of the people,now

,are the times when

there is a complete glut of the commodities which they needand which they make . This is a paradox— one that economistsrarely make allowance for . The more abundant that are thecommodities which men need

,the cheaper they are in money

price, and the smaller is man’s power of getting them. So ,

literally, a man sometimes stands in the midst of plenty—andstarves because of that plenty . If we could think of the bee swhich rule the hive turning out the workers as soon as they havestored it, saying Go we have no further use for you,

” thosebees would be no wiser in their economy than are men. As it18

,men are far less prescient than the bees .There is another form in which beneficent cheapness approve s

itself. It may be laid down as a general law,with only a few

exceptions , that commodities will always be transported from aplace where they are cheap to one where they are dear . England ,the country of rigid protection

,became the greate st exporting

country, showing that her system had enabled her to distancein cheapness all her neighbours . France and Germany have alsoenjoyed an almost prohibitory protective tariff, and under itthey have overtaken England in cheapness

,and now compete


with her in her export trade , showing that protection must havecreated cheap production at home

,or that the aggregate export

trade is maintained at a loss .America taxed English cheap ironware out of her markets .

Between 1880 and 1888 America had taken tons ofiron and steel from England

,or an average of tons a

year. That cheap supply being stopped, the American ironmines were at once developed

,and American foundries can now

underse ll England in her own market . That, too , is a beneficentcheapness in so far as it has enabled man to subdue the forces ofnature .

There is a corresponding clearness which is always mischiev ous . We must look for it in countries like Turkey

,Jamaica

,

and every place where free importations have prevented theestablishment of local manufactures

,and enabled traders to

charge monopolist prices . That kind of dearness is j ust asdestructive as is the cheapness arising from unregulated competition . The cause of both these evils is the same . It alwaysarises in the cheapness of man . Clearly, as the money valueof labour products goes down— apart from unionist combinationsand new labour-saving inventions— labour itself declines andmoney value goes up . Man is degraded

,and money is exalted .

Man becomes a slave,and begs for the right to work . Money

is supreme and commands labour on its own terms .The experience of all the world approves this to be true of

cheapness . Carlyle put it

Everyone who will take the stat istical spectacle s off his noseand look

,may discern in town and country that the cond it ion of

the lower multitude of English labourers approx imates more and

8. Carlylemore to that of the Irish compet ing with them in all

and Carey markets . Crowds of miserable Irish darken all our

on cheap towns . The Milesian is the sores t evil this countryness .

has to striv e with . In his rags and laughing savageryhe is there to undertake all work that can be done by mere strengthof hand and back

,for wages that will purchase him potatoes . He

needs only salt for condiment . He lodges, to his mind , in any pig

hutch or dog-hutch

,roosts in outhouses

,and wears a suit of tatters,

the getting ,ofl

'

and on of which is said to be a difficult operat ion,transacted only on fest ival s and the high t ides of the calendar.


The Saxon man,if he cannot work on these terms, finds no work .

Yet these poor Celt iberian Irish brothe l s, what can they helpit ? They canno t s tay at home and s tai v e . It is j ust natural thatthey come hither as a curse t o us .

‘

But Free Traders deny that this cheapness of man is anycurse .

On the contrary, they say it is a great blessing to the

capitalist,for cheapness in labour is essential to cheap pro

duction,and a cheap production promotes industry and yields

employment . The whole system ,

” wrote Carey, rests upon

the idea that the prosperity of man is to be promoted by the

cheapening of the raw products of the earth . And yet theexperience of the world, past and present, teaches that whereverthey are cheapest the cultivator is most a slave, whi le land haslittle value .

” 2

Such is the cheapness of competition . Its features are wellknown all the world over . They are haggard and starved .

Cheapness sits by the side of the girl who sews at once with adouble thread a shroud as well as a shirt .” It lives in the sweater

’

sden. The clutch of its nails has left scratches on the broadpages of all economic history . Wherever money has been dearand labour cheap the toiler of all grades has been most indigentand this where the land has been overflowing with the riches ofthe loom and the factory . The pseudo-economist is not unawareof these truths . And he sometimes seeks to evade them . SirT . H . Farrer once wrote : “ Mere cheapness is not what FreeTraders aim at or desire what they desire is abundancefor all—abundance of consumption

,abundance of production,

and of the employment necessary to production .

” 3

But, if Free Traders do not desire cheapness, it is singul arthat they have sacrificed English agriculture to the che

ap wheat

9 . Cheap ofAmerica . And,for abundance, of what use i s it when

328

?it means warehouses and granarie s filled to repletion

p ored

as mm while famine sits gaunt in the houses of the con

finite

;sumers 2 It is openly declared

,in the very work j ust

quoted, that the English farmer must perish if he cannotgrow] wheat and meat as cheaply as they are grown on the

Carlyle , Chartism.

2 Carey , Princip les of Social Science , v ol . ii. p. 80.3 Farrer, Free Trade versus Fair Trade, p. 130.


c eiv ed by you , Sir Higgler of the Market. Hence it is we see

that though cheapness is the very corner- stone of free trade ,some free traders repudiate cheapness in wages . Henry Georgesays TO raise and maintain wages is the greatest obj ect that

all who live by wages ought to seek .

” 1 Yet it is simply impos

sible to degrade the money value of labour’

s products withouta degradation of the money value of labour itself . Other thingsbeing equal, the one degradation logically involves the other .Or

,rather, it would be truer to say that the one degradation is

the other .Respecting the doctrine of cheapness, therefore , instead Of

the formula with which we Opened this letter, we reach the

followingI . It is economically wise that labour shoul d always be paid

for at rates sufficient to maintain the workman decently in theusages of civilised life, with a surplus to guarantee the10 . The

true future .

“m um“ II . The rates ruling in the cheapest markets are notalways suffi cient for such maintenance .

III . It is therefore unwise that labour or the product oflabour should always be bought in the cheapest market .In this proposition

,cheapness, as cheapness, stands con

demned. It does not follow logically as fact that all cheapness ispernicious because it is so generally. The cheapness that flowsfrom abundance

,after all human wants have been fully satisfied,

is always a beneficent cheapness . Such a cheapness arises inthe steamship

,in the railway

,and in the thoughts that shake

mankind .

” But,as we have seen, mere abundance in produc

tion is too Often the prelude to starvation in the producersto a cheapness in man and a dearness of money.

The doctrines here promulgated are gaining the assent of allthinkers . It is true that they out clean across the teachingsof some economists, for whom the world has great respect .Before men will be able to approach political economy theymust realise the fact that indiscriminate cheapness i s a maleficent thing, not a goal to be struggled for .

Henry George, Free Trade or Protection,p. 5 .

LETTER IV.—TO THE WAR SPIR IT OF COMPETITION

TRADE COMPETITION—THE GREAT DEMORALISER

War it s thousands slays , peace its ten thousands .—BEILBY PORTEUS.

YOUR MOST MALIGN PUISSANCE ,—TO you as the author of

trade competition I address thi s letter . It is a favourite formulaof the deductionist school that you , Sir Competition

,are the

soul of business .” Starting from the basis that self-interest i sthe beginning and the end Ofeconomic motive , the cult naturallyevolves the principle of trade competition .

Lord Farrer, in the name of the Cobden Club , said of youCompetition is one form Of a higher law . Free trade cheer

1 Thefully obeys this law .

” 1 Henry Fawcett adores you

dgductiom thus Competition befriends the working classes . Iti

ti‘

i

i

niw cheapens commodities and ensures that the maximum

of wages shall always be paid .

” 2 Sentences full of selfcontradiction . Bastiat says Of trade competition : Of all thelaws to which Providence has confi ded the progress of humansociety

,it is the most progressive levelling and communautaire .

” 3

Despite all this praise, however, he admits in another placethat you have some drawbacks, for he says that he had notfailed to see

,and will not deny, the extent of evil that competi

tion has inflicted upon mankind .

” 4 Newman says Of yourinfluence that it is what gravitation is in the mechanism ofthe heavens

,an all-combining , all-balancing, and beneficial

law .

” 5

Professor Thorold Rogers is in quite a maze of uncertaintyabout you . Respecting the operation of competition in fixing

Farrer, Free Trade versus Fair Trade , p. 149 .

2 Fawcett , Man ual of P olitical E conomy , p. 1 10.

9 Bas tiat , Harmonies E conomiques , p. 2 67. I bid.

5 Newman, Lectures on Political Economy, p. 119 .


rent, he condemns you : NO human skill can draw the linebetween a competitive and a famine rent .

” 1 He believes, more

over,that no sound writer would ever sanction such an applica

tion of your system ,but that unfortunately most politica l

economists , mis led by their abstract methods and habitual dis

regard for facts , treat the movements of capital as all equallyfluid or nearly so 2 But in relation to ordinary industry he

holds that to extinguish competition is to extinguish enter

prise .

” 3 Yet he readily admits that trade competition Oftenruins producers ,4 and that some other economic expedient issadly required,5 for there is no denying one sad result of it is

adulteration .

6

Dr. Hearn’s view Of trade competition is The whole resultincessantly tends towards the general advantage and elevationof our kind .

” 7 J . S . Mill speaks of trade competition as aprinciple which alone entitles Political Economy to the rank Of a

science .

8 Therefore , in the Opinion of this economist,if trade

competition is an unsound principle , all the economi st’s structure

falls .Professor Walker takes a more discriminating view . He is

dubious about you,and defines his term thus : Competition

signifies the unrestrained operation of individual self-interestamongst the buyers and sellers of every article in the market .It implies that each man is acting for himself solely, in exchange ,to get the most he can from others , and to give the least hemust himself .” 9 He would agree with Bastiat as to the beneficence of the system if we were living in an ideal world wheretrade competition could be really free and equal . That is whereBastiat has fallen into error : trade competition can never befree or equal unless all the competitors meet with equal adv antages and this is what the world

,he says

,has never seen and

never can see .

10 He points out { that competition absolutelyfailed in Ireland over the land question

,and has always failed

in the money market .11

Rogers , E conomic Interpretation of History, p. 173.

2 I bid .3 I bid . p.

’

375 .

4 I bid . p. 376 .

s m e. p. 377 .6 I bid . p. 388 .

Hearn, P lutology, p. 335 .

9 Mil l , Principles , v ol . ii. Book 4 , ch. iv'

.

Walker, P oliti cal E conomi p. 96 .

‘0 I bid.11 1 5rd,

TRADE COMPETITION —THE GREAT DEMORALISER 33

Adam Smith lays down the doctrine that trade competitionis an almost perfect regulator of produce and price

,the com

petition of sellers restraining production in times of excess,and

that of buyers stimulating it in times of scarcity .

1 Such hasbeen the almost stereotyped view of the English deductionis tschool, which has followed the teaching of Adam Smith . AlfredMarshall modifies this somewhat ; but only to the extent ofsaying that Competition can never be perfect

,

” 2 and thereforehas to be accepted with numerous allowances . His viewslargely coincide with those OfWalker .It is of the very first importance to ascertain how far these

varying views concerning your Most Puissant Malignity are

sound or unsound . There appears at first sight some contradiction between the admissions OfBastiat that trade competitionhas inflicted much evil on mankind , and his praise Of it as themost progressive and levelling ” law given by God to man .

But the contradiction is only in seeming . Newman’s comparison of the law of competition with that of gravitation make sBastiat

’

s meaning clear . Gravitation has caused the death andmutilation of millions of men

,but its general beneficence is not

to be impugned on that account . In inquiring how far competition corresponds with the character Of a higher law

,

”we

shall have to note , in the first place,why it is called a law. This

seems to be because it naturally flows out Of the doctrine thatall men are moved by a master-motive of self-interest to desirean increase of material wealth ; and that that self-interest isquite sufficient to insure perfect economic harmony .

But then we have seen how that doctrine is based upon atotally unsupported hypothesis, which is itself founded on amanifest fallacy.

In treating here of competition we have to distinguish betweenthat emulous principle which lies at the root Of human motive

,

2 .Definingand your competitive principle in the production and

terms exchange of wealth . Emulousness, being a part of ourcommon nature , can never be stamped out ; and if it could, itwould be only at the cost of producing an emasculated race .

Emulousness bears no inward likeness to you . The desire in

Smith, Wealth of N ations , pp. 5 9 , 60 , 89 .

2 Marshal l , Princip les of E conomics , pp. 72 , 73, 95 , 96.


man to excel is almost as strong as the desire to perpetuate his

species . Both can be regulated ; neither can be suppressed .

The institution of the family, j ealously guarded by the law,

limits the sexual instincts within rigorous bounds . The emulous

faculty in man is j ust as capable of regulation . Suppress it and

we should stunt the noblest faculties ; direct it to the cultiva

tion of the higher altruism ,and rigorously cut it off from the

acquisition Of material wealth , and we retain all its usefulness

and draw the sting Of its mischief . It will be understood, there

fore,that the form of competition dealt with here is that form

which is in the mind of all economic writers , pertaining to trade

and production— your own special war spirit—trade competi

tion .

If trade competition, as asserted, were one of the highest

eternal laws , it must always have been operative in that form .

3 , Trade Man cannot for an hour suspend the laws Ofgravitation0 9mpeti or heat . They are from eternity unto eternity . Buttion not an

eternal not so Wi th trade competition , which is an economi claw system of quite modern development . We can chainyou up absolutely whenever we will .Bastiat asks l very triumphantly of those who deny the

utility of competition what they are prepared to substitute forit . He implies that while once it could be done without, it nowfulfils a function which renders it indispensable . Man, we are

told,is a competing animal ; competition is a common seeking

after a common Obj ect of desire ; man competes with nature ;the Polish Jew competes against the London artisan ; theChinese laundryman competes against the European ; capitalistcompetes against capitalist

,workman against workman

,and

each against the other women compete against men,and child

labour against both children are taught in the ir school lessonsto compete for prizes ; athletes compete for place of honour inthe boat, the cricket, and the football teams ; authors competefor readers ; competition may work harshly sometimes, and itsabuse make devils of human beings

,but God’s seal is upon it .”

Sir Edmund Beckett once said that only lunatics can questionthe fact of the eternal truth on which competition is based .

Workmen, he urged, must be free to take advantage.

Of the ir

Bastiat , Harmonies E conomiques , p. 2 65 .

TRADE COMPETITION— THE GREAT DEMORALISER 35

employers’ jealousies , and to compete against each other forwork or

,as Sir H . Maine put it, strive to climb on the shoulders

of one another, and remain there , through the law of the survivalof the fittest.”

These are the grounds on which competition in industry isdefended, on which it is declared to be indispensable . Theseare the points we have to examine . In former times industrywas organised

,not on a competitive but on an ethical basis .

You,Sir Malignity

,were scarcely known . It may be so again

indeed,it must be so again, as we shall see .

John Stuart Mill expressly admits

Compet it ion has only become in any cons iderable degree the

governing principle of contracts at a comparat ively modern period .

The farther w e look back into history the more w e see all transact ions and engagements under the influence Of fixed customs . The

reason is evident . Custom is the most powerful protector of the

weak against the strong—the ir sole protector where there are no

laws or government s adequat e to the purpose . Custom is a barrierwhich

,even in the most oppressed cond it ion Ofmankind

,tyranny is

forced in some degree to respect . To the industrious populat ion ina turbulent mi litary community

,freedom of compet it ion is a v ain

phrase . They are never in a condit ion to make terms for themselves. There is always a master who throws his sword into the

scale , and the terms are such as he imposes . But though the lawOf the strongest decides, it is not the interest , nor in general thepract ice

,of the strongest to strain that law to the utmost , and

every relaxation Of it has a tendency to become a custom,and every

custom to become a right . R ights thus orig inat ing , and not com

pet ition in any shape , determine in a rude state of society the shareof the produce enjoyed by those who produce it . The relat ions,more especially between the landowner and the cult ivator, and thepayment s made by the latter to the former are , in all states of

society but the most modern,determined by the usage of the

country. Never,unt il late t imes

,have the conditions of the

occupancy of the land been (as a general rule) an affair of competit ion. The occupier for the t ime has v ery commonly been cons ideredto hav e a right to retain his holding while he fulfils the customaryrequirements ; and has thus become in a certain sense a co -

pro

prietor of the soil .1

1 Mill , Principles of Political E conomy, vol. i. p. 2 85 .


Nor does the proof Of this fact depend on any admission o fMill

.In early Christian times some of the Fathers , like St . Augus

t ine,taught that all mere trading for a profit, like usury, was

immoral .Leo the Great, in the fifth century, is among the first who

conceded its lawfulness , and who laid down an ethical rule forits regulation . His trade maxim was the maxim of the GospelsWhatsoever ye would that men should do unto you do yealso unto them .

” Then came the angelic doctor of the schools ,Thomas Aquinas

,a man whose wisdom touched everything

,

and illumined everything that it touched . He dealt with theproblem Of prices, and concluded that the worth of a thingmust be its cost of production and conveyance to the purchaser .This allowed for no unnecessary interposition Of a middleman

,

nor for any toll being taken by the capitalist . Custom pre

scribed the style Of living Ofall the classes engaged in production,

and the charges of each had to be regulated by that custom .

He would not give an instant’s countenance to your PotentMalignancy . It was the same in England . Some Of the statutesofEdward I . fix prices and qualities of goods , and some Of thesewere continued down to the eighteenth century .

We see, therefore , that this supposed eternal law

,which

is supposed to be your throne,had till recently little or nothing

4 , Trade to do in economic questions . We have still other means

g9mpeti ' of proving that your Competitive Highness

,as we know

ion tends

to des troyyou in trade

,has no more basis in natural law than

its elf has cannibalism or any other barbarous custom . Competition is, indeed, a relic of barbarism,

because it is in savagelife that the strong oppress the weak

,and triumph “ in the

survival Of the fittest .” Competition is inherently se lf-destructive ; pursued to its logical conclusion , ends in monopoly. The

most successful competitor is he who destroys competition .

Competition, therefore , ever works towards competitive suicide .

Mr. Syme has an admirable passage in which this view isinsisted on

Competition exists when possess ion is disputed . If compet itors ,howev er, act exclus ively with a view to the ir own int erests

,as we

are told they must , it will be the ir main Obj ect to reduce compet it ionto a minimum,

or,in other words

,to create a monopoly. Thus the

to any peranent advantage over the o ther. In that

case, wherthey are not too numerous, they oftentiés bine and urge the public with monopoly prices. Thi s

where the number o competitors is too lu g for such a oom

and destructive as 8? cam e of the ba 1;

0The business of; newsagent in any large a ty is n m in

point. It is one to vhich the indigent app " to flock jus t as

the despairing trav eir in the desert trim to m ob the drying-up

children struggling i make a few pence per day by the a le 0 !the weekly and dailyiews sheets . Every hour they tum! on ouchother

’

s kibes , and mtch the coveted mom ! from each o ther'

slips . Their life is alaily competitive s trife agains t penury .

A picture of the result was drawn by Mr. W. 8 . Lilly , one ofthe most accomplishl of all philosophical and economic thinkersof the day

Unrestricted comitition regulating the pric e of things by supplyand demand is thi great principle on which the old orthodoxpolitical economy ham. And odultemt ion, as Mr. Bright, n Nadmirer of that ol orthodox po litical m a ny. has to ld M itmerely a form of onpetition. The eon-q ueues it

, that in thefierce striving to bi s ich every man'

s hand inW m Inna.Manufacturers fighmgainst one another and w the po li te.the masters fight agen t the men, and the men agains t the Inn-ta n,and in this intermine war the weakes t, an in main ]

, havesuccumbed. Indiviml firms and oompem’

m compete for N u.Labourers, skilled ad unskil led—bands they are tailed

, and tha ni s a world of meanig in the term—compe te for “ gen,exercises no control for the production of wea lth. And from thehaste of the capitalis to be rich there arm fromOf goods in the mrket . Commoditim are produced, not for mebut for sal e

, and “ in a glut comes they a n no loop be mi l.The

k

warehouses ar c hoked with produce, for WM M is nomar et . The labo urs have to fall back on their amthey have any—or I look starvation in the M . mina

b


colonies applied the system in the disposal Of their crown landsby auction

. It was a wholesale failure . The land shark andblackmailer attended all the auction rooms, insisted on beingbought off

,and then arranged for each buyer to get the land at

their own prices .

The modern brewing system is conducted on the monopolyprinciple . The great brewing companies buy up the smallerhotels

,and put in landlords who are obliged to buy all their

malt liquors from the proprietary establishments . The Victoriancoal importers for twenty years crushed all attempts to developVictorian coal mines certain gas companies held the field againstall competitors ; and coach proprietors and steamboats have

everywhere killed competition at great sacrifices in order to

enj oy monopoly .

The system of tendering is a very special form of competition .

Contractor competes against contractor . Under this methodGovernments have believed that they can feed and clothearmies

,supply navies, make railways , carry mails, and do the

various things incidental to government, at the most economicalrate . Yet the history of contracting competition is one longhistory Of fraud . In this your Malignity is in excelsis . Armie shave been robbed, soldiers starved, brave warriors betrayed bygoing into battle with villainous weapons, and mammoth chicanery supplied with opportunities for its most e fficient exercise .

Even where palpable roguery has not acted, knock-outs andcombinations have enabled great contractors to obtain work atmonopoly prices to the detriment of the public . Some men

,

like the contractors Brassey and the late Baron Hirsch, havemade enormous fortunes altogether disproportionate to theirexertion ; and others have been disastrously ruined , to the lossOf the community who trusted them . The actual labourer hasrarely get the due reward of his labour . In fact, the chroniclesofmodern trade are full Of successful monopolies carried on foryears in defiance Of competition .

These,then

,are the results where competition is so entirely

successful that some one competitor has succeeded in beatingdown all rivalry . This continues until the enormous profitsmade by the monopolist provoke competition once more

,and

then the battle of supremacy begins all over again .

TRADE COMPETITION—THE GREAT DEMORALISER 39

We may view it in another aspect . There are many exampleswhere the competitors in business are so equally equipped in6. Com, knowledge and c apital that no one Of them can attainpetition to any permanent advantage over the other . In thatin sal e of

commodi case , where they are not too numerous , they Often comties~ bine and charge the public with monopoly prices . Thiswas the case with a number of the London gas companies . Butwhere the number of competitors is too large for such a combination there ensues a state of war as cruel

,cutting

,wasteful ,

and destructive as any carnage of the battlefields .The business Of a newsagent in any large city is a case in

point . It is one to which the indigent appear to flock j ust asthe despairing trave ller in the desert tries to reach the drying-upwell . Every street is crowded with poor men

,women

,and

children struggling to make a few pence per day by the sale ofthe weekly and daily news sheets . Every hour they tread on eachother’s kibes

,and snatch the coveted morsel from each other’s

lips . Their life is a daily competitive strife against penury .

A picture of the result was drawn by Mr . W . S . Lilly,one of

the most accomplished of all philosophical and economic thinkersOf the day

Unrestricted compet it ion regulat ing the price of things by supplyand demand is the great principle on which the Old orthodoxpolit ical economy hangs . And adulterat ion

,as M r. Bright , a great

admirer Of that Old orthodox pol it ical economy, has to ld us, ismerely a form Of compet it ion . The consequence is

,that in the

fierce striving to be rich every man’s hand is against every man .

Manufacturers fight against one another and against the public,the mas ters fight against the men

,and the men against the masters,

and in this internecine war the weakest,

as is natural,have

succumbed . Individual firms and companies compete for profits .Labourers

,skilled and unsk illed—hands they are called

,and there

is a world Of meaning in the t erm— compe te for wages . Societyexercises no contro l over the product ion of wealth . And from the

haste of the capital ists to be rich there arises from t ime to t ime a g lutof goods in the market . Commodit ies are produced

,not for use

but for sale,and when a g lut comes they can no longer be sold .

The warehouses are choked with produce , for which there is no

market . The labourers have to fall back on the ir petty savings—ifthey hav e any

—or to look starvat ion in the face . This is a peculiar


feature Of the exis t ing industrial individualism. Of course , tradecris es and famines happened under the various industrial systemswhich have hitherto existed— in the nomadic stat e , in primit ivecommunism,

in the state of great land and s lave ownership, in thefeudal s tate . Bu t nev er, until our own day, w ere these ev ils attribu

table to a superfluity of wealth. N ev er was the institution of

property harder and less human than it is now . It has been said,

with a great amount of truth,that our present type of society is ,

in many respects , one Of the most horrible that has ever existed inthe world ’s history— boundless luxury and selfish indulgence at one

end of the scale , and, at the other,a cond it ion Of life as cruel as that

of a Roman slave , and more degraded than that of a South SeaIslander.

1

Everyone is familiar with the spectacle of several rivalbutchers

,bakers

,grocers

,or colleges

,struggling to live where

there is room only for one . The shifts, evasions , adulterations ,and chicane resorted to are endless, each trying to secure patronage from the others by underbidding in price . This it is whichcauses Ruskin to exclaim The wicked trade Of underbidding !If you are the sellers

,it is the law of heaven that you must sell

your goods under their price .

”

In that struggle of brother man against man,who can

name the heartburnings,the secret wrath

,the Open hatred

sometimes,which are engendered during the process of destruo

tion of the one by the other 2 This ill -will is not like the suddentragedy which follows a spasm of wrath . In this trade competition—where one Of the parties can live only by the annihilation of the other— there is aroused all the venom which flowsfrom the infliction of mutual daily wounds

,and from hatred

fanned by ever-recurring inj uries .Some time ago we received through the cable an appalling

account Of a mad scramble in Moscow amongst people

7 . com.

for some prizes Of the royal bounty . The expectant

petition multitude waited up all night for a chance of the goodWith the things, and at a signal in the morning they made amask off.

Simul taneous rush for the expected feast . They wereunder the inspiration of your most Malignant Highness . Inthat terrible stampede nearly Of the weakest men and

W. S. Lilly , Melbourne Argus, July 2 7 , 1895 .

TRADE COMPETITION - THE GREAT DEMORALISER 41

women went down to be trampled flat under the merciless fee tof the human Juggernaut of unregulated competition . The

picture is an accurate similitude of what is taking place everyday of the week in the world’s social system . Nor is it in theleast overcharged .

Mr . Syme well remarks that industrial progress has madeno such advance as was reasonably to be expected . He asks

Is not the struggle for industrial existence as keen,as un

scrupulous, and as deadly as ever it was ? Do not compet itorsregard each other as enemies , who are to be got rid of at all hazards ,and as soon as possible ? Why, may I ask

,should the stat ic con

dit ion of the industrial world be one of warfare ? Why should theman of large capital be allowed to crush his weaker rival

,or the

honest trader be ruined by the rogue ? Why, in fact , should notindustry be conducted on the principles of j ust ice

,instead of

,as at

present,by brute force and cunning ?1

But when we turn from competition in the sale of commodi

ties to the competition for the sale of labour the evil is greatly

8. Com_accentuated . This hardship arises out of the nature of

petition the thing to be sold . If a man has wheat to sell, andm wag es “

he cannot get its value in the market, he may hold itover for another day

,and borrow a little money on its security

for his immediate needs . But if,instead of wheat, he has fish

or oranges,he must sell at once

,or his commodity will perish in

a few hours . He is at the mercy of the buyer who knows hisneeds .With the seller of labour the necessity is still more imminent .

If he cannot sell his labour on the instant,that labour is irrev o

eably lost . Every hour’s idleness is, to the worker, an hour’ s

profit lost beyond recall . But even that is not the worst . Notalone does the lost day’s wage leave the wage -earner so muchpoorer

,but it is an equal loss to the aggregate wealth of the

community.

Count Edward Soderini scouts the popular notion that competition obviate s oppression or extortion . He says Competition unchecked doe s not hinder

,but rather helps it . And

he says that the benefit it has conferred in some things does not

Syme , Outl ines of Industrial Science, p. 9 1 .


alter the fact that in its excess it aids the strong against theweak ,

until the fulness of freedom has generated a kind of

slavery.

” 1

Leo XIII. is still more emphatic . He says

Although the guilds of arts and crafts were in the last centurysuppres sed without anything being subst ituted in the ir stead , at thevery t ime when inst itut ions and laws were withdrawing from the

Christian spirit,it came about that by little and little workmen

were left isolat ed and unprotected against the spirit and the greedof employers and of unrestricted competit ion .

2

The competition for the sale of labour ramifies much furtherthan this . When two men compete for the work of one master,the employer who buys his labour in the cheapest market pits

the necessities of one man against the other, and pays , not thevalue of the work done , but the lowest price for which he can

get either of the competitors to sell his services .Here arises the ethical element in the transaction . We have

now a fourfold wrong done . First,the wrong done to the work

man,whose labour was re j ected because he could not suffi ciently

underbid the true value of his work . Secondly,the wrong

done to the workman obtaining the work, who was sweatedbecause of his poverty . And

,thirdly

,the moral wrong

,self

inflicted, by the employer who has wronged them both .

Fourthly,the wrong done to society

,which is poorer in all its

parts to the extent of the inj ury to its members . Yet we are

told that society can have no other true economical basis thanthat of wrongs such as these—wrongs which Spring out of thefact of each unit regarding himself alone .

Competition is a war between hostile forces— those of thebuyer and the seller . Mr . J . B . Say put it very candidly that

Humanity would rejoice to s ee labourers and their familiesdressed in clothing suitable to the climate and season ; havinghomes in roomy , warm,

airy,and healthy hab itat ions

,and fed w ith

wholesome and plent iful d ie t,with perhaps occasional delicacy or

variety but there are v ery few countries where wants,apparently

Soderini, Catholicism and Socialism, p. 175 .

2 Leo X I I I . , Encyc lical R erw mN ovaram.


Trade competition rejects all the ethical teaching on whichalone society can rest ; and it endeavours to build on a purelybarbarous law of self-interest an economic law applicable tocivilisation . The advocates of trade competition are accus

tomed to admit most of these accusations against their system

but they say that all human things are inseparable from anadmixture of evil, and that some of these will correct themselvesas competition becomes more scientific .

But we see no sign of this improvement—rather the reverse .

As trade competition deepens, frauds increase . Mr . Symestrikes this nail on the head

When there are no longer any customers to cheat , cheat ing willno doubt be abandoned as an unprofitable business , just as the

thieves ’ occupat ion will be gone when there is nothing to steal .But why the fate of the thief should be so d ifferent from that of thed ishonest trader

,who flourishes on his gains in all the odour of

respectability,is one of the mysteries which the economists have

left unexplained . They both take what does not belong to them ;

they both bring d iscredit on the country ; but , if anything , thedishones t trader is worse than the thief, for in addit ion to all this hehelps to ruin the country which supports him.

1

I have,so far

,barely touched upon the economic waste

involved in competition . Yet this consideration alone might

10 Thcondemn it . In all states of society we see new com

e

waste of petitors , workers pushmg their way into ranks whl ch“ 3 519, 0 0m

'

are already overcrowded .

peti ti on.

Lawyers,doctors

, arch1tects,engineers

, palnters ,

poets , artisans , are elbowing each other aside in the struggle forbread . The mere misuse of effort involved in this is stupendousbut when we add to this the necessary deterioration in the moralfibre of men thus engaged in a lifelong anti-social strife , theloss to the race becomes incalculable . It was this which madeFrederic Harrison say that the waste of the competitivesystem is awful

,

” and that 90 per cent . of the actual producersof wealth live always within a narrow margin of pauperism

,so

that a single month of sickness must plunge them into it .”

1 Syme, Oit tlinesiof Industrial Science , p. 90 .


Fisk longed, as we all do, for an ideal State in which therewould be no misapplication of the lives

,intellects

,and souls of

men. But trade competition is directly productive of waste inall of these . Indeed, it very often increases cost to the consumer .Professor Gide says

In France , more probably than in any other country,the

number of middlemen is increasing , and is becoming a regularnuisance , aggravating prices enormously without profit ing anyone , notexcept ing the middlemen ,

since the ir numbers and the compet it ionthey cause reduce their share to aminimum . A ccording to the figuresg iven by M . Trésor de la Rocque , the number of tradesmen

,which

in 1876 was only is to—day over thus it hastrebled in less than twenty years . This refers of cours e only tosmall retailers or clébitants

,a sort of trade which seems to have a

special attract ion for the French temperament . Here in there may

lie explanat ion of such a miraculous multiplicat ion . Many peasant s ,many servants

,look upon it as the ambit ion and aim of their life

to establish a business as grocers, drapers , or bakers . To have a

shop,a sign in the street , to chat with customers, to have even some

l it t le polit ical influence , and, above all,a sedentary life and little

bother—here is an ideal seduct ive to very many. N ow,this mult i

plicat ion ofmiddlemen has , as its result,by no means a continual

lowering of prices to consumers,but

,contrary to the fundamental

principle of classical polit ical economy as to the effects of compet it ion

,a gradually increasing d ivergence between the price at which

the producer sells his produce and the price paid by the consumer.

At this present moment the French producer is selling his corn at

18 francs the 100 kilograms, and the consumer is paying for hisbread at the rate of 30 to 35 francs the 100 kilograms . Now ,

w e

know that one kilo of corn represents one kilo of bread ; hencethe divergence is enormous, and it is the same for consumers

’

com

modities . Exactly so ,” cry the middlemen . We’ve got to live .

Indeed ?’ We don’

t quite see the nece ssity ; and, accordingly, ifproprietors and consumers succeed in putt ing themselves in d irecttouch one with another, it will be a great benefit , not only to theformer

,who would se ll at better prices, and to the latter, who would

buy cheaper,but also to the entire nat ion

,inasmuch as all these

parasites would be e liminated and forced t o set about getting moreuseful and more product ive employment .

Let no one think this testimony peculiar to France . In


Acland’

s Working Men Co -operators, page 16,we find the

following

But petty shops started with insufficient capital, with no

bus iness experience , and with no means of getting at the wholesalemarkets ; shops which must make working men suffer e ither in thecharges for or quality of their goods, and which hold many of themin bondage through the baneful credit system,

are the cause of the

mos t seriou s loss to the working classes . It will often happen thattwenty shops are doing a bus iness which fiv e persons could easilymanage . Are the working people , who least of any class can affordit

,to be obliged to pay out of the ir own pockets for the livelihood

of fifteen unnecessary distributors ?It has been calculated that there are in London twenty

fiv e shops for every ten that are really needed, even if ev ery

householder required all his shops to be within one -third of a

mile of his house , and a public-house to be w ithin one-sixth of a

mile .

1

The same thing is true in Melbourne . Some years ago Mr .W . Nuttall made a calculation that there is in this city one shOpfor distributing food and clothing to every twelve or thirteenfamilies . It requires no thought to perceive that these

,in order

to live,must take te ll from both producer and consumer . Under

the competitive law this uneconomic waste is for ever intensifying itself . In England , in 1862 , there were ninety-nine people toevery shop open . In 1882 there were only seventy-nine peopleto every shop open . I have not the figures for to-day ; but Idoubt not the shop competition has been brought to the Melbourne level, where one shop exists for every sixty persons orthereabouts .All this is a consequence of the competition in shops , multi

plying the middle man, and raising the cost to the consumer .In Scotland competition gave us the clearance s that depopulated whole counties like those of Sutherlandshire . In Ireland ,your Most Malignant Highness gave us a famine with its concomitant fever and death

,reducing its population by nearly

5 0 per cent .

In India an equal devastation has been the result. That

E conomic Journal , June 1895 .


country,as Europeans found it, was declared to be not inferior

in civilisation to the people of Europe .

” 1 It fed its own peopleplentifully, and clothed them in a cotton of its own growth andmanufacture . Manchester trade competition broke its industrymore than Clive’s soldiers broke its power .All this

,and a score of instances beside

,have tended to

check the forces which make for the progress of man . Careyhas well said Whatever tends to deteriorate the con

1 1 . Trade n

competidition of man anywhere , tends to do so everywhere .

2

Efnn

dzf two This economist, who is a keen observer, a shrewd

reasoner,and an original thinker, has a theory that

trade competition is both good and bad according to circumstances . He says Competition is of two kinds— the one

being for the sale of labour and its products, and the other forits purchase. Whatever tends to increase the first tends towardsslavery. Increase in the other on the contrary tends towardsfreedom .

” 3

He elaborates this point somewhat in another passage,where

he says

The more the competit ion for nature’s services,the more rapid

is the advance in the value of land and labour. A centurys ince

,steam power was scarcely known in Eng land . N ow it doe s

the work of men . Like England , Turkey and Indiahave coal yet they scarcely use steam, because Eng lish policy hasannihilated the industries which would have developed Turkish and

Indian coal—mines . France and Germany have ignored the doctrineof cheap raw materials and cheap labour. Themore compet itors , heargues, there are for nature ’s powers

,the greater the demand for

man’s serv ices .” 4

In other places, too , he makes the broadest distinctionbetween the two kinds of competition . When two workmencompete for employment by one employer

,he says

,the result

is slavery. When two employers compete for the services of oneworkman the result is freedom . In the same way he will haveit that -if A competes for the purpose of B ’s labour B will be

Sleaman’

s R ambles in India ,v o l . i . p . 4 .

2 Carey , P rincip les of Social Science , v ol . iii. p. 2 44 .

3 Ibid. v ol . iii. p. 42 3.

4 I bid. v ol . iii. p.

' 2 5 4 .


Acland’

s Working Men Cc -operators, page 16,we find the

following

But petty shops s tarted with insufficient capital , with no

bus ines s experience , and with no means of getting at the wholesal emarkets ; shops which must make working men suffer e ither in thecharges for or quality of their goods, and which hold many of themin bondage through the baneful credit system,

are the cause of the

mos t seriou s loss to the working classes . It will often happen thattwenty shops are doing a bus iness which fiv e persons could easilymanage . Are the working people , who least of any class can affordit

,to be obliged to pay out of the ir own pockets for the live lihood

of fifteen unnecessary d istributors ?It has been calculated that there are in London twenty

fiv e shops for every ten that are really needed,even if ev ery

householder required all his shops to be within one -third of a

mile of his house, and a public-house to be w ithin one-sixth of a

mile .

1

The same thing is true in Melbourne . Some years ago Mr .W . Nuttall made a calculation that there is in this city one sh0 pfor distributing food and clothing to every twe lve or thirteenfamilies . It requires no thought to perce ive that these

,in order

to live,must take toll from both producer and consumer . Under

the competitive law this uneconomic waste is for ever intensifying itself . In England , in 1862 , there were ninety-nine people toevery shop Open . In 1882 there were only seventy-nine peopleto every shop open . I have not the figures for to -day ; but Idoubt not the shop competition has been brought to the Mel

bourne level, where one shop exists for every sixty persons orthereabouts .All this is a consequence of the competition in shops, multi

plying the middle man, and raising the cost to the consumer .In Scotland competition gave us the clearances that depopulated whole counties like those of Sutherlandshire . In Ireland

,

your Most Malignant Highness gave us a famine with its concomitant fever and death , reducing its population by nearly5 0 per cent .In India an equal devastation has been the result . That

E conomic Journal , June 1895 .


country,as Europeans found it, was declared to be not inferior

in civilisation to the people of Europe .

” 1 It fed its own peopleplentifully, and clothed them in a cotton of its own growth andmanufacture . Manchester trade competition broke its industrymore than Clive ’s soldiers broke its power .All this

,and a score of instances beside

,have tended to

check the forces which make for the progress of man . Carey

11 Tradehas well said Whatever tends to deteriorate the con

cojnpetp dition of man anywhere , tends to do so everywhere .

” 2

£3l

gtwO This economist

,who is a keen observer

,a shrewd

reasoner, and an original thinker, has a theory thattrade competition is both good and bad according to circumstances . He says Competition is of two kinds— the one

being for the sale of labour and its products,and the other for

its purchase. Whatever tends to increase the first tends towardsslavery. Increase in the other on the contrary tends towardsfreedom .

” 3

He elaborates this point somewhat in another passage,where

he says

The more the compet it ion for nature ’s services,the more rapid

is the advance in the value of land and labour. A centurys ince

,steam power was scarcely known in Eng land . N ow it doe s

the work of men . L ike England , Turkey and Ind iahave coal yet they scarcely use steam, because English policy hasannihilated the industries which would have developed Turkish and

Indian coal-mines. France and Germany have ignored the doctrineof cheap raw materials and cheap labour. The more competitors , heargues, there are for nature ’s powers, the greater the demand forman’s serv ices .” 4

In other places, too, he makes the broadest distinctionbetween the two kinds of competition . When two workmencompete for employment by one employer

,he says

,the result

is slavery. When two employers compete for the services of oneworkman the result is freedom . In the same way he will haveit that ' if A competes for the purpose of B ’s labour B will be

Sl eaman’

s R ambles in India , vol . i'

. p . 4 .

2 Carey , P rincip les of Social Science , v ol . iii. p. 2 44 .

3 Ibid. v ol . iii. p. 42 3 . I bid . v ol . iii. p.

' 2 5 4.


likely to compete for the labour of C, and so on to the end of thealphabet .It is abundantly evident that there is a broad economic dis

tinction between the two classes of competition—the competition of the buyer, and the competition of the seller . The firstcreate s what Adam Smith call s effectual demand, and thesecond supplies that demand . But it is diffi cult to see how, i ftwo masters compete for the purchase of B

’s labour, they willnot afterwards have to compete as sellers of the products of that

labour.

You will have remarked that I have admitted Carey’s broad

economic distinction between the results of competition whenapplied to buying the products of industry and se lling thoseproducts . That is so because , when the producer knows he canfind ready sale for his wares , production is brisk, employmentabundant

,and wealth multiplied . When two men desire to

sell what one only desires to buy, production is discouraged ,and producers are idle .

There is still more di fference between the results which flowfrom competition when it is directed to the acquisition of per

12 . Comsonal riches , and when it assumes the form of emu

petition, lousness in well-doing . Thinkers who confound the

31

3325“ emulousness of schoolboys and athletes with the comwhen a petition by which traders seek to destroy each other’sp° l s°n' means of living , will not perceive the difference betweenthe man who drinks wine medicinally and him who wallows aninebriate in its slops .Arsenic is a deadly poison ; but in the medicinal pharma

copceia it is used as a valuable remedial agent . Trade competition is equally deadly and blasting in its nature ; but competition, applied to the higher purposes of life , may producewhat is known as an emulousness in virtue .

It has been said that in subduing the earth man compete swith nature . That is an inaccurate use of language

,and a

slovenly mode of thought . When a man converts a wildernessinto a garden, he trains nature , and does not compete with herany more than the teacher competes with, his pupil in the instruotion which he imparts .The final obj ect ion is, that we have nothing to use as a sub


likely to compete for the labour of C, and so on to the end of the

alphabet .It is abundantly evident that there is a broad economic dis

tinction between the two classes of competition—the competition of the buyer, and the competition of the seller . The firstcreates what Adam Smith calls effectual demand, and the

second supplies that demand . But it is diflicul t to see how,if

two masters compete for the purchase of B’ s labour, they will

not afterwards have to compete as sellers of the products of that

labour.

You will have remarked that I have admitted Carey’s broad

economic distinction between the resul ts of competition whenapplied to buying the products of industry and sell ing thoseproducts . That is so because , when the producer knows he canfind ready sale for his wares, production is brisk , employmentabundant

,and wealth mul tiplied . When two men desire to

sell what one only desires to buy , production is discouraged ,and producers are idle .

There is still more difference between the results which flowfrom competition when it is directed to the acquisition of per

12 ‘ Comsonal riches , and when it assumes the form of emu


emulousness of schoolboys and athlete s with the comwhen a petition by which traders seek to destroy each other’ sp° l s°n' means of living , will not perceive the difference betweenthe man who drinks wine medicinally and him who wallows aninebriate in its slops .Arsenic is a deadly poison ; but in the medicinal pharma

copceia it is used as a valuable remedial agent . Trade competition is equally deadly and blasting in its nature ; but competition

,applied to the higher purposes of life , may produce

what is known as an emulousness in virtue .


,and a

slovenly mode of thought . When a man converts a wildernessinto a garden, he trains nature , and does not compete with herany more than the teacher competes with his pupil in the instruotion which he imparts .The final obj ect ion is

,that we have nothing to use as a sub


stitute for trade competition, and hence that it is indispensable .

This also is a mere assumption, unwarranted by the facts existing .

This letter is not the place to expound the principle of cc -operation . But it is the time and place to assert that the principleof cc -operation, if scientifically applied, is suflicient to adequately

meet all the needs of society in avoiding alike the Scylla oftrade competition and the Charybdis of monopoly.

The position,then

,that we have reached is this, that trade

competition is in itself a warfare,and

,like other war

,is more or

less disastrous according to the virulence with which13. Nature

of trade 1t i s waged . Its nature and practice are 1ntr1ns1cally

Epofipeti maleficent , because they are regardless of all ethical

considerations .Clausewitz declared that economic competition is a form of

war,and war only an altered form of economic competition .

The primary obj ect of the competitor is to gratify his desires atthe expense of another . The seller rece ives more or less thanthe true worth of what he sells, according as the buyers are keenor slack in their competition . The famished digger, dying ofthirst by the side of his new dis covery, would give his El Doradofor a flask of brandy and water and a dry crust . The strict lawsof trade competition

,as interpreted by your Malign Highness ,

will sanction the trader making a bargain on these terms . The

more extreme the want, the more extreme the price to be paidfor its gratification . The economic Deductionist recognisesthis ; and attempts to escape from the difficulty by arguingthat though self-interest may operate to the debasement of theindividual

,it gives a resultant of economic perfection in the

aggregate . In other words, ten thousand acts of overreachingand chicane will yield a sum total of human beneficence . It isnot that

,

There is a soul of goodness in things evil ,Would men observ ingly d ist il it out ,

but that out of a multitude of acts purely selfish we get altruismand goodness in the economic product . The logic is strictlyanalogous with that of the trader who lost on every article hesold, but was compensated in the great aggregate of his business .There is little wonder that the rising school of German

E


likely to compete for the labour of C, and so on to the end of the

alphabet .It is abundantly evident that there is a broad economic dis

tinction between the two classes of competition—the competition of the buyer, and the competition of the seller . The firstcreates what Adam Smith calls effectual demand, and thesecond supplies that demand . But it is difficult to see how, iftwo masters compete for the purchase of B

’s labour, they willnot afterwards have to compete as sellers of the products of that

labour .You will have remarked that I have admitted Carey’s broad

economic distinction between the results of competition whenapplied to buying the products of industry and selling thoseproducts . That is so because , when the producer knows he canfind ready sale for his wares , production is brisk, employmentabundant

,and wealth multiplied . When two men desire to

sell what one only desires to buy, production is discouraged,and producers are idle .

There is still more di fference between the results which flowfrom competition when it is directed to the acquisition of per

12 . Com_

sonal riches , and when it assumes the form of emu


itiiitl

fm emulousness of schoolboys and athletes with the comwhen a petition by which traders seek to destroy each other’sp° l s°n' means of living , will not perceive the difference betweenthe man who drinks wine medicinally and him who wallows aninebriate in its slops .Arsenic is a deadly poison ; but in the medicinal pharma

copoeia it is used as a valuable remedial agent . Trade competition is equally deadly and blasting in its nature ; but competition

,applied to the higher purposes of life , may produce

what is known as an emulousness in virtue .


,and a

slovenly mode of thought . When a man converts a wildernessinto a garden , he trains nature , and does not compete with herany more than the teacher competes with his pupil in the instruotion which he imparts .The final obj ect ion is, that we have nothing to use as a sub


stitute for trade competition , and hence that it is indispensable .

This also is a mere assumption, unwarranted by the facts existing .

This letter is not the place to expound the principle of cc -Operation . But it is the time and place to assert that the principleof cc -operation, if scientifically applied, is sufficient to adequatelymeet all the needs of society in avoiding alike the Scylla oftrade competition and the Charybdis of monopoly.

The position, then , that we have reached is this, that tradecompetition is in itself a warfare , and, like other war, is more or

less disastrous according to the virulence with which13. Nature

of trade it 1s waged . Its nature and practice are intrinswally

gofipeti ' maleficent , because they are regardless of all ethical

considerations .Clausewitz declared that economic competition is a form of

war,and war only an altered form of economic competition .

The primary object of the competitor is to gratify his desires atthe expense of another . The se ller receives more or less thanthe true worth of what he sells, according as the buyers are keenor slack in the ir competition . The famished digger, dying ofthirst by the side of his new discovery, would give his El Doradofor a flask of brandy and water and a dry crust . The strict lawsof trade competition

,as interpreted by your Malign Highness

,

will sanction the trader making a bargain on these terms . The

more extreme the want,the more extreme the price to be paid

for its gratification . The economic Deductionist recognisesthis ; and attempts to escape from the difficulty by arguingthat though self-interest may operate to the debasement of theindividual

,it gives a resultant of economic perfection in the

aggregate . In other words, ten thousand acts of overreachingand chicane will yield a sum total of human beneficence . It isnot that

,

There is a soul of goodness in things evil ,Would men observingly d ist il it out ,

but that out of a multitude of acts purely selfish we get altruismand goodness in the economic product. The logic is strictlyanalogous with that of the trader who lost on every article hesold

,but was compensated in the great aggregate of his business .There is little wonder that the rising school of German

E


economists—with their doctrines that ethics and economicsindisso luble—should pour ridicul e on such dogmas as those wehave been considering—that from the tree of vice we are topluck the fruit of v irtue that the more men pit their selfishnessagains t each other the more altruism will grow ; that you haveonly to sow thorns in order to gather grape s

,

secure for yourselves the most lusc ious fig s .

Net result—c ompe tition is ethically vici ous,and e conomi

cally false .

LETTER V.—To THE FRATERNAL SPIRIT IN MAN

CO-OPERATION—THE SOLVEN T or COMPETITION

Surely it s tands to reason that only a ful ler love can competewith the loveof the W0 1‘ld .

—PROFESSOR DRUMMOND.

Love rul es his kingdom without a sword , and binds without a cord .

Proverb.

MY DEAR BENEFICENCE ,—Wll en the common sense of most

shall have full y grasped the fact that unrestricted trade competition in its very essence is of the devil damnable

,it will

look about for the best means of supplying its place . The restless Spirit of research is even now keenly on the scent for asubstitute . Many thinkers

,scared from the uncharted waters

into which State Socialism seems to launch the national bark,

stand shivering on the shore,preferring to bear the wrongs ,

reeking and radical, which stain the competitive system withthe plague Spots of infernalism rather than take the largerplunge . Is there not a practical via mediaSome there are

,no doubt

,who refuse to countenance cc

Operation because of its affinity to Socialism . Cc -operat ion is

1 Ahma sort of Socialism . Others oppose it because it does

v;ay not go far enough . The followers of Lassalle and KarlMarx are impatient of what they deem the inadequacy

ociah sm.

of the cc -operative principle . But both of theseclasses alike—whether they think its methods too drastic or toofeeble—pay tribute to the purity and nobility of the cc -operative aim

,which is to expedite the time when

M an to man the warld o’

er

Shall brithers be and a’

that .

Before it is possible to ascertain what cc -operation can dowe must find out what it has done and what it is . In someshape or other cc -operation is ubiquitous

,and has always been

E 2


economists—with their doctrines that ethics and economics areindissoluble—should pour ridicule on such dogmas as those wehave been considering—that from the tree of vice we are topluck the fruit of virtue ; that the more men pit their selfishnessagainst each other the more altruism will grow that you haveonly to sow thorns in order to gather grapes

,and thistles to

secure for yourselves the most luscious figs .Net result—competition is ethically vicious

,and economi

cally false .


so.Every nation

,as such

,is a cc -operative body—a body

organised to defend mutual rights and to resist mutual wrongs .Every municipal section of that nation is a co -Operation within a

co -operation .Every business company or partnership is in a

sense a cO-operative body. Every friendly society, every tradesunion

,every church congregation, every mutual improvement

society, every political league , every speculative syndicate is a

form of co -operation .

But it is with industrial cc -operation we have now to do .

Rochdale Equitable Pioneers subscribed their first £ 28 of capital

2 . HOWin 1844, and set up their little business in Toad Lane .

industrial That name is famous now wherever the English lan

ifgfipem ‘

guage is Spoken . But in that day (fifty-nine years ago)began it meant only a handful of obscure working enthusiasts ,strong in the possession of a common altruistic idea that all men

are brethren, and who saw a practical means of asserting thatbrotherhood . Close around them ,

hedging them in on everyside

,they saw the surging billows of human misery— poverty

in the midst of plenty . In the cities there were horrible nestsof squalor and vice

,peopled by thieves and beggars, and by

their side honest slop workers poor men,

” says Queen’s Counsellor Thomas Hughes, women and children

,who

,if their

employers could only have flogged them,would have been in a

far worse state than any negro slave .

I saw (he said), that the compet it ive struggle for life hadbrought them to this pass

,and yet the most approved t eachers in

reviews and newspapers were insist ing on free competit ion as a

corollary to free trade , and as a necessary pillar Of industrial prosperity. One universal cry of d istress is going up from every

great trade and industry in the land . And what is the cry ?

Surely, my friends, the strangest that ever went up from any great

trading community until now ,Too much corn ! ” “ Too much

sugar Too much cotton Too much labour Too much,

in short , of every species of wealth ; and yet our merchants and

manufacturers are being ruined,while two -thirds at least of our

people are underfed , badly clothed , and miserably housed .

The Rochdale Equitable Pioneers had asked themselvesmany times how all this came about. They saw that too Oftenit was because the producer was too little of a consumer, and

COO PERATION—THE SOLVENT OF COMPETITION 5 3

he was too little of a consumer because he was paid a sweatedwage and not a living one . Men were in misery

,and increasing

each other’s wretchedness for want of a guide to the way out .Paley, in his Moral Philosophy (vol . i. , book 3, Oh . i.

,p .

had sketched the position for them exactly

If you should see a flock of pigeons in a field of corn,and if

(instead of each picking where and what it liked,taking just as

3 Th much as it wanted,and no more) you should see ninety

e

social nine of them gathering all they got into a heap,

condition reserving nothing for themselves but the chaff and

ifiefaffl to

refuse,keeping this heap for one

,and that the weakest

,

perhaps worst,pigeon Of the flock

,sitt ing round and

looking on all the wint er whilst this one was devouring , throwingabout

,and wast ing it ; and if a pigeon ,

more hardy or hungry thanthe rest

,touched a grain of the hoard all the others instant ly flying

upon it and tearing it to pieces if you should see this, you wouldsee nothing more than what is every day pract ised and establishedamong men . Among men you see the ninety and nine to iling and

scraping together a heap of superfluities for one (and this one , too ,oftent imes the feeblest and worst of the whole s et— a chil d , a woman ,

a madman,or a fool), gett ing nothing for themselves the who le

while but a little of the coarsest Of the prov isions which their own

industry produces ; looking quietly on while they see the fru its ofall the ir labours spent or spo iled and if one of the number take or

touch a part icle of the board, the others jo ining against him and

hang ing him for the theft .

Now the impatient Socialist,looking upon these evils, became

a physical force Chartist ; got shot, imprisoned, or drifted into

4 . Thethe ranks of the malcontent proletariat . The free

traders’ trade doctrine set up quite a different remedy . Theremedy ‘ evils of the world were to be cured by a beneficent lawof ultra selfishness . Free competition was proclaimed as thesole adj uster of the law Of supply and demandm -the semi-sacredlaw of trade and this of itself was to work out the millennium .

Such was the kind Of political economy in vogue when the

Rochdale Equitable Pioneers looked around and saw theircountrymen starving in the midst of plenty . Men were to besaved by the selfishness of trampling each other down . Thispagan teaching imposed on millions of men but it never touchedthose who believed in Christian ethics, except to revolt them .


Teaching men that it was their destiny to climb into happinessonly by trampling on each other

’s shoulders was the exactreversal of Bear ye one another

’ s burdens,”

and“ Do unto

others as ye would they should do unto you .

”

The Rochdale Pioneers seized instinctively the true basis onwhich to build . That principle was afterwards embodied in

three propositions, which remain the foundation of

cc -operation to this day . Those propositions are :

1 .That human society is a body consisting of many

members, not a collection of warring atoms .

2 .That true workmen must be fellow workers, and not

rivals .3 .That a principle Of j ustice , not of selfishness , must govern

exchanges .But the laws of the land were adverse . They made every

member responsible for the debts of the whole , there being nolimited liability . Legal remedies, however, soon came .

Amendments in the laws took place in 1846, 185 0 , 185 2 ,185 6, 1862 , 1867, 1871, and 1876. The Act of 1862

gave to the workers the privilege Of limited liability . In thislatter year, 1862 , the position of co -operation was as follows

Number of societ iesNumber ofmembersShares and loan capitalAnnual salesProfits

Two years later,in 1864

,in the House of Commons, Mr .

Gladstone said of the co -operative movement

For my part,I am not ashamed to s ay , that if ten years

ago anybody had prophesied to me the success of that system as

7 . Earlyillustrated in R ochdale and other towns in the north

testi if I had been told that the working men would so

many .

associate together for the ir mutual advantage , to the ex

elusion of the retail dealer, I should have regarded the predict ionas absurd . There is

,in my opinion

,no greater social marvel than

the manner in which these societ ies flourish in Lancashire,com

bined with a cons ideration of the soundness of basis on which theyare built .


The Rochdale Pioneers saw that in trade many inferior mendrew large salaries, whi le able subordinate s were underpaid .

8. TheMany political economists Contend that the law of

doctrine supply and demand regulates this with precise j ustice ,°f ability ' because the scarcity of organising power, they say,properly claims high

‘

remuneration . Mill afterwards explodedthis fallacy by showing how the few are often born into managership

,and the many to hard work and poverty throughout life ,

irrespective of ability . The Pioneers observed that, in mostgreat firms, son succeeds father, while in others rich men purchase into management and ownership , with no other capacitythan long purses .Mr. Benj amin Jones is a man well qualifi ed to speak on this

phase of the subj ect, and I will quote him to illustrate a pointon which I shall have to enlarge 3. little directly . Mr . Jones

,

in his lecture on What is meant by Co -Operation, says

Almost everybody knows establishments where all the bes tposit ions are filled by relat ives

,irrespect ive of the ir: capacity

,and

the ir short comings are made good by men in humbler posit ions withinferior remunerat ion . This is not only morally wrong , it iseconomical ly unsound . A business cannot succeed so well withinferior men at the head as it can when superior men take the lead .

Failure brings misfortune to the humblest individuals in the firm’

s

employ—however well they may have done the ir duty—as much as

it does to the master whose incapacity has caused the disaster. Co

operators s ee this clearly and they believe that co -operat ion willremove the unsoundness

,and will bring into action the principle of

the best men in the best posit ions. They know that there is noscarcity of organising power, nor of administrat ive ability. The irexperience sat isfies them that there is an abundance of both, and

that the apparent scarcity of it is caused by a real monopoly of itby a limited class of the community.

In 1864, or j ust twenty years after the Rochdale Pioneersstarted, there was organised the English CO-operative Wholesale

9 , The Society. Up to that time all the retail stores had been0 9 -0pera compelled to purchase from competitive wholesalet ivewhole merchants . Thl S wholesale orgamsation was a com“3 19 bination Of the retail societies to provide funds for awholesale business

,which might buy direct from the producers


and se ll to the retail societies at prime cost, plus expenses . Itbegan in purchasing in wholesale quantities from local dealers,next from importe rs and manufacturers . This saved the travelling expens es and time of hundreds of retail buyers , inasmuchas each retail society sent its orders by post to the federalwholesale . This had another good effect . Many more retailstores started as soon as it was found that a small societyof 100 members could get its goods as cheaply as one of

members .From this time forward co -operation extended by leaps and

bounds . The wholesale society appointed buyers in Ireland,America

,France

,Germany, Holland, Denmark, Greece , Aus tria ,

Finland,Italy

,and Sweden . It commenced with sales of onl y

a week . It is now over per week, whil e thewhole co -operative business reaches nearly two million per week .

Having an enormous comm and of ready cash, the wholesale ,w ith its trained buyers of selected ability, buy out whole plantations and factories on the best terms . They employ analyststo secure purity and good quality. In twenty-six years thetotal cc -operative sales came to and the totalprofits to All those profits went into thep ockets

Of co -operators . The foll owing figures show to what extentthis magnificent business had attained in 1890 and 1902 respec

tiv ely

Number Of societiesNumber ofmembersShare capitalAnnual businessProfits for yearEducation expenditure

It is estimated that about four-fifths of the membersin the United Kingdom are heads of families

,so that

,reckoning

that each head of family stands for fiv e persons,the co -Operators

represent about or one -fifth of the population Of the

United Kingdom . The cause supports a good weekly paper .The country is mapped out into six sections —The Scottish

,

the Northern, North-Western,Weste rn, Midl and, and Southern .

The united board meet quarterly, each sectional board monthly.


and a national congress annually, attended by aboutdelegates . This is a genuine labour parliament, of which thecentral, e lected yearly by delegates at Easter, is the cabine t .

Although this organisation is so vast, and its business almostinconceivable in its dimensions, yet it goes on with surprisingregularity and absence of friction . It has grown by degreesunder the ablest management in the world .

Such are the statistical outlines Of what co -operation hasachieved in England . But the statistician alone can never tell

10. Thethe story of co -operation . His figures and facts are

moral very brill iant, but they reveal less than half the real

$33; triumph . When we read of a co -Operative businesscp-opera with a banking turnover of a year

,the

twn' stupendous total arrests and startles the imaginationbut it is a very imperfect measurement of the actual achievements of co -Operation .

The first of these is the wonderful educational stimulus ithas given to the working masses of the country . In every one

Of the societies a small group Ofmen is being continuouslytrained in business habits, forethought, tolerance , and selfrestraint . They encourage one another in a high standard ofmorality in trade

,and they are becoming more and more fitted

to lead their fellows in political thought .The second of those benefits which it has conferred is that it

has enabled the very poorest of men to become provident,with

out that parsimony which is the economic bane of some othermodes of saving . The dealer at a co -operative store pays thecurrent rate for all he buys ; but the saving and profits are

regularly credited to him,and so he become s a capitalist without

any effort,further than a steady attention to the rules of the

society .

This brings me to a third service rendered by co -operation,

It is much allied to the first,but has vaster ramifications . It

is the lesson it has taught to statesmen and thinkers . Mr .

Gladstone owned to having been educated by the co -Operativemovement. Mill did the same , and in consequence changed oneof his views respecting the wage fund . But it has much yet toteach to the nation’s teachers . One example of this I cannotforbear quoting .


Mr . Lecky, a Conservative historian , a few years ago,published a book on Democracy and Liberty,

” in two largevolumes . That book has provoked a good deal Of comment, andwas quoted with much approval by unprogressive writers . Mr .Lecky confessed to being terribly afraid of the extension of theEnglish franchise , lest the country should be governed by itsignorance instead of by its intelligence . He said

One of the great d ivisions of polit ics in our day is coming tobe whether, at the last resort

,the world should be governed by it s

ignorance or by its intelligence . A ccording to the one party, thepreponderat ing power shoul d be with educat ion and property.

Accord ing to the other the ul t imate source of power,the supreme

right of appeal and of control,belongs leg it imately to the majority

of the nat ion told by the head— or,in other words

,to the poorest ,

the most ignorant , the most incapable , who are necessarily the mostnumerous .

It is a theory which assuredly reverses all the pas t experiencesofmankind . In every field of human enterprise

,in all the com

pet itions of life , by the inexorable law of nature, “superiority lies

with the few,and not with the many

,and success can only be

attained by placing the gu iding and controlling power mainly inthe ir bands .

In this the historian coolly assumes three things, none ofwhich he attempts to prove . The first is

,that the minority

vote is always an intelligent one . Secondly,that

,being intelli

gent, it uses its intelligence for the benefit of the whole people ,and not for its own limited class . And thirdly

,that the popular

vote would be unintelligent . On all these points the co -operative movement teaches us very much . First

,that most of the

unjust, foolish , and restrictive laws against labour, and thereforeagainst the common weal

,were enacted under the limited fran

chise .

It was not until after the passing of the R eform Bill of 1832that anything approaching to Liberal Factory Acts coul d besecured, or any recognition of the organisation of labour . Itwas the minority vote of England that always opposed the

cc -operative movement,and which

,in this very important

question of social and industrial development, proved itself most


Professor Sedley and Mr . Gilman have both written on

profit-sharing abroad . The latter has given ample details

11 . Co_respecting more than 130 firms which are sharing

operative profits with their workmen . In France this system

$1

233; has attained to its highest development . The namethe Con of the Maison Leclaire readily occurs to the mind ; asm e“ does Godin

,the ironfounder Of Guise the Maison

Moutier at Germain-en-Laye in France . In Germany,Italy

,

Austria,and

,in fact

,nearly every country on the Continent, the

movement is established, and with a constant expansion .

And now what is the economic work that cc -operation hasto do We have seen that the defenders Of competition

,while

12 _ Ethi admitting many of its cruel effects,have declared it to

ten be indispensable on the ground that there is nothing todeney of

c 0 -opera. take i ts place . Through co -Operation men are more andti°n more coming to perceive the cardinal mistake involvedin the apotheosis Of competition . And what

,perhaps, is better

than all,co-Operators are recognising that there is no possibility

of compromise between the competitive system and the ir own .

Sir Edmund Beckett once said that only lunatics can question the fact of the eternal truth on which competition is based .

Workmen he urged, must be free to take advantage of theiremployers j ealousies, and to compete against each other forwork or, as Sir H . Maine put it

,strive to climb on the shoul ders

Of one another, and remain there , through the law of the surv ivalof the fittest .” This

,which was at one time rece ived as economic

gospel, is now very large ly discounted in all quarters, and thereis no intelligent co -operator in the world to-day who does notdisavow it as a blighting heresy

,as foolish as it is false .

Thomas Hughes, whose voice no cc -operator will disregard,has declared, in language singularly like that of Herbert Spencer,that if the time has not actually come when an honest andscrupulous man cannot live by trade

,it is not far Off. The

coach will be over the precipice before we know it, unless thehorses can be turned into the right road . He holds up thefinger of solemn warning to every co -operator How long willv e halt between two Opinions ? If competition and selfassertion be the law, then follow it ; but if concert andthe sacrifice of selfish desires be the law

,then follow it . Believe

CO OPERATION— THE SOLVENT OF COMPETITION 6 1

me there is no halting-place between the two . One or the otheryou may be faithful to . To both ye cannot be faithful .It seemed at first a hard saying to co -operators

,this denuncia

tion of competition . It was like the surrender Of a corner-stonefrom their snug economic edifice . But when they came to perceiv e that in all cases competition means war, and co -operationmeans peace , the two principles were seen to be mutually destructive . Competition and co -operation are deadly Opposites . One

means strife and the other harmony. Competition must diebefore co -operation can truly live .

Men must get clear views about the doctrine of selfishness—that it can never be a true science for man, even in the baldestof political economies—mot even as a wealth science . MatthewArnold had the truer phiIOSOphy : N0 individual life can betruly prosperous

,passed in the midst of those who suffer . To

the noble soul it cannot be happy ; to the ignoble it cannot besecure . The highest class of co -operators are setting theirteeth like flint against the blasting cry Ofmere money cheapness .They know

,as President Harrison put it, that behind every

cheap coat there must stand a cheap man . They have lookedthrough the emptiness of the formula which seeks a profit inbuying cheaply and selling dearly . They see—what the meretrader has been blind to —that the very market in which theymust buy cheaply is identical with the one in which they seekto se ll dearly. There are not two distinct markets in the world .

The buyer is also a sell er . He cannot buy cheaply withoutselling cheaply . The consumer is also mainly a producer . Ifyou cheapen consumption by the sweating principle of competition, you cheapen production at the same time , and when youcheapen production you cheapen the producer

,and in cheapening

the producer you cheapen men’s lives,bodies

,and souls . Co

operation is the deadly enemy of all this . It will make men

brethren instead of rivals—helpers instead of enemies .John Stuart Mill saw the want of something better than his

competitive principles— something that will seek conciliation,

not by compromise,but by justice—by giving to every man

,

not the half of what he asks, but the whole Ofwhat he ought tohave .

” At another time he wrote Of all the agencies whichare at work to elevate those who labour with their hands there


is none so promising as the present co -operative movement .

Yet he failed to perceive that the vivifying principle of thatmovement is one in direct contrariety to that of competition ,which he lauded .

I look upon cO-Operation as the salt of the working men,

said Charles Kingsley and in the same spirit, Professor Thorold

Rogers declared

I never yet met a man who had s eriously forecast the means bywhich his countrymen could be bet tered who did not detect theread ie st means in co - operat ion . The kindliest and most genial men

have laboured for and advocated it ; the shrewdest have commendedit and if the mass ofworking men fairly grapple with the problemand undertake to work it out

,the present progres s of the English

nat ion will be as nothing compared to its future .

We naturally wonder why so potent a principle has occupiedso small a space in the text-books, see ing that many thinkersof the first order have not been less emphatic . Mr . G . J . Holy

oake says

Co -Operat ion supplements polit ical economy by organising thed istribut ion of wealth . It touches no man’s fortune

,it seeks no

plunder,it causes no d isturbance in society, it g iv es no trouble to

st atesmen ,it enters into no secret associat ions

,it contemplates no

violence,it subv erts no order

,it envies no dign ity, it asks no

favour,it keeps no terms with the idle

,and it will break no faith

with the industrious ; it means self-help , self- dependence , and suchshare of the common competence as labour shall earn

,or thought

can w in,and this it intends to have .

I cannot refrain from quoting another class of intellect onthe same subj ect . Professor Cairne s says

Our reas oning brings us to this conclusion,that what is known

as Co -operat ion—the contribut ion by many workmen of the irsav ings towards a common fund , which they employ as capital andcc -operate in turning to profit

— const itutes the one and onlysolut ion of our present problem

,the sole path by which our labour

ing classes as a whole , or even in any larg e number,can emerge

from the ir posit ion of mere hand-to -mouth living , to share in thegains and honours of advancing civilisat ion .

1

Professor Cairnes,Leading Princip les , p. 345 .

CO OPERATION—THE SOLVENT OF COMPETITION 63

Therefore it is, my dear Beneficence , that I confidently suggestco-Operation as a good working substitute for the outcast demon

13. Subofa ruthless unrestricted trade competition . We cannot

sidiary forget that competition in wages has already been supermeans ’

seded in many trades by the principle of unionism .

But that principle lacks as yet the sanction of statutory confirmation. It needs enforcement by such laws as those whichhave been passed in New Zealand and New South Wales

,where

compul sory arbitration has snuffed out freedom of contract,

and in doing so has abrogated strikes and competition,so far as

its application extends . The details of this process can beevolved only gradually . But they will emerge along with theperception Of the truth that competition is a principle thatmust be used only sparingly, and subj ect to the most carefulregulation .

It is an importunate fact that English co -operators are

to-day so intent on the mere money profits of their own greatbusinesses that they are unwilling to abandon the competitivemethods which they employ in them

,and that they clamour

against Mr . Chamberlain’s principle of preferential trade . Thatis but an example of the seeming immortality of error

,and of

how an evil principle will sometimes linger in the inner recessesof men’s minds after its practical abandonment .The same thing reappears amongst many trade unionists

,

who imagine that they remain free traders . Trades unionismis protection in its very essence, and a trades union free traderis a contradiction in terms . But custom is always stronger thanlogic . Thoughts are things—perhaps organisms . And the

modifications of organisms are of slow growth . The great pointis to get the current of thought set towards the truth—that forthe progress of society men must co -operate with each otherrather than compete against one another .


LETTER VI.

— TO LORD ROSEBERY

TRADE—ITS TENDENCY AND NATURE

He was a man

Who stole the l ivery of the court of HeavenTo s erve the devil ln.

—POL LOK .

MY LORD,—You have been a diligent student Of the records

of trade and commerce . 1 am sure,however, you have heard

of the man who could not see the forest for the trees . May itnot be that your Lordship has failed to perceive the populardelusion that underlies the trade idea in consequence of aninadequate conception as to the nature of trade ? Trade hasoften spoken with a Circean voice . Half the world, more orless positively, has accepted the doctrine that trade per se is

beneficent .

Yet nothing is more absolutely Opposed to fact . It is concerning the nature and character of trade that your Cobdenist

1 . Trade reaches his highest altitude of dogmatism . You are

not al tru familiar with the writings OfMr . W . S . Lilly—certainly18m “ not the least of the philosophical thinkers of England .

In an article published in the Melbourne Argus of July 2 7,2 . Trade 1895

,he exactly described the doctrine of your cult in

idolatrY four lines Give every man a vote,and let every man

have perfect liberty to buy in the cheapest market and sellin the dearest—such was their panacea for the woes of theworld .

”

Your Lordship , reversing the ordinary rule , has a maxim ofyour own Take care of the imports and the exports will takecare of themselves .” Cobden used to say very much the samewhen he preached from the text The more we buy the morewe sell .” But it was Bright

,his colleague

,who

,culminating in

trade fanaticism, said : Free trade,if not given amid the

TRADE—ITS TENDENCY AND NATURE 65

thunders of Sinai , is not less a commandment of God , and notless intended to promote and secure the happiness of man .

”

The doctrine of the a priori school Of political economistsmay be stated in the following formulae

1 . Growth in trade is human progress, and is a fair gaugeOf civilisation and prosperity .

2 . The greater a nation’ s imports and exports the larger itstrade , and the more its consequent progress and prosperity .

3 . Therefore the promotion Of free trade,as a natural law

,

is the prime means Of promoting the national well-being .

These formulae are described as axioms,

” springing out ofthe principle that buying in the cheapest market and selling inthe dearest is the end of economic man . Yet I submit to yourLordship that there is not one of them in which there does notlurk a fallacy . Increase in foreign trade is not synonymouswith increase in prosperity. The ancient Peruvians reachedthe summ it of their prosperity without the smallest knowledgeof external trade and they lost their happiness and well-beingonly with the advent of the soldier and the trader . It is nottrue that imports and exports are a test of prosperity . Thoseof England are the largest in the world

,and

,though it is quite

true that Great Britain is wonderfully opulent , there is scarcelyany other nation so blighted with pauperism . It is not truethat trade of any kind is a natural law . Trade Of all kinds isthe product of a strictly artificial system Of society.

These general corrections dispose of the claims of the freetraders to axiomatic truths . Men do not dispute axioms

,

3 . Trade nor challenge mathematical demonstrations . No manwhich is denies that a straight line is the shortest distance behurtm ‘ tween any two points that the whole is greater thanits part

,or that between any two hills there must be a valley .

But tens of thousands of men of light and leading deny thattrade

, qua trade, is e ither altruistic or beneficent . It is quitetrue

,doubtless

,that trade is sometimes of genuine utility

sometimes wealth-producing and beneficial . But this is accidental to it . It is quite as frequently a matter Of great andserious inj ury . The trade which the publican has with the

B right’

s Speeches , p. 436.


drunkard is a trade which is profitable to the one and accursedto the other, and to all that is his .

The trade in which a man passes off worthless stock in

exchange for good cash is really an economical loss for thoughit merely transfers wealth without diminishing it absolutely,it lowers the moral tone of society, and decreases that commonstock of confidence between man and man which is itself apotential source of wealth . When a broker floats a new mineor a trading company

,and sells shares on a deceptive prospectus,

or even upon an honestly drawn prospectus based on mistakendata

,he does a brisk trade and pockets large gains ; but the

whole of these trade transactions are a loss to the community .

A merchant, perhaps, receive s special information respectingthe world’s crop of tea, sugar, or rice . Buying largely, he create sa corner

,

” and,unloading

,

” acquires a fortune at the expenseOf the consumer . All the Operations in that trade are hurt ful .The merchant’s gains are the gains of the gambler who hasplayed with loaded dice , and who wins only what others havelost . A speculator receives early information of the death ofthe Kaiser, or the Sovereign of Great Britain . By means ofagents he buys up all the available crape in the market . Heexercises the power of the monopolist

,and reaps a prodigious

profit . The whole of such trade is anti-social and inj urious .A grain dealer has a telegram handed to him over his breakfast coffee . It tells him of a sudden rise in the wheat market .He immediately closes a dozen pending transactions with asmany farmers, whose necessities compel them to sell at glutprices . The grain dealer make s a great profit—the grain growerbarely

.

makes bread and butter . The blessing of that trade isthe benison which the shark bestows on the swimmer—devouringhim .

In Wall Street, New York,or on the Stock Exchange ,

London ; in Collins Street, Melbourne—as in many similarplaces all over the world

, every day in the year—there may beseen a crowd of men who pass their lives in buying and sellingstock . Only a small percentage of that trade is of any realbenefit to society. The transactions are mainly as unproductive as are those of the tens of thousands Of betting bookmakerswho live in fine villas, travel in first-class style to all sports ,


further afield—from the individual to the nation . Accordingto a recent statement, the alcohol trade in Africa has alreadyassumed large proportions . The Gold Coast imports some

millions of gallons a year, and Lagos even more . What isfeared is that the West Coast railways will be used for the exten

sion of the traffic .

There can be no question of the moral degeneracy whichfollows the free use of intoxicants by savage or semi-savage

tribes . But how is it to be prevented Should Great Britainpass a self-denying ordinance , it would not stop the supply ofalcohol to the natives . The trade would simply pass to theFrench and German traders, and not merely the supply ofintoxicants

,but great part of the general trade as well .

The prohibitive policy was tried in the South Seas withunsatisfactory results . British merchants were prohibited fromselling spirits and firearms to the natives ; but as the order wasnot binding on foreign traders the latter Obtained somethinglike a monopoly of the trade , and the natives got guns and ginall the same . The world was all the poorer for that trade .

I may ask your Lordship’ s attention to one other sample of

the means by which a nation of traders holds its own share and

4 , Trade grasps other people ’ s as well . The trading spirit is theroad

w

ay1immediate progenitor of the brood of the adulterator.

an a 11

t eration. On all sides (says Herbert Spencer) we have found theresul t of long personal experience to be the conv ict ion that tradeis essent ially corrupt. In tones of disgust or d iscouragement ,reprehension or derision, according to their sev eral natures, menin bus iness have , one after another, expressed this belief. Omitt ingthe h ighest mercant ile classes, a few of the less common traders

,

and those except ional cases , where an ent ire command of the markethas been obtained , the uniform testimony of competent judges isthat success is incompat ible w ith strict integrity . To live in the

commercial world it appears necessary to adopt its ethical code ;ne ither exceeding norfalling short of it, ne ither being less honest normore honest . Those who sink below it s standard are expelled

,

while those who rise above it are pulled down to it or ruined . As,

in self-defence , the civ ilised man becomes savage amongst savages,so it seems that , in self-defence , the scrupulous trader is obliged tobecome as little scrupulous as his compet itors . It has been saidthat the law of the an imal creat ion is Eat to be eaten and of our


trad ing community it may similarly be said its law is Cheat to becheated .

” A system of keen compet ition ,carried on as it is without

moral res traint , is very much a system of commercial cannibalism .

There are but two courses—e ither to adopt the pract ice of

their competitors, or to g ive up business . It is imposs ible tocarry on trade w ith strict rectitude . The scrupul ously hones tman must go to the wall .

A few examples may be given by way of illustrating whatMr . Spencer says, and showing what this unrestricted foreigntrade really is

A regular branch of trade here at Birmingham is the manufac

ture of guns for the African market . They are made for about adollar and a half. The barre l is filled w ith water

,and if the water

does not come through it is thought proof sufficient . Of course theyburst when fired

,and mangle the wretched negro who has purchas ed

them upon the cred it of English faith, and rece ived them most

probably at the price of human flesh . N o secret is made of thisabominable trade

, yet the Governmen t never interferes,and the

persons concerned in it are not marked or shunned as infamous . l

The London Engineer says that at some works to which itsattention was drawn

,boiler-plates were being turned out in rather

large quantities,which made it tremble for the consequences

that may ensue when these plates are being submitted tothe work to which many boilers

,both in our country and in

America, are now not infrequently subj ected . Boilermakers

ought to be aware that it is impossible to get a good plate atthe price s at which some are being now supplied to them . The

rage for low-priced iron occasions the greatest apprehension inour minds .”

In matters of clothing it is a thing of every-day experiencethat the poor labourer finds his new shirt to be mostly starch ,and his woollen coat shoddy and cotton waste . In food

,vinegar

is water and sulphuric acid ; tea is sometimes gypsum andPrussian blue ; coffee is chicory, and chicory ground bullock

’sliver curry powder is mixed with red lead , pickles with verdigris ,cheese with vermilion, and so on through a hundred others ofthe tricks resorted to by trade in order to undersell and crushrivals .

Southey, E spriel la’s Letters .


Turkish trade in the middle of the seventeenth century wasamongst the most important in Western Europe . Turkish

merchants were amongst the wealthiest . In thosedays Turkey had an internal commerce and great manu

t t ade facturing productivity. Her weaving and dye ing andmatory '

silk manufactures were amongst the best in the world .

She made a free-trade treaty with France and England, and assoon as keen competition began through England

’

s advance inmechanical invention, Turkish industries, one by one, collapsed

the soil largely reverted to barbarism ; and the country is nowan insolvent State and abj ectly poor. Turkey was half ruinedby external trade .

Mr . Prescott has given us a book showing the aboriginalstate of the Peruvians . They lived on a territory ofsquare miles, and numbered There was not apauper in the land . Famine and hunger were unknown .

The invader came , bringing them war and trade, and ruinedthem .

India is another instance . Previous to the British occupation India clothed and fed her own people from the productsother own fertile soil . Lancashire competition , when it entered ,shut up the Indian looms ; and poverty and starvation stalkedover the land . Indian-grown cotton

,instead of being woven in

Indian factories, was transported to England and returned inpiece goods, and this while hundreds of thousands of the ryotswere standing idle . All this frightful economic waste wasdeliberate ly incurred in order to give profit to the carrier, theshipper, and the trader, not one of whom,

except in a secondarysense

,is a producer.

Mexico , when Cortez found her, was a rich, we ll-fed landwith forty cities . She had no external trade , but great internalopulence . She was self-contained . She manufactured for herself, and had means and markets . She fell under the traders’

power, her products declined, her markets collapsed, and she

sank by the middle of the nineteenth century to a country of noaccount amongst nations .Athens is sometimes cited as an example of a State which

grew great by means of trade . Never was there a more unfortunate reading oi history. Ancient Athens is a shocking


example of the blight of foreign trade . When Attica becameunited under Theseus she had a system of peace and internalcommerce and interchange . The people manufactured forthemselves . Solon consolidated this happy system . He

encouraged arts, trades, and diversities of occupation . A hundred years after Solon’s time Attica had a hundred towns

, eachthe centre of its own hive of industry and local government .External trade was little or nothing . Then came the Persianinvasion

,the change of government, the democracy of peace

converted into an aristocracy of war and fore ign trade . The

power Of the State grew immensely. Athens became the mistress of the seas . War was her trade and trade was her pastime .Ostentation flaunted everywhere , and slavery and poverty grewbeside it. There was the usual fate . The nation passed fromdespot to despot—from Themistocles and Cimon to the ThirtyTyrants

,to Alcibiades and Pericles, to Philip of Macedon, to

Alexander, and finally into Roman subjugation .

Rome presents us with another example of the same thing .

The history of Rome is but a repetition on a grander scale ofthat of Athens .” 1 Mr . Marshall quite concurs in this

,where

he says

And yet a lesson might hav e been learnt from the quick decadence of Greece , which was brought about by the want of that solidearnestness of purpose which no rac e has ev er maintained formany generat ions without the d iscipline of steady industry.

The R omans were a great army rather than a great nation . Theyresembled the Greeks in leaving business as much as possible toslaves .

2

The history of Sparta is one that ought to stand as a shocking example to the world . Industry was despised . Honestywas a thing almost unknown . The people lived for war, andrapine , and trade . There was no foundation in the State , andwhen it sank

,as it was bound to do

,there passed away a power

which possessed the single virtue of courage , marred by almostevery crime

,and destitute of all progressive industry .

In estimating the value of trade it would not be right toomit mention of Carthage . All the resources Of that once

Carey , Princ ip les of Social Science, vol . i. p. 2 47.

2 Al fred Marshal l , P rinc ip les (f E conomics , p. 19 .


Turkish trade in the middle of the seventeenth century wasamongst the most important in Western Europe . Turkish

merchants were amongst the wealthiest. In thosedays Turkey had an internal commerce and great manu

trfi de facturing productivity. Her weaving and dye ing andhwtory '

silk manufactures were amongst the best in the world .

She made a free-trade treaty with France and England, and assoon as keen competition began through England

’s advance inmechanical invention, Turkish industries, one by one, collapsed

the soil largely reverted to barbarism ; and the country is nowan insolvent State and abj ectly poor. Turkey was half ruinedby exte rnal trade .

Mr. Prescott has given us a book showing the aboriginalstate Of the Peruvians . They lived on a territory ofsquare miles, and numbered There was not apauper in the land . Famine and hunger were unknown .

The invader came , bringing them war and trade , and ruinedthem .

India is another instance . Previous to the British occupation India clothed and fed her own people from the productsofher own fertile soil . Lancashire competition, when it entered ,shut up the Indian looms ; and poverty and starvation stalkedover the land. Indian-grown cotton

,instead of being woven in

Indian factories,was transported to England and returned in

piece goods, and this while hundreds Of thousands of the ryotswere standing idle . All this frightful economic waste wasdeliberate ly incurred in order to give profit to the carrier, theshipper, and the trader, not one Ofwhom,

except in a secondarysense , is a producer.Mexico, when Cortez found her, was a rich, we ll-fed land

with forty cities . She had no external trade,but great internal

opulence . She was self-contained . She manufactured for herself, and had means and markets . She fell under the traders’

power, her products declined, her markets collapsed, and shesank by the middl e of the nineteenth century to a country of noaccount amongst nations .Athens is sometimes cited as an example of a State which

grew great by means of trade . Never was there a more unfortunate reading Of history. Ancient Athens is a shocking


example Of the blight of foreign trade . When Attica becameunited under Theseus she had a system of peace and internalcommerce and interchange . The people manufactured forthemselves . Solon consolidated this happy system . He

encouraged arts, trades, and diversities of occupation . A hundred years after Solon’s time Attica had a hundred towns, eachthe centre Of its own hive of industry and local government .External trade was little or nothing . Then came the Persianinvasion

, the change of government, the democracy of peaceconverted into an aristocracy of war and foreign trade . The

power of the State grew immensely . Athens became the mistress Of the seas . War was her trade and trade was her pastime .

Ostentation flaunted everywhere , and slavery and poverty grewbeside it. There was the usual fate . The nation passed fromdespot to despot—from Themistocles and Cimon to the ThirtyTyrants

,to Alcibiades and Pericles, to Philip of Macedon, to

Alexander, and finally into Roman subjugation .

R ome presents us with another example of the same thing .

The history of Rome is but a repetition on a grander scale ofthat of Athens .” 1 Mr . Marshall quite concurs in this

,where

he says

And yet a lesson might hav e been learnt from the quick decadence of Greece , which was brought about by the want of that solidearnestness of purpose which no race has ev er maintained formany generat ions w ithout the d iscipline of steady industryThe Romans were a great army rather than a great nation . Theyresembled the Greeks in leaving business as much as possible toslaves .

2

The history of Sparta is one that ought to stand as a shocking example to the world . Industry was despised . Honestywas a thing almost unknown . The people lived for war

,and

rapine,and trade . There was no foundation in the State , and

when it sank,as it was bound to do, there passed away a power

which possessed the single virtue of courage, marred by almostevery crime , and destitute of all progressive industry.

In estimating the value of trade it would not be right toomit mention of Carthage . All the resources Of that once

Carey, Princ ip les of Social Science, v ol . i. p. 2 47.

2 Alfred Marshal l , Princ ip les of E conomics , p. 19 .


magnificent city were built upon trading monopolies . There

was no industrial foundation . For a time she flourished , j ustas may a pirate who robs and scuttles ships . When she fell,she fell like Lucifer, never to rise again .

Venice and Genoa afford us like examples . Instead ofbuilding from the internal industry of the people and the promotion ofhome commerce , there was a constant hankering after

the profits of foreign trade and the monopolies which could besecured by them . Splendour there was , and power— the usualaccompaniment of success in war and trade ; but stability andfreedom there was none . Their national existence was that of

the moth , and their end the same .

Are other examples wanted Portugal is one . This nationbuilt herself on her trade monopolies secured as the result Ofherdiscovering the passage via the Cape to India . But

,like all

power that comes from mere trade , it is a national weakness .At the end of the fifteenth and in the beginning of the sixteenthcentury her estate was splendid . At the end of the sixteenthcentury she was a Spanish province . She regained her inde

pendence , and set to work to plant home industries . She succeeded

,when in an unlucky hour the Methuen Treaty of 1703

threw Open her ports to foreign trade . Her manufactures werecrushed out

,her lands declined, and she has gone on for a century

and a half sinking in the relative scale of nations . That iswhat mere trade has done for Portugal .Spain is a very cogent example of the blighting effects of

mere trade . The country, before the union of Castile and Aragon ,had always been ravaged by wars

,pestilences

,and piratical and

trading raids . There was little or no steady industry . Fer

dinand and Isabella reformed all that,and encouraged the

establishment Of manufactures . Unfortunately, however, forSpain, religious hatred against the Moors caused the expul sionOf the flower Of the nation’s manufacturers . Spain had at thattime thirty millions of people , and with them a splendid diversityof industry, making her correspondingly prosperous . But thefatal act which drove out her most enlightened artisans was asignal for a start on the down grade to decay. Her marketsdied out, her lands went into the hands of great nobles , and thenation was engul fed in poverty . She became strong and great


ton,for some considerable period , it would ruin many of the

American manufacturers , and would for a time open the wayfor a large demand of English iron .

” It was trade which causedIreland to export food while her people were dying of famine .

It was trade also which declared the unj ust opium war againstChina— a war that has tarnished British honour.Historians have traced the rise as well as the fall of Napoleon

to trade ideas . His “ Continental System , designed to ruinEngland through the ruin of her trade , made him popular with

the Jacobinical Revolutionists . On the other hand, Englandhad dreams of universal trade dominion, j ust as Napoleonhad of territorial dominion . One writer in the English

Historical Review says There is , indeed , room for beliefthat the policy of the Orders in Council was an attempt, notmerely to retort on our enemies the evils of the ir own injustice

,but also to crush neutral commerce , and establish a com

plete maritime monopoly.

”Russia could not afford to dispense

with English manufactures, and so infracted Napoleon’ s blockade .

English goods began to pour into Central Europe by way ofRiga. Napoleon coul d not permit this gap in his ContinentalSystem,

and went to Moscow. Thus it was English trade attraetiv eness which ruined Napoleon .

There is one sort of trade we must not omit to glance at inthis place—the Slave Trade . All the more so because this was

6. Trade the first form of trade known to man . I am often toldand that free trade is natural trade . People who say so useSlave“ words which confuse the ir meaning . Trade , as we knowit, is not a natural system at all . It is the growth of an artificialand highly organised society. But in one sense the savage wasthe first free trader. Force was the first law

,and the first trade

commenced when some strong warrior stole upon his surprisedvictims and procured a supply of men and women for the slavemarket, or for his own or his ne ighbour

’s larder. The slavetraders’ gains have always arisen from the same source as thoseof all other traders whatsoever—viz . the amount of toll he can

levy on humanity. This is as true of the merchant who buysand sells tea as of Z ebehrPasha who captured and sold men andwomen . At all events, the slave trade has been a well-recognised one for forty centuries at least and the slaver has always


been the most uncompromising and consistent of free traders .He seeks his commodity in the cheapest market , and sells it inthe dearest one . Those who woul d put down slavery are Protectionists to that extent . These , perhaps , may suffi ce in theway of samples taken out of the actual trade records of theworld . Having got this glimpse of what trade has done , it iswell that we shoul d see what are its nature and its pedigree .

We must not for one moment—ifwe would think accurately—confuse trade with commerce . Commerce is the association of

persons with each other, whether for the exchange oftheir products, their thoughts , or the ir affections . Commerce may be trade— trade is never commerce . Commerce is that direct or indirect interchange which natu

rally springs out of the division of labour, and which is strictlylimited by the requirements ofthe most facile distribution . Tradeis a system superimposed upon commerce by a class that seeksto grow wealthy by the mul tiplication of exchange . Commerceseeks to bring the producer and the consumer together. The

trader seeks to keep them as far apart as possible , because inthat he finds his profits . Commerce is always good . Trade isonly sometimes so and often , as we have seen , very baneful .Sometimes, as in the case of the pedlar who carries his pack

to the far settler, the trader is a necessity. But even in suchcases he is the most expensive part of the social machine , tobe tolerated only as long as he is indispensable . Productionand distribution are two parts of the social machine . Both are

necessary ; but they are very different in their utilities . The

highest economic efficiency is that state in which production isat a maximum and distribution at a minimum , where the consumer lives close beside the producer , and where the carrierfinds little or no occupation . All machinery, social or mechanical, is costly in proportion to the complexity of its parts . Everything which simplifies , improves . Every unnecessary transaction in the work of distribution is an economic waste . Therefore

,every unnecessary trader is a mischievous wheel in the

industrial machine , caus ing a loss which some producer or consumer somewhere must make good .

Clearly it is the interest of the trader to keep the producerand the consumer as far apart as possible in order that he may


be necessary to their traffic . He insists sometimes in standing ,half a dozen deep , between those who create wealth and thosewho use it. But it is the interest of the producer and consumerto come together . The trader, therefore , has an interest anta

gonistic to those of the producer and the consumer . This maybe proved in another way. The trader must make his profitby buying cheaply and selling dearly. He can do that bes twhen prices fluctuate most, because uncertainty offers him mostscope for making shrewd bargains . But the producer and theconsumer desire steadiness— the one that his profits may besecure and his business stable , and the other that his meansmay be calculated to cover his needs . Therefore the trader’sinterests , even where he is necessary, always conflict with thoseof society .

We now see that in the nature of things trade always aimsat centralising industrial production and keeping it as far aspossible from the point of ultimate consumption . Commerceaims at planting the farriery in the ne ighbourhood of the farm .

Trade in itself produces nothing . It seeks its gain in the businessof exchanging what others produce .

Carey , therefore , had a very definite meaning when he

wrote : “ War and trade regard man as an instrument to be

8 . Where used . Whereas commerce regards trade as an instrutrade ment to be used by man . Trade is to commercel eads “ what mathematics are to science . Both are instru

ments . And again : Trade is dispersive and warlike .

Commerce diminishes the necessity for the trader’s services andlessens his power.” 2

There remains to be noticed one other feature about theOperation of trade . It is clear that if every man in this worldwere perfectly self-helpful the trader coul d have no place in it.If every man could build his own house , find his own food

,

make his own clothing , the middleman or trader woul d find hisoccupation gone . That, however, can never be . There mustbe division of labour . Such division is

,indeed , most expedient.

It creates diversity amongst men,corresponding to the diversity

of the ir talents . So long as this diversity promotes association

” 1

1 Carey , Princip les of Social Sc ience, v o l . i. pp. 2 14, 2 15 , 2 16 .

2 I bicl ., vol . ii. pp . 2 38, 2 39 .


wiles as Circe’s banqueting table . On entering a shop thebuyer has left the conventional world, where the ten com

mandments still have a place in our religious exercises , andcrossed into a nether region of topsy-turvy morals in which thegolden rule Do to others as you woul d be done by ” is replacedby the brazen warning Do others , or they will do you, andwhere whisky is a concoction of potato spirit, j ams are composedof turnip mash

,margarine is sold for butter, lemonade 18 guilt

less of lemon juice . The history of trade in our times is indeedvery much as it was when De Foe wrote his Complete EnglishTradesman ,

” and satirically laid it down that ful ly to merit theclaim to such a character a man must first be a completehypocrite .

”The tradesman of his day, he tells us, had his

doctored scales and tape measures , his bag of spurious coin ,which he handed his customers in the way of change the falselights to give delusive appearances to his shoddy, and the sh0 prhetorick and flux of falsehoods that have such a charm for

the ear of the shop-going daughters of Eve ; and , of course , tendto inflate the bill that paterfamil ias has to pay. The defencewhich De Foe offers for the complete hypocrite of his day isprecisely that which the trader offers for himself in ours , namely,that it is as impossible to carry on business on the lines of theSermon on the Mount, as it is to carry on war. Strict integrityspells bankruptcy, and is hopelessly incompatible with competition , which is , in fact, a state of war . Either he must shutup his shop

,defraud his creditors , reduce his wife and children

to beggary, or he must resort to the artifi ces used by his com

petitors .

Some of the tradesmen who reply to the charges broughtagainst them

,in the correspondence we have quoted above ,

aver that they are driven to adopt practices of which their consciences disapprove by the insane cutting of prices othersdeclare that they are often blamed for what is really owing tothe dishonesty of their employés the very errand-boy can’tbe trusted ”

; while a favourite excuse among most of them isthat the fraudul ent customers who get the ir goods and evadepayment for them on one pretext or another are responsiblefor the sufferings of the innocent . This is equivalent to sayingthat they can’t be honest because other people are dishonest.


If,then , trade be of this equivocal character—accursed

between the liquor dealer and the drunkard ; mischievousbetween the broker and his victim if it be murderous and cruelin the slave dealer ; destructive and warlike where the com

petitors of one nation crush out the industries of another ; if itaim at mul tiplying obstacles and distance between the manwho grows food and the man who eats it if it be the enemy ofthat diversity amongst men which is the soul of human development ; if it be so often the cause of economic waste in the unnecessary multiplication of distributors ; and if it be wise andbeneficent only inthe comparatively few cases where producersand consumers cannot meet, and where it works as an aid tothe broader commerce—it seems to follow that free and uh restricted trade must be a national peril .

The formulae, therefore, which we now reach will be asfollowsI . Trade , like fire and water, may be of real utility as the

well-ordered servant of man .

II . But trade , like fire and water, is liable to overleap control and become a scourge and a source of serious economicloss , when the business of exchange is promoted beyond thestrict requirements of e fficient distribution.

III . Therefore, trade requires the most careful regulationand restriction

,and shoul d be no more free than the elements

of fire and water.


BOOK II

TRADE VIEWED IN THE LIGHT OF HISTORY

LETTER VII—To MR . JOHN BULL

BU ILDING THE WORLD’

S WORKSHOP

To found a great empire for the sole purpos e of rais ing up a people of

cus tomers , may at first sight appear a project fi t only for a nation of sh0p

keepers . It is , however, a project al toge therunfit for a nation of shopkeepers ;but extremely fi t for a nation which is influenced by shopkeepers . Wealth of

N ations , Book iv .,ch . v ii., part 3.

Oh , how full of briars is this working-day world l—As you l ike it .

MY DEAR JOHN ,

—For j ust about a century you aimed atconcentrating within your own grasp the trade of the world .

1 . Eng ,

It was a very ambitious conception . You see now howlan

e’s illusory it was . Napoleon’s dream of universal military

ear

80 0121 dominion was inferior to 1t in pomt of magmtude . Itconditim seems curious that you , who , up to the middle of the

eighteenth century, were so backward amongst the nations in

the mechanical arts, should ever have formed so vast a schemeof universal trade subj ugation . However, the idea came toyou

,and with that fine masterful way of yours you followed

your destiny . When you glance back on your country’s historyyou find that previous to Magna Charta it presents to your gazea nation of hinds . Of internal commerce in those early daysEngland had little or none , and consequently little or noindustrial stability.

Generally speaking the nation was exceedingly poor,even

when bread and ale were plentiful . The exports were principally raw hides , wool, and tin . The imports were cloth andmanufactures . Your farmers were never sure of what theywould reap from their sowings ; for, added to the uncertainty


importing cavas from France and cheap coarse cloths andyarns from ermeny, while English workmen were standingidle . His sceme of outdoing the Dutch was to import theirskilled workl en instead of their products , and he concludes

N ow I h e shown you the two manufactures of linen and iron,w ith the proact thereof and all the materials are with us grow ing .

These two nnufactures will, if by law countenanced, set all the

poor in Englad at work , and must enrich the country, and therebyfetch people ito the k ingdom,

whereas they now depart .

That we not quite the first note of systematic protectionever soundi in England, but it was among the first . It wasa strange rite then ; but it is familiar now all the world over .About thatt ime the country began to legislate for the establishment home industries . Two centuries ago London mer

chants prajd the Government of William III . to discouragethe woollennanufac tures of Ireland in order that all Irish woolmight be frced to pass through English looms . Both Careyand Curtissc ite statutes of George III . forbidding artisans toleave Britai lest they should carry their skill to other lands .By Act 2 1 eorge III .

,1781, the export of utensils for the manu

facture of ik was likewise forbidden for the same reasons . Inthe next yir, Act 2 2 George III . extended the prohibition toworkers imprinted calicoes, muslins, or linens, or in makingblocks andmplements to be used in their manufacture .

Threeyears laterin 1785 , Act 2 5 George III . prohibited the exportof tools 1nd in iron and stee l manufactures

,as well as the

workers inthe same . Fourteen years later,again

,in 1799

,by

Act 39 Ge(ge III ., colliers were included in the same category .

Most of this laws remained in force for neathey were ill made to compel the color

'

nations to and their raw material for me

As the e ars went on EnBritish colnies were not pe

3 . Eng l ishbrd Chatham d

wars for

monopoly .

BUILDING THE WORLD ’S WORKHOP 83

bidden to sell a pound of their produce in any m.ket save that

of England .

British trade ruined Jamaica by strictly cohibiting allmanufactures there . It is estimated that Great ritaiu boughtand shipped slaves to the British islans in the Wes tIndies ; and all of these toiled in order to per weal th intoEngland . Yet when these slaves were emancipeed there werefound only The remainder , toge ther wh the naturalincrease

,had been worked to death for the taskmasters .

Jamaica was drained of its wealth , and Bigelowleseribes it interms of most terrible misery .

There is no doubt,my dear John , that you ere a terribly

tyrannous Protectionist in those days . No halfneasure s withyou . Here is a specimen of what one of your tpieal Englishmen

, a Mr. Gee , said in 1750

Manufactures in American colonies should be e couraged, pro

hibited.

We ought always to keep a watchful eye over ur colonies , torestrain them from sett ing up any of the manufiuure s which are

carried on in Great Britain ; and any such atte pts should becrushed in the beg inning .

That all clothing mills and eng ines for drawing ire or weavingstockings be put down.

That al l negroes be prohibited from weav ingeithcr linen o r

woollen, orspinning or combing of wool , or workig at any manu

facture of iron.

If we examine into the circums tances of the inlhitants of our

plantations and our own, it will appear that not oz-i'

o urth part o ftheir product redounds to their own profit , for ou t

'

all that comeshere they carry back onlv clothing and other aconmodations for

their families .N ew England and colonies have of w rumoditic

and products return for the clo thing , and

re anyh them,

and h en they haveout of are new-fashhcd enough for

your trade rs century ago .

c Australian monies a quarte r

vol. 1. p. 290 .


importing canvas from France and cheap coarse cloths andyarns from Germany

,while English workmen were standing

idle .His scheme of outdoing the Dutch was to import the ir

skilled workmen instead of their products, and he concludes

N ow I have shown you the two manufactures of linen and iron,w ith the product thereof ; and all the materials are with us growing .

These two manufactures will , if by law countenanced , set all the

poor in England at work, and must enrich the country, and therebyfetch people into the k ingdom,

whereas they now depart .

That was not quite the first note of systematic protection

ever sounded in England, but it was among the first . It wasa strange note then ; but it is familiar now all the world over.About that time the country began to legislate for the esta

blishment of home industries . Two centuries ago London merchants prayed the Government of William III . to discouragethe woollen manufactures of Ireland in order that all Irish woolmight be forced to pass through English looms . Both Careyand Curtiss cite statutes of George III . forbidding artisans toleave Britain lest they should carry their skill to other lands .By Act 2 1 George III . , 1781, the export of utensils for the manufacture of silk was likewise forbidden for the same reasons . Inthe next year, Act 2 2 George III . extended the prohibition toworkers in printed calicoes, muslins, or linens, or in makingblocks and implements to be used in their manufacture . Threeyears later, in 1785 , Act 2 5 George III . prohibited the exportof tools used in iron and stee l manufactures

,as we ll as the

workers in the same . Fourteen years later, again, in 1799 , byAct 39 George III .

,colliers were included in the same category .

Most of these laws remained in force for nearly fifty years andthey were all made to compel the colonies and independentnations to send their raw material for manufacture into England .

As the years went on English protection grew more rigid .

British colonies were not permitted to refine their own sugar .

3 . Engl ish Lord Chatham declared that he would not allow the

Wars for colonial settlements to make so much as a hobnail forthemselves .1 The Virginian tobacco growers were for

Lis t , N ationa l System of P ol itical E conomy, p. 167.


of a century ago . In that document we see trade casting asideall disguise and appearing in its true character—that of thewar maker and invader . In order that Great Britain might be

mistress of the world’s commerce every foreign interest had tobe destroyed . Mr . Gee spoke only the language of foreigntrade

,though he may have spoken it a little too bluntly. This

English policy succeeded to a miracle . Her mineral riches incoal and iron

,her application of machinery, and her command

of the sea, made England industrially invincible In 172 6,

Defoe wrote , in his Tour through Great Britain, that not abeggar was to be seen or an idle person .

”

At the close of the e ighteenth century your manufacturingsupremacy was unquestioned ; and no military war was evermore cruel and unsparing than the war of the trade throughwhich that supremacy was achieved . During the Napoleonicwars England grew rich amidst the destruction of the nations .From 1815 until 1874 there was a steady expansion of Britishtrade , the percentages of increase being almost exactly the

same in the Protectionist and Free Trade periods . In 185 6

England had cotton spindles at work, while Europehad only She employed cotton weaversagainst in all the principal continental nations . By1872 America and Germany became competitors with England .

From that year Great Britain’s supremacy began to dwindle .

In 1885 there was appointed the Commission to inquire intotrade depression and agricultural decline .

But trade supremacy may mean much or little . We mustascertain its true significance to England . In the early part of

4 , The last century thinkers like R icardo began to perceivelanded that England could outrival all the world in manufacinterests

of Eng tures only by means of cheap labour and to thi s endland a cheap leaf was a necessity. The English landlordwas a ruthless oppressor of the poor . The high price of cornmeant no extra profit to the farmer nor higher wage to thefarm labourer . It simply increased the rent .Professor Thorold Rogers says

The condition of the agricultural labourer has been differentfrom that of the art isan. Scattered and incapable of combinedac tion with his fellows, bowed down by centuries of oppression,

hard

BUILDING THE WORLD ’S WORKSHOP 85

usage, and hard words , with, as he believes , every force against him,

the landlord in league with the farmer, and the clergyman in leaguewith both

,the latter constantly preaching resignation, the two

former constantly enforcing it , he has lived through ev il t imes .

There is nothing in the history of civilisation more odious than the

meanness of some English landlords, except it be their insolence .

‘

The revolt against this came in the abolition of the cornduties . By the middle of the nineteenth century the last ofthe corn laws went by the board

,and England began to import

her corn and neglect her own agriculture . It was concludedthat having gained bv her protective tariffs a commandingposition in manufactures, the nation could best consolidate herpower by open competition against the world . Surely, withher Splendid supply of iron

,coal

,and cheap labour

,combined

with mechanical supremacy,England might undersell every

other nation,and hold the world at her mercy. The vision was

a splendid one . To Cobden it was a new religion of pure unmitigated selfishness . It is literally true that under the spur of thenew policy of cheapness English factories multiplied their output

,and English trade expanded by leaps and bounds ; but,

owing to the development of trades unions,wages rather increasedthan diminished .

Since the beginning of the century the wage rate had beenslowly improving and food was cheapening . Mr. Thorold

5 . WagesRogers says :

and food0

cost at Ifwe can only rely en M r. Leone Law s figures, takenfrom the record ofprices paid at Greenwich from 1800 to

”m “1820

,and between 182 1 and 1840 , w e shall find that

wages had actually risen and the price of the necessaries of life hadgreatly fallen.

2

After 1840, chiefly through the development of trade combinations

,wages more than maintained their rate s, so that the

workman,getting higher pay and eating a cheaper ioaf, began

to Spy a sort of paradise . The revolution in the English tariff

made not an atom of change in England’s industrial aims . Her

goal was still to become the workshop of the world .

Thorold Rogers , Work and Wages, p. 144 .

2 Ibid., p. 140.


Monopolist laws and protective tariffs had proved efficientagencies towards destructive ends . The monopolist weapon

6 . Howof competitive cheapness was now to make a cleaner

Eng land and deeper out than could the sword of the tariffmono

nn

d

pg’

i" polist.But in each case monopoly was the end in

t ive view . These facts are sometimes illus trated very curiSystem ' onely.

In 185 4 , eight years after England had got ridof her last protection on com , a commission sat and reportedon the state of the population of the English mining districts.

Here is an extract from the pages of that Report, as publishedby the House of Commons

The labouring classes generally in manufac turing districts of thiscountry, and especially in the iron and coal districts , are very lit tleaware of the extent to which they are often indebted for their be ingemployed at all to the immense losses which their employers v oluntarily incur in bad t imes in order to destroy foreign competit ion,

and to gain and keep possession of foreign markets. Authent icinstances are well known of employers having in such t imes carriedon their works at a loss, amount ing in the aggregate to three or

four hundred thousand pounds in the course of three or four years .

If the efforts of those who encourage the combinations to restrictthe amount of labour and to produce strikes, were to be successfulfor any length of time

, the great accumulations of capital could not

then be made , which enable a few of the most wealthy capitaliststo overwhelm all foreign compet it ion in times of great depression,and thus to clear the way for the whole trade to step in when price srevive , and to carry on a great business before fore ign capital canagain accumulate to such an extent as to be able to establish a com

pet ition ih prices with any chance of success . The large capitals ofthis country are the great instrumen ts of wwrfare (if the expressionmay be allowed) against the competing capital of foreign countries,and are the most essential instruments now remaining by which our

manufacturing supremacy can be maintained .

Nor has this policy of warfare been in any degree changedsince 185 4 . Rather has it been strengthened and systematised .

Instances are all around us . India is one example . India usedto admit raw cotton duty free , and imposed a small duty of3 to 5 per cent . on cotton manufactures for revenue purposes .By

-and-by Indian cotton mills began to start up and flourishunder this minute modicum of protection . Then Lancashire,


gospel of buying in the cheapest market, that market beingEngland .

These being the facts, we may now reckon up the results .

One result certainly is that England has grown enormously

3 . Eng ,

wealthy. Before the close of the eighteenth centuryland

’s she exported more than she imported

,and

Zfil th

had all the profits of her shipping trade besides . Herpov ertY foreign trade continuously increased from the beginning of the nineteenth century up to 1872 , both under protectionand free trade . The Napoleonic wars had made her supremein manufacturing production . She is said to have loanedabroad a sum of money not less than She

receives back in interest not less than worth ofcommodities every year, perhaps more . Half the globe paysher tribute— a tribute won, not, like that of Imperial Rome , atthe point of the sword, but by the warfare of the trader . Her

flag flies in every clime ; her ships and sailors cover the sea .

That surely is a goal worth winningStay ! Look on the reverse of the shield . Look at home

,

and see what has come of it . If gold may be purchased toodearly

,may not manufacturing industry also British agricul

ture is comparatively a thing of the past. England has starvedher lands in order to feed her furnaces . The result is thateverywhere farming has gone to decay the richest land remainsuntilled ; the English farmer has been driven from his home ;internal commerce has been crippled in order that the tradermay flourish by buying American wheat and meat in the cheapestmarket and selling it in the clearest.In 185 1 the farmers and agricultural labourers in England

and Wales numbered In 1901 they had fallen toIn 1866 the area under wheat in England and Wales

was acres . In 1903 the area had diminished toacres . The loss in the value of agricultural land, which hastaken place to the extent of is no light price topay even for the world’s workshop .

Mr. Cunninghame Graham said I am a rabid Fair Trader,

or Protectionist if you like,because the workpeople of this

country are starving in the streets, undersold by foreignlabour.

”


countries there is an alarming decrease . The same magazineestablishes the proposition that

British exports to the compet it iv e and protective countries apartfrom coal have been declining in value rapidly and without interrupt ion since 1872 , and are not only lower in point ofvalue thanthey were in that year, but are hardly higher than they were in1866 .

SO far has this gene that it is said with truth that, for thepurposes of British trade, Europe is a dying market . Thirtyyears ago England had no rivals . Now she is outclassed onevery hand . Just one other table referring to Great Britain’ s

exports of her own manufactures and imports of foreign manufactures

Brit ish Imports forManufac tures N e t E’SPOI

‘ tS

M i llions M i llions

These results might have been accepted with some sort ofpatience were they general throughout the world . But this isnot so . The trade between India and China and Japan hasenormously expanded in the very years that English trade hasdeclined .

Such is the result of Lancashire’s instrument of warfareafter fifty years of a free-trade paradise . The wise words ofAdam Smith perforce recur to us

A nat ion that would enrich itself by fore ign trade is certainlymost likely to do so when its neighbours are all rich, industrious, andcommercial nations. A great nat ion surrounded on all s ides bywandering savages and poor barbarians might , no doubt

,acquire

riches by the cult ivation of it s own lands,and by its own interior

commerce , but not by foreign trade . It seems to have been in thismanner that the ancient Egypt ians and the modern Chineseacquired their great wealth. The ancient Egyptians, it is said,neglected foreign commerce , and the modern Chinese , it is known ,

Omitting ships .

BUILDING THE WORLD ’S WORKSHOP 91

hold it in the utmost contempt , and scarce deign to afford it thedecent protect ion of the laws . The modern maxims of fore igncommerce , by aiming at the impoverishment of all our neighbours ,so far as they are capable of producing the ir intended effect , tend torender that v ery commerce ins ignificant and contemptible .

l

The fact is,that most Of the predictions Of English free -trade

prophets have been falsified by the event . Instead of othernations throwing open their ports to buy in the cheapest markets,they have raised their tariff walls ever higher and higher .Lord Salisbury

,as far back as October 20

,1879 , made a

speech before the Manchester Chamber of Commerce in which

10 . A he referred thus to these hostile tariffsnational It is an act of fiscal war. War is a bad thing but itdanger. is the only way Of defending ourselv es against this wrong .

Why is it wrong to do it in dealing with your fiscal matters as we llas in other internat ional relat ions ? What I desire to impress onyou is that under cover of this fet ish worship of a set of doctrineswhich are called free trade

,but which are not free trade , you are

excluded from these acts of self-defence,and SO long as you are

excluded you may sigh in vain for just ice in fiscal matters .

Mr. Chamberlain and Mr . Balfour are both speaking andthinking the same thoughts now

,and they express the sense

of unrest which underlies all England . In 1894 there waspublished a volume called British Industries

,in which the

author, Mr. Williamson, wrote in the preface as followsNearly half a century has passed since

,by the abolit ion of the

Corn Laws,a new principle was introduced which

,twenty-fiv e years

later on,led to the final abandonment of the protect ive system.

The promises then so confidently held out of abid ing prosperity,universal peace

,and the adopt ion of free trade by other countries

—an ind ispensable e lement of it s success—have not only not beenfulfilled , but our markets are new subject to long periods of un

exampled depress ion followed by fleet ing rev ivals . Agriculture ,our greatest industry, is wellnigh ruined

,and the outs ide world

is more wedded to protect ion than ever. May we not,therefore

,

claim that the whole quest ion of our fiscal system should be

reconsidered,and that it is t ime we should abandon that attitude

of blind indifference which as sumes that,although the civilised

world is against us, we alone are right ?

Wealth of Nations.


Mr. J . S . Jean, in his work on England’s Supremacy, saysthat quarters of wheat are imported into Englandannually. A fortnight’s loss by the country of the commandof an ocean highway

,and England would be at starvation

point . It is from this point of view that the following passagefrom Alison’s History of EurOpe has a great meaning

No nat ion can pretend to independence which rests for anysens ible port ions Of its substance , in ord inary seasons, on foreign,who may become hos t ile, nat ions . And ifwe would see a memorableexample of the manner in which the greatest and most powerfulnation may, in the course of ages, come to be paralysed by thiscaus e

,we have only to cast our eyes on Imperial Rome

,when the

vas t extent of the Empire had pract ically a free trade in grain withthe whole civilised world

,and the result was cult ivat ion d is

appeared from the Italian plains the race of Roman agriculturists,

the streng th of the Empire , became ext inct ; the leg ions coul d nolonger be recruited but from fore ign lands ; vast tracts of pasturageoverspread ev en the fields of Lombardy and the Campagna of Naples ;and it was the plaint ive complaint of the Roman annalist that themistress of the world had come to depend for her subsistence on

the floods of the Nile .

N0 man,placing these facts against England’s multiplica

tion of riches, can feel anything but dissatisfaction . Yet thatis the short story of what “ free imports ” have done forEngland .


we have to try and discover the law operating between what

the dominant partner has sown and what both partners havereaped by the sewing .

When you and I look back attentively at the condition of

early Irish manufactures , we shall find them to have been inadvance of England . In the fourteenth centuryEngland

fiiffirly imported most of her cloth ; but there are documents

manufac extant which seem to show that Ireland , even at thattures 'date , had made considerable progress in the manufac

ture of apparel . For example , a poem , D ita Mundi,” written

before 1367, in which year its author died , speaks of the nobleserge which Ireland sent to Italy. Then there is a special Actof Parliament in 1376 passed for the care of Irish frieze .

Coming down to the time of Charles II . , Act No . 12 prohibitedthe export of raw Irish wool for the express purpose of enconraging the manufacture Of the article at home . This legislationquite answered its intended purpose for we can learn from the

Encyclopaedia Britannica that woollen manufactures increasedin Ireland with great rapidity . What that means we canunderstand from the fact that , in 1641, some thirty years prev ious to Charles’s Act , there had been some peopleengaged in Ireland in manufacturing woollen fabrics . It wasfor these the wool was kept at home . The linen trade wasalmost equally prosperous . Green , the historian ,1 tells us thatthe foundation of the linen manufacture , which was to bringwealth to Ulster, and the first development of Irish commerce ,date from the Lieutenancy of Wentworth .

” This was from1632 to 1640 . It was quite clear that at the time of the exitOf the Stuart dynasty in 1688, when King James made hisinglorious skedaddle , Ireland had a flourishing commerce inmanufactures, more particularly in linen and woollens .It was natural , I suppose , that anything good in Ireland

should create the j ealousy of England . At any rate , this Irishskill in manufactures roused the London merchants

3 . England into activity and resentment . They formally peti

seams t° tioned William III . for the discouragement of theestroy .

woollen manufactures of Ireland .

” As a matter ofcourse this most delectable prayer was graciously acceded to .

Green, Short History , p. 5 06.

FREE TRADE THE DESTROYER OF IRELAND 95

William could not very well suppress the trade by direct law,

so he prohibited all Irish exportations , except those that weresent to England , and he placed heavy duties on Irish goodsentering English ports . The law was quite effectual . It protected England against Ireland . It destroyed the Irish industry ,and caused frightful poverty and destitution amongst the Irishpeople . The Irish farmers were now compelled to export theirwool in a raw state to London

,and rece ive a small part of it

back in a finished condition . Irish people in thousands stoodidle the while and starved . But this policy of the ul tra-protected English traders inj ured England as well as Ireland .

Numbers of skilled Irish workmen , be ing shut out of a livingat home , emigrated to France , Spain , and the Netherlands ,where they planted the ir industries and became formidablecompetitors against the English looms .Mr . Froude has told this story at length , ful ly bringing out

how English traders, for the ir own supposed advantages , wroughtdestruction on the manufactures of the Sister Isle . But ne itheryou nor I will be partial to taking James Anthony Froude’s wordfor anything , even when he agrees with us ; so I will ratherquote the Encyclope dia article already referred to

The materials manufactured were of such a quality as to

awaken the alarm of English manufacturers, at whose instanceboth Houses of Parliament pet it ioned William III . to come to therescue . In accordance with his wishes the Irish Parliament in1698 imposed add it ional heavy dut ies on all woollen clothing , w iththe except ion of friezes

,exported out of Ireland

,and in the following

year anAct was passed by the Brit ish Gov ernment prohibiting theexport from Ire land of. all woo llen goods to any country saveEng land , to any port in Eng land save six

,from any town in Ireland

save s ix .

That, of course , was protection to England at the expenseof Ireland . Green thus glances at the subsequent development

4The history of Ireland , from its conques t by William

Green’s III . up to this t ime is one which no Englishman can

Opinion recall without shame . For more than a century IrelandOf 1t '

was the worst governed country in Europe . England didher best to annihilate Irish commerce , and to ruin Irish agriculture .


Statutes passed by the jealousy of English landowners forbade theexport of Irish cattle and sheep to English ports. The export ofwoolwas forbidden, lest it might interfere with the profits ofEnglish woolgrowers .

Poverty was then added to the curse of misgovernment ,and poverty deepened with the rapid growth of the nat ive population,t ill famine turned the country into a hell .

That statement is to be found at pages 787—8 of his ShortHistory and at another place he says

Ireland then, as now,was England

’s difliculty . The tyrannousmisgovernment under wh ich she had grown ever since the batt le of

the Boyne was producing its natural fruit . Pitt saw that much,at leas t

,Of the misery and disloyalty of Ireland sprang from its

poverty. The populat ion had grown rapidly, while culture remainedstat ionary and commerce perished . And of this poverty much wasthe result of unjust law . Ireland was a graz ing country ; but toprotect the interests of Engl ish graziers the import of its cattleinto England was forbidden . To protect the int erests of Englishclothiers and weavers, its manufactures were loaded with duties.

This brings us to one of the most instructive parts of Irishindustrial history. England had been forced to withdraw

5 Thetroops from Ireland to assist her trade war in America ;

effects of she was threatened with a French invasion ; she hadreluctantly to consent to the arming of Irish volunteers .NO sooner did these volunteers find themselves with

arms in their hands than they demanded the independenceof Ireland . England had no Option but to submit . Grattan

’s

Parliament was commenced in 1782 , and College Green wasempowered to make its own laws without let or hindrance .

Almost its first work was the establishment of a protectivepolicy for Irish manufactures . The duties imposed on importsranged as high as 60 per cent .Ireland began to have gleams of hope . Her industries

commenced at once to improve . With unconscious ironyGreen reminds us that the first financial effort Of Pitt, and theBill which he introduced in 1785 , did away with every Obstacleto freedom of trade between England and Ire land .

” We haveno wonder at the contempt with which the Irish Parliamentrej ected this Free Trade Bill of Pitt’s . For e ighty-fiv e years


Irish Parliament to repeal the independent constitution . The

cash was forthcoming ; the votes were bought ; and after oneabortive attempt the legislative union of the two countries was

effected . The immediate consequence was a repeal Of the Irishprotect ive policy . Some of the duties were immediatelyabolished ; others were fixed by law on a gradually vanishingscale , to disappear entirely in twenty years or so .

Industry began at once to decline . Silk manufacture virtually died out with the last of the duties in 1826. Linen had

6 Theparticularly flourished up to the time of the Union

death under the protective duties but it di ed out so muchbl °w ° that the Linen Board ceased to sit after 1830 for wantof anything to do . After ten years of Protection, in 1792 theIrish were exporting yards of drapery. Two yearsafter Free Trade , in 1802 , that expert had fallen to yards .

The Irish imported yards in 1782 ; these imports increased to yards in two years after the free trade of

the Union . In the year 1800 , the last of the protective period ,hands were employed in cotton manufacture . In thirty

nine years of free trade these hands had dwindled toin the year 1850 they were only and in 1879 they

had decreased to These figures are t aken out of theEncyclopaedia Britannica .

Such a result was , of course , inevitable . The Irish marketwas opened to the competitive raids of the Lancashire weavers .The high duties against English calicoes were continued until1808, and those of cotton goods till 1810 . There were ninetyOne master woollen manufacturers in Dublin in 1800 . Fortyyears later they were all stamped out but twe lve . Wool -combersand carpet-makers had at the same time almost wholly vanished .

1

Free traders everywhere admit that English traders ruinedIrish manufactures but some of them assert that the ruin wasnot inflicted by free trade

,but by protection . Henry George , in

Protection or Free Trade ,” p . 18, says As for the assertion

that the English theory of free trade has been used to destroythe industries and Oppress the people of Ireland, the truth isthat it was the English theory of protection that was so used .

”

The observation is quite true . Mr . George is welcome toCarey , P rincip les of Social Science, v ol . 1. p . 322 .


all the help it can give him,which is none at all , seeing that the

English protectionists denied protection to Ireland and forcedfree trade upon her.

What I am now demonstrating in this case is the inherentnature of free imports . I want to show that it possesses the

7. Asdevastating qualities of war. We have seen that the

ruinous foreign trader invaded Ireland and destroyed heras W” nascent industries as soon as her tariffguard was brokendown . Whether it was done by a free trade or protective

nation is nothing to the purpose . Everyone knows that a tradewar waged by a protective nation is j ust as deadly as if wagedby a free -trade one . SO long as Ireland was protected by the

law made in Grattan’

s Parliament She was safe and strong .

When her protective tariff was destroyed her industries wentwith it . The competition of English traders swept Irish manufactures out of be ing.

This is exactly what the free trader admits would happenin Australia under his tariff . In the House of Representativesone of them openly declared that we can have no woollen manufactures here in Australia till our people are worse off than theyare at present, and ready to work at sweated rates , the same asother countries . How Ireland was affected is told us verysuccinctly by Carey in the work I have already cited

England had the home market,the fore ign market , and that

of Ireland open to her ; while the Irish manufac tures were forcedto contend for existence

,and under the most disadvantag

circumstances, on the ir own soil . The former coul d afford to

purchase expensive machinery , and to adopt whatever improvementsmight be made , while the latter could not . As a natural con

sequence of this,Irish manufactures gradually d isappeared as the

Act ofUnion took effect .

From and after that t ime (1800) commerce gradually declined ,unt il it finally died away

,and there was wasted each and ev ery

year an amount of Irish capital equal,if properly applied , to the

creat ion of all the cotton and woollen machinery exist ing in

England . To this enforced waste of capital we must look , if w e

desire to find the caus e of the decline and fall of the Irish nat ion .

The poor people were , in fact , selling the ir so il to pay forcotton and woollen goods that they should have manufactured forthemselves.


That is a condition of things the free traders assert to be

economically wise . If the Irish could purchase in the Englishmarket more cheaply than in their own , it was well to

8 . The

conso do so,say these doctrmaires . The consequence was

$222“ °f that in a few years they had nothing to purchase with .

Trade With the abolition of Irish manufactures the Irish unemw isdom ployed were everywhere . The people were all thrownback on the land , or left to starve , or to emigrate . They didboth . Mr . George himself admits that Ireland was exposedto starvation on the failure Of a single crop .

” We rememberwith a shudder how that starvation eventually came . Millionsof Irishmen daily wasted the capital of the ir labour becausethere was nothing for them to do . And this while Englishmanufacturers were killing off their industries by cutting pricesunder a free-trade doctrine .

It was one of the most ruthless trade invasions and devastations ever known . But it was strictly in accordance with theeverlasting laws Of the same doctrine that is now actually proposed by Australian foreign traders for the Australian Commonwealth ; and with the same identical Obj ect in View . Whilethis ruin was being effected in Ireland middlemen and tradersmade fortunes

,and they carried those fortunes out of the country.

Foreign trade stood over and dominated commerce . Even thesavings of the people were forbidden by law to be invested inIreland . The landlords took their rents and spent them abroad .

The country had nothing to rely on but its lands ; and woe toany country which is reduced to the raw product of the soil !From Ireland the produce of the land was sent abroad , while thepoor wret ches at home starved .

This is not a mere rhetorical assertion . I will give you afew figures . The export of Irish grain at the Act of Union was9 , A tw i_ quarters . The rest of the national grain proble fact duct was consumed at home by the manufacturersand the workers in subsidiary call ings . In thirty years afterthe beginning of free trade the people coul d no longer consume

at home , and they sent abroad quarters Of grain . The

country was drained to pay for the imported goods, and for therent of absentee landl ords . The consequence was unavoidable .The best men fled the country. Those who could not do so

102 PREFERENT IAL TRADE

our legislators , but wholly without effect , t ill the terrible calamityof the potato d iseas e in 1846 and 1847, and the horrible events thatensued , and forced them into act ion.

1

The same writer adds

The law has hitherto g iven to the landlord complete power overthe land he holds , to deal with as he pleases . M il l ions of peoplewho possess no land

,nor any other property, are absolutely

dependent , not for happiness only,but for the power to live , on

having a port ion of this land to cult ivate . Under these circums tances the landlord is master of the situat ion . He can demandwhat he pleases for his land . He can let it out on what terms hepleases ; and he can subj ect his tenants to any rules or regulat ionshe or his agents think proper. The people must hav e land or

starve ; so they offer any rent,agree to any terms

,and are

consequently always the v irtual,if not the actual

,slaves of the

landlord . Hence the perennial misery and crime of Ireland . Hencefamines

,evictions , and the shoot ing of landl ords or agents. Some

of the people blame the landlords. But why ? The law tells themthat the land is their property. Pol it ical economy t ells them to

sell it,or the us e of it

,in the dearest market ; that supply and

demand regulate the price of all commodit ies ; and that it is bestfor all that it should be so regulated . They simply act on theseprinciples

,which have been drilled into them as the highest teaching

of polit ical science . Yet the result is a nat ion in the most helplessmisery to be found anywhere in the civilised world .

Now , I am not blind to the fact that there is a land grievance

there as we ll as a free-trade grievance . But the land grievance

11. Free was immeasurably increased by the destruction ofTrade the

,

Irish manufactures ; and it was absolutely created bymother ofan the the application of the unrestricted free-trade competiev il s tive system to the land . The same results , in a moreor less aggravated form, have always followed when the manufactures of a country have been starved, and where the wholepopulation, or the greater part, have been compelled to dependon the land alone .

You remember the advice given to his countrymen by theworthy Dean of St. Patrick’s . If they would prosper

,he told

them, they shoul d burn everything that came from England

1 Wal lace , Land N ational isation,p. 34 .


except her coal . He saw that large importations of Englishmanufactures must close up Irish factories , and drive the peopleback on the soil . That is j ust what occurred . Seven millionsof people were dependent on almost a single crop—at any rate ,on a single industry . The true policy amongst all peeples is toincrease the diversity Of occupations to the utmost limits ofpracticability. The reason for this is obvious . As men’s talentsare diverse , so should be the means of the ir employment

,in

order that each land may obtain from its people the best thatis in them . Wherever a nation becomes nomadic

,or purely

pastoral or agricul tural , the genius of its people is stunted ;square human pegs are forced into round holes , and there ensuesa colossal waste of energy and talent . That is what took placeafter the Union in Ireland .

John Stuart Mill , having seen the Irish in their native homes ,said of them

The rents which they promise , they are almost invariablyincapable of paying ; and consequently they become indebted to

those under whom they hold,almost as soon as they take possess ion .

They g ive up, in the shape of rent , the whole produce of the land,

with the except ion of a sufiiciency of potatoes for a subsistence ; butas this is rare ly equal to the promised rent

,they have constantly

against them an increasing balance . Almost alone the Irishcottier is in this cond it ion—that he can scarcely be any better or

worse Off by any ac t of his own . If he were industrious and

prudent , nobody but his landlord would gain. If he were lazy or

intemperate,it is at his landlord ’s expense .

1

In 1824 De Beaumont declared that the condition of the

Irish cottier was then worse than that of a savage ; and JudgeFletcher once publicly stated that he had seen English sowshoused better than Irish peasants . The bitter consequence ofall was the great famine , and the virtual dispersal of the nation .

It has been well said that the country which begins by livingon the export of raw products must end by the export of men.

12 DeNever was this more terribly demonstrated than in Ire

cline of land . Mulhall , the eminent statistician,in his D ic

the ropu tionary of Statistics ,” points out very forcibly that the

lation.

reign of Queen Victoria was more disastrous to Ireland

Mil l , P olitical E onno nn Book 2 , ch . ix.


than that of any other previous king or queen . During thereign of Queen Victoria there died of famine emi

grated evicted —~a total ofThere is a volume of meaning in the following table of the

growth and decline of Ireland’s popul ation , and its comparison

with that of Scotland

Ireland Scotland

Between the years 1841 and 185 1 the population of Irelanddecreased by Ireland had been reduced to a farmingnation depending on its crops . In 1846 the free imports of allagricul tural produce struck the nation’s industry in a vitalplace . At that time the London Times made a statementthat has been properly pill oried for its cynical cruelty For awhole generation man had been a drug in Ireland , and population a nuisance .

” That sentence reveals the underlying moralityof the foreign trader as laid bare in the doctrine of supply anddemand .

” The same j ournal wrote about the “ inexhaustibleIrish supply which had kept down the price of Englishlabour,

” adding that this cheapness had contributed vastly tothe improvement and power of those who had money tospend . We may possibly live to see the day when the

chief produce of Ireland will be cattle,and English and Scotch

the maj ority of the population .

”

Is there any wonder, when Free Trade England has thusapplied its principles to ruin Ireland

,that the Irish are instino

tiv ely Protectionist ? People have said that Ireland’s popul a

tion increased beyond the"

means of sustenance . Mr. Georgehas demolished that fallacy : When her population was at thehighest Ireland was a food-exporting country. Even during the


It is astonishing how those remarks cut to pieces the freetrader’s exhortation in Australia, to drop manufactures and taketo the land . As a matter of fact, wherever agricul ture is pursuedto the neglect of manufactures it becomes precarious , because insuch cases it must depend on the export trade . That is what,in Ireland and elsewhere , has so often raised the questionHow are the people to be fed and employed 2 This problemstill baffles an age which can transmit a message round theworld in the twinkl ing of an eye , and which can point out thelocality of a planet never seen . It is a question which confoundsalike the bold and the wise .

And yet the answer to the question thus stated ought notto be far to seek , if men only approached it with the scientific

14 . Causes mind . Carey asks pertinently enoughof Irishdecline. To what may this extraordinary course of ev ents beattributed ? Certainly not to any deficiency of land , for nearly one

third of the whole surface— including millions of acres of the richestso ils of the kingdom—remains in a state of nature . N ot to the ori

ginal inferiority of the so il in cult ivat ion,for it has been confessedly

among the richest in the Empire . N ot to a deficiency of mineralores or fuel

,for coal abounds and iron ores of the richest kind

,as

well as those of other metals,exist in vast profus ion , N ot to any

deficiency in the physical qualit ies of the Irishman—it be ing an

established fact that he is capable of performing far more labourthan the Eng lishman

,the Frenchman

,or the Belg ian . N ot to a

deficiency of intellectual ability,Ireland having g iven to England

her most d ist inguished sold iers and statesmen,

and hav ingthroughout the world furnished evidence that the Irishman is

capable of the highest intellectual improvement . Nevertheless ,while poss essed Of every natural advantage , he is , at home , a Slaveto the severest taskmasters

,and in a cond it ion of poverty and

distress such as is exhibited in no o ther port ion of the civilised

That is the problem . Surely history answers it. Besideswhich Ireland has been persistently overtaxed . Mulhall, inhis Industries and Wealth Of Nations , says : If taxation wereadj usted in proportion to earnings the share that correspondsto Ireland would be exactly per annum,

or 24 per cent.less than at present .”


We saw Ireland , in the days of her early manufactures , quiteas well to do as England was . We saw the wars Of the tradersravage her industries and destroy them for a century, duringwhich period Swift called upon his countrymen to burn everything from England except her coal . We saw in the birth of anindependent Parliament, in 1782 , a tariff wall set up to guardthe land against the invasion of trades , and in that period weperce ived a splendid effort at national regeneration . But assoon as the beneficent safeguards were broken down the domesticindustries of Ireland collapsed , and the people drifted intounexampled poverty and famine . This is but the Operation of awell -known law— that no land can be prosperous while it liesat the mercy of the trader, who , when unrestricted , is the universal

fee of human well-being.

PREFERENTIAL TRADE

LETTER IX.-TO LORD CURZON

THE HINDOO AND THE TRADER

Covetousness disbeliev eth God , and laugheth at the rights ofman.

MY LORD ,—You know that Great Britain is indebted to trade

for her Indian Empire . There can be no denial of that . Whatever oi merit is in that stupendous acquisition it equitablybelongs to trade ; and, of course , whatever of demerit also .

The political economist may study the career of the trader inIndia with great advantage . We may take one preliminaryglance at what was the social condition of the country overwhich you preside prior to the advent of the trader .The Indian Empire , you know, like China and Egypt, had

prohibited external trade,and according to Adam Smith had

1 . India grown Opul ent in doing so . India had both arts andbefore the manufactures in a much more advanced state than hadtrade”

e ither Mexico or Peru . Many historians concur instating that the natives Of India enj oyed much simple liberty .

Greig is one . He says

The nat ives of Hindustan seem to hav e lived from the earliestperiod down, comparat ively speaking , to late t imes, if not free fromthe troubles and annoyances to whichmen

,in all condit ions ofsociety,

are more or less subject , st ill in the full enjoyment , by eachindividual , of his property

,and of a very considerable share of

personal liberty }

The rul e of the native princes had been that of despotictyrants , and their taxes were often grinding but the ir exactionswere always Spent in methods which found employment for thepeople . There were laws of village communities which werenever violated ; and the direct commerce of the producer and

Greig ,His tory of B ritish India ,

v ol . 1. p. 46.


very nearly ruined the new venture . Forty years later thesedifferences were composed , and the company acquired and

exercised exclusive rights .Then came Clive . He was a mere clerk in the Service ; but

on troubles arising with the natives he turned out in arms , andhaving fought and won Plassy ,

he gave the Company a positionin India by right of conquest . A few years of great prosperityfollowed— some brilliant fortunes were made but, in 1773, t heCompany was again in a state of bankruptcy. Warren Hastingshad been sent out the previous year to pul l things together .

He did it by a course of such energetic and unscrupul ous ruleas made all England Shudder, when , later on , the facts becameknown . The Regul ation Act of 1773 took most of the governingpower out of the hands of the Company direct, and vested it ina Board of Control .Warren Hastings ruled for thirteen years , and returned in

1785 to be impeached for high crimes against humanity. AdamSmith ,

'

writing the year before his return , said The Companyis now in greater distress than ever .”

The House of Lords , a body in the e ighteenth century ascorrupt as Walpole’s own Comm ons, passed a vote of censureon the course of appalling treachery and cruelty of the firstBritish rulers in India . As for the hideous crimes of WarrenHastings— crimes of murder, rapine , spoliation , treachery, andextortion almost unexampled—Green says they were mostlycommitted to glut the ceaseless demands of the Company athome . The tyranny and corruption of the merchant clerks ,who suddenly found themselves lifted into rulers, was fast ruiningthe Province of Bengal .” 1

Your Lordship cannot avoid feeling a pang on a review ofthese things . Apart from open robbery

, the very dealings ofthe Company with the natives were an intolerable oppression .

I have said that India’s new masters possessed exclusive traderights . The East India Company could fix its own selling priceon what it sold , and its buying price on what it bought . Itexactly resembled Sydney Smith’s definition Of marriageMarriage resembles a pair of shears , so j oined that they cannot

Green, Short History , pp. 75 8 , 766.

THE HINDOO AND THE TRADER 111

be separated ; often moving in Opposite directions , yet alwayspunish ing anyone who comes between them .

”

The Hindeo~

passionately attached to the place of his birth ,and ready to suffer any privations rather than abandon it—hadno e scape from the Company’s trade . There was no customerfor his tea and his corn but the Company , and no one else fromwhom he could get his necessaries . He was

’

between the bladesof the trader’s shears , and Macaulay tells us how he was cut topieces 1 « 1

The misgov ernment of the English was carried to a point suchas seems hardly compat ible with the existence of society. Theyforced the nat iv e s to buy clear and sell cheap . Enormousfortunes were thus rapidly accumulated at Cal cutta

,while thirty

millions of human beings were reduced to the extremity ofwretchedness . They had been accustomed to l ive under tyranny

,but never

under tyranny like this . They found the litt le finger of the

Company thicker than the loins Of Surajah Dowlah . Under the irold masters they had at least one resource—when the ev il becameinsupportable the people rose and pul led down the gov ernment .

But the English government was not to be so shaken off. Thatgovernment , oppressive as the most Oppressive form of barbariandespot ism

,was strong with all the strength of civ ilisat ion . It

resembled the gov ernment of ev il geni i rather than the governmentof human tyrants . Somet imes they submit ted in pat ient misery.

Somet imes they fled from the white man as the ir fathers had usedto fly from the Mahrattas

,and the palanquin of the English

traveller was often carried through silent villages and towns that thereport of his approach had made desolate .

1

The fore ign trader ruled everywhere . The weight of histyranny was heavier than the sword of Oliv e . According toAdam Smith , even while food was abundant in the country , theexactions Of the rulers caused three or four hundred thousandpeople to die from hunger every year in Clive ’s time

,in the

Province of Bengal , purely on account of the extortions of whathe describes as

the mercant ile Company which Oppresses and domineers in the

East Ind ies . The great fortunes so suddenly and so easily

Macaulay, E ssay on Lord Clive ,


acquired in Bengal and the other Brit ish Set tlements in the East

Indies maysat isfy us that , as the wages of labour are very low ,

so

the profits of stock are very high 1n those ruined countries .1

Even Clive himself, a ruthl ess tyrant over the subj ugatednatives , felt compelled to denounce the still more unsparingrapacity of the honourable merchant traders who had employedhim

.Burke , in a dozen speeches of immense power, laid bare

the iniquitous policy of the East India Company, and showedthat the methods employed, the fraudul ent collus ions between

the London board of directors and their officers in India , theirwars

,broken treaties , ruination of zemindars , and usurious

exactions , were the root of the nation’s misery and bankruptcy.

India,he said , was lashed from oppressor to oppressor, whilst

a single drop of blood is left as a means of extorting a singlegrain of corn .

” It was in this way that production itself wasarrested . The poor ryot , who was charged 40 , 5 0 , and even

60 per cent . on money lent to him, threw up his cultivation indespair . The land reverted to jungle , and the Company reapedin bankruptcy the harvest which it had sown in rapine . Therewas seen in the Madras Presidency four-fifths of the land out ofcul tivation , while famines abounded . Vast heaps of humanityfestered in compul sory idleness, and encumbered the soil whichthey ought to have tilled .

Then was illustrated the difference between the tax imposedby the fore ign tyrant and the domestic one . The taxation of

the native princes had always been spent where it had beenlevied ,

and the country as a whole appeared to be little poorerfor it. But the taxation of the Company was sent to pay Englishdividends . The imposts of the native rul ers , in being spent,had given employment

,but the foreign tax drained the country

of nutriment and returned nothing .

It was the enforced idl eness that inflicted themost deadlyevil . The ryot was prohibited from gathering salt on the shore ,

3 . Idl e_ even though salt was necessary to him to ward off

nes s and disease . The Company woul d collect only as much as“8 waste ‘ would sell at a monopoly price —a price ten times asgreat as that he had had to pay to his Mohammedan masters .

1 Adam Smith , l l calflz of Nations , pp. 75 , 94 .

114 PREFERENTIAL [ TRADE

prohibitive tax on his loom and his spindle , and an embargo on

the collection of salt that crystall ised before his door. Whatidleness means in moral declension is incalculable . Idleness is

the grave of living men. It is the mother of poverty in pocketand in mind . Idleness has been called the devil

’s bolster . Itis the greatest prodigality in the world and certainly the proverbruns true that if the devil catch a man idl e he will set him towork

.Doing nothing is always to do ill . And the policy of

the East India Company was to compel the ryot to do nothingfor half his time .

The London Daily News , some years ago , said of the Indianpeasantry that they were becoming reckless through ruin .

When food shoul d have been passing in exchange for othercommodities the way was strewn with the gaunt corpses of

people starved to death .

” Similar facts caused Mr.Campbell , in his “ Modern India,

” to say : The longer we possessa province the more common and general does perjury become .”

And another writer says In places the longest under our rulethere is the largest amount of depravity and crime .”

Mr. Carey, writing in 185 6, the year before the great Mutiny,says

Calcutta grows the city of palaces,but poverty and wretched

ness grow as commerce is more andmore sacrificed for the promot ionof the interests of trade . Under the nat ive rul e the people of eachlittle dis trict woul d exchange with each other

, giving food for cottonor cotton cloth

,paying nobody for the privilege . N ow

,every man

must send his cotton to Calcutta,thence to go to England with the

rice and indigo of his ne ighbours , before he or they can exchangefood for cloth or cotton.

This was not an accident,but a part of a well-considered and

deliberate plan . McCulloch, in his Commercial D ictionary,expressly admits that from English trade Indian manufacturehas received a shock which it is not likely it will ever recover .”

In another place he says : From Smyrna to Canton, fromMadras to Samarcand

, we are supplanting the native fabrics.”

There is no mistaking language like this , written by aneconomist who understood the true meaning of competition intrade, when the weak were pitted against the strong . There is

THE HINDOO AND THE TRADER 115

a consensus of Opinion that the English system of trade government was the ruin of India . Henry George says

The millions of India have bowed the ir necks beneath the yokeofmany conquerors ; but worst of all is the steady grind ing weightofEnglish dominat ion—a weight which is literally crushing millionsout of existence and as shown by English writers , is inevitablytending to a most frightful and wide -spread catastrophe .

1

We know what a terrible day of reckoning came in 185 7 ,when , the cup of misrule being full , and its iniquity running

over, a flood of blood and crime drowned the land , submerging the innocent and the guilty alike . No one

can say that the terrible uprising was unforeseen , orthat it was the result of blind fanaticism . An Indian

officer gave this testimony to a London j ournal

For years and years w e have been act ing as if we were under nomoral responsibility whatever— as if India were a thing madeexpressly for our mere worldly advantage and nothing more— thenat ives of the soil no better than the wild beasts of the jungle , or,be ing more helpless, only fit to be hewers of wood and drawers of

water, the slaves of the white man left ent irely to the mercyof the merchant and the money-lender.

It is a terrible indictment against the trader, whose alldevouring avarice in India is thus referred to by M . Michelet

You have everywhere been gathering and sucking the substanceof the earth

,but implant ing nothing—neither sympathy nor

thought . Having brought no moral idea with you, you havefounded nowhere . Your Ind ia, one of the fines t empires the sun

has seen—what have you done w ith it’

.Z It has withered in your

hands. You remain exterior to it .

Even the very troops before the Mutiny were housed ininsanitary ovens . The death rate in the barracks was 60 per

cent . per annum for Europeans , and 2 for natives . Now , owingto more humanity since the rule of the trader has been expelled ,the mortality is only 16 per cent . for Europeans and 1 2 fornatives .Nor was the ruin confined to material things . The Hindoo ,

George , Progress and P overty, p . 82 .


when he was made a slave , was treated as a brute in the matterof education . This people , which set such high store by education when under the rule of their own princes, have been debasedby the most sottish ignorance . In 185 8, the year after theoutbreak, only was set apart for the education of all the

children of India . Now the Government spends more thana year ; but the condition of the natives may be

gauged by the fact that there are of them unableto read and write .

After the Mutiny the iniquitous rule of the Company wasabolished by the Indian Act of 185 8. The Queen took over thewhole government . A Secretary of State in London , with anIndian Council, rules the dusky empire with its three hundredmillions of souls . In India itself you are the Governor-Generalor Viceroy, assisted by a Council of Advice , and you administerthe government . The area over which you rule isacres , with a population of 184 to the square mile .

I have shown , in the chapter on the World’sWorkshop,the

method by which Lancashire traders in our own day have soughtto suppress all attempts at restoring Indian manufactures .Under free trade and protection alike the nature of the traderis ever the same . The Indian Government for purposes ofrevenue put a 5 per cent . duty on cottons . All Lancashire wasin arms lest this revenue impost should incidentally encouragethe re-establishment of Indian mills and the Rosebery Government was threatened with extinction unless it reversed thisIndian policy . Even now

, the exports of India are almos tentirely agricultural ; and one third of them are swallowed upin English pensions and expenses of government . In the lastIndian famine but one it was estimated that six millions ofpeople died of starvation . Mr . F . H . Barrow,

writing in theCalcutta Review of December 1892 , says of the condition ofthe country in the Province of Bengal : All the old parts aremore or less in a state of decay . Bengal is raising a paradisefor lawyers and a pandemonium for everybody else .

”

It is an astounding fact that in a country populated by 184persons to the square mile four acres out of every fiv e are returnedas uncultivated . The consequence is a depleted revenue and ashrunken expenditure . A single i tem from the list of imports


LETTER X.—To PRESIDENT EMILE LOUBET


If thou sees t a man of understanding get thee betimes unto him, and let

thy foot wear the steps of his door—E cclesiasticus .

MY DEAR MONSIEUR ,—In Jean-Baptiste Colbert, France was

once happy,in j ust such a man as is described by Ecclesiasticus

—a man of luminous understanding—and he shines1 . Her

policy of down upon us as a beacon through ages of economi c

gigs“ darkness . His life’s work wil l never be forgotten by

his grateful countrymen . It is a story full of instruction—this industrial history of France . There was never apeople on earth who wrought more for their own undoing thanyour countrymen have done . Never was there a nation whichmore persistently followed the policy of the warrior and thetrader.For a thousand years, with brief exceptions, France pursued

the ignis fatuus of foreign trade and spoliation , with its almostinvariable concomitant of industrial neglect. Glory and tradewere her goals. She has often gained both . But she gainedthem , only to discover, again and again , in the midst of herseeming splendour

,that her domestic weakness and destitution

laid Open her territory to the spoil er.Ignoble wars of rapine and conquest have frequently dazzled

the eyes of French vanity,only to end in national humiliation

and collapse . The path of French glory has invariably led tothe grave of the nation

’s hopes .You, Monsieur, will scarcely dispute this . Pepin and Charle

magne overran Italy and Germany . They wrote their nameson the open page of history in a blaze of glory. They passedaway and left a kingdom so exhausted and defenceless that itfell a prey to a horde of Norman robbers . Twice , for brief

WHY FRANCE ABJURED FREE TRADE 1 19

intervals under the reign of Louis XI . and Henri Quatre , therewere spasmodic efforts at the cultivation of a home trade in thelight of the arts and sciences . But they were like flowers blooming out of due season . They were industrial encouragementsoffered to a people bent on conquest and rapine . The soldierand the trader have always scorned the toiler . Work was dishonourable . Through murder and theft lay the prime path tohonour. It was so much easier, according to the feudal code ,to levy tribute on foreigners at the point of the sword than toraise riches from the soil under one’s feet, or from the atelier ofone’s own city.

This, Monsieur , is well known to you . It is written largein very red letters . During the whole Valois dynasty a policyof violence and plunder continued . The Bourbons exh ibitedbut little improvement . Magnificence in the nobleman andpoverty in the peasant existed side by side , the one at the expenseof the other. France was always a country of social extremesone class revelling in luxury, and the other ground to the earthby rent and taxation .

Hard as was often the lot of the English peasant,it was

regal compared with the hopeless indigence of the Gallic hind .

Reading the following passage from an old writer we cease towonder how it was that the French tr0 0 ps went down beforethe sturdy English bowman and billman at Crecy, Poitiers , andAgincourt

Thay drynke water, thay eate apples w ith bred right brownmade of rye . Thay eate no flesche

,but if it be selden ,

a litill larde,

or of the entrails,or heds of bests sclayne for the nobles and mar

chaunts of the lond . Thay w eryn no wollyn ,but if it be a pore cote

under their uttermost garment , made of grete canv as (it cal it a

frok . The ir hosyn be of like canvas , passen not the ir knee ;wherefor they be gartried, and the ir thyghs bare . Their wyfs 8

:

chi ldren gone barefote thaymay in non otherwise lyve for sume of

them,that was wonte to pay to his lord for his tenement , which he

hirith by the yere scute payyth now to the kyng over that sent fyneskuts . Wher thrugh they be artyd by necessit ie so to watch

,

labor, grub in the ground for the ir sustenance , that their

nature is much wastid,and the ky nd of them brought to nowght .

Thay gone crokyd and ar feble , not able to fyght , nor to defend therealme ; nor they have w epon nor monye to buy them wepon


w it-ha] ; but v erely thay lyvyn in the most extreme pov ertie

myserye , yet thay dwellyn in one the most fert ile realme of the

world .

‘

That was a French peasant of the fifteenth century . He

was but a shade better in the middle of the seventeenth century ,

2 Cha_

when the Grand Monarch began to dazzle the world andrgwm and overawe Europe . It was in 1661 , when that magnlfi

Pol icy of cent piece of royal meanness , who had a peculiar talentColbert .

for choosmg capable servants , summoned Colbert totake charge of the finances of the country . Never did rul ermake a happier selection . Men of the most diverse minds haveagreed in eulogising this minister. I do not think , Monsieur ,that you are an exception .

Jcan-Baptiste Colbert was France ’s first and greatest Protectionist Minister . He was Scotch by descent , and is describedby an Encyclopaedia writer as having a mind somewhat heavyand harsh

,but solid

,active , and unwearied in work .

” 2 Greensays that no financier could compare with Colbert.3 On cominginto office Colbert took a survey of the state of the country. He

found agricul ture at the lowest ebb, and manufactures scarcelyin existence . He saw that French arts and industry had everywhere declined, while those of Holland , Germany, and Italy wereflourishing . With what in that age was a touch of genius heat once diagnosed the disease and divined the remedy . The

French peasant, he observed, had not been unmindful of thesoil ; but he needed a home market in order to escape dependence on a fore ign trade which left him no profit . There wasno chance of agriculture flourishing except in conj unction withmanufactures . To the establishment of these he bent all hisenergies .But Colbert did more . He found domestic commerce crippled

by a system of internal Customs houses, set up between everyprovince of France . They were the engines of royal rapacity.

He removed them all to the frontiers of the country, and thereincreased the duties on imported manufactures , with a v iew totheir entire exclusion .

Quot ed by Carey , P rincip les of Social Science, v ol . iii. p. 140 .

2 Encyc lope dia B ritcwmica , art . France .

3 Green, Short History, p. 65 8 .


the wonderful development of her industry. Even AdamSmith testifies to his great abilities ,

” and says he was a manof probity

,of great indus try, and knowledge of detail of great

experience and acuteness in the examination of public accountsand of abilities , in short , every way fitted for introducing methodand good order into the collection and expenditure of the public

revenue .

” 1 Dr . Smith properly blames Colbert for his prohibition of the export of French corn , and likens it to the fallacy of

the school of the free-trade French philosophers , who , a centurylater, represented agriculture as the sole source of the revenueand wealth of every country.

” 2

But splendid as were the results to France which followedColbert’s protective pol icy, they were much interfered with bythe king’s constant wars , as well as by his persecution of theHuguenot artisans and skilled artifi cers . For a dozen yearsbefore the Revocation of the Edict of Nantes in 1685 , the monarchhad harassed these clever tradesmen by fines and forfe itures .Indeed , four years before Colbert

’s death the Dutch secured ,under the Treaty of Nimeguen in 1679 , a partial repeal of Colbert

’ starifl of 1667. Subsequently other treaties were forced uponLouis— those of Ryswick (1697) and Utrecht (1713) -completingthe industrial discomfiture of the country . The discouragementthat came to French manufactures when the ports of Francewere again thrown open extended at once to French agriculture ,and the grand monarch ended a reign of seventy-two years, afterbegging a peace dictated by Marlborough , and being reduced tothe extremity of selling titles for his royal maintenance .

History is replete with chronicles of the social misery whichfilled the country between the death of Colbert and the rise of

3 , The Turgot . We know how that misery was revenged in

Ea

gles: 25 the Revolution and the Re ign of Terror. Turgot, whoFree fully grasped Colbert’s idea of the enormous adv and e ' tages of internal commerce compared with externaltrade, declared that in ten years he would undertake to peacefully revolutionise the condition of the country. But after threeyears Louis XVI . superseded him by the appointment of Necker,who concluded a commercial treaty with England which in two

Adam Smith , Wealth of N ations , p. 62 2 .

2 I bid. p . 62 3.

WHY FRANCE ABJURED FREE TRADE 123

years gave the coup de grdce to the remnants of French manufactures . M . Blanqui describes the position for us

While England and Holland could borrow at 3 or 4 per cent ,

the farmers of the revenue charged the K ing of France 10,2 0

,or

even 5 0 per cent . The enormous taxat ion had exhausted the

country,deprived as it had been of the labourers by reason of the

demands for the war. Commerce had almost ceased to exist ; andmanufactures

,decimated by the proscript ions of the Protestant s

,

seemed condemned to lose all the conquests for which they hadbeen indebted to the genius of Colbert .

‘

In this disastrous return to free ports ended France ’s firstexperience of protection . That policy had made the countryprosperous beyond any previous example its extinction causedher to relapse into her former condition of misery .

The eclipse , however, was a brief one . The Revolution wasat hand , and with it came the re-establishment of protection .

The plunge which France made into foreign war neces4 . The

Rev olu sarily closed French ports to foreign manufactures, andtion

bring swhat commenced as a mere mlhtary neces81ty Napoleon

bad; prO subsequently expanded into a definite policy. Histeetmn' Continental System ,

” though conce ived as an act ofwar against England

,had most beneficial resul ts on France

internally. It revived all the national traditions of Colbert ;and as fast as Napoleon’s perpetual levies drained France ofmen and money, the newly awakened energy and industry ofthe people made good the losses sustained from war. It was awonderful and almost unique instance in which the soldier hashelped industry.

And then,Monsieur le Président, there was in addition another

point which told in France’s favour . The subdivision of Frenchsoil had begun,

in pursuance of Colbert’s policy, before theRevolution . Arthur Young travelled in France in 1789 , and ,describing the Dunkirk district, he speaks of one or two fieldsenclosed, of most wretched blowing dune sands , naturally aswhite as snow but improved by industry. The magic of ownership turns sand to gold .

”

The small peasant proprietorship was growing common;

Blanqui, Histoire ole l’E conomic P olitique, vol . 1. p . 2 5 4.


How much these two forces—revived agriculture and stimu

lated manufactures—must have aided the country, may bepartly gauged by what she had to endure in the first two decadesof the century

From 1808 t o 1815 (says Dupin), twelve campaigns cost usnearly a million of men

,who d ied on the field of bat tle

,or in the

prisons,on the roads

,or in the hospitals

,and of

francs . Two invasions destroyed or consumed on the so ilof old France francs’ worth of raw products

,

or of manufactures,of houses

,of workshops

,of machines

,and of

animals,indispensable to agriculture , to manufacture , or to com

merce . As the price of peace,in the name of the Alliance

,our

country has seen herself compelled to pay add it ional millions,

that she might not too soon regain her well -be ing , her splendour,and her power. We found ourselves thus d ispossessed of all ourconquests

,and with strangers encamped on our territory ,

where they lived at the expense of our glory and our fortune , unt ilthe end of the year 1818 .

5 . AgriIt will be interesting to give some comparative

cultural figures, showing the progress of French agriculture .

pmgrees ' They are compiled from the Statistique de l’Agriculture de la France and the Statesman’s Year Book

Annual AverageYear. Fiscal System Increase Farm Produce

1700 to 1760 Free Trade1760 to 1788 Free Trade1788 to 18 13 Protection1813 to 1890 Protection (all but one short interval)

There has been a marvellous expansion in French agricul

tural production of wheat. Thus

Value

Mulhall says that since 1850 the total till age remains atabout but that the tonnage of the creps has increased


count by thousands men who have never known bedsheets ; otherswho have never worn shoes ; and by mill ions those who drink onlywater

,who never, or very rarely, eat meat or even white bread .

The number of people said to be engaged in agricul ture inFrance is about Mulhall sets down the hands as

but this means with him the landowners and the irmale assistants . If the families are reckoned in , there is not anyreal discrepancy in the two calcul ations .Mr. Harris , in a paper read before the Royal Statistical

Society in June 1895 , estimated that the value of English landhas decreased of late years by as large a sum asIn France the story is all the other way, thus

Value of French land in 1813Ditto d itto 1840

Dit to d itto 185 6

Ditto d itto 1894

The English contrast is given as follows

Value of English land in 1815Ditto d itto 1843

Ditto d itto 1885

Ditto d itto 1895

These figures are not final— perhaps they are disputable ;but there is no possible question that English land has declinedin value enormously . That is what protection has done forthe French farmer, and what free trade has done for the Englishfarmer. In France people earn a living on the landfrom agriculture . In Great Britain and Ireland there are only

who do so .

In French silk cul ture,in production of coal, iron ore , pig

iron, and fin ished iron and steel , there is a record of continuous

7 M ate_advance . Sugar beet produced onl y tons in the

I‘

l al first quarter of the century ; in 1884 it producedgmmh ‘ tons . In considering the foreign trade ofthe two countries there are some exceedingly interesting factsto be noticed . France had a century’s start of England in

WHY FRANCE ABJURED FREE TRADE 1 27

external commerce} She lost that advantage when Englandadopted protection , and England took a strong lead . Napoleon’sContinental System was designed to ruin English trade .

Curiously enough , it was really the ruin of Napoleon himself .It assisted French manufactures greatly but the blow it aimedat England was largely foiled by the vast system of contrabandtrade that it encouraged . This was so enormous that Napoleon’sown soldiers were clad in great coats made in England andmarched in shoes made in Nottingham . It is an historical factthat Napoleon’s irritation against the Russian Emperor Al exander arose primarily because the Czar would not or could notenforce strictly the blockade of English goods . Napoleon wentto Moscow to compel the Czar to obey him , and he found hisfate .

The foreign policy of France during all this century—savein a brief period during the re ign of Napoleon III .—has beenone of protection to the national manufactures . This may beseen in her tables of imports and exports . She exports nearlythree times as much in manufactured goods as she imports .She imports much raw material and exports little . There isalways a large balance of bull ion finding its way to France . The

growth of her fore ign trade , which has come without forcing , isas follows

Year.

The rate of foreign trade per head was as follows

French imports and exports, 185 4Ditto d itto 1884

Ditto d itto 1894

Ditto d itto 1901

Adam Smith , Wealth of N ations, p. 39 1 .

Average AnnualImports and Exports .

L


The first two items are taken from SirRobert Giflen’

s“ Report on

the Depression of Trade ,” and the last from the Statesman’s

Year Book .

”

This is a record of advance which is very wonderful as theforeign trade of a nation that has taken no pains to make itself“ the workshop of the world . Of course it is true , however ,that France has not escaped her share of the prevailing trade

depression .

Miss Betham-Edwards brought out, in 1889 , a new edit ionof Arthur Young’s Travels in France .

” She give s a strikingcontrast between England and France . It is the record ofa hundred years of progress in both countries— from 1789 to

1889 . In the former year Arthur Young saw the English farmerand peasant superior in every respect to the French . He ate

more meat, slept warmer, and was clad better. The Englishlabourer was a free man , the French labourer almost a serf .To -day

,says Miss Betham-Edwards, the contrast is reversed .

It is the English labourer

who is worse housed , worse fed,worse clothed , worse taught

who has nothing of his own ,who can never save to whom an acre

of land is as much an imposs ibility as a diamond necklace , and whomay no more think to own a cow than to own a racehorse ; whofo llows the plough for 2 8 . a day , and ends

,when he drops

,in the

workhouse . Eng land has increased in these hundred years farmore than France in popul at ion ,

in wealth , in commerce, in manufactures

,in dominions , in resources

,in general material prosperity

in all but the condit ion of her rural labourer. In that she has goneback

,perhaps pos it ively ; but re lat ively it is certain that she has

gone very far back . The English traveller in France tod ay is amazedat the wealth , independence , and comfort of the French peasant .

‘

Ever since the establishment of the Third Republic Francehas been increasingly protective . M . Thiers , the first President ,

8 . Won,was a determined Protectionist . This appeared almost

derful prov idential .e O O O a

Mr . Egerton , the British Consul at Pans , compiledW3 13 for Lord Duflerin a report in which he showed that atthe close of the war of 1870 France was in an almost unparalleled situation.

Forum,March 1890 .


How has this accumulation of disaster been met ? Thequestion is intensely interesting to the economist. M . Jul esSimon , in the Forum of December 1890 , said that France hadpractically the old administration of Colbert improved ratherthan replaced by the Revolution .

” In five years from the end

of the war in 1870 France had paid her war indemnity ofand was financially sound again . Bismarck had

calculated that penalty would cripple France for a generation .

He saw the country spring up in five years as if she had neverbeen wounded and then he wanted to go to war again in orderto complete her ruin .

But it was not to be . Mr. W . J . Harris tells us in detail avery wonderful story} He sets out the losses of France thus :

9 Fremh Loss upon her army in excess of England’s

323,Eng loss upon hers

,after allowing

weal th gained by Savoy and°°mPar9¢ NiceLoss through war with Germany

,including the

indemnity of and the provinces ofAlsace and Lorraine

Loss through the s ilkworm d iseaseLoss through phylloxera

Total

He then makes a comparison between the growth of wealthin England and France, starting from the year 1841, j ust beforeEngland commenced her free-trade policy. From that date , orfrom the repeal of the corn laws

,the economic policies of the

two countries have been not only distinct,but opposite .

The systems of land tenure and cultivation in the two nationsare directly Opposite in their nature and tendency. In Englandimmense estates are owned by individuals who let them out infarms to tenant-farmers , who carry on their operations withhired labourers . In France nearly the whole of the agriculturalland is owned by those who actually work upon it ; in somecases with the help of hired labourers . Peasant proprietorship ,in many and varied forms, is the basis of the system there inOperation .

W. J. Harris , M .P., Papers before the Royal Statistical Society, June 1895 .

WHY FRANCE ABJURED FREE TRADE 131

As regards French manufacturing progress,Mulhall shows

that in woollens , cottons , silks , linens , hardware , leather, glassand porcelain, paper, houses , furniture , clothing , and food , thevalue of the product has risen from in 1812 to

in 1894 . The French nation raised onlytons of coal in the first period , and in the second .

A like increase has taken place in the production and consumption of iron .

As regards their fiscal policies that of Great Britain wa sbent in the direction of free trade , with an ever-increasingdetermination to realise that ideal ; while that of France wasfixed in the direction of protection , setting always domesticcommerce before foreign exchange .Mr. Harris made a very careful , and , from the nature of the

information at his disposal, apparently a very equitable , calculation of the wealth of the two countries in the year 1841, fromwhich his comparison dates . His authority for the wealth ofGreat Britain at that time is Porter’s Progress of the Nationpublished in 1847. Taking the figures given in that volume ,with such corrections as to him appear necessary

,Mr. Harris

estimates the national wealth of the United Kingdom , in 1841 ,at which gives an average for each individual of£ 208.

His method of arriving at his estimate of the national wealthof France is based upon the French system of death duties ,which have been a mode of taxation in that country for a verylong period . The French authorities calculate the averageperiod of succession to property at thirty-six years . To multiply ,therefore

,the total wealth passing at death in any one ordinary

year by thirty-six gives an approximate estimate of the totalnational wealth . Whatever error may exist is on the side ofunderestimating ; for, as Mr. Harris points out, while it maybe a fairly safe means of arriving at such an estimate sofar as real property is concerned , it is not to be so dependedupon as regards personalty, e specially in a country likeFrance

,where families are small and a partition is so Often

made before death , in consequence of which an undervaluationmay be anticipated . Adopting this method , however, as the

x 2


best available , he arrives at the conclusion that in 1841 Francehad a total national wealth of giving an averageof £ 93 for each individual .Mr

.Harris has another factor in the sum . He says

We mus t cons ider one circumstance which laid a heavy embargo

on the growth of French wealth as compared with English, quiteindependently of any economic po licy. France has always been a

military nat ion ; Eng land has only needed to keep up a strongnavy, but has not was ted the energ ies of more than one -half thenumber that the military policy of France has removed fromindustry. The total nat ional wealth of the United K ingdom in the

year 1865 waswhile the wealth of France at that

date had increased to These figures show thatduring the twenty -four years under cons iderat ion English wealth hadincreased by and French wealth bythis be ing a greater increase for France than for England of

Up to this date,therefore , the wealth of France

had increased fast er than the wealth of England by a

year for the twenty-four years from 1841 to 1865 .

Put in tabular form the relative position of the two countriesis as follows

England 1841 2 08 England 1 893 2 48

France 184 1 93 France 1891 . 2 5 4

Engl ish exces s 115 French exces s

This result shows that during the fifty years under review,

notwithstanding the great start England had in 1841,France

has caught up to and surpassed her, not only in the aggregateof wealth , but also in the average per head of popul ation . Thislatter has been increased in France from £ 93 in 1841 to £ 2 5 4 in1891 , an increase of £ 161 per head ; while the increase in GreatBritain has only been from £ 208 in 1841 to £ 248 in 1893 , anincrease of only £ 40 per head . This does not materially differfrom Mulhall

’s estimate of £ 90 per head in 1830 , £ 176 in 1869 ,and £ 242 in 1892 . Mulhall estimates British wealth at a some


described the no less amazing changes over against Mont St .

Michel , a wide area of salt marsh turned into arable land and

market gardens.

Nothing is a more certain index to the condition of a peoplethan the number of its paupers . The statistics of pauperism10 , pan are kept differently in France and in England. In

£1

2221“ France there is a record kept of all persons relieved .

”

and Eng . In England the figures apply only to the registeredland paupers at the beginning of each year. Mr. DudleyBaxter calcul ated a few years ago that the number of people inEngland in receipt of charity is something over InFrance the actual number was the popul ation of thetwo countries being not very different. But a still more strikingcontrast is exhibited when we take the offi cial statements of themoneys disbursed in the two countries . The figures are thoseof the latest date in each case . The amount oflicially disbursedto paupers was

In England , in 1900In France

,in 1901

A review of the facts here given,scanty as they are

,leaves us

in no doubt as to the reasons why France has definitely cast 0 11free trade . She has experienced the effects of bothfiscal systems, and her best-informed sons know thatwhile under free trade she was reduced to poverty ,under protection she has placed herself industrially,

commercially, and as a patron of arts , in the very van of civil isation . She has done more than this . She has met the penaltiesof military reverses which woul d have crushed her under othercircumstances, and her system of internal commerce is nowmaking it possible for her to maintain a military establishmentwhich is the most expensive the world ever saw.

French foreign trade is almost free from the perils whichthreaten England’s foreign trade . England has aimed at beingthe workshop of the world . France has aimed at being selfsuflicing . Success came to each of them . But the differenceis this—that when the workshop loses its foreign customersit is partly paralysed . France has no such dread . Her foreign


commerce is but the natural overflow of her exuberant domesticexchange, as that of every nation ought to be .For a nation to import , on the ground of mere cheapness ,

what her sons , with a little instruction , could easily supply forthemselves, is a policy which France has abj ured on the groundthat it stunts national talent and prevents the national expansionof human facul ty. History everywhere supplies corroborationof this . Most nations need from other peoples something whichfrom unsuitabil ity of climate and soil they cannot produce forthemselves . To that extent division of production is beneficial .Extended beyond this , foreign trade is a positive inj ury.

France has had the insight to perce ive this . Her historylightly sketched in this chapter is a very wonderful one . Lookedat in any way it is a lesson , but in none more than in the signalproofs it affords that nations need to guard themselves from the

ravages of the trader with as j ealous a care as they use againstthose of the soldier.


L ETTER XI .

— To PRESIDENT THEODORE ROOSEVELT

HOW AMER ICA FOUND HER FISCAL FAITH

Though Eng land is deafened with spinn ing wheels , her people have notclothes ; though she is black with digging of fuel , they die of cold ; andthough she has sold her soul for gain,

they die of hung er.—RUSKIN .

SIR ,—Your Americans are a seeing people . They have looked

abroad and perce ived the truth of Ruskin’s true and terrible

1 . Thepicture prefixed to this letter. They had long looked

American at home and seen millions of their own people wastingintel l ect life away in idleness because , in all the wide limitlessness of their land , there was no man to hire them . The Americanintellect is perhaps the keenest in the world . It is especiallyquick to penetrate the deception of a false analogy. The net

resul t is that eighty millions of people in the United Statesafter forty years of continuous protection interspersed with ashort and disastrous relapse into semi-free trade—have agreedupon a more vigorous enforcement of the protective policy thanever. The Democratic reactionary legislation of 1894 wasdoomed by the Republican victories which placed your predecessor in the White House .

You are a thinker, and you are a writer of books which havemade others think . You know

,sir

,that great effects must have

notable causes . It is we ll if we can find out those causes . Yourlast Presidential message shows that you have searched intoAmerican economic history .

Custom counts for a good deal in nations as in individuals .When first the American colonies threw off the British yoke

2 . Thethey still remained saturated with English modes of

effect s of thought and methods of policy. They had long“ mm

exchanged their raw produce for the manufactures oftheir mother land . Trade

,of course

,was interrupted during


raw products were chiefly tobacco and cotton , looked to theEuropean markets for their profits j ust as they looked to theslave ships for their supply of labour.Slavery in the south had always cast its voice solidly against

a protective tariff, j ust as freedom in the north naturallyleant towards protection . This was in accordance with fitnessand consistency. Protectionis a social doctrine . Free tradeand slavery are both anti-social , and on parallel lines .Henry Carey quotes specimens of contemporary j ournalism

and literature which are curious reading to us now, and throwsome side -lights on the inherent relations between the rootprinciples of slavery and free trade

The South maintains that slavery is right , natural, and necessary,

and does not depend on difference of complexion. The laws of theSlave States just ify the holding ofwhitemen in bondage —Richm ond

Enquirer.

R epeatedly have we asked the North “ Has not the experimentof universal liberty failed 2 Are not the evils of free societyinsufferable ? And do not most thinking men among you proposeto subvert and reconstruct it ? Still no answer. This gloomys ilence is another conclusiv e proof

,added to many other conclusive

evidences we have furnished , that free society in the long run is animprac t icable form of society it is ev erywhere starving , demoralised ,and insurrect ionary. We repeat , then, that pol icy and humanityalike forbid the extension of the evils of free society to new peopleand coming generat ions. Two Opposite and conflict ing forms of

society cannot , among civilised men, coexist and endure . The one

must g ive way and cease to exist ; the other must become univ ersal .If free society be unnatural

,immoral

,and unchrist ian ,

it must fall,

and g ive way to slave society—a social system old as the world ,universal as man—Richmond Enquirer.

’

Here we see the early speculations of the American FreeTraders that universal society must be built on slavery, withwhite slaves as well as black . Another quite serious passagethrows a clear light on the methods to be employed towards thewhite poor of the north

Sell the parents of these children into slavery. Let our leg islature pas s a law ,

that whoever will take these parents and take care

Carey , Princip les of Social Science, vol . 11. pp. 188 , 206 .

HOW AMERICA FOUND HER FISCAL FAITH 139

of them and their offspring , in sickness and in health—clothe them,

feed them and house them—shall be legally entitled to their serv icesand let the same legislature decree , that whosoever receives the s eparents and the ir children ,

and obtains their services , shall take careof them as long as they live—N ew York Day Book.

Stand ing upon the ample planks of the Cincinnat i platform,we

are not only the apolog ists , but the advocates and defenders, of thatpeculiar institut ion . We claim for American s lavery that it hasbeen one of the chief bulwarks of our liberty, while w e claimthat it has ameliorated the cond it ion of the slave—SyracuseStandard, N .Y.

‘

That, my dear President , is a fair sample of the conclusionsto which the free-trade principles of self-interest conduct itsvotaries . The spectacle was un ique . A people who had sprunginto nationhood on the declaration that all men are born freeand equal,

’ were here seen , under the impell ing motives of animmoral trade , enforcing the doctrine that the rich had a properright to enslave the poor—that poverty and slavery wereproperly synonymous terms, and that no human society couldbe stable unless built on that doctrine .

The first symptoms of a new fact began to exhibit themselvesbefore the war of 1812 . The lands which had been cropped

4 Theyear by year showed signs of exhaustion , and though

first the area was extended , and the aggregate productionPr°te°tiv e increased , the smaller farmers were in large numbers

forced to abandon their holdings and take new farmsfurther west. American cul tivators were literally shippingtheir soil s to Europe . As a keen student , you have doubtlessnoted this . They are still continuing the process in the greatAmerican grain and cattle trade .

The first check to this came with the hostil ities of 1812 . The

immediate effect was the stoppage of both imports and exports .The country was shockingly unprepared for the struggle onwhich it entered . It had virtually no manufactures of its own,

and had depended for almost all its necessary supplies on importations . The privations of the people became extreme . But outof necessity came development . Manufactures Sprang up on

Carey , Princ iples If Social Scie nce, v ol . 11. pp. 2 5 8 , 2 5 9 .


raw piducts were chiefly tobacco and cotton , looked to theEuropm markets for their profits just as they looked to theslave sips for their supply of labour.Slaery in the south had always cast its voice solidly against

a pro’

c tiv e tariff , j ust as freedom in the north naturallyleant rwards protection . This was in accordance with fitnessand ccs istency . Protection is a social doctrine . Free tradeand slaery are both anti-social , and on parallel lines .Hel'y Carey quotes specimens of contemporary j ournalism

and liteature which are curious reading to us now , and throwsome isle-lights on the inherent relations between the rootprincips of slavery and free trade

The outh maintains that slavery is right , natural , and necessary,and doenot depend on d ifference of complexion . The laws of theSlave S ites jus t ify the holding of white men in bondage .

—RichmonclEnquire.

R epitedly have we asked the N orth “ Has not the experimentof univ 'sal liberty failed (I Are not the ev ils of free societyinsufl

'

erile ? And do not most thinking men among you proposeto subv ct and reconstruct it ? St ill no answer. This gloomysilence ianother conclus ive proof

,added to many other conclusive

evidencew e have furnished , that free society in the long run is animpractnble form of society it is everywhere starv ing, demoralised,and insrrec tionary . We repeat

,then

,that policy and humanity

alike for'

d the ext ension of the evils of free society to new peopleand coung generat ions. Two opposite and conflicting forms of

society cmot, among c iv ilised men

,coexist and endure . The one

must giv way and cease to exist ; the other must be come universal .If free ssie ty be unnatural , immoral , and unchrist ian,

it must fall,and giv eway to slave society—a soc ial system Old as the world,universals man .

—Richmoml Enquirer.

1

Here we see the early speculations of theTraders iat universal society must be built on slavery, withwhite slves as well as black .

throws azlear liwhite pa: of the north

Sell t lture pas s


every side . They were rude and primitive , but they were abeginning .

This protection lasted two years and a half . The war wasdeclared by America in June 1812 , and closed in December 1814 .

The consequent impetus to domestic industries gave a new andunique life to internal commerce . A limited foreign trade wasof course at once resumed , after the cessation of hostilities butit was more than a year before the newly planted industriesbegan to feel any serious inj ury from it . The effect of both theAmerican wars— that of Independence and the war of 1812was that domestic industry rece ived an extraordinary stimulusfrom them . This prosperity, as you know, was a mere questionof time . By the end of 1816 a new free -trade tariff was passed ,and the infant trades , submerged under the flood of fore igncompetitors , were strangled . The nation was once more reducedto its export trade of raw products .The distress which followed the return to free trade in 1817

is still a dark spot in American history . For seven years , from

5 . The 1817 to 1824 , there was a continuous industrial deelensecond Sion . In the latter year the public patience was ex

fifféf’tiv " hausted

,and the germs of a protective tariff were

evolved . It was a very timid effort indeed . But itmore than answered the expectations of its authors and so , in182 8

,Congress amended the tariff

,making it really protective

to the extent of 37 per cent . import duties . This was not donewithout a bitter struggle between the free and slave states .The latter were furious against the new policy

,and it required

all the firmness of President Andrew Jackson,and the dexterity

of Henry Clay, to avert a civil war urged by the slavery partyin the interest of foreign trade . The end was a compromisemade in 1832—3 . The protective tariff was to be graduallyreduced and abolished in ten years . This was done .

The result was wholly disastrous . By the year 1842 the

country had reached free trade , and insolvency followed almost

6immediately. There was an alarming industrial crisis .

T he

third In the midst of It a protective tariff of 40 per cent. ad

fséj fi v e valorem was passed . The result was an immediate

upspring in national life .

HOW AMERICA FOUND HER FISCAL FAITH 14 1

Referring to this period Carey says

Deep as was the abyss into which the nat ion had been plunged ,so mag ical was the effect of the adopt ion of a system that turnedthe balance of trade in its favour

,that s carcely had the Act o f

August 1842 become law,when the Government found that it

could have all its wants at once supplied at home . Mills,factories

,

and furnaces, long closed , were again Opened ; labour came againinto demand ; and before the close of the third year of its existence

,

prosperity almost universally re igned .1

But it was not permitted to continue . It was at this timethat the agitation for the repeal of the corn duties in England

7 . The grew to a head . The influence of Cobden’

s crusade

39

38 reached America . In 1846 the Free Traders were again

tgiflg of in the ascendant in Congress, and they abolished the1846 protectionist tariff , so that America and Englandadopted the policy of the Manchester school at the sametime .

But it was with very different consequences . To England,

possessed already of manufacturing supremacy,it brought

twenty-fiv e years of trade prosperity. To America the conse

quences were immediately disastrous . England was in a position to receive a great temporary impetus from her change offiscal policy . Her industries were most fully developed , andconsequently most ready to reap the advantage of foreignmarkets . But in America it was quite otherwise . She had nomore than twenty millions of people , white and black , all told .

Mostly they were a widely scattered , planting , farming , andgrazing people . The consequence was that their nascent manufactures rece ived another severe blow . In ten years they werestaggering . During the year 185 7 there were failures inbusiness for sterling .

Men then began to think seriously, and newspaper editorswrote earnestly. The following extract from a current newspaper will show the tendencyof the popular reflection

Our experience proves conclusively that all countries whichdraw the ir suppl ies from fore ign and distant sources occupy a

most uncertain,humiliat ing , and dependent posit ion. They place

Carey, Principles of Social Science, v o l . ii. p. 32 0 .


themselves at the mercy of others,and can never become truly

independent . The ir supplies depend upon so many cont ingenciesthat it is first a feas t and then a famine— firs t extremely low pricesand then extremely high— a country of extremes, and cannot beany other under such a system. The remedy is to manufactureour own staple goods , and grow our own grain .

I quote this passage for two reasons . It is a milestone on

the road of popular education . It marks a distinct stage ofnatural conviction as to the truths of fiscal science . It is , moreover, an expression of Opinion applicable to the student of thatscience in all times and climes .Every year now added to the feeling of utter instabil ity

and industrial unrest . Internal commerce stagnated . The pro

ducer was face to face with ruin , owing to his profits beingswallowed up in the cost of transportation . Farmers had topart with their wheat at 16 cents per bushel, while the samegrain sold for a dollar in London . Their bushel of wheat wasable to purchase sixteen or e ighteen yards of calico in Londonbut they were able to get only a yard or two at most for thebushel . The trader had the difference . This , you know ,

hasalways been a pecul iarity of his .In fourteen years from this last inauguration of free trade

came the War of Secession . In November 1860 Lincoln was

8 Theelected , and the threats of secession were carried out .

fjurth The war brought protection, and at its termination

fsémv e Congress confirmed the restrictive fiscal policy with a

final authority. From that time down to 1892 theUnited States of America pursued a protective policy withincreasing tenacity , and a corresponding national development .But in 1892 the Free Traders under Grover Cleveland gained

a maj ority. Once more they reduced the tariff, with the usualresult of disaster to both industry and finance . An industrialcensus , taken in 1893, showed a loss of 472 0 per cent. in thevolume of trade as compared with the preceding year, and anindustrial census in October 1894 showed a decrease of 5 6 percent. in the output of factories as compared with 1892 . Thesame census showed a decrease of 60—21 per cent. in the numberof hands employed .


There are other tests equally convincing . Manufactorieshave sprung up everywhere , so that America now competes in

11 . Thethe markets of the globe . Commerce and inte rchange

produc have doubled . Invention has shown how the creative”v " “8" skill of the people has kept pace with their industrialactivity.

All these things have evinced to the world the attractivenessof America as a land where life was worth living . Immigrantspoured in from Europe at from to a year.Chicago

,the second city of the Union , grew from in

1867 to in 1880 , to in 1890, and toin 1893, and to in 1901.

The following will show in a few staple items the rate ofwealth expansion

Number ofhorses, catt le , andsheep

Value of gold, silver, produced

1800 1901

We ight of cotton product ion lbs. lbs .1875 1901

Product ion of pig- iron . tons tons

Imports and exports,value

Owing to her protective policy America is to-day not only amore self-contained and self-sufficing nation than at any previousperiod of her history , but she is more so than any other nationon the planet. If she were walled in from all the outside worldto-morrow , or blockaded by hostile fleets, she could feed andclothe and

,

supply herself with every requisite , and with the

merest minimum of inconvenience . If the same calamity wereto happen to free-trade England

,a single month would see her

people starving .

12 . TheAnother comparison may be made—that of

pauper pauperism . The statistics of the two countries takenteet ’ from the Statesman’s Year Book are as follows

Country Populat ion


This means that in Free Trade and wealthy England there isone pauper to every forty persons . In Protectionist America therei s one pauper to every persons . In the light of thesefigures it is a little comical to read Free Trade dissertations onthe failure of protection in America .

”

Then there is the wages test. It is one of the very best inevery country , if taken in connection with prices and cost of

13 . Theliving . We can make this comparison with a good deal

wages of confidence . Some years ago , when the friends of“ st ‘

the trading system were clamouring for America torevert to free trade , the Finance Committee of the Senateappointed a board to make an exhaustive inquiry into the actualresults of American protection .

That work was vigorously undertaken and faithfully performed . The report definitely established three things

1 . The cost of living under protection had not advanced , buthad declined .

2 . Employment under protection had not been lessened , buthad been made much more plentiful .3 . Wages under protection had not declined, but had de

finitely advanced .

All these facts were elicited and set forth as the official answerto critics who had asserted that protection had distressed thepeople , and that the McKinley tariff would further impoverishthem . The Commissioner of Labour in New York , himself aFree Trader, frankly admitted in his statistics that, in additionto previous advances

, the McKinl ey tariff gave a great impetusto production , and an increase to the general rate of the wagefund . If we test this increase in the wage rate by another process , the resul ts are equally incontestable .

Taking the period of American protection from 1860 to 1890 ,and comparing the relative advances in the wage earnings ,we find' :

Increas e of wages in Great Britain under free tradein 2 7 years 30 pe r cent .

Increase of wages in United States under protect ionin 30 years 6 1 per cent .

During these periods the cost of living in England increased17 percent., and the cost of living in America decreased 5 per cent .


The last year of President Harrison’s administration , 1892 ,was the most prosperous the country had yet seen up to that

14 . Thedate . The imports and exports of merchandise reached

consum The silver question had been j ust asm , test ' great a bugbear under Mr. Harrison as it was afterMr . Cleve land was elected . But immediately afterlthe inauguration of the latter, in March 1893 , the financial and commercialtroubles began mill s were closed , and manufactures could findno purchasers .It is always advisable , when possible , to prove one

’s facts by

the testimony of an adversary, and in this instance we can doso by quoting the Democratic American press . The New York

World was a strong pro-Cleveland organ . Shortly after thePresident’s accession to power it published a circul ar letter froman ex -Lieutenant-Governor of New York, who was also headof a large hardware manufacturing company. The circular wassent to his customers in all parts of the States . In it the traderasks his clients to give him some estimate of what the proportionof their orders will be compared with those of the previous year .From north , south , east, and west the same answer came—thatthe free-trade platform of the Democrats had killed business ,and that their orders would not amount to more than one -halfto two-thirds of those of 1892 . A few quotations from some ofthem as to the reasons of this decline will furnish a subj ect ofthought for any Free Traders who feel able to digest them

Al l parties are wait ing to see what changes may be made in thetariff. N o faith in Government and its policy.

”

If the party in power persist in carrying out their platform and

promises, w e have but j ust commenced our troubles .”If the administrat ion goes on in the same line that it has in

the past , w e doubt ifwe shall sell any at all .”

If Congress attempt to meddle with the tariff,as they are

pledged by the new party platform to do,the remainder of our

factories will close . Without factories we shall be a nat ion of

beggars .”

These are but a few extracts from more than two columns ofsmall type , and it must be remembered that they are the utterances of sober business men in answer to a business communication, and that they have all the we ight which the unwilling


Free Trade depression From 1846 to 1860Protect ionist advance 1860 1892

Semi-Free Trade depression 1892 1896

Protect ionist advance 1896 1903

The Wil son semi-free trade tariff of 1894 unsettled , as wehave seen, all confidence in the investment of capital. The resultwas Coxey’s army of unemployed , and the depletion of gold inthe country. Tens of thousands of men roamed the countrybearing banners asking these significant queries

Why is it that those who produce food are hungryWhy is it that those who make clothes are raggedWhy is it that those who build palaces are houselessWhy is it that those who do the nation’s work have to

choose between beggary and crimeThe answer was that it all arose out of the evils of a murderous

competition . Imports increased manufactures declined . Tothese appeals the Democratic President turned a deaf ear, andcalled out his soldiers to suppress the starving .

The flux and reflux of American prosperity may be accuratelyindicated by the following diagram

[ 8 9 2

I8 3 4 us asPaorficrlou

FREETRADE

18 2 4 18 9 6

18 4 2

18 6 0

a favourite fallacy with Free Traders that Prote ctionistcountries cripple the ir own exports . In this connection the following table of American imports andexports may be interesting

Import s per head of Populat ion Exports per head of Population


Import s per head of Population Exports per head of Population

It has been shown in many other cases that agriculture isalways promoted by manufacturing prosperity. The United

17 . TheStates are now estimated to produce 30 per cent . of the

cultiva world’s cereals , and have increased the area of the ir”m “st ' cultivation by more than 70 per cent. since the finaladoption of a Protectionist policy. In 1850 the corn averagedthirty-seven bushels her head , in 1880 it was fifty-three , and in1891 about fifty-fiv e . In 1900 it had fallento about forty-fiv ebushels per head . This was partly owing to the great increaseof popul ation , and partly to the depressed prices of agriculturalproducts . Fortunately the country had other means of profitable occupation

, or there would have been universal destitutionin the country. Since then the grain -growing industry hassomewhat recovered

,and there is an annual product of about

bushels .I have remarked that the American intellect is shrewd in

observation . It has looked on the facts here narrated , and hasthoroughly understood them . It has perceived that a nationmust have diversity of avocation at any cost ; that unl imitedcompetition destroys diversity , and sets up the trader in terrorem

over both producer and consumer. Hence it is that America ,led by the testimony and teaching of her highest intellects, hasonce and for ever rej ected the school of unregul ated trade .


LETTER XII . —To THE UNSPEAKABLE TURK

HOW THE FORE IGN TRADER BLIGHTED TURKEY

Trade’s proud empire hastes to swift decay—JOHNSON .

Fol ly taxes us four times as much as Parl iament—Old Sahv .

He who buys what he does not want , will Oftenwant what he cannot buy .

Wise Maxim.

MY DEAR EFFENDI ,—You were not always unspeakable , youknow . Time was when a great English Queen , a Defender of

1 . Th ethe Faith ,

” wooed you as an ally against the Spanishkey’

s idolater .” 1 Queen Bess had fully assured yourMuradg reatnes s“ that English Protestantism and Islamism were one intheir hatred of idolatry . A Turkish Sultan in those days wasworth the political wooing of an English monarch , as was Turkishtrade worth the keenest pursuit of the English merchant . In15 79 we find our royal vestal going to great diplomatic lengthsin securing from your renowned ancestor the right to a freeinterchange amongst their subj ects ; and eight years latershe adjured him in the name of the fierce anger of Godto help her in destroying the Spaniard Off the face of theearth .

In those days,then

,your Sublimities had a good deal to be

proud of . You were never too proud,perhaps

,to be beyond the

suspicion of having an itching palm,

” if the bribe were onlylarge enough ; and Philip of Spain is thought to have playedyou Off cleverly by a liberal use of doubloons . But that mattersnot now . It is certain that your country was rich

,and your

people prosperous,up to the middle of the eighteenth century .

Your manufactures were numerous,your merchants wealthy

,

and the employments of your people diversified .

When your Tartar hordes first poured down on Western Asia

Eng lish Historical R eview, August 1893.


LETTER XII—To THE UNSPEAKABLE TURK

HOW THE FOREIGN TRADER BLIGHTED TURKEY

Trade’s proud empire hastes to swift decay .—JOHNSON .

Fol ly taxes us four times as much as Parl iament—Old Sam .

He who buys what he does not want ,will oftenwant what he cannot buy .

Wise M ax im.

MY DEAR EFFENDI,—Y0u were not always unspeakable , youknow . Time was when a great English Queen , a Defender of

1 . Tubthe Faith ,

” wooed you as an ally against the Spanishkey’s idolater .” 1 Queen Bess had fully assured your Muradg reatness ‘ that English Protestantism and Islamism were one intheir hatred of idolatry. A Turkish Sultan in those days wasworth the political wooing of an English monarch , as was Turkishtrade worth the keenest pursuit of the English merchant . In15 79 we find our royal vestal going to great diplomatic lengthsin securing from your renowned ancestor the right to a freeinterchange amongst their subj ects ; and eight years latershe adjured him in the name of the fierce anger of Godto help her in destroying the Spaniard ofi the face of theearth .

In those days,then

,your Sublimities had a good deal to be

proud of . You were never too proud,perhaps

,to be beyond the

suspicion of having an itching palm,

” if the bribe were onlylarge enough ; and Philip of Spain is thought to have playedyou oii cleverly by a liberal use of doubloons . But that mattersnot now . It is certain that your country was rich

,and your

people prosperous,up to the middle of the eighteenth century.

Your manufactures were numerous,your merchants wealthy

,

and the employments of your people diversified .

When your Tartar hordes first poured down on Western Asia

English Historical R eview , August 1893.

HOW THE FOREIGN TRADER BLIGHTED TURKEY 15 1

and Eastern Europe they were lucky in striking some veryOpulent patches of this old globe of ours . Carey says

Of all the countries of Europe,there is none possessed of natural

advantages to enable it to compare with those const itut ing the

Turkish Empire in Europe and Asia. Wool and silk,corn

,Oil

,and

tobacco,might with proper cul t ivat ion be produced in almost

unlimited quant it ies while Thessaly and Macedonia,long celebrated

for the product ion of cotton,abound in lands uncult ivated

,capable

of yield ing it in sufficient extent to clothe all Europe . Coal andiron ore abound

,and in quality equal to any in the world while in

parts of the Empire the hills seem a mas s of carbonate of Copper.

Nature has done everything for that country.

1

Nor is this a whit too florid in its colouring . The naturalriches in the dominions still left to you are nothing short ofmagnificent

—in soil,climate

,and minerals alike . As well as

coal,iron

,and copper , there are silver, lead, manganese , chrome ,

bitumen,sulphur

,salt

,and alum

,in abundance . In your best

days you never made the most of these things ; but that is noSpecial reproach to you, see ing that it is less than a centurysince England herself has learned to make full use of hermineralwealth . Still , a century ago you were able to teach Europe theblending of colours in the dyer’s art ; 2 you grew your owncotton

,wove it into fine muslin ; you cultivated the silkworm ,

excelled in the manufacture of the film of the cocoon ; and youstood at least equal with the foremost of the age in most otherbranches of manufacture .How does your Most Sublime Highness stand to-day, either

in your own opinion,or in that of the world at large ? You

have still an empire covering an area ofkey’s square miles and a population of And yetdecline ' they call you the Sick Man .

” Sick enough, heavenknows

,you are . What are the causes There must have been

some very potent ones . Perhaps they were many. But thereis one which at any rate you will not deny to have been mainlyinstrumental in pulling you down fromOpulence to insolvency .

In the latter end of the seventeenth century one of yourSolymans made a trade treaty with

'

France and England . If

Carey , Princip les of Social Science, vol . i. pp. 311—12 .2 Urquhart , R esources of TW key, p. 47.


you look it up you will find that it bound you not to imposemore than 2 or 3 per cent . on any imports . There was nothingvery mischievous in that when it was made , because neitheryour country nor France was at that time able to undersell theproducers of the other in the domestic markets . It ratherencouraged than retarded production . Yet out of that simpletreaty there sprang a host of subsequent evils upon you . Inthe first place

,in order to make up for the Customs revenue

which you lost,you had to impose taxes on the transport of

goods between your several provinces, and also on your exports .Man has rarely invented a more injurious form of taxation

than the octroi, whether levied at the gate of a city or on theborder of a province . It is a direct discouragement to the most

beneficent'

form of commerce . Your free -trade treaty withFrance and England encouraged the foreign import trade anddiscouraged the home trade . Your producers had to pay theexport duty

,and were so far at a disadvantage in foreignmarkets .

You may remind me,very likely, that you went on for nearly a

century after that in the maintenance of most of your prosperity .

And that is quite true . So admirable had become your domesticindustries that they easily held the ir own against foreign nations

,

as those nations then were . Besides , though you may not beaware of it

,English traders were not free to exploit you . The

Turkey Company,of the second George’s reign in England

,was

a vast monopoly ; and no one but its members had any rightto carry British manufactures to Turkey. D id not AdamSmith complain that the Turkish trade in England was notfree 2But mark the dates

,and note what happened as soon as

England began her conquests of steam,iron

,and coal . You

had only two alternatives . You must e ither keep pace, stepby step , with England in mechanical development or repealyour free -trade treaty. You did neither .The inevitable came . English looms

,fitted with all the latest

improvements,soon undersold Turkish looms and shut them up .

3. Ind'

us_Of 600 looms at Scutari in 1812 , there were but forty a

trial few years later . Of weaving establishments at” napse‘

Tournov o in 1812 only 200 remained in 1830 . Sincethat date the weaving manufacture has entirely vanished .


consume the products of Brit ish labour and skill ; and thus it hasbeen that

,in our own day, the fable Of ZESOp, of the goose and

the golden egg , has been re -enacted .

1

One of the earliest results of manufacturing decline was theconsequent decay of agriculture . In each district the great

4 . Agribulk of the agricultural classes cultivate the same

cultural articles of produce , and pursue the same routine ofdecline ‘ culture ; consequently, every man possesses a superfluityof the articles which his neighbour is desirous of selling .

” 2

The same condition holds to-day for we read in the Statesman’s Year Book that the system of your agriculture is

most primitive,” and that

only a small proport ion of arable land is under cult ivat ion, owingprincipally to the want of roads and means of conveyance

,which

precludes the possibility of remunerat ive exportat ion . The systemOf levying a t ithe on all produce leav es no inducement to the farmerto grow more than is required for his own use .

From these reasons your cotton-fields in Thessaly,when you

held it, were largely left untilled .

As might be imagined in such a state of circumstances, yourcul tivators who remain are most of them hopelessly in debt tothe money-lenders, who fleece them,

and you have no relief togive them . Real estate has become a drug in many parts ofTurkey .

Turkey’ s exports in 1899 amounted to about andher imports to The character of some of this tradeis seen in the fact that you export raw wool

,cotton

,and silk to

the value of two millions and a quarter sterling, while you importseven millions worth of manufactured dress materials, whichyour own people might have profitably made up themselves hadyour manufactures not been destroyed earlier in the century bythe undercutting of foreign traders . Even your coal you importfrom England, whi le rich coal mines in your own borders lieundeveloped . The economic waste in this foreign trade of yoursis a marvel of absurdity.

Carey , Princip les of Socia l Science, vol . i. pp. 319—20.

2 B lackwoocl’

s Magazine, 185 4 .

HOW THE FOREIGN TRADER BLIGHTED TURKEY 15 5

There is no wonder that under such circumstances we readthat Constantinople is dwindling .

” The public revenue and

5 . Natiomexpenditure each amount to about 73 . per head ; the

al bank . cultivated area of land to about one acre per head therupwy ' imports to 83 . 6d. per head the exports to 103 . 6d. per

head and the population per square mile to twenty-four . The

financial condition of the country is still more disastrous,i f

possible,than that of your industry . You are nationally insol

vent . Everyone remembers the crisis of 1880 , when you hadto confess bankruptcy in the face of the world , and when yourdebt was commuted from to onwhich latter sum you pay only 1 per cent.I have thus traced your commercial decline and fall with

an obj ect. You were rich and prosperous . You are now sickand poor in every way . Your eclipse came with the collapseof

.

your manufactures . The collapse of your manufactures camefrom the invasions of foreign traders who undersold and shutup your industries one by one . The war of trade in Turkey wasmore deadly to you than any military war you ever sustained ,and so it has been wherever the trader has found a people ’sindustries defenceless .


LETTERXIII .—To THE PR IVY COUNCILLOR M .DE WITTE

,

Ex-MIN ISTER OF RUSSIAN FINANCE

THE RISE OF THE MUSCOVITE MANUFACTURER

Cheap is dear in the long run. OldAdage .

He who buys what he does not want , wil l Oftenwant what he cannot buy.

I bid.

We develop the resources of the world, and mature and discipline our ownpowers by endeavour.

—THOS. LYNCH.

YOUR EXCELLENOY,-Everyone who has studied the history of

your great country agrees that that history has an importantindustrial story to tell . What is more , it is as interesting as itis important and one which no economist who would know hisbusiness can afford to neglect .But then

,whatever may be your love pour patrie, you will

frankly admit that the story is quite a modern story. The

1. Russia Russian commercial system dates very little furtherin the back than 1812 . It is true that your Great Peter spentpas“ a couple of years abroad studying Western industrialmethods, and that he returned with a determination to plantthe seeds of his acquired knowledge but his wars and the vastextent of his territories made the result infinitesimal . Beforethe beginmng of the present century Russia had little economichistory at all, and virtually no home manufactures or domesticor foreign trade worth counting .

Where your people were not nomadic, as they were in thecase of many of the Siberian tribes

,they were almost exclusively

agriculturists or pastoralists,carrying on their social and

industrial life in the most primitive and patriarchal fashion . Iam all the more confident that you will acquiesce in this

,because

your own illustrious Professor Mendeléefl 1 ten years ago clearly

D. I . Mendeléefi , Industries of Russia, 1893 , vol . i. pp. 1- 5 4 .


undone . R ichard Cobden, describing Russia’s condition as it was

in the early part of the century, said

So dest itute were they ofmanufacturing resources, that even thecoarse wooll ens required by the army were purchased in England .

At that t ime to have cut off the Russian Empire from all commercewith foreign countries would have been to doom part of its peopleto nakedness .1

There was, perhaps, a slight rhetorical exaggeration in this .But as a matter of strict fact, while there were no manufacture s ,there was no economic demand for manufactures . The belovedpatriarchal state of domestic economy 2 was nearly all that yoursimple and primitive countrymen wanted when the first Alexander

,having assisted in packing Bonaparte safely away on his

Atlantic rock,was forming his Holy Alliance .

Still,the conditions of modern life were making themselves

felt. Your soldiers, at least, had to be clothed with somedegree of uniformity. For that purpose foreign woollens wererequired . Napoleon’s Continental System had given you asevere pinch . Your ports, at his imperious dictation, had to beShut against English goods j ust when you most wanted thosegoods . The effect of that blockade was to give a stimulus toyour own local production . But Russian and foreign smugglerswere so clever that even in the time of its strictest enforcementmany of the Muscov ite soldiery were clad in English-made coats .Indeed

, modern history tells us that it was the knowledge Of

this fact that so chagrined Napoleon that he invaded Russia inorder to enforce more effectually the blockade against Englishtrade .However,as soon as Alexander had fairly rid himself of his

great Corsican enemy, he set himself to create a system of perfect

2 Russia’sfree trade for his empire . This was thirty years before

ti' ial of England adopted free trade . M . Storch was his tutor

£52e in political economy. That statesman was an earlyedition of Messrs . Cobden and Bright . He taught the

Czar that foreign trade was the only true means of prosperity,

and that out of it there was no national salvation .

Cobden, What N e

xt ? p . 7 .

2 Mendeléefi‘

, Industry of R ussia ,v ol . 1. p. 3 .

THE RISE OF THE MUSCOVITE MANUFACTURER 15 9

What followed is told in a few words . The nascent industries of Russia found it impossible to hold their own in a tradecompetition against the more advanced factory system of theWest . They pined, withered , and decayed . What Colbert hadrecently taught the French , the Russians had yet to learn . The

Muscovite had to purchase his knowledge by experience . Britishgoods poured in, and Russian gold poured out and the Government was enfeebled while its industries were undermined .

Count Nesse lrode discovered this state of things in the lastyear but one of Alexander’s reign—1824 . He set out the factsin a State circular, showing that after ten years of free tradeagriculture , commerce , and manufacturing industry werebrought to the brink of ruin .

At the accession of your great Nicholas in 1825—“ Old Nickwe used pleasantly to call him in England—Russia was stillunable to manufacture enough even to clothe her own army .

And her fore ign trade was j ust as insignificant . Her totalexports were only about 33 . 6d. per head, and her imports about

43 . Such a thing as a steam-engine could not be made in all herwide territory, and she could afford to export SO little—owing tothe expense of transport, and her need for most of her own produce of grain , hemp , flax , timber, and wool—that any extensiveimportation of machinery was out of the question .

Moreover, as each family provided for itself most of what itwanted

,there was as little internal commerce as of foreign trade

,

and barbarism and Slavery were universal throughout the land .

’

That is perhaps a rather strong expression but it notunfairly epitomises the j udgments of many writers ; and ProfessorMendeléeff

’

s work already quoted corroborates that j udgment in the main .

But in 1824 Count Nesse lrode brought in a mild Protectionisttariff. The duties generally did not exceed 12 per cent ., but

33 mm”, they were high enough to be protective . In those daysstart of the costs and risks Of land carriage and sea transport

tactive.

were much greater than now nor had any one countryPol iCY then achieved SO marked a superiority in mechanicalarts as has Since been attained in England . Therefore CountNesselrode’s moderate duties were enough to give effective protection . The manufacturers of the country began at once to


revive . In ten years Russian cloth was carried in caravans tomany Asiatic fairs .It is a fact not unworthy of attention that it was mostly a

farmers’ question which induced the passage of the first Russiantariff. The low prices of corn operated then as now to the distress of the farmer . Just as the English farmer is now drivenoff the land, as the American farmer was driven to the brink ofinsolvency, and as the Australian farmer has known a life-anddeath struggle with low prices, so was it then in Russia .

In 1815 Mordinoff published in St . Petersburg a book calledManufactures and the Tariff. He makes some striking state

ments about the condition of agricul ture , and showshimself to have been a very clear thinker on the lines

ofmanu' which Adam Smith had taught thirty years earlier .factures .

He says

To the flourishing cond it ion of the nat ion,the farmer

, the

tradesman,the artist

,the manufacturer, and the merchant are

doubt less all necessary ; but ifw e compare the relat ive benefit whichis rendered to the farmer by the other professions here named

,it

must be admitted that the manufacturer and the mechanic are

infinitely more serviceable to him than the merchant .

And your Excellency may have noted that even at thatearly period Russian economists were aware Of a fact whichFree Traders in these days invariably overlook—the waste ofidleness . M . Tegoborski, writing in the middle of the presentcentury, puts this view admirably

In countries where the climate is temperate and the populat iondense , where there are a number of small towns, and the home tradeis act ive , the peasant whose labours in the field last from the beginning of March to the month of November, will find l ittle diflicultyin turning his t ime to account during the three or four months ofwinter; He can carry his produce to market he can fell and carryhome t imber ; he can look after the fattening of his cattle ; he can

hire out his labour as a carrier for the conveyance ofmerchandiseor engage in some other subsidiary branch of rural economy. Withus such resources are very much more limited , While the labours Of

'

the field are interrupted for a much longer t ime . Now what a lossof product ive forces must arise , and what a cause of impoverishmentmust be in act ion, if,for want of any sort of indus try, of the s ixty


the pinch of the foreign competitor . This work of revision wenton systematically in the light of experience gathered fromthe needs of the Empire . The following table shows whathas been done during a period of over twenty years . The percentage of duties to the value of the imports has nearly trebledsince 1869, as shown thus

The effect of this rapid advance in protection excited theanger and ridicule of the Cobden Club in England . Possibly

7 . Cobden. your Excellency has amused yourself over what Lordis t opinion Farrer has had to say about your country. He has°fit ' treated of Russia and her special follies ” in good setterms of critical infallibility. He assures us that your Muscov ite

Empire has never achieved anything by protection except toencourage sickly manufactures which provide her people withdear and bad goods,

”making agricultural labour scarce and

dear by attracting workmen from the land to the factories andlastly

,to cripple the foreign market for Russian agricultural

produce by refusing to take anything from foreign countries inexchange .

” 1

But anyway,apart from the enormous growth of your home

commerce your exports increased from in 185 4 toin 1890 . Your industries in cotton, wool, dyeing ,

flax and hemp,silk

,paper-making

,chemicals, farming, glass,

pottery,and machine -making increased under your tarifl periodfrom 1877 to 1890 by an average Of 102 per cent .

2

How different is the tale told by Professor Mendeléeff in hisfiv e bulky volumes on the Industries of Russia

,

” written as ahandbook to what Russia had to show at the Columbian Exposition at Chicago !The first effect of that tariff increase was

,says the author

,

1 Farrer,Free Trade versus Fair Trade, pp. 2 14- 15 , 2 5 6

—7 .

2 Curtiss , P rotection an d P roweritg , p. 460.

THE RISE OF THE MUSCOVITE MANUFACTURER 163

an ev ident diminution in the quantity of foreign goods imported,

” together with almost a doubling in the growth of local3 , m m ,

manufacturing and mining produce . “ Their pro

(

8

13621

32? duction cannot be developed if foreign goods are

omcial admitted duty free , says the professor ; and he isreport ! emphatic that the increased production has been of

the greatest advantage to the inhabitants,seeing that the getting

and treatment of these art icles furnish the people with wagThe great increase in the home product ion of cotton goods ,

cas t iron,coal, sugar, the products obtained from the treatment Of

petroleum,and even gutta-percha goods, already exported to

Western Europe,coinciding with the temporary introduct ion of

protect ive dut ies,clearly demonstrates the expediency of the

applicat ion of the principles of protect ion .

‘

Then Professor Mendeléeff goes on to show (page 10) that thisstimulus given by the tariff to goods of domestic production

,

at the expense of the foreign imports,” has enabled Russia to

consume more wheat at home and save the cost of transportingit abroad at barely payable rates . This export trade in wheatand coal he has little delight in, because wherever it exists in alarge degree the nation is

expending the fert ility of the soil,the suppl ies of which cannot

be renewed The present industrial policy of Russia is d irectedprecisely to the end that the product ive forces of the country shouldbe turned to the manufacture of the abundant agricultural and

mineral products of the Empire , that the people may obtain new

sources ofwages and income .

According to him the accomplished facts place Russia’s policyof protection beyond the region of rational controversy . The

home manufacturing industry is annually widening at the ex

pense of foreign imports at the rate of about roubles .Remaining in the country, this sum goes to enlarge the

national wealth (p . 10 , vol .As examples Of what the Russian mines have gained from

the encouragement of the Russian tariff, Professor Mendeléeff

points to the coal and non mines . Notwithstanding the

Mendeléeff, Industries of Russia , vol . i. p. 6 .


immense supplies of coal existing in Russia , foreign coal wasadmitted till 1880 duty free ,

” and cast iron paid only an insignificant duty. From the date of the new duty the development

Of the coal and iron mines began . In the sixties Russia produced annually only tons of cast iron ; in the e ightiesShe annually produced tons ; now she is producing

tons a year of rolled steel,

tons of wroughtiron

,and nearly tons of pig iron . The oflicial comment

on this increase is that such a growth is taking place gradually,increasing the development of the home wages and wealthamong the masses of the people (p .

The fallacy that protective duties increased the cost to theconsumer is shattered in this Russian narrative as it is in everyother where observant thinking men have looked to actual factsfor the correction of bookish theories . Before the high proteotive duties on petroleum the price of the article was such thatonly a few people could afford to use it . Shortly after the imposition of the duty the price fell rapidly

,and the consumption has

increased nearly e ightfold (p .

It is as a grain producer that Russia has had to learn one ofthe severest lessons . Her export of cereals was an extensivepart of her foreign trade . But the decline in grain values ,owing to the enormous products of California and Argentineand the modern system of gambling in wheat “ futures,

” hasconvinced the Russian farmers of the impossibility of relyingupon agriculture alone for the industrial li fe of the country .

In this respect the Russian experience is of peculiar value inAustralia , where a certain school of doctrinaires have beenteaching the farmer that his future lay mainly in the productionand exportation of grain . The only way out of this dilemma ,says the Russian writer

,

“ is the development in Russia of itsnational resources .” In other words

,they are to export less

wheat and produce a greater home market for the wheatgrower .All this is very scandalous to the logic of fhe Cobden school .

But Russian thinkers have left these gentlemen intellectually along way in the rear . The Muscovite economist perceived thatthe more he develops an export trade in wheat under existing


cotton-mills was only roubles while nine years later,again

,in 1889 , the cotton product of Russian mills was valued

at roubles .Russia occupies

,after England , almost, if not quite , the first

place for the number of cotton Spindles . This supply of nativecotton is of immense consequence to Russia, as the Lancashireoperatives in England will understand .

The Siberian inhabitants are partly nomadic and partlysettled . The nomads supply Russian manufacturers with wool ,

11 Siberiatallow

,felt

,and leather . The settlers are farmers,

an

'

d its graziers, and fruit-growers . Siberia to the averageBriton is a frozen land of horrors . So far from this

newbeing an accurate description

,it is a country teeming

with the abundant gifts of nature . It contains Englishsquare miles ; and it has a mineral wealth so rich as to givebirth to the proverb—Siberia is a golden well. Yet at the presentday this enormous golden we ll supports only ofpeople out of Russia’s total ofA magnificent patrimony is that of the Great White Czar,

full of national and geographical advantages . Your Excellency

12 . Fopumust have felt the responsibility of a comptrollership

lation and over an area of English square miles,about

area ' a sixth of the habitable world . Your people are growingfaster perhaps than any other on the face of the earth

,save

only the United States of America . Here is a record

There has been no regular census of the whole empire since185 9 but the figures are statistical deductions from the mortalitytables and the birth-rates . It is a Splendid growth

,more espe

cially when it is added that the material prosperity of the peoplemore than keeps pace with the expansion of the empire .


The four chief cities have a growth worthy of the empire .

The following are their populations

St . PetersburgMoscow

Odessa

Russia in the past has been regarded as one of the purelyagricultural countries of the world . Like every other grain

13 . The exporting country, she has always been very much in theRum“ power Of the foreigner . This dependence increasedfarmerand low unt1l many of the poor peasants were helplessly bankPfi ces rupt, and in the hands of Jewish moneylenders . Lowprices were only one of the causes of this . The famine of a fewyears ago compelled many of the farmers to sell their horses andcattle ; and the land system

,consisting of holdings under a

communal tenure in the mir, was a discouragement to goodfarming . Manuring the soil has not been carried on systemati

cally ; and high interest on loans completed the misfortunes ofthe farmers . Besides all this

,the Russian farmer still works

under primitive conditions . He has not yet the latest agricultural machinery to help him . In many parts the tools are o fquite an antique pattern . Even Count Tolstoi, it is said, stilluses on his own farm implements of an out-oi-date description .

Every peasant in Russia has been given a right to the landand that fact differentiates the country from all others . ProfessorMendeléeff tells us (p . 48) that

“ in Russia,more often than

in any other country,agricultural activity is able to be combined

with the industrial and the commercial ,” the reason being that

the peasants have all their lots Of land, and are able to devote asmall portion of their time to agricul ture . The greater part ofthe year

,and nearly the whole of the winter, they can give to

manufactories and mills,or to the smallest household or domestic

industries called kustarny.

”

14 Bus .

This information enables us to estimate at its true

8191's value the statement of Lord Farrer in the Cobden

2231811 Club papers that Russia is s tarving her agriculture

to foster sickly manufactures .” He is quite right ,

however,in saying that since 1877 she has discouraged

16

imortations

tafi .

” But it

pedent of th

imease ,

1872

1900

It isth dev

Rssia,


importations of manufactured goods by an almost prohibitivetariff .” But it is with the resul t that she is now practically independent oi the world

,and able to supply herself with food and

articles of luxury alike . She can easily feed all her own people ,clothe them

,and manufacture almost all she wants .

Yet her foreign trade fully maintains itself in spite of a largeincrease of tariff duties in 1891—perhaps in consequence of thatincrease

,seeing that it has given to the people a greater pur

chasing power by affording them more employment.The following table will illustrate this

Total

These figures are extracted from the Statesman’s Year Book .

It is interesting to observe how Professor Mendeléeff brings outthe same general facts with different years . He says (p . 46)

It is most interest ing to d irect attent ion to the fact that withthe development of the protect ive system the fore ign trade of

Russia,speaking in general terms, has not changed , has r ather

increas ed than diminished , while the home trade has unmistakablyincreased .

He gives the following figures in proof

Year Value ofExport s Value of Imports Total Foreign Trade

There is also another test, and a very interesting one, whichmay be given in this matter . It illustrates at once the growthof Russian finance

,customs returns , and fore ign trade . A

writer in the M essenger of Europe for 1890 said that theRussian imperial budget had trebled itself in thirty years . Without going quite so far back ProfessorMendeléeff gives us a tablewhich seems partially to bear that statement out . It is asfollows


P r t fMean Imperial Mean Customs (fugfdhiz

ggg Mean Value of Percentage o f

Rev enue , Rev enue , v enue to Imports, Tariff Dut iesin Mill ions of in M illions of To tal Imperial in M il lions of to v alue o f

Paper Roubles Paper Roubles R evenue Paper Roubles ImportsYears

The revenue in 1900 was paper roubles ; theexpenditure was giving a surplus ofroubles . Here we see it demonstrated that so far from the hightariff duties decreasing customs revenue , as it is sometimes saidthey inevitably do

,they have nearly trebled the customs receipts

in Russia since 1869, and raised the percentage of customsrevenue towards the total revenue from 10 to 16, although thetotal value of the imports has remained practically stationary .

No wonder your Excellency has persevered with your Proteotionist policy.

Your Russian tariffwar against Germany was for many yearsa very bitter one . But in 1894 a treaty was made to last forten years

,terminable

,however, by a year

’s notice on either side .

This permitted an interchange of many articles between the twoState s on mutually advantageous terms . Germany took Russianwheat over her border and Russia absorbed German manufactures . When the Russian trade statistics for 1894 were published ,as they were in February 1896, they showed qui te a reversal ofthe positions of British and German trade with Russia . In1893 British exports to Russia were greate r than those of Germany by about roubles . In 1894 Germany had theadvantage by about the same sum . This incident illustrates thekeenness of the trade competition between nations .Russia well recognised the principle that the Government

may advantageously start industries which private enterprisemay be slow in adopting . It was in this way that

1 5 . Rus

sian paper-mi lls,foundries

,and porcelain works were first

imam“ promoted in your Excellency’s country as Government

Wh om works . They have now attained to great dimensions .It is openly admitted in Professor Mendeléeff

’

s book that the


basis on which Russians hope to build up a manufacturingcompetition against England is cheap labour . The pay of theRussian workman is not more than half that of the Englishartisan ; but the Russian land system and the prices of livingenable him to live in moderate comfort on his smaller earnings :

The industrial future belongs beyond quest ion to the

countries possessing the condition of cheap provisions,and therefore

comparat ively cheap labour. Russ ia is.

as sured of these condit ionsnot only for the present

,but for the far-distant future (p .

The whole survey of Russian manufactures may be statedapproximately thus

Number of factories,1897

Product of same in roublesNumber of workmen employed in same

This,of course

,is exclusive of the kustars , or domestic products .

Russian forestry is a great industry. One -third of the wholeempire is clothed with forests Of valuable timber . But owingto the extension of cultivation there has been a decrease in theforest area since the beginning of the century of 2 3 per cent .The forest revenue of 1900 was roubles .Russian mining may be said to be

,like most of its industrie s,

in its infancy ; but it has already reached to magnificent proportions . The soil is rich in ores of all kinds . Gold, platinumsilver, zinc, lead, copper, iron, coal, naphtha, salt are all Obtainable

,and some in inexhaustible quantities . Still, up to the present

there are not more than persons engaged in mining .

Russiahad about miles of railways open in 1901, theGovernment owning The total capital invested up to1900 in Russian railways has been estimated atThe finances of your Exce llency’s country are unquestion

ably growing more solid every year. The rate of interest isdecreasing on the State debts

,and the ability of the country

to meet its Obligations becoming more and more easy. In 1890your predecessor

,M . Wyschnegradsky, is said to have effected

an economy in the management of Russian finance by whichthe Empire saves many millions of roubles annually ; whileyou have carried financial reform still further .


LETTER XIV.—To KAISER WILHELM

GERMAN ETHICS IN POLITICAL ECONOMY

The State is an ethical organism pol itics therefore is a branch of e thics .

BLENNERHASSETT .

MAY IT PLEASE YOUR IMPER IAL MAJESTY,—Your late and great

Chancellor made Germany, next to Russia , the most rigidly protected country in Europe , and you have accentuated that policy.

The Germans are perhaps the most profoundly philosophicalthinkers in the world . I want to trace these two facts, andendeavour to discover the connection between them .

German thinkers have followed a method which is j ust theopposite to that followed by the Manchester school . Your

1 . German great Chancellor had a sort of contempt for fine-Spun

rnethcd of theories . Your countrymen instituted what is calledmqmry '

the historical school of political economy. They beganby observing facts , and

'

deducing principles from those facts .The Cobdenist method is to postulate a series Of principles andmake the facts square with them . A study of modern Germanhistory in relation to fiscal science will help to spread light inseveral dark places .Professor List may be called the father of the present Ger

man Zollverein . He was one of the most philosophical thinkersof Germany. In 1841 he published his National System ofPolitical Economy. In that work he traces for us the gradualevolution of German manufacturing skill .

2 Th German classic literature may be said to have hade

national Its beginmng In the elghteenth century . Since that

32221

1

1

1

“ time it has been opulent with men of the deepest8

the cos cul ture and the profoundest thought In all departments

31213211“ of physical science , mental philosophy, and historicalY

research . Such names as Klopstock, Goethe , Schill er,

GERMAN ETHICS IN POLITICAL ECONOMY 173

Lessing , Linnaeus , Kant, Humboldt, Schlegel , Gall, Spurzheim ,

Neander ,Liebig , Fichte , Schelling ,Hegel , Schleiermacher , Strauss ,Ranke , and List , are but a selection of particular stars out of agalaxy of learning and talent .AS a philosopher and political economist, List represents at

one and the same time the discovery and elaboration of the“ National ” as Opposed to the “ Cosmopolite theory of politicaleconomy. List was born in 1789 , along with the French Revolution. Like most of his countrymen at that date , he favouredthe doctrine taught by Adam Smith . He was a Free Trader ,as Germans had mostly been for a couple of centuries at least .But List was a genius too profound to remain long the mereslave of a theory .

While J -B . Say was writing a work which was to be to hiscountrymen the eloquent exponent of the doctrine taught inthe “ Wealth of Nations ,

” List’s more subtle insight had piercedthrough the fallacy of the cosmopolite school . He saw that thefree-trade theory was founded on the basis that the wholehuman family is a single people , possessing identical interestsand equal advantages in the great competitive battle of life .

From this point he took his departure from the Free Traders .He Showed in a wealth of writing, which was finally consolidatedin his National System ,

” that every separate people mustprimarily legislate for themselves—fl that a nation like an indiv idual

,has no interests more precious than its own . He at once

laid aside all unfounded preconceptions, and applied himself tothe study of economic history. He found everywhere the samelessons writ large in the chronicles Of the world—that whenevernations had neglected the culture of the industrial arts andsciences, they had fallen in status . His results may be said to

be crystallised into the following sentences concerning England

Once in possession of an industry England surrounded it forcenturies with her solicitude , as a thing requiring cons tant supportand attent ion . He who knows not that by d int of labour

,Skill

,

and economy,an industry becomes in lapse of t ime a public

advantage ; that in a country well advanced in agriculture and

general civ il isat ion ,new manufactures , suitably protected , however

imperfect and co st ly the ir products in the beg inning , may , by theaid of experience and the st imulus of domest ic competit ion

,rival in


all respects the products of older factories in fore ign countries ; hewho does not comprehend to what degree a nat ion can raise itsproduct ive power by unremit ting care ; that each generat ion willpursue the work of industrial progress by taking it up where ithad been left off by its predecessor—must learn all this by studyingthe history ofEngl ish industry.

Two years after the appearance of List’s book, Dr. Wilhelm

Roscher published an explicit confutation of the cosmopolitetheory of political economy and fiv e years later again , in 1848 ,Bruno Hildebrand issued his Die Nationaloekonomie der Gegenwart in Zukunft

,

” which some critics declare to contain the mostmasterly criticism ever written on the system of Adam Smith .

Following these came a host of writers , all insisting on the

historical method in the treatment of political economy,and

adopting the national ” system as the only sound one . Ofthese Karl Knies was the first , and Schmoller, Held , Schoeffle ,Rosler, and Brentano were followers .At the present day in Germany almost every professorial

chair is held by a teacher of this school , which is the dominant

3 . Theone in this country. The leading feature in this school

l eadingis that it accentuates a moral element in all economic

$3

339

.

science . This is what your Maj esty’s Chancellor deand elared in 1878 . It is the very antithesis of the teaching

223510911 of Jev ens , who says that those who would studyhumanity in connection with political economy quite

misunderstand its purposes .” It is equally opposed to Mill , whosaid that political economy has nothing to do with humannature ; but that

“ it is concerned with him (man) solely as abeing who desires to acquire wealth .

”

The new German political economy maintains that in theproduction and distribution of wealth there are and must bethree active principles— private economy, public economy, andcharity. The first is ruled by individual interest, the second byState interest, and the third by benevolence . All writers of thehistorical school hold that individual interests must be madestrictly subordinate to those of the State , with which they are

far from identical ; that there is a close relationship betweeneconomics and j urisprudence and, above all , that Adam Smith

’sconception of the State is fundamentally erroneous, as are


free competition is the engine through which he should performthat duty . Yet this free competition owns no law and no duty, savethat of unmingled self-interest Do that you may not be done .

”

List says Germany owes her first progress in manufacturesto the revocation of the edict of Nantes ,

” 1 and to refugeeartisans who flocked into the country in consequenceof that political move of Louis XIV. It is true thateven before that date Germany had exported to England cheap coarse cloths and yarns , and in some things

was in advance of England . But, practically speaking, She hadno manufactures of any account . That act of Louis in 1685brought a change . The skilled Huguenot artisans found theirway to Germany as well as to England .

Frederick the Great of Prussia was quick to perce ive theconomic advantage , and encouraged Skill ed workmen almost aseagerly as his father did his giants in the Potsdam Guards .Napoleon’s Continental blockade was the next great stage in

German industrial growth . List says

It is acknowledged , however, in Spite of theorists,and part icularly

of English theorists—all those who are acquainted with Germanindustry bear witness , and all enlightened stat ist s furnish the

evidence— that with that blockade commenced the upward impul seof German manufactures of every kind . The nat ion

,it is true ,

lost by that blockade much of her export trade but the new profitlargely exceeded the loss .

2

When , in 1815 , Napoleon had been muzzled by the allies ,peace was restored to Germany, and with it came a period offree trade . Trade depression followed almost instantly in theContinental markets; This was inev itable , quite apart from the

natural exhaustion following upon the war. Fostered by a veryrigid system of protection— perhaps the most thorough the

world had ever seen— English mechanical invention had enj oyedfifty years of unexampled splendour, beginning with Smeaton

’snew blast furnace in 1760 , followed by Arkwright and Hargreaves , and ending with Watt’s improved steam power in itsvaried applications .3

List , N ational System of P olitica l E conomy , p. 15 3 .

2 I bid. p. 15 4—5 .

It is not out of place to note here that Crompton, who invent ed themu le, and Hargreaves , of Spinning -jenny fame, both died in poverty . In 182 9 ,


The growth of British capital also had far outstripped thatof every Continental State , thus enabling her merchants to givelonger credit . The consequence was that on the raising of the

Napoleonic blockade , foreign markets were at once filled withEnglish-made goods .Henry Brougham had incautiously declared in 1815 thatit was well worth while to incur a loss upon the first exportation , in order, by the glut , to stifle in the cradle those risingmanufacture s in the United States , which the war had forcedinto existence contrary to the natural order of things .” Hume ,

ten years later, confi rmed this iconoclastic doctrine when hesaid The -manufactures of the Continent should be strangledin their cradle .

” 2

German statesmen took alarm . They had observed thatPrussia had a protective tariff which had saved the artisans ofthat State from the ruin that fell on the rest of Germany . Itwas true that the Prussian tariff duties were much lower thanthose of England

,but they answered the ir purpose perfectly .

Slowly the German States were brought to j oin in the Prussiansystem . First Saxe-We imar and Mecklenburg came into thetreaty ; then Hesse , and eventually Wiirtemberg , Bavaria ,Baden , Nassau , Frankfort, and all the smaller States were j oinedin a commercial Z ollverein. The completion of this great policyoccupied about twenty years , commencing in 1818 .

All Northern Germany by this treaty became one greatsociety, with perfect internal free trade , and protection againstthe world .

The effect was marked . In 182 5 Germany was exportingwool to England because she had not the means of manufac

turing it . She got back woollen cloth in exchange . Thisshowed that at that time raw wool was cheaper in Germany thanin England

,and that cloth was dearer . A quarter of a century

later Germany was importing wool and sending out a surplusof the manufactured article . Paper and cotton manufactures

after a year had been gained for fifty years by manufacture sunder thes e inventions , Sir Richard Phil lips found the ag ed daugh ters o f

Hargreaves at Salford subs is ting on a charitable endowment of 3s . perweek.

Homgard , First Series , v ol . xxxiii. p. 1099 .

2 List, N ational System of P olitical E conomy, p. 15 7 .


had increased in equal proportion, and a similar impetus hadbeen given to German coal and iron mines .This had a corresponding influence on German agricul ture .

It gave the German farmers a prosperous and active home

5 . German market . German statesmen perce ived that when thouagricul sands of strong arms were withdrawn from farmingt‘m ' labour to engage in manufactures and mining, the newworkers became home buyers of the farmer’s produce , and thathome commerce took the place of fore ign trade. The prices ofthe raw products went up . The prices of all manufacturedcommodities tended downwards . Under the system of Colbert,which Germany had adopted , commerce tended steadily togrow, while the power of the trader declined . Such had beenthe growth of German manufactures up to the middle of thelast century . The Zollverein had done its work .

But agricul ture had advanced under the stimulus of theGerman protective system almost as much as it has since dec lined in England under the blight of free trade . Largelanded estates began to disappear in Germany, j ust as theytended to aggregation in England .

Mr. Kay, in his book on the Social Condition and Education of the People of England and Europe ,

” written about themiddle of the century, draws a contrast in favour of the German peasant as against the English peasant (pp . 235 , Ofthe respective methods of agriculture he says : “ The presentfarming of Prussia

,Saxony, Holl and , and Switzerland is the

most perfect and economical farming I have ever witnessed inany country.

”

On the same subj ect Mr . Howitt is quoted by ProfessorA . R . Wallace as saying the German peasant is “

the mostindustrious peasant in the world . He feels himself a manhe has a stake in the country ; no man can threaten him withej ection or the workhouse so long as he is active and economical .He walks , therefore , with a bold step he looks you in the facewith the air of a free man , but with a respectful air .

” 1 Yourgreat Chancellor must have had this in view when in 1879 hesaid about the peril threatening German agriculture from freetrade : Not only agriculture , but the present State, and

Wal lace, Laxnd N ationalisation,p. 141 .


economic principle , and it was a characteristic touch of hiswhen he told the Reichstag on May 2 , 1879

One thing is clear, that , through the widely open doors of its

import trade the German market has become the mere storagespace for the over-product ion of other countries . We must

,

therefore , shut our gates and take care that the German market,

which is now being monopolised by fore ign wares, shall be reservedfor nat ive industry. Countries whi ch are enclosed have becomegreat , and those which have remained open have fallen behind .

Were the perils of Protect ionism really so great as somet imespainted

,France would long ago have been ruined , instead of which

she was more prosperous after paying the fiv e mill iards thanGermany is to -day . And Protect ionist Russia too— look at her

marvellous prosperity ! The quest ion before us is not a

po litical,but a financial one , and we should put all personal

s ensibility aside .

1

Again , in 1882 , your Iron Chancellor said, with added emphasis

Herr R icht er has called attent ion to the respons ibility of the

State for what it does . But it is my opinion that the State can

also be respons ible for what it does not do . I do not thinkthat doctrines like thos e of Laissez faire, Zaissez al ler

,

“ PureM anches terdom in polit ics,” Jeder sehe, w ie er

’

s treibe,Jeder ache

,wo

er bleibe,

” He who is not strong enough to stand , must be knockeddown and trodden t o the ground ,

” “ To him that hath shall be g iven ,

and from him that hath not shall be taken away even that whichhe hath —that doctrines like these should be applied to the State

,

(1 especially in a monarchically,paternally governed State .

2

As to the resul ts which followed these tariff changes, we

will take the statements of a declared enemy of protection .

The president of the Cobden Club , Lord Farrer, in the workalready referred to , tell s his countrymen (pp . 15 9—176) that atleast German trade resul ts prove the folly of English FreeTraders who have been unwise enough to attribute our commercial prosperity to free trade alone .

” He admits that springing

Bismarck , before Reichs tag , May 2 , 1879 , quoted by Curtiss , p. 404 .

2 Quoted by Curtiss in Protectionflaml Prosp erity, p . 42 1 .


from a period of intense depression in 1879 German trade waslargely increased , and that the increase has been coincidentwith the adoption of a Protectionist policy .

This,at any rate , was a pretty broad admission , but it was

made only because the official reports on trade leave no Option .

The author quotes Mr. Mulv any , the British Consul at Diis se ldorf, to whose practical knowledge Mr. Scott , the ConsulGeneral , bears ample testimony. Mr . Mulv any is of the Opinionthat the welfare of the working classes in Germany has improved immensely owing to the wise policy of the GermanGovernment in giving up free trade that landowners andfarmers have suffered by the low price of foreign imports andthat it is fortunate for Germany that American bacon has beenall but prohibited . We might mention here pig iron as one

example out of many. The production of pig iron in Germanyin 1873 was tons ; in 1884 , tons ; in 1891 ,

tons in 1895 , tons in 1896, tonsand in 1902 , tons .In later years goods “ made in Germany have been a sort of

bogey troubling the dreams of English Free Traders . The

Germans,” says Lord Farrer

,rival us successfully in cheapness

,

though not generally in excellence . In that last statement ofthe Free Trade writer is contained a fact which contradicts pointblank a favourite doctrine of Free Traders in theory. Cobdenwas the first to lay it down as demonstrably true that Proteotionist countries can never compete in cheapness with FreeTrade ones . His argument was that as high tariffs necessarilyincrease the cost of all material , protection must be alwayshopelessly out of the race for cheapness . His followers havereiterated the argument ad nauseam.

The Free Trader has half a dozen methods of accountingfor the Protectionist triumph in Germany (1) German energy

7 , Free (2 ) improved trade laws ; (3) State railways ; (4) noTrade Fx strikes ; (5 ) improved wages ; (6) German thrift

(7) technical education . But the Free Trader assures

31 2 2 9 89 °f us that all this seeming success of Germany is unreal .erman

proteoGerman producers , it is sa1d , charge h1gh prices at

ti” home in order that they may sell cheaply to the

foreigner abroad.


Lord Farrer was quite sure that the German sugar trade hasbeen fostered at a dreadful loss to the nation . The Germanhad to pay a high price for his sugar in order that Englishmenmay use the German product for a song. The German beetgrower is in distress , we are told, and the manufacturers areworking at a loss . The State , they assert, has paidin bounty money, the manufacturers have sunk in

factories ; and all with the resul t that larger profits may bereaped in England . German capital has enabled England tofeed her cattle on German sugar, and made Germany the

laughing-stock of England .

This is the Free Traders’ report of the great fact of theGerman sugar trade . Official returns of the dividends paid byGerman sugar companies during the year 1893—94 were asfollows : Hirschfeld, 13 per cent . ; Neumark , 16 per cent . ;Frankenthal , 17 per cent . Kruschuetz , 24 per cent . D inham ,

37 per cent . ; Tuczno , 37 per cent . ; Wreschu,45 per cent .

Georgenburg , 45 per cent . ; Peplin, 47% per cent . ; whilst forseven years in succession the North German Company paiddividends ranging from 2 4 to 32 per cent .Such are the admitted and undeniable facts as to the manner

in which protected Germany has come up in the industrialstruggle , overtaken , and challenged the former supremacy ofEngland . Germany has never been noted for a country givento wars of aggression . For one reason her geographicalposition has prevented it . She has been , as a rule , strongfor defence and weak for offence . Unlike France , she hasnever created a great centre for the monopoly of politicalpower .It used to be said that Paris was France . Berlin was never

Germany. Munich , Hamburg, Le ipzig , Hanover, Cologne , anda dozen other populous centres of industrial and intellectualactivity, prevent any monopoly . To this some thinkers haveascribed the great intellectual lead which Germany has taken inthe world .

The Chevalier Bunsen , writing in 185 5 , said The greatestsin of Germany during two hundred years has always been itspoverty .

” Truth to say, Germany is not even now a wealthy


against sickness and accident has proved successful . The lawof old age pensions has proved almost as vexatious as it hasbeen useful so far.In 1890 your Imperial Maj esty dismissed your great Chan

cellor and determined on inviting the nations of Europe to unitefor the bettering of the condition of the workman ,

” and foramending the factory laws in the regulation of the hours andconditions of labour . In this work you enacted the part of thebenevolent despot . You welcomed help from all , but at thesame time threatened to crush all who opposed you . In thatsame year German Socialists swept the polls . Four years lateryou accepted battle against the Socialists on the subj ect of anincrease of the army . You went to the polls, and returned witha small maj ority for the military increase ; but this year theSocialists have scored against you more heavily than ever .To sum up . Here we find the most deeply philosophical

people on earth following the bent of the ir profoundest teachers ,utterly condemn ing the doctrines of free trade , and proving byscience and example that national economy cannot be divorcedfrom ethics, and the ethics demand tariff protection as a buttressagainst unrestricted competition .

LETTER XV .—To THE MINISTER OF THE INTERIOROF THE NETHERLANDS

THE HAN SEATIC LEAGUE AND THE N ETHERLANDS

The streng th of the bearers of burdens is decayed—N ehemiah.

MY DEAR MIN ISTER ,—In the volume called The Coming

Reaction ,” recently issued from the English press

,you may have

seen drawn an historical parallel between the course of Hollandand England

,as the great sea carriers of the world . The wri ter

develops one very interesting point,and misses another . The

point he makes is of great value . It is that every nation whichsets out to do the carrying for other nations must lose that tradej ust so soon as the countries which produce the goods can developships of their own . He shows how Holland rose to dazzlingeminence and fell j ust when England was ready to take up therunning with greater economic e fficiency . By precisely the

same law England is now losing the carrying trade of Germanyand America

,because those countries can do their own and some

of the world’s besides .The point he misses is that previous to the rise of Holland

the Hanseatic towns had a precisely similar experience . Their

1 . Therise and fall emphasise the principle set forth in his book ,

Hanseatic and they offer a striking commentary on the presenttraders ’ position of the Protective controversy in England .

Just as England is to-day the principal carrying nation of theworld

,so 5 00 years ago were the Hanse Towns, and again at a

later date so was Holland . The Hanse Towns were literally thebearers of the world’ s burdens but they found both glory andriches in the occupation , j ust as England now does . Theirglory and the ir opulence have long passed away . It is possible

,

however,to learn something from their story, as Mr . Chamber

lain has done .


The conditions of English trade are in some respects similarto those of the Hanseatic League . In others they are different.It was as early as the eleventh century when the Hanse Townsbegan to form themselves on the north coast of Germany. The

term Hanse then meant union . Their number eventuallyreached eighty-fiv e , and they formed a league for mutualdefence and protection . The bond sometimes hung loosely uponthem

,because of trade rivalries , but it served and the Hanseatic

League grew and flourished,and became the greatest mercantile

power in the world .

During the twelfth , thirteenth , and fourteenth centurie s

the ships of the League did for England, as for most of the otherEuropean countries , the bul k of the carrying trade . There waswealth in it then as there is now . They carried raw wool andtin

,and hides and butter from London to Hamburg, and to the

other cities, and returned laden with manufactured cloths andsilks and implements . They even established a great steelyardcompany in England for the promotion of this fore ign trade .

But about the middle of the fourteenth century Edward III .conceived the idea of getting his own work done in his owncountry . To that end he induced a number of Flemish artificersto settle in England . Having got them there

, he put on a probibitory import tax against foreign goods . This was a blow atHans e trade . Edward’s policy

,however

,was not persevered

in,and the Hanse Towns early determined that the ir goods

shoul d be transported only in their own vessels . This was exactlywhat England afterwards did in her navigation laws .The Hanse Towns became opulent even beyond the dreams

of avarice . Their ships covered the ocean,j ust as England’s

do now . Monarchs sought their friendship . Theysupplied the trade requirements of North Germany

,

many of the wants of Austria,of Flanders

,of France

,

and of England . They appear to have realised in the sixteenthcentury what England set herself to accomplish in the nineteenth . But the Hanse Towns

,intent only on the profits of

foreign trade , made a mistake which England has not made .

They neglected to provide any political union with the interiorof the country . They isolated themselves from the internaldeve lopment of the German States, claimed independence, and


In 1630 they formally dissolved their league after havingbegged in vain at the door of every foreign State for a continuance of the privileges of free trade . They implored the Government of Germany to prohibit English cloths ; but as they hadalways held themselves aloof from German interests, Germanyin turn failed them in their need . Denmark , Sweden, Russia ,and Holland did the same . As a settlement of pure free tradersthey have vanished, leaving nothing but a memory Ofevanescentsuccess and ultimate unmitigated failure .The lesson deducible from their story is precisely that which

the author of The Coming Reaction draws from Holland . Itis that a carrying trade can last only until other nations are ableto do their own transportation for themselves . England’

carrying trade must vanish in exact proportion as the economicefficiency Of the German , French , Russian, and American marineperfects itself . The rapidi ty with which that is being aecom

plished is what Mr . Chamberlain has his attention fixedupon .

The thoughtful writer of The Coming Reaction has shownthat the rise and fall of Holl and as a carrying nation are quitedifferentiated in one important particular from the case ofEngland . Throughout its history the trade of Holland was anintermediate and carrying trade only . England is the world’sgreat carrier, but she is also a great world workshop . The

author holds that her carrying trade must go as Holland’s went .But she may

,with wisdom

,save her manufacturing and other

industries .A rapid historical re’ sumé will present the argument . Holland

rose on ’

the ruins Of the Hanseatic League . The early Dutch

5 Thewere a very primitive and even miserable people .

u se of They lived in a country half covered by swampsHmand ' and forests . Compelled as they were to settle onislands Of sand

,agriculture was for a time almost impossible

to them . They consumed fish, eggs

,and vegetable food

almost exclusively,and being unable to get their supplies

from the soil,they turned to foreign trade as the ir natural

means of sustenance . To this trade they added some rudemanufactures .The example of their Hanseatic neighbours conduced to this

HANSEATIC LEAGUE AND THE NETHERLANDS 189

natural bent,and they put such energy into the carrying trade

that they are said to have built over ships in a single

6 Heryear . The Dutch further imitated the Hanseatic League

efiergy by bui lding, according to Macaulay, e ighteen cities,

apd each of which was for many purposes an independentn eb es '

State , j ealous Of all interference from without .” ButHolland did even more than this . With invincible courage she

turned her energy to draining her marshes and salt lakes .Macaulay says in his English History

The Batav ian t erritory, conquered from the waves and defendedfrom them by human art

,was in extent little superior to the

principal ity ofWales . But all that narrow space was a busy and

populous hive, in which new wealth was every day created , and inwhich vast masses of Old wealth were boarded. The aspect of

Holland , the rich cultivat ion, the innumerable canals, the everwhirling mill s, the endless fleets of barges , the quick succession of

great towns, the ports bristling with thousands Of masts,the large

and stately mansions, the trim villas, the richly furnished apartments ,the picture galleries, the summerhouses , the tulip beds, producedupon the English travell er in that age an impression similar to theeffect which the first sight Of England now produces on a Norweg ianor a Canadian.

The Dutch soon outstripped in sea power and riches everynation which had preceded them . They challenged Englandon the ocean , and withstood Louis XIV . on land . We haveJ . R . Green’s authority for it that the quarrel of the Dutchand English merchants on the Guinea Coast

,where both sought

a monopoly of the trade in gold dust and slaves,was the cause

of the second war between those nations . It was in this warwe remember

,with a blush , that the Dutch fleet sailed up the

Thames and burned three men-Of-war in English docks . Thenthe roar of foreign guns was heard for the first and last timeby the citizens of London .

” For six weeks the Dutch fleetswept the English Channel, and no British ship dare carry the

7 DutchUnion Jack abroad on it .

same Nor was it mere ly on the sea that the Dutch were

11

23513311“ formidable . The Prince of Orange , at the head of the

force s of the Netherlands, Opposed the Grand Monarchin the floodtide of the King’s success . Louis spoke with


affected contempt of the Dutch as a nation of shopkeeperslong before Napoleon derisively applied the term to England .

Down to the middle of the seventeenth century the Dutch wereas much superior to the English in the development of theirmanufactures as the English are now superior to the French . Itwas then that England began her Nav igation Acts, in which sherefused to permit imports to be brought into England except inEnglish ships . Adam Smith , Free Trader as he was, praisesthese stringent measures of protection , because they wereinstrumental in establishing British maritime supremacy .

Just as England had challenged the foreign trade of theHanse Towns, she now,

as you know, began to do the same withthat of Holland . The struggle was long and bitter . You werea stubborn people . Even as late as the end of the eighteenthcentury , 150 years afte r,Adam Smith says (“ Wealth of Nations

,

”

p . 92 ) The Province of Holland, in proportion to the extentof its territory and the number of its people , is a richer countrythan England .

”The Dutch were , indeed, a credit nation to the

extent of inve sted in English and French funds,investments at home carrying no more than 2 or 3 per cent .We can now profitably compare the rival policies of the two

nations . Adam Smith says

The carrying trade is the natural effect and symptom of great

nat ional wealth,but it does not seem to be the natural cause of it .

8 . AdamThose statesmen who have been d isposed to favour it

Smith on with part icular encouragement , seem to have mistakenP119 carry the effect and symptoms for the cause . Holland

,in

ing trade. proport ion to the extent of the land and number of its

inhabitant s by far the richest country in Europe,has accord ingly

the great est share of the carrying trade of Europe . England ,perhaps the second richest country of Europe

,is likewise supposed

to have a considerable share of it . Though what commonly passesfor the foreign trade of Eng land will frequent ly perhaps be foundto be no more than a roundabout fore ign trade of consumpt ion .

1

In that passage we have perhaps an accurate picture Of thetwo great rivals for the carrying trade and the manufacturingsupremacy of the world . Everyone knows now the bitterness

“ 1 Wealth of Nations, p . 35 2 .


Z uyder Z ee , which will some day be accomplished, and add anew province to the Netherlands .Holland was admirably situated for maritime intercourse .

Even now Germany looks longingly to the time when she mayabsorb the Netherlands and find her proper expansion in amaritime position. But Holland’ s position tod ay is that of adecayed and neglected power . The courage of her race is stillmaintained . She still manages to support some 360 people on

each average square mile Of her territory . But her formeropulence and consequence have fled. For two centuries she

boasted that the world’s trade was done by the Dutch Republic .

She lost that trade to Protectionist England .

Holland’s internal poverty is very great . The people arebarely able to provide for their proper maintenance . Her

10 . H01_manufactories are few

,principally breweries and dis

land’s tilleries . The comparative retrogression of the country”mm " is marked in all respects . The accumulated wealth of thecountry has declined . Her pauperism prevails more and more .

Her riches, per capita, are lower than those Of England,France ,

America, and the Australian States . The conclusion to whichevery student Of her history must be forced is that her long andeventful trial of free trade as a national policy resulted infailure

,as it has done everywhere else . It failed not only to

produce the national blessings predicted for it, but it has beenthe occasion of her gradual decline from the front ranks ofnational prosperity, to one in which individual poverty presseswith special severity upon the people .

The author of The Coming Reaction holds that the lessondeducible is not that Holland was wrong in clinging to free

trade,but that

,having her carrying trade as her chie f

support and maintenance , she was bound to lose it j ustas soon as other nations developed ships of the ir ownto carry their own produce . In that respect he holds

the Dutch record to constitute a lesson and a warning to England .

Great Britain has been long the world’s carrier, because she hashad no competition . Germany and America are now enteringthe field . England cannot hope to retain the carrying trade ofthose nations, or of any others which develop similar economiceffi ciency . We may agree with the author in a part of that con

HANSEATIC LEAGUE AND THE NETHERLANDS 193

elusion but in a part only. Had Holland devoted her energiesas much to the building up Of a home trade as she did to themaintenance of her foreign trade , the domestic growth wouldhave helped the other

,as it did in the case of England . She

left her home industries to care for themselves,and those of

protected England grew up and swamped them .

What Mr . Chamberlain now contends for is that England isleaving her home industries to take care of themselves

,and that

American and German manufactures are growing up and makinga dumping-ground of her domestic markets . TO the extentthat Holland neglected her home manufactures she was in error .England was right in conserving hers . But England underfree trade is now in error, and America and Germany are right .On the other point I can cordially endorse the teaching inThe Coming Reaction . NO nation can permanently remain

the world’s carrier . England must gradually lose that portionof her national income , j ust as the Hanseatic League and theDutch Republic lost it. But she can still, by a wise revision ofher foolish fiscal policy

,retain for her own people the Splendid

home industries which are still hers .


LETTER XVI.—TO DAVID SYME

, Esq ,

PIONEER OF AUSTRALIAN PROTECTION

WHY AUSTRALIA SHED COBDEN ISM

The master of superstition is the people . The schoolmen had frameda number of subtle and intricate axioms and theorems—BACON .

There are errors near akin to Truth , and wholesomes l inked with poisons .

Fol ly’

s shal low l ips can ask the deepest questions .—TUPPER .

DEAR MR . SYME ,—I think you will agree with me that Aus

tralia,too

,has its economic lesson to teach . A couple of years

Since it rid itself of the last vestige of the foreign traders’ policy,

What you began forty years ago was then completed . Everyone Of the seven separate Australian colonies started its lifeunder free trade . Every one in turn has cast that system ofl.

In this they have but followed the example of the world atlarge .

Certainly this has not been owing to any laxity on the partof the foreign trading advocates . Every effort that money

1 . Free could stimulate has been made to arrest the march ofTrade thought towards the Protectionist goal . Free Tradeenergy ' literature has been poured in floods on Australianshores . Paid organisers have never been lacking

,and Cobdenist

newspapers have been generously subsidised with all the adv ertising patronage which opulent corporations had to bestow. Inthis way

,whatever were the merits of the cause , they had the

benefit of the largest advocacy .

Nor was this all . Protectionist j ournals in the early dayswere placed under the most rigorous boycott. You had yourown experiences of that . The Age newspaper was made thevictim of a special conspiracy . The foreign importers appre

ciated the game and played it for all it was worth . The Agebegan in its earliest days to teach the doctrine that men had


disdained to give his time for less than £ 1 a day . Small bits Ofland fetched fabulous prices , and little cottages were let for arental of £ 900 a year . Hay was worth £ 70 a ton, and cabbages5 3 . each . There is no need to marvel as to where the moneycame from . By the end of 1860

,in nine years, gold worth

had been taken out of Victorian soil .But now came the inevitable reaction . Slowly the gold

yield began to slacken . As the goldfields gave out, hordes ofhomeless men had nothing to do . There were no occupationsfor the surplus diggers . People who had gone mad with theirnew -found opulence in the delirium of the gold fever stooddestitute at the door of starvation . The colony was burdenedwith a population for a large part of which it had no means ofsustenance . The lands were mostly monopolised in the handsof Shepherd kings ; local manufactures were almost unknown .

Importers were bringing to us worth of imports ayear from abroad in exchange for our wool, gold, tallow,

andhides . England had found in us a profitable customer, and ourfree -trading importers made cent . per cent . profit on the goodsthey bought and sold . The vast sums of auriferous treasurehad been won and Spent, and none save the traders seemed anythe richer for them . Poverty was everywhere . R iches were inthe hands of a few . Internal commerce there was almost none .

So that,when the gold yield dwindled

,trade went with it .

In 185 9 and 1860 the colony began to awaken to a new

inquiry To whom does Victoria belong ? ”The Age was

then some seven years old . You recall sometimes,I suppose

,

the history Of that time . The whole interests of the State werein the hands of two classes— the land monopolists and the trademonopolists of Flinders Lane . The Legislature was dominatedby them . Free Trade had so far run a course Of twenty-fouryears . The first fifteen had been a time of stagnation . The

last were a delirious riot of riches . But ne ither the one periodnor the other had laid the smallest foundation of permanentnational well-being .

4N ictoriaThe unemployed were

‘

ev erywhere . Soup kitchensin had to be established in Melbourne to feed thep°v °rty ' famished . The terrible facts sobered the men. Theybegan to think ; they began to talk, to debate , to agitate . The

WHY AUSTRALIA SHED COBDENISM

Liberal press began to ring with protests . Parliament joined inthe clamour . The colony was visibly rich in resources

,though

much of its surface gold was gone . The land cried out from itsprimeval wilderness for willing workers , and yet tens Of thousands ofmen stood idle in the streets . Shiploads Offlour pouredin from Chili

,while men were longing in vain to get on the rich

lands Of the State and grow the wheat for themselves . Thosewho ought to have grown wheat and those who Should haveground it into flour were alike idle . The two monopolist classes—the importers and the squatters— divided the colony betweenthem . NO man could deny the imminence of the evil . Itcovered the land as with a pall .In the mad whirl Of gold-getting no man had troubled him

self about the morrow . The riches came and went,and there

was an end Of them . But that morrow came,and brought a

terrible awakening . It brought home to the minds of the morethoughtful

,and most certainly to yours

,that a nation which

depends only on raw products stands like a house of cards,

ready to topple at the first breath of misfortune . That misfortune came in 1860 , when the gold yield suffered its first declinefrom in the year toThe Age newspaper began to force public men to study

the origin of the depression and the way out of it . It saw the

chief means of wealth were in the hands of a few ; that thecolony was being governed for the benefit Of a little coterie oflanded magnates and importing. traders . Men were asked toremember the means by which England had ruined herAmericancolonies . Many had j ust come from the United States

,where

,

after years of hard experience,the people were j ust ridding

themselves finally of the policy of free imports,which had once

brought America to bankruptcy and again to destitution . Andso it came that hardship brought inquiry, and inquiry broughtlight . Far-seeing men,

of whom it is certainly no flattery tosay you were one

,rose up and instructed the people in the

world-wide truth that “ foreign trade , monopoly, and warare a trinity

,

”ever j oined for the enslavement Of man . Sir

Graham Berry,afterwards Premier Of Victoria

,was amongst

the earliest and most prominent advocates of a Protectionistpolicy.


Victoria was then miserable and poor, not because her peoplewere too many, but because she had no diversity of occupation .

NO one more than yourself forced home the teaching5 . The

want of that any people who depend upon three or four staplesa new of raw produce— such as wool , gold, wine , and tallowcomuy '

must always be prepared to see the many dependenton the few . It was manifest that such production and trans

portation are always draining a land of its fertility on the one

hand,and leaving it, on the other, to the perils arising from

risking all one’ s eggs in one basket . Antonio,in the play,

felicitated himself

I thank my fortune for it ,My ventures are not in one bottom trusted

,

N or to one place ; nor is my whole estateUpon the fortune of this present year.

Victoria,in her infancy, had commenced life as a pastoral

colony . Gold-mining was added as a lucky accident . A checkcame to the gold yield, and She was sick almost to nationaldeath . Outside the very narrow bounds Of the Cobden Clubliterature men found that the doctrine of the division of employment might be pushed to ruinous conclusions . The father ofFree Trade , Adam Smith , taught unmistakably that the homemarket of every nation is worth far more than any possibledevelopment of a foreign one .

It happened that j ust then John Stuart Mill was expresslyadmitting that in young countries

,under new conditions, a

certain measure of protection is not only profitable but necessary for the e stablishment of new industries . That Englishphilosopher, in spite of his Free Trade environments, said it wasunreasonable to expect private individuals in a new country toestablish such industries without encouragement . The risk wastoo great, he said, and the probability of loss too serious . Headmitted the imperious need of such industries

,and therefore

frankly stated that the best way Of getting them was to put aprotective duty on imports in order to discourage importationand encourage domestic manufactures. Henry Carey had justrecently published his erudite work in America on the Principlesof Social Science

,

” and List’s philosophical book on Nationa]


Australian Federation came and threw all the State tariffs intothe political melting-pot

,out of which to form a composite

Federal tariff.In South Australia the revolt against free trade was later .

It was,however

,no less determined . Of course the advocates

of foreign trade stood out as sturdily as in the case of6. Protec

tion in Victoria . But Charles Cameron Kingston was a tower

gjgand of strength to the cause Of the people , and in 1893 heQueens became Premier

,and the tariff was finally moulded on

l

sfi‘

i’h Protectionist lines . In this Mr . Playford and Sir JohnAustral ia

, Cockburn materially helped .

gzzmania

, In New Zealand the Free Traders had held undisWestern puted sway up to 1876 under Sir Harry Atkinson andAuStmh a' Sir Julius Vogel . The colony had got almost into astate of despair over the magnitude of its debt the decay ofproduction

,and the charge for interest abroad . There was a

very Short Liberal term under Sir George Grey, and then arelapse to Sir Harry Atkinson’ s Continuous Ministry until1891 . Then came the great Ballance policy of Liberal legislation and protection through the Customs . In three years thenational rescue was complete , and New Zealand is now the

most prosperous of all the State s,and at the same time most

advanced in her legislation and her protective policy. Since1890 her population has increased by or 2 9 per cent . ,while Free Trade New South Wales gained only 2 5 per cent .In Queensland the tariff question has never been a prominent

one, but in the last decade there was a movement in favour of

protection, largely helped by the Federation . The Queenslandtari ff was very high

,but many of the dutie s were levied for

revenue . The maj ority of Queenslanders have been Proteotionists for many years

,but the labour question is paramount,

not the fiscal one .

In Tasmania the fiscal policy has always been mixed . TheTasmanian tariff was high and intentionally protective ; but itsrevenue features dominated it .

The Western Australian policy was very pronounced proteotion, so much so that the State refused, even after federation,to abandon her tariff duties against the other federalisedStates .

WHY AUSTRALIA SHED COBDENISM 201

The mother colony of Australia has always been less pro

gressiv e in ideas than the State of Victoria . This is easily

7 N ewaccounted for . She had not the advantages of the cos

35m,mopolitan impetus which came with the gold rush .

Wales Up to 1890 the tiny State of Victoria led the large one

of New South Wales even in population,as well as in

ideas and in legislation, and so it came about that until 1891New South Wales never emancipated herself from the influencesof Cobdenism . In that year Sir George D ibbs brought intoOperation a mi ld Protectionist tariff, declaring that it was onlyby a reverse of the foreign trade policy that New South Walescould secure her prosperity . The people of the State wereabout evenly divided . But j ust then there were many otherquestions gathering on the political horizon . The Labour Partycame upon the scene with a rush , demanding large social reforms .They were opposed by both Sir George D ibbs and Sir HenryParkes . Mr . G . H . Reid

,one of the Free Trade leaders , saw his

Opportunity . He placed himself at the head of the RadicalProgressivists

,and Offered to give that party a land tax provided

its members would Sink their views on the fiscal question andgive him a “

free port . He offered,in addi tion

,to carry a

drastic reform of the Legislative Council . The bargain wasstruck . The Labour Party voted for free trade , and thattari ff came into operation on January 1 , 1896 . It was doomed ,however

,almost from its birth . At the very next e lection the

people returned a maj ority against it ; but the Government ofthe day declined to amend it because federation was j ust thenbecoming an accomplished fact .At the first Federal election protection was the first item in

the Government programme,as free trade was in that of the

Opposition . Ministers won . Protection was triumphant for allAustralia . But the first Federal tariff was necessarily a com

posite one, in order to harmonise the conflicting views of the

various States .These may be considered as the most prominent facts con

8. Concerning the revolt of the Australian States from the

tributory economic system in'

which they began their nationalmmv es ‘ housekeeping . The secret of their action may befound in the thoroughness with which the popular intellect


seized the scientific doctrine of diversity of avocation . Possessed of this diversity a people may enj oy a limitless internalcommerce . Lacking it

,they can have nothing but a precarious

external trade .

Sir Charle s D ilke,in his Greater Britain, tells a story which

touches the kernel of the popular understanding . He talkedwith a Ballarat miner who had been told by the foreign tradersthat protection increased the cost of his living . At that stagethe man had no means Of contesting the question of cost . He

therefore accepted it,and remarked to Sir Charles that he

preferred to pay dearer for his j acket and moleskins because byso doing he aided in building up in the colony such trades as themaking of clothes

,in which his brother and other men,

physically too weak to work as diggers

,coul d gain an honest living .

”

That was the way in which many of the early Protectioniststhought and Spoke . It is a very unscientific statement of theeconomic e ffects of a Protectionist policy

,because , as a matter

of fact,protection is almost invariably followed by lower prices

to the consumer instead of higher ones . But in what theBallarat miner said about providing occupations for men weakerthan working miners

,he rightly indicated the popular apprehen

sion of a profound philOSOphic truth—the imperative need ofdiversity of employment .But while these motives were powerful enough to cause the

whole of the Australian States to cast offwhat the world at largehad declared to be an economic delusion, they do not quitecover the ground . A keen watch was kept in all the colonies onthe progress of Victoria

,which had always been regarded as the

most progressive of the group ; and when under the Ballance

and Seddon Governments New Zealand began to take a leadingplace in advanced legislation

,and under a Protectionist policy ,

that colony became a subj ect of equally intimate study. New

South Wales being the only State which adhered to a Free Trade

policy, it very naturally became the custom to compare the

relative progress made by Victoria and New South Wales .In this, Sir

,you assisted with quite characteristic vigour .

The States exist Side by side . They are governed by the samerace, thinking mainl y the same thoughts, and actuated by thesame aspirations . Both are perfectly autonomous in govern


Vic toria

Railway mileageRailway mil eage per square milePos tal officesTe legraph officesFree l ibrariesFree booksPrimary school sScholars in s chool sValue of farm cropsValue per capita (1901)Acreag e cul tivatedAcreage per capita (1901)Value , orchard and garden crops (1901)Value per acre (1901)N O. of dairy cowsValue ofm ilk , but ter, cheeseExport o fbutter, chees eExport of swine product sProduct ion primary indus tries per square mileBread-winnersDependentsMinersRegistered factoriesHands empl oyed in factoriesDwel ling s occupiedDwel l ing s unoccupiedHouses being builtHous es of 1 and 2 rooms

Houses of 3 to 6 rooms

Hous es of 7 t o 10 rooms

Houses of 11 and upwardsDepositors in Saving s BankDepo sit sDepositors per cent . of populationFriendly Society fundsFriendly Society membersPublic debt (1903)Public debt , per capitaN o. of estates

Value of es tates

Proportion of estates per 100 deaths of adultmales and females .

Proportion of es tates per 100 deaths of pOpulat ion

The above table embraces Six distinct constitutingthe main elements of progress

1 . Application of the arts and sciences .2 . Education—moral and primary.

3 . Population—volume and density .

4 . Industry—s0 0 pe and development.

WHY AUSTRALIA SHED COBDENISM 05

5 . Accumulated wealth .

6 . D iffusion of wealth .

In all of them Victoria holds an advantage .

There are a few other comparisons which can be made .

The people of the two States have always lived at the same

11 , Cost level in food, clothing, and lodging . What is the relaOf living o tive cost of living under a Free Trade and a Proteotionist tari ffHere is a statement of prices copied out of a trade price-list

Moran Cato,

Melbourne

Candles , per 1b .

Cocoa (Epps ), per packet.

Coffee , per 1h.

Tea, per box

Fig s , per box

Fre sh herring s , per t inJam, per lb . t in

Lol l ies , per lbCurrant s (Patras ), per lb .

Marmalade , per lb . t in

Oatmeal , per 7 lb . bagRiceSago

Salt

Soap , per cw t .

Tapioca, per 12 lbs .

There are still other means of proving that the cost of livingunder free trade is higher than it is under protection . Mr .Coghlan

,the statist of New South Wales

,says in his Seven

Colonies The conditions of life and the standard of livingare much the same in all the colonies .” He proves this by thetable of food consumption . He then give s the following table ,Showing all Protectionist Australia under one head and FreeTrade New South Wales under the other

Div isions of Expenditure N ew South Wales Australasia

8 . (1.

Food and non-alcoholic beverages 12 1 5 1 1

Fermented and spirituous l iquors 2 19 8

Tobacco 0 15 7

C lothing and drapery . 5 2 7

Furniture O 10 3

Carried forwai‘d 2 2 4 0


Div isions of Expenditure N ew South Wales Australasia

Brought forward .

Rent or value of building s used as

dwel ling s .

Locomotion .

Fuel and l ightPersonal attendance , service and

lodging 1 17 5 1 14 10

Medical attendance , medi cine and

nursingRel ig ion, charities , educationArt and amus ementBooks , newspapers , &c .

Pos tage and tel egrams

Direct taxes not fal ling on trade .

Household expenses not included el sewhere

Miscel laneous expenses

Total 39 14 1 1 36 19 5

New South Wales consumes, consequently, less food, lessdrink

,and lodges in Slightly inferior houses . Still it costs

19s . 3d. per head more for her less food, 43 . 6d. more per headfor her less drink ,

63 . 3d. more per head for her inferior houses ,and 13 . 1d. more for her lower charity and education . All theseinstances

,which are the citations Of the Free Traders them

selves, prove that the actual cost of the same articles is dearerunder free trade than under protection . They prove beyondhonest dispute that the free-trade citiz en gets less food

,less drink

,

and worse lodging for more money which he has to pay for it .There could not be a more triumphant demonstration that Mr .Coghlan is right—that while the standard of living is about thesame in all State s

,the cost of that standard is less by £ 2 15 s . 6d.

per,head under protection than it is under free trade

,and

that the free-trade house father is taxed £ 13 173 . 6d. per annumfor the pleasure of living under an importing regime, instead ofbuying the products of his own citizens .All these things have sunk into the popular mind

,and have

fructified in an enlightened public Opinion . Every one of thesestatements

,being an unassailable fact, has to be reckoned with

if a man would base his j udgment on ascertained truths insteadof trying to make the truths square with a preconceived judgment.


there is any party in Canada which has a desire to return tofree trade .

Denmark,Norway

,and Sweden touched the policy and were

scorched by it . Switzerland has always followed a policy ofnatural protection, and Belgium has done so with a few lapses .China grew Opulent in the cul tivation of a purely domestic

trade . Open doors were forced on her at the sword’s pointand though we may truly say,

Better fifty years ofEurope than a cycle of Cathay

that remark refers to the political development Of the countryand not to its industrial condition .

NO one can study the system of Greece without seeing that

her troubles always came from foreign trade and foreign wars,which generally meant the same thing .

Of Rome , Green and Kidd are both agreed that the freemen

OfRome could hardly be said to work they fought and lived on

the produce of fighting .

” And this despite Cincinnatus and hisplough . The purely despotic system of the Roman government, by crushing all local independence , crushed all localvigour . There was no commerce in the country . DepOpula

tion,hunger, rapacity, misery, and fraud form the long terrible

story . Even Brutus lent money at 4 per cent . permonth . The

pauperised and brutalised people cried only for bread andcircus es, as when under Septimius Severus a thous and pairs ofgladiators fought

,and rare wild beasts were exhibited . And

thi s continued until the Empire went out of existence,almost

without a blow . What they lacked were home indus tries .Venice , too, grew and flourished by war

,rapine

,and trade .

She became very great and famous and powerful . HerRepublicboaste d of great antiquity and grandeur. She made wars forthe sake of trade , and she made the subj ect peoples buy andsell with her on her own terms, j ust as Eng land did with theIndians . Her colonies were ruled for the sake of giving richesto her trading aristocracy. Her subj ects were ground withtyranny, and were in constant revolt . She had naval andmilitary strength , but no stability, not even when she seemedmost substantial . The one essential of all—home trade andassociation—was lacking . In her day of trial she went out likea puff of smoke .

WORLD -WIDE EXPERIENCES OF FREE TRADE 209

Spain,says Adam Smith , lost her manufactures by her lust

for gold in distant colonies,and he tells how those colonies were

obliged both to buy very dear and to sell very cheap .

” Herarmies brought her at once Splendour and weakness . She

declined from the same causes as those which ruined Carthageand Rome—the want of internal strength and industrial stability .

Every student is familiar with the manner in which England ’sfree-trade policy ruined Jamaica

,and how Spain

,by precisely

the same means,ruined Cuba, preventing her internal commerce

and manufacture s,and compelling her to trade abroad .

Portugal has gone down by her dependence on foreign tradeand by relying almost solely on her export of wine . It is impossible to conceive of an old and once thriving nation be ing reducedto a much lower ebb than Portugal, and it all dates from the

fatal Treaty Of Methuen, which threw her ports Open to theunchecked invasion of the foreign trader .The list might be easily extended . But enough has been

said to Show that a universal law governs nations in their industrial development or decline . The people who seek foreigntrade as an Obj ect of national life , and to the neglect of diversifiedemployment and home commerce

,have ever failed, and Often

failed miserably. But the nations,wherever they have pursued

the enl ightened policy of cultivating arts and avocations amongstthemselves

,so that a copious domestic exchange was rendered

possible,have always flourished . We have , indeed, seen instance s

in which the same peoples at di fferent stages of their histo ryhave waxed and waned

,according to whether they fostered

their home industries or neglected them .

It was the perception of these facts which made Bismarckexclaim on May 2

,1879 , in the German Parliament

I see the countries which protect thems elves prosper, an d thatthe countrie s which are open are declining , and that great and

3 0powerful England , that strong combatant , who after

pi

nions of streng thening her muscles entered the market and sai dBismarck , Who will contest with me ? I am ready for any one

,

2211

311

31

35“ is gradually go ing back to protect ive dut ie s , and will in a

few years adopt them so far as is neces sary to pre s e rvingat least the English market . One thing is clear, that throughthe widely open doors of its import trade , the German market had


there is any party in Canada which has a desire to return tofree trade .

Denmark, Norway, and Sweden touched the policv and werescorched by it . Switzerland has always followed a policy ofnatural protection

,and Belgium has done so with a few lapses .

China grew Opulent in the cultivation of a purely domestictrade . Open doors were forced on her at the sword’s pointand though we may truly say,

Better fifty years ofEurope than a cycle of Cathay,

that remark refers to the political development of the countryand not to its industrial condition .

No one'can study the system of Greece without see ing that

her troubles always came from foreign trade and foreign wars,which generally meant the same thing .

Of Rome , Green and Kidd are both agreed that the freemenof Rome could hardly be said to work they fought and lived onthe produce of fighting .

” And this despite Cincinnatus and hisplough . The purely despotic system of the Roman government, by crushing all local independence , crushed all localvigour . There was no commerce in the country . DepOpula

tion,hunger, rapacity, misery, and fraud form the long terrible

story . Even Brutus lent money at 4 per cent . permonth . The

pauperised and brutalised people cried only for bread andcircuses, as when under Septimius Severus a thousand pairs ofgladiators fought, and rare wild beasts were exhibited . Andthis continued until the Empire went out of existence , almostwithout a blow . What they lacked were home industries .Venice , too , grew and flourished by war

,rapine

,and trade .

She became very great and famous and powerful . HerRepublicboasted of great antiquity and grandeur . She made wars forthe sake Of trade , and she made the subject peoples buy andsell with her on her own terms, j ust as England did with theIndians . Her colonies were ruled for the sake of giving richesto her trading aristocracy . Her subj ects were ground withtyranny

,and were in constant revolt . She had naval and

military strength, but no stability, not even when she seemedmost substantial . The one essential of all—home trade andassociation—was lacking . In her day Of trial she went out likea puff of smoke.


become the mere storage Space for the over-product ion of othercountries . They must

,therefore , shut the ir gates, and take care

that the German market , which is now be ingmonopolised by foreignwares

,shall be reserved for nat ive industry. C ountries which are

enclosed have become great , and those which have remained openhave fallen behind . Were the perils of Protect ionism really so

great as somet imes painted , France woul d long ago have beenruined , ins tead of which she was more prosperous after paying thefiv e mill iards

,than Germany is to -day . And Protect ionist Russia,

too,look at her marvellous prosperity ! Manufacturers there had

late ly been able to sav e from 30 to 35 per cent .,and all at the cost

of the German market . Let us close our doors and erects omewhat higher barriers, and let us then take care to preserve at

least the German market to German industry.

Schmoller is the able leader of the younger school of Germanpolitical economy. He says in his work on The MercantileSystem

At last all the voices alike of scholars and of the people cometogether in unison . There is but one way out of it . We mustdo what England , France , and Holland have done before us. We

must exclude fore ign wares . We must become masters in our own

house . Fact s had taught them with inexorable clearness that at at ime when the most advanced nat ions were carrying on the

collect ive struggle for existence,with the hardest nat ional egot ism,

with all the weapons of financial leg islat ion, and of force , withnavigat ion laws and prohibit ion laws

,with companies

,and w ith a

trade under state guidance and d iscipline,those who would not

be hammer would assuredly be anvil .

Professor List began his scholastic life as a Free Trader .Inquiry undeceived him , and he became the author of theGerman Zollverein, and the philosophical exponent of Protectionin his National System of Political Economy .

”

And so Germany has become Protectionist . The j udgmentof the great Corsican was keen as a lancet . He saw through the

4 _ Pol icyfallacy of free imports as through a transparency. He

gac

zl

lgzr

n

t , saw that England was growing richer all through his

am; wars, because her towns were beehives of industry.

Thiers o He rightly called her the workshop of the world .

England, while fighting Napoleon,found money for her own

armies and those of her allies,and loaned abroad some

WORLD -WIDE EXPERIENCE S OF FREE TRADE 2 11

Napoleon saw that his surest way Of ruiningEngland would be through her trade . He tried to do it by hisContinental System .

” He failed only because he could notcommand the sea as he commanded the land . Napoleon hadstudied political economy for some years , as it was then taught ,and he declared that if an empire were made of adamant

,free

trade woul d crush it to dust .”

Napoleon was greatly influenced by the teaching of the greatColbert, whose policy of protection rescued France from misery ,and led her into great internal prosperity.

Thiers founded his Opinions on the systems of both thesegreat thinkers, and taught France a protective policy with greatzeal and success . And France for more than a century

,except

for a short interval,has been zealously Protectionist .

Daniel Webste r began his student life as a Free Trader.Experience and study caused him to change his Opinions and to

5 . A declare that free trade is based on an erroneous theory,

gfigg aqfiwhich in practicewoul d inflict mortal inj ury on America .

intel l ec Henry Clay was another convert . He was at firsttual stars a lukewarm Protectionist . Greater knowledge cameto him

,and in 1844 he became an earnest and convinced Pro

tectionist .

President Lincoln’s keen intellect pierced to the kernel ofthe Free Trade doctrine , and he crystallised one phase of it inhis historic remark : When an American pays 20 dollars forsteel rails to an English manufacturer , America has the stee l andEngland has the dollars . But when he pays 20 dollars for thesteel to an American manufacturer, America has both the stee land the 20 dollars .”

Another convert is found in Willard Phi llips, who is conv inced that free trade tends directly to distress , decay, anddegradation . In his Propositions he says

Being then imbued with the economic creed which is taught inour public seminari es

,I had occasion to attempt its vind icat ion

,

and I had the good fortune to convert myself to the OpinionsI had undertaken to combat . I came out with the thoroughconvict ion that the science which s eemed so luminous to tho se at

The Condition of Nations , quoted by Geo . B . Curt is s in P rotection and

Prosperity, p. 97.


the feet of the Gamaliels , consisted very much of groundlesspostulates and sophistry .

George Washington sa id

Congress has repeatedly and not without success d irected atten

t ion to the encouragement of manufactures . The Object is Of too

much importance not to ensure a cont inuance of these efforts inevery way wh ich shall appear elig ible .

TO Thomas Jefferson protection ' appeared in the guise ofpatriotism . He said

The dut ies we lay on all articles of foreign manufacture whichprudence requires us to manufacture at home—with the patriot icdeterminat ion of every good cit izen to use no foreign art icle whichw e can make ourselves— secure us against a relapse into fore igndependency .

Benj amin Franklin put it thus

Every manufacture encouraged in our own country makes a

home market,and saves us so much money to the country that must

otherwise be exported . It seems to me to the interest Of our

farmers and owners of land to encourage home manufactures inpreference to fore ign ones.

President McKinley was a whole-hearted Protectionist . Hesaid

We have now enjoyed twenty—nine years cont inuously of pro

t ectiv e tariff laws,and w e find ourselves at the end of that period

in a cond it ion of independence and prosperity,the like of which

has never been witnessed at any other period in the history of our

country,and which has no parallel in the recorded history of the

world . There is no nat ion in the world where the same reward isg iven to the labour of men’s hands and brains as in the UnitedStates .

President Rooseve lt is equally explicit, thus

Every applicat ion of our tariff policy to meet our nat ional needsmust be cond it ioned upon the card inal fact that the dut ies mustnever be reduced below the point that will cov er the difl

"

erence

between the cost of labour here and abroad . The well-be ing of the

wage -workers is a prime considerat ion in our ent ire policy of

economic leg islat ion — ill essage to Congress .


Cromwell

Now I hav e showed you the two manufactures Of linen and

iron,with the product thereof, and all the mat erials are with us

growing and these tw o manufactures will,if by law countenanced

,

s et all the poor in England at work,and must enrich the country

,

and thereby fetch people into the country whereas now they depart .

Lord Farrer in his Free Trade versus Fair Trade,though

a Cobdenist , said that the result of a protective policy

would be greatly to increase our agricultural industry ; to bringmuch waste and bad land into cultivat ion ; and very largely to

increase the employment of agr icultural labourers .

Frederick Greenwood

The forms of gov ernment vary in d ifferent communitiesabsolute autocracy in one place ; something less autocrat ic in

another ; elsewhere v arious degrees Of democracy down to the

most extreme . But no matter what the form of gov ernment may

be ; no mat ter whether the decision is made in the undisturbedcabinet ofa Czar

,or in the roaring tumult Of street polit ics

,there

is no acceptance of free trade outs ide ofEngland .

Herbert Spencer

A system of keen compet it ion,carried on as it is without moral

restraint,is very much a system of commercial cannibalism

There are but two courses— e ither to adopt the pract ices of theircompet itors or to g iv e up business . It is impossible to carryon trade w ith strict rect itude . The s crupulously honest man

must go to the wall .

You yourself,sir

,tell us that light has come to you after

many years— forced upon you by the facts of life . You say thatthe British nation needs educating , as you frankly admit was thecase with yourself . You

,like Bismarck

,Webster , and Thiers ,

have had the courage to avow past mistakes, and the grace tocorrect them .

England is in process of following your high example .

BOOK III

REACHING ACONCLUSION

LETTER XVIII .—TO SIR A . CONAN DOYLE

THE SC IENCE on PROTECTION

Wealth may s eek us but wisdom mus t be sought ,Sought before al l ; but (h ow unlike al l el se

We seek on earth I) ’

tis never sought in vain—YOUNG .

MY DEAR SIR ,—With a frankness that does almost as much

honour to your sincerity as your literary lifework does to youracute j udgment, you have confessed that the facts revealed inthe current fiscal controversy have compelled you to abandonthe tenets of the Cobden Club . That fact induces me to askyour special attention to the considerations pressed in thislette r . I do not hOpe that any argument, however sound it

may be , can be enough of itself to convince all men,for I recog

nise the truth of the statement that an economic principle byitself

,as all sensible men have now learnt, can never be decisive

of anything in the mixed and complex sphere of practice .

” 1

But at least we may guard ourselves against word worship,

Too many men have deified the word Trade more than ever1.Word they apotheosised that blessed word Mesopotamia .

worship 4 6 n

an ignisLaing

,in hi s Chromcle of the Sea Kings

,says very

fatuus . truly

We , too , worship our signs, our words . Let any man set

himself to the task Of examining the state of his knowledge on the

most important subjects , div ineor human ,and he will find himself

a mere word worshipper. He will find words,without idea or

meaning in his mind,v enerated

,made idols of—idols d iffering

Morl ey, L ife of Cobden,v ol . ii. p. 2 39.


Cromwell

Now I have Showed you the two manufactures of linen and

iron,with the product thereof

,and al l the mat erials are with us

growing and these two manufactures w ill,if by law countenanced

,

s et all the poor in England at work,and must enrich the country

,

and thereby fetch people into the country whereas now they depart .

Lord Farrer in his Free Trade versus Fair Trade,though

a Cobdenist , said that the result of a protective policy

would be greatly to increase our agricultural industry ; to bringmuch waste and bad land into cul t iv at ion ; and very largely toincrease the employment of agricultural labourers .

Frederick Greenwood

The forms of government vary in d ifferent communitiesabsolute autocracy in one place ; something less autocrat ic in

another ; elsewhere various degrees of democracy down to the

most extreme . But no matter what the form of government may

be ; no matter whether the decision is made in the undisturbedcabinet of a Czar

,or in the roaring tumult of street polit ics, there

is no acceptance of free trade outside Of England .

Herbert Spencer

A system of keen compet it ion,carried on as it is without moral

restraint,is v ery much a system of commercial cannibalism

There are but two courses—e ither to adopt the pract ices of the ircompet itors or to g ive up business . It is impossible to carryon trade with strict rect itude . The scrupulously honest man

must go to the wall.

You yourself,sir

,tell us that light has come to you after

many years— forced upon you by the facts Of life . You say thatthe British nation needs educating , as you frankly admit was thecase with yourself . You

,like Bismarck, Webster

,and Thiers

,

have had the courage to avow past mistakes, and the grace tocorrect them .

England is in process of following your high example .


from those carved in wood or stone only by be ing stamped withprinters’ ink on white paper.

There is another word which has been made a great god of ,as has the word Trade .

” It is the word Freedom as appliedto Trade and to Contract . It is a word the rhetoricianalways employs to conjure with , and he rarely fails , not so muchbecause Of his own deftness as from the credulous gullibility ofhis audiences

,who often merely open wide their mouths and

swallow any tasty morsels put into them

The word freedom has exercised over them [Free Traders] anirres ist ible fascinat ion

,and they have drawn from it many pernicious

consequences . Thus they have not perce ived that if in theory fre e

trade be seduct ive,in pract ice it is very often not so , s ince while

it s eeks to Obtain well -be ing by means of freedom,it attains to

ne ither one nor the other. By dreaming of liberty all roundradicals have allowed themselves to be fascinated by the illusion of

that mag ic word , and have forgotten but too read ily the saying of

Chamfort that he would bet that every accepted idea,if it sprung

from the great word liberty,

” is an outrage .

1

And now I ask you to turn to something much more importantto any nation than mere freedom of foreign trade . Douglas

2 DiverJerrold used to say : In this world truth can wait ;

sity of 0 0 , she’s used to It .” But diversity of occupation is some

;‘

élggségg

s thing which cannot wait,except at a national sacrifice .

A truth,clearly stated

,slowly wins its way . To

that end I would wish very exactly to define this position . One

basic principle on which Protection must stand,if it stand at

all, is found in the diversity of human talents . May I put itthusN o nation ever did

,and no nation ever can

,become perma

uently great andprosperous , without a wide diversity of employmentexisting among its people .

That proposition is really the foundation-stone of the doctrineof preferential trade as treated in this book . If it be sound andtrue , I am confi dent that it will carry the argumentagiv e superstructure . If it be not true , my main conclusions must bedoubtful .

Soderini, Socialism and Catholicism,pp. 184- 5 .

THE SCIENCE OF PROTECTION 2 17

It has been well said,I think by Ruskin , that

the material wealth of any country is the portion of its pos

sessions which feeds and educat es good men and women in it .

The strengt h and power of a country depends absolutely on

the quant ity of good men and women in the territory of it,and not

at all on the ext ent of the territory.

If that be so,it follows that we must strive to make the

avocations of the people as wide and various as the talents theypossess . Indeed

,the consequence which immediately flows

from the doctrine of diversity is that every nation which aspiresto be strong and prosperous must found its economic policyon a maximum cultivation of the industrial arts and sciencesconsistent with the climate and natural resource s of the

State .

The underlying principle of Free Trade is D ivision of Employment .” The Cobdenist holds that j ust as certain provinces in a

3 . What country are more fitted by nature for certain industrieshinders than for others, SO certain countries are marked out fordiversity ‘

Special production . Cobden himself thought Englandwas intended by nature to be the workshop of the world

,and

most other nations the providers of raw material for that shop .

England in her Protectionist days treated her colonies in thisSpirit . Their manufactures were to be crushed in the cradle .

”

The means of crushing were found in unrestricted competition .

It is manifest that if a nation whose manufactures are wellestablished is to have free admittance into the markets of onewhich has scarcely begun that part of national growth

,it will

be found as impossible for the new industries to take root as fora tender plant to thrive in the full blast of a north-west gale .

I don’t know,Sir

,whether you have pondered at all on these

words of Adam Smith

TO found a great empire for the sole purpose of raising up apeople of customers may at first sight appear a project fit only for a

nat ion of shopkeepers . It is,however

,a proj ect altogether unfit for

a nat ion of shopkeepers,but extremely fit for a nat ion whose

government is influenced by shopkeepers To prohibit a greatpeople

,however

,from making all they can of every part of their

own produce,or from employing the ir stock and industry in the


way that they j udge most advantageous to themselves, is a manifest v iolat ion Of the most sacred right s ofmankind .

Those words need to be particularly noted,because we shall

have occasion to see,I think

,that the monopoly which is at the

root Of free trade is chargeable with j ust this violation of themost sacred rights of mankind .

”

The grounds upon which this principle will have to be established are two—historical and logical . Few teachings are more

4 , How to plainly written on the pages of history than is the proofProve

,

the of this and deductive reasoning will be found to supdoctrine

of port the weight of the facts .divers“? In the first place the greater the tendency amongstmen towards combination and domestic interchange , the morerapid the diffusion of knowledge and the accumulation of wealthand power . That there maybe combination and interchange theremust be differences in pursuits and diversities Of avocations . Anation of farmers or of bootmakers could have no interchange . The nearer the place oi exchange or conversion can bebrought to the place of production

,the greater will be the com

bination and commerce in society,and the less must be the loss

in the process of distribution .

When Mill wrote his Essay on Liberty he had little notionof elaborately laying down a premiss in favour of protection .

Yet the whole intent and purpose of one part of that treatise isto illustrate the extreme danger of nations falling into a conformity of type ;

1 and such uniformity must necessarily resultin a country exclusively engaged in raising raw produce , or inmaking shawls

,carpets

,cutlery

,or any other Single occupation .

A nation of Shepherds and farmers would lack the frict ion ofthought

'

necessary for the generation of new ideas . The samething would result in a nation Of weavers . Every man wouldmeet in his fellow man a being pursuing the same routine andthinking the same thoughts as himself .The world affords not a few examples of the manner in which

a diversified industrial condition quickens the Springs of human

5 . Diver invention . It has even an influence on the develop

Sigulatesment of the whole character of man .

abil ity . Guyot,in his book Earth and Man

,says

J. S. Mil l , E ssay on L iberty, chap. 3 .


to the level of a hand . Free trade,in stunting diversified

employment,does the same . Its sole obj ect being money cheap

ness,its perceptions do not travel beyond that horizon .

There are economic reasons also why diversity is essential forthe prevention of waste . Humanity, as we have seen, is not

6 Div ar_framed mentally any more than physically

.

in one

sity is mould . Idi osyncrasies and corporal faculties are

equally various . A boy who might make an excellentShepherd will perhaps prove a very bad watchmaker . One

who might become an excellent watchmaker or builder wouldfail as a shepherd or a sailor .I have told in another place the story of Sir Charles D ilke’ s

Ballarat miner who said he would rather pay a higher price , ifnecessary, for his moleskins in order that his brother, who wastoo physically weak to work as a digger

,might be able to earn a

living as a tailor . The case is illustrative of the economy whichexists in diversity . There Should be fitting work in every Statefor the weak as well as for the strong

,for the deformed

and crippled as well as for the stalwart for the quick and theinventive as for the dull and the plodding . It must be as muchthe duty of rulers wisely to employ the ir people as the ir soils .We should regard as fatuous in the extreme a farmer who

Should sow his fields indifferently with tobacco,potatoes

,and

wheat without reference to the constituents of their soils andfertilities . It cannot be less foolish for a nation to limit itsindustries to two or three specialities without regard to thevariety of talents in its citizens craving for opportunities ofexpansion . Besides this, there are climes where from the extremesof heat or of cold certain avocations can be pursued for only afew months in the year. If particular parts of Sweden

,Russia

,

and North Germany had not indoor occupations for their farmers,seven months in the year would be passed in comparative idl eness .Fifty years ago M . Tegoborski, a Russian, wrote 6

In countries where the climate is temperate and the populat iondense

,where there are a number of smal l towns

,and the home trade

is act ive,the peasant whose labours in the field last from the beg in

ning ofM arch into the month of November,will find litt le d ifficulty

in turning his t ime to account during the three or four months of

THE SCIENCE OF PROTECTION 2 2 1

winter. With us such resources are very much more l imited ,whil e the labours of the field are interrupted for a much longer t ime .

Now ,what a loss Of product ive forces must arise

,and what a caus e

of impoverishment mus t be in act ion,if

,for want of any sort Of

industry, of the sixty millions compos ing the population of Russ ia inEurope, more than fifty millions should remain unoccupied duringthe six or seven months that the labourers of the field stand st ill . ‘

Yet that would become a necessity if that extreme divisionOf labour contemplated by Free Trade were ever to becomeestablished in the world .

For all these reasons , then, may I not submit as a demonstrated doctrine that diversity of occupation is an absoluteessential to every progressive people 2

We now reach to a second proposition, which is that—Nonation can cultivate this essential diversity under conditions of

unres tricted trade . It was more than aught e lse a sense

T

'

mde of the profound truth that underlies this teaching

ggggfgxwhich finally drew Colbert, Daniel Webster,Clay

,Carey

,

Greeley, and a host of others away from the false lightswhich lured Cobden .

Cobden thought of nations as Specialising the ir several products

, one growing meat and wheat, another tobacco and cotton ,a third rice

,and a fourth sugar, and SO on .

In the interest of trade the Cobdenist is always anxious toconfine national production to the fewest possible varieties . Hetalks largely of “ natural industries .” He is for ever depreciatingwhat he calls artificial ” ones . In Australia he has tried to confine production to the farm,

the station, the orchard, and thevineyard . In England he holds that the people Should leavethe farm ,

and make dress materials and Special kinds ofhardware in the cities . In China he would limit the producerto the growing Of rice

,and Mauritius to her sugar . The sailor

should go amongst them all fetching and carrying . That is theessence of Free Trade economy .

Very different is the precept of Commerce . She says to theAustralian farmer Look first of all to

'

your home market, andincrease it as much as possible by the encouragement of al lsuitable trades . Grow hemp and flax for domestic manufacture

1 Tegoborski, Productive Forces of R uss ia ,v ol . 1. p. 446.

2 2 2 PREFERENTIAL TRADE

and beet for sugar . Grow mulberry trees to cultivate the

cocoon in order to supplant the imported silk . Grow scentflowers for essences

,and make them up amongst yourselves .”

In like manner Commerce would say to the Englishman :Keep your land active at all hazards . Till every rood of it

,

even though the produce may cost a fraction of a penny morethan that transported from America . Supply your own homemarket as far as you can . Do the same with your workshopsand for your surplus

,if any

,let it have an outlet, even at surplus

rates if necessary,in the neutral markets of the world .

”

The foreign trader gauges a nation’s prosperity by its volumeof imports and exports . His statists measure trade only byforeign trade . Home commerce knows better than this . Itsmiles at complaints of half-deserted wharves, so long as domesticmarkets are busy . It knows that the most unprofitable of allexchanges is that which involves the maximum of transportation .

You,sir

,I hope

,think of nations as utilising to the fullest

all their natural resources .Lord Penzance was felicitous when he said : Protection is

the regulator of import duties in such a manner as to secure asmuch employment as possible for the people by inducing themto lay out the ir money in buying the produce of their countrymen’s labour in preference to that of foreigners .

”

That is why all protection is preferential trade .

Monchrétien,who lived in 1615 , is quoted by Soderini as

asking : “ Can that be a good administration which puts itshand into one ’s pocket to purchase what it might take from itsown estates ; which , that it may make somebody else’s landturn to account

,leaves its own uncultivated

Free Traders dispute the util ity of a nation doing for itselfwhat it can get another to do for it more cheaply . They seek

8 . Whyto impale Protectionists on the horns of a logical

not pro dilemma,and to reduce the claims for diversity to a

redactio ad absurdurn. They ask why the bricklayeras wel l as should not make his own boots and save the expensemantra”? of employing the bootmaker ? A favourite query oftheirs used to be : If it be wise to protect England againstFrance , why not protect Sussex against Kent or the counties tothe south of the Thames against those to the north of that


to have a monopoly his principle being to buy at the lowestprice and sell at the highest . The mere trader is everywhereinimical to commerce .

”

Home commerce means the dealing of citizen with citizen ;foreign trade is the instrument by which man seeks to grow richthrough the mere process of exchange . Trade prices generallyrise under the Operation of the foreign trader

,and decline with

the diminution of his power . Home commerce is good in itself,

and can be vitiated only by transactions which are anti-socialsuch as the traffic of the drunkard and the liquor seller .Foreign traders are instruments which commerce may some

times use beneficially, but only with the most extreme care ,because the mere trader at best is but the parasite which growsaround the tree of production . He has his uses

,so long as he

is not permitted to overrun and choke the trunk and branchesof that tree . That

,however, is his invariable tendency, j ust as

the parasite of the forest kills the finest timber . Man shouldcontrol and use the instrument of trade , but never allow the

instrument to use and control him . Foreign trade is for evertending to become man’s supreme master . Wherever a nationdepends on its fore ign trade it is largely ruled by its own servants .Where it subsists mostly on its own production and interna lcommerce it is strong and independent .The greater a nation

’ s home commerce the smaller the needfor the mere trader . An indubitable sign of true national progress is in the minimum of its fore ign traders, and its maximumof diversified employment and internal commerce . With theIshmaelites of old, the Phoenicians, the Sidonians, the Greeks ,the N orwegian sea kings, the English Drakes, Hawkinses , andCavendishe s—war and piracy and foreign trade were ever inalliance . These three must ever have the same nature . Theydecline j ust as home commerce grows , and wax as commerce

wanes .The Free Trader always seeks to make dominant the mere

business of foreign exchange . The Protectionist looks primarilyto production and domestic interchange . He cares for foreignmarkets only as the outlet for the surplus of his own .

There is a sort of natural alliance between the soldier and

the trader . Henry Carey thus describes it

Carey , Princip les of Social Science, vol . i. p. 2 10 .

THE SCIENCE OF PROTECTION 2 25

The sold ier desires labour to be cheap that recruits may read ilybe obtained . The great landowner desires it may be cheap that he

10. Themay be enabled to appropriate to himself a large propor

soldier t ion of the proceeds of his land ; and the trader des ires itand the to be cheap that he may be enabled to d ictate the terms

trader. upon which he will buy, as well as those upon which hewill sell . The object of all these be ing thus identical— that of

obtain ing power over their fellow -men—it is no matter of surprisethat w e find the trader and the sold ier so uniformly helping and

be ing helped by each other. The bankers of Rome were as readyto furnish material aid to Caesar, Pompey, and Augustus, as are nowthose of London

,Paris

,Amsterdam,

and V ienna to grant it to the

emperors of France,Austria

,and Russia

,and as indifferent as

they in relat ion to the end for the attainment of which it wasdest ined to be used . War and trade thus travel together, as isshown throughout the history of the world ; the only d ifferencebetween wars made for purposes of conquest and those made for themaintenance of monopolies of trade be ing that the virulence of the

latter is much greater than that of the former.

1

But it may be said that wars are the very evils that Cobdenmost sought to avoid . They claim as the ir motto Peace andgoodwill to men.

’ They even base their cosmopolitanism onthe plea that all men are brethren .

Softly ! Cobden sought to subdue the trade of the wholeworld to a trade with England . Trade wars are as cruel andfraught with as much misery as those of the sword . And allforeign trade is war . Trade wars are not always bloody

,though

they very frequently lead to blood . But they reek with ruin ,destruction

,and death . The unrestricted competition which

crushes factories and sends hundreds of helpless families intobeggary

,as did the clearances of the Highland crofters, is a

ruthless destroyer of human happiness .The greater the obstacles between the producer and the con

sumer the greater is the trader’s profit, the higher the prices of his

11 . Thegoods

,and the lower the condition of man . The trader

trader’s always desires to increase those obstacles . It is hismterem ' business to prevent producers and consumers meetingexcept through his intervention . The more widely they are

kept apart the greater is his power to reap profit at their cost .

Carey , Princip les of Social Science.


A few examples will suffice to show the enormous leakagewhich takes place by the present system of middlemen . The

same wine for which the French consumer pays 50 , 60 , or even70 centimes a quart, is sold by the vignerons at 15 centimes .Again

,when the French farmer sells his wheat at 18 francs the

100 kilograms, the consumer pays from 30 to 35 francs per100 kilograms for his bread . The dearness of fish in Melbournei s a proverb amongst housewives . Fish are sold almost alwaysat famine prices . Yet the earnings of the fishermen are extremelysmall even when their hauls are greatest . Take again the supplyof orange s and lemons in Australia . Lemons sell at l s . per

dozen . Yet the growers have a difficulty in getting 4d. a dozen .

Quite recently threepence each was charged for Washingtonnavel oranges in our retail fruit shops, while the orchardistswere only rece iving about the same price for them as for theirlemons .The trader always regards the farmer as a mere instrument

for his own enrichment . In his eyes the agriculturist growscrops only for sale and shipment

,not for use . He would have

the tiller of the soil live for ever at the mercy of the bulls andbears - of a foreign market . But this

,though the foreign

trader’s paradise , is a upas garden where home commerce dies .Let us see what the distinguished Scotch economist has to

say on this point

The capital which is employed in purchas ing in one part of the

country in order to sell in another the produce and industry of that12 , Adam country, generally replaces by such operat ion two d istinctSmith 0 11 capitals that had both been employed in the agriculturefiddhgznd or manufacture of that country

,and thereby enables them

home to cont inue that employment .commerce. When both are the produce of domest ic industry

,it

necessarily replaces by every such operat ion two d ist inct capitals,which had both been employed in support ing product ive labour, andthereby enables them to cont inue that support . The capital whichsends Scotch manufactures to London and brings back Englishmanufactures and corn to Edinburgh necessarily replaces by everysuch operat ion two Brit ish capitals

,and which had both been em

ployed in the agriculture or manufactures ofGreat Britain .

The capital employed in purchasing fore ign goods for homeconsumpt ion

,when this purchas e is made with the produce of


himself to answer that pregnant passage from the Wealth ofNations .” He says

We may obtain, with the same valid ity, such proposi13 . Henry

° If E 1. d '

h PGeorg e’s

t ions as this pi scopa ians tra e w it resbyterians ,

attempt to two profits are made by Protestants ; whereas when

2218

i Presbyt erians trade with Catholics only one profit goes tothe Protestants . Therefore trade between Protestants

is twice as profitable as trade between Protestants and Catholics .‘

That is the best answer he gives . He admits that in theforeign trade case there will be only one -half the replacement ofhome capital , but thinks that it is all right because one -half ofthe capital will remain at rest . A child can see that this give sup the whole case , since it is clear that if the trade were confinedto Protestants it would be twice as profitable to those Protestantsas when it is shared with Catholics .R icardo tried by another plan to get rid of this inconvenient

passage of Adam Smith . He says

14 RiSuppose that Scotland employs always a capital of a

cardo’s thousand pounds in making linen, which she exchanges forfailure to the produce of a similar capital employed in making silks

in England . Two thousand pounds and a proport ionalquant ity of labour will be employed in the two countries .

Suppose now that England discovers she can import more linenfrom Germany for the silks which she before exported to Scotlandand that Scotland discovers that she can obtain more silks fromFrance in return for her linen than she before obtained fromEngland—w ill not England and Scotland immediately cease tradingwith each other, and w ill not the home trade of consumption bechanged for a foreign trade of consumpt ion ? B ut although two

addit ional capitals will enter into this trade— the capital ofGermanyand that of France—will not the same amount of Scotch and

English capital cont inue to be employed, and will it not g ive mot iont o the same amount of industry as when it was engaged in the hometrade ? 2

That is the best answer that Adam Smith’s advocacy of hometrade has ever received . And

,yet

,sir

,I hope to show you that

Henry George , P rotection or Free Trade, p. 1 17.

2 Ricardo , P rincip les of P olitical E conomy , chap. 6.

THE SCIENCE OF PROTECTION 2 29a.)

it is fatally defective . R icardo assumes that at the same momentwhen Scotland loses the English market for her linens she findsa French market more profitable . But that is impossible inthe very case stated, because England has found German linencheaper than Scotch linen, and therefore France would do thesame

,and would not take the Scotch linen .

Therefore since Scotland cannot find a market for her linensin France to compensate for that she has lost in England

,her

half of the former trade is lost . Even that does not exhaust thefallacy of R icardo’s illustration . If Scotland could obtain moresilks from France than from England

,so could Germany

,and

therefore Germany would not buy English silks .The case

,therefore , stands good as Adam Smith stated it .

Home trade is always twice as profitable to a country as foreigntrade

,since it makes a profit at both ends of each transaction .

Sometimes it is many times more profitable . Such is homecommerce . Such is foreign trade .Mulhall says

Internal trade is much more important than external tradeand presents the best gauge of a nat ion’s industry and prosperity.

15 . Com.The aggregate v alue of human industry— that is, of

parativ e all products (excluding transport charges) -was in 1894

;zggzzg nearly ten milliards st erling ; that of goods interchangedforeign

between nat ions 15 milliards ; from which it appears thattrade. nat ions consume at home 8 5 per cent . of the ir product sof every descript ion ,

and barter 15 per cent . with their neighbours .In other words, the products of industry average daily,ofwhich are kept for home consumpt ion,

and

exported .

1

There we have in a thimble the relative values in cash of thehome trade and the foreign trade . When to this is added the fact—elsewhere proved from Adam Smith’s reasonings , and from the

refutation of R icardo’s and George’s criticisms of them—that

every pound spent in the home trade is worth at least two poundsspent in foreign trade , we are forced to admit that the home

market is everything . Comparatively speaking the foreign

market is a trifle .

Mulhall , Industries and Wealth of N ations, p. 10 .


We hear a great deal just now at both ends of the worldabout revenue tariffs as Opposed to protective tariffs . One of

16. Rev a,the most logical of the world’s Free Traders has declared

nue tariffs against revenue tariffs . Henry George quote s withare not

free approval Henry Carey, who says Tariffs for revenuetrade should have no existence . Interferences with tradeare to be tolerated only as measures of self-protection .

” Again,

Duties for revenue are highly unjust . They inflict allthe hardship of indirect and unequal taxation without even thepurpose of benefiting the consumer .” 1

Commenting on these Mr . George says Those Protectionists are right who declare that protection is the only j ustification for a tariff

,and the advocates of a tariff for revenue

have no case .

”

I do not myself agree with either Carey, Thompson, or George ,because I hold that indirect taxation is almost always to bepreferred to that which is direct

,and the Customs House is one

of the least irksome of all means known to man of putting cashin the King’s coflers . To say it is costly does not necessarilycondemn it . All valuable things are costly .

The taxgatherer is the most obj ectionable visitor who comesto every man’s door . A direct tax is always a heavy burden .

An indirect tax is paid without the consciousness of paying itand this one is often shifted on to the shoulders of the foreigner ,and paid by him as a toll for entrance to the domestic market .A million pounds paid through the Customs House is far lessirksome to the general body of taxpayers than a tenth of thesum paid to direct demand . That is human nature

,and the

theorist who quotes arithmetic against human nature is likeMr . Filer in Dickens’s Chimes

,

” proving from statistics that apoor man should never eat stewed tripe .

Still,George is consistent in arguing that a revenue tariff is

a violation of free trade . Yet that is what our Cobdenist FreeTraders clamour for . They are agreeable to any tax so long asit does not assist an industry .

We see from these aspects of the controversy what a maze of

contradiction the Free Trader becomes involved in . We see

diversity of occupation to be an essential part of national well

Professor R. E . Thompson, P olitical E conomy , p. 2 32 .


LETTER XIX .—To THE R IGHT HON . ARTHUR BALFOUR

,

PR IME MIN ISTER OF ENGLAND

THE PHILOSOPHY OF PROTECTION

How charming is divine philOSOphy !Not harsh and crabbed as dul l fool s suppose ,But m

a‘sical as is Apol lo ’

s lute—MILTON .

MY DEAR PR IME MIN ISTER,

- I have never felt more than nowthe force of that Miltonic Observ ation . The English-speaking

world has j ust perused,sir

,your Economic Notes .”

They are brief,but they are not unworthy of the

author of Foundations of Belief .” They induce me toinscribe this letter to you

,treating as it does the

philosophic side of the Protective doctrine . In reasonings suchas these at present engaging us, it is well to test our steps as weproceed and in no way that I am aware of can we better checkour scientific postulates

,such as those in the preceding letter ,

than by an application of the philosophic method in this . We

prove a sum in one arithmetical rule by testing it in another .SO we may test science by philosophy, and philosophy by science .

If they will not square,there is a factor astray somewhere .

I'

read a passage some years ago in the book of a clever andbrilliant but rather amateurish economist} in which it was saidthat a certain position was philosophically true and economicallyfalse . I hold that statement to be a paradox . It is a positionto which no man can be driven except under the stress of a falseargument

,since it is a contradiction in terms , and, if I may be

pardoned,an illogical absurdity .

Political economy may not be a true science . We knowthat both Carlyle and Ruskin derided it as a pseudo -science .

The first was always girding at its janglements ,” and Ruskin

1 Mal lock, Labour and the P op ular IVelfare .

THE PHILOSOPHY OF PROTECT ION 2 33

tells that rogue manufacture by political economy has turnedout a mad speculation .

” He describes R icardo’s theory of rentas a very creditably ingenious work of fiction,

” and asserts thatpure air, water, earth , hOpe , and love are the chiefly usefulthings to be got out of political economy when it has become ascience .

”

It was the insistence on political economy being regardedethically that made Yves Guyot assert that

The science of economics is es sent ially immoral . It troublesnot itself about the character of the feelings , the needs and pass ionsofmen it registers with the same impart iality the worship of the

blacks for bits of glass and of the whit es for diamonds .1

But then we have to take it as we find it,and try and winnow

its falsitie s from its facts . Any way,so far as it is true

,it must

be always in accord not only with itself in all its parts, butequally in harmony with every other branch of true science , aswell as with the teachings of true phi losophy . To assert that athing may be economically true and philosophically false , is tosay that truth can contradict itself . As well might we say thatthe very same truth taught by Plato in his Academy is contrary to the verities promulgated by Aristotle in his Lyceum .

”

Sir Will iam Hamilton defines philosophy for us as the

science of the sciences .” Had our classical economists bornethis in mind

,it would have saved them from some very curious

lapses .Many of our writers have defined political economy as the

science of wealth .

2 But those who agree in this,disagree in the

2 Pdefinition of what wealth is . Jevons says that Mill

ol i t1

cal econo_ made a buge mistake In treating the term value asm? the something which does not need definition . In thescl ence of

happines s , same way Mill treats the defimtion when made by others

30

:5 ,t as somethingO

supererogatory . And yet it cannot bedemed that this loose use of economi c terms has drawn

both thinkers and writers into many contradictions .Ruskin denies that political economy is a science of wealth

at all . He says1 Yves Guyot , La Science E conomigue, p. 46.

2 Senior, Introductory L ectures on P olitical E conomy, p. 36 . Mil l ,Princip les of P ol itical E conomy, p. 1 . Jevons , P olitical E conomy, p. 8 .


Polit ical economy is that science which teaches nations to des ireand labour for the things that lead to life , and which teaches themto s corn and destroy the things that lead to destruct ion ,

by

means of which a nat ion may cons ist of the greatest number of

human be ings , noble and happy }

Here we come upon a new train of thought, and one,too

,

which is well worth following . Instead Of the desire of wealthbe ing there treated as the master motive of man, we have substituted the desire of happiness .” The superiority of thisemendation is self-apparent

,since when men seek for wealth or

material possessions it is not usually for the wealth’s sake , butfor what they esteem the means of procuring happiness .These contradictions and inaccuracies in the method of

investigation are cogently stated by Mr . David Syme in hisclosely reasoned treatise on individual science . He says

Wealth is not pursued for it s own sake,but on account of the

pleasures it may bring or the pains it may avert . The prospect ofeven an enormous amount of wealth will never impel to exert ion ,

if it is believed its possession would not conduce to happiness .Wealth is pursued as a means , not as an end ; and the t erm“ means ” implies o ther modes of arriving at the same end

,as the

term em implies the subordinat ion ofmeans ?

But,manifestly

,if a desire for happiness and not the desire

for wealth be what Mill calls the main and acknowledged endof man’s industrial action

,

3 this difference vitiate s the whole ofthe reasonings based on the hypothesis of his being actuatedsolely by the desire of material gain .

Yet if we use the inductive method Of inquiry, forming ourthesis upon Observed facts instead of deductively interpreting

facts by an arbitrary formula,we shall, I think, solve

all difli culties .

For example,a youth chooses his profession in life .

What are his motives in making his choice ’4 Wherever

the power of choice exists,which is not always

,it is almost

invariably exercised because Of some predilection which teaches

Ruskin, Fors Clav igera.

2 Syme , Outlines of Industrial Science , p . 17.

3 Mil l , Some Unsett led Questions , pp. 139 - 40.


the statesman in his statecraft ; the orator in the rapture Of

popular applause ; the merchant in his gains . All these are

wealth,as are the discoveries of the laboratory to the savant .

This train of reasoning compe ls us to the conclusion thatpolitical economy is a mental science built upon exceedinglycomplex motives .When the D ivine Nazarene taught men that the richest of

wealth is garnered by those who choose the cross and materialpoverty

,there was an esoteric economy in His doctrine . Nor

has that doctrine fallen flat . It is operative upon millions inmodifying their business pursuits and transactions .I have tried to show elsewhere in this book that diversity

of occupations in a nation is a demand Of economic science

4 . Diver that no nation ever did or ever can become prosperoussity °

.

f oc unless the avocations of its people correspond with

35533?

the resource s of the climes and talents of the people .

sophic I want to urge upon you,sir

,in this letter

,that a

truth ' philosophical view of the facts of life is equally insistenton the same point . It will, as I am persuaded, teach us theneed of proportioning the avocations of the people to theirconditions of life and to the variety of the ir natural aptitudes .You all agree most readily that there ensues an economic wasteevery time a square peg is .driv en into a round hole . What ,then

,would be the awful waste were half a nation of artists and

mechanical geniuses compelled to pass their lives in shearingsheep or hoeing turnipsYet if Cobden’

s great idea of the international division oflabour were to become operative , that is exactly what musthappen . National division of labour may be economic . Mostlyit is so . It concentrates effort . It doe s not interfere with thewidest diversity within the realm . International division oflabour is a very different thing . Had England continued to bethe world’s workshop , American resources would have beenpermanently undeveloped, and the world at large would havebeen poorer .The Cobdenic doctrine teaches that each nation should do

only those things which it can do better than can any others .Each separate people are to confine themselves to a few callingsin which they can acquire superlative perfection . In that they

THE PHILOSOPHY OF PROTECTION 2 37a )

are to find their economic gain . They will be the survival of

the fittest, the fitte st being the cheapest . But from the reasonings here set forth we see that that economic gain would bepurchased at the expense of the national character ; at the costof stunting human nature ; at the wicked waste of God-giventalents . We see that this FRE EDOM OF TRADE

,which under the

iron law of competition would stamp out diversity,leads not to

freedom ,but to INDUSTR IAL SLAVERY . In it we discover the

greatest possible care for production— no care at all for man ,the producer .It is against this exterminating law of competition that we

raise up the shield of protection to national industry . We do

5 . Philo so because the law of competition is an unnatural law .

8 °

}tin It is the exact contrary to the law of self-preservation

,

;fiiiifi?’

which is the first law of Nature .

t ion Protection is self-preservation and I hope to showthat it is based on a law,

the operation of which underlies allhuman conduct . The whole life of man— from the momentwhen his infant eyes first open on the light

,to the moment

when they are closed in his last sleep— is guided by Protectionistprinciples . NO such thing as the law of supply and demand , ofunrestricted competition , of the survival of the fittest

,

” is permitted to intrude into that life

,so far as human affection and

watchfulness can ward it off.The new-born babe receives an affectionate welcome even in

the largest family . There was no demand for it . The supplyapparently was fully adequate . The new-comer involves inevitable sacrifices . What matters ? The parents will care forit

,suffer for it, rear it. That is protection to the potential

source Of native industry .

In its first childhood the infant is furnished with the neces

sary mental equipment for its condition of life . When the boy

6 Proteoexpands into the youth

,so far from being turned

5 0 , to the abroad, like lambs in a pasture , to shift for himself, heand has lavished upon him the means of gentle education .

man.

That is protection to native industry .

Many parents will consider that a thousand pounds is a sumnone too large to Spend upon the mental, moral , spiritual , andphysical equipment of a single son . Such outlay is a recognised


part of human policy . The educated man in human society isso much more valuable than the uneducated one . Hence thepresent sacrifice is cheerfully made in order to reap the futureadvantage . That is protection to native industry .

When the youth leaves his alma mater, the same policy iscontinued . Whether he be destined for a profession or a trade

,

he has to pass through an apprenticeship Of some kind . Duringthat novitiate he works hard for little or no monetary pay . He

does so in order that he may acquire some specific knowledgethat will be of future profit to him . That, again, is a policy ofprotection to native industry .

What if some wise economist of the time were to approachsuch a youth and say

You have been foolish in expending all this t ime and money as

you have done . Your years now reach twenty. It would havebeen much cheaper had you commenced ten years ago to earn wages.Had you done so , an average sav ing of 10 a year, with its accruedin terest

,would have placed a sum of £ 15 0 in your hands . Your

father has spent upon you another £ 2 5 0 . These two sumstogether, if now g iven you , would enable you to start life with a

small useful capital of £ 400 . Now you have nothing .

The extremest Free Trader who ever chopped false logicwould smile contemptuously at his own doctrines if they werepresented to him in this form . Yet that is the Free Tradedoctrine in its legitimate and logical conclusion .

If we trace this youth further we shall find the protectivepolicy unchanged towards him . The barrister Spends several

briefless years in reading the doctor buys himself a prac

tice .

”! Analyse the meaning of these two things, and we find

that each of them Offers a bonus for means of living .

If the doctor be not wealthy enough to purchase this prac

tice,

” or in other words buy this market for his talents, he hasto go afield and “ make a practice for himself, working hardand living Sparely , with an eye to the future . That, too , is

fostering an industry at considerable cost, and it is protection

to n ative industry .

Identically the same principle works out in man’s relations

to inanimate nature . He will purchase plants and seedlings,and lavish on them some cost and the tenderest care . Some


one nation ; but one law of being touches and pervade s thewhole .

A band Of frontier pioneers build a fort for protection againstan irruption of savages

,j ust as a government builds a tariff

wall to prevent an irruption of trade invaders . Free Tradersoften reply to this and say that the trader cannot trade unlesshe has someone willing and anxious to trade with him . That isan apparent truth and an absolute fallacy . The courtesan andthe saloon keeper find people willing to trade with them,

but itdoes not alter the fact that the ir trade is evil . The trader come sunsought

,offering apparent advantages in the guise of cheap

ness . It is a cheapness which kills domestic commerce . Itgive s a slight temporary advantage to the consumer, but cripplesthe well-being of the producer, who would be a consumer inturn

,but that his power of consumption is taken away by the

fore igner . The consumer falls into the temptation Of a de lusivecompetitive cheapness which destroys . This is the trade thatkills—the Free Trade— the invader .Empires build armies and navies at vast expense . They

maintain them at a cost only j ust short of what is ruinous . Itis to protect themse lves against invasion .

If it be found true , as it has been a hundred times, as it isbe ing found in England to-day, that trade invasions and thedumping of foreign goods are as devastating as the raids of

the soldier , then protection against the one is as imperative anecessity as it is against the other . Singly, and in the mass,all men need protection . That law of the individual and ofthe nation is one .

I am tempted here , sir, to reinforce this view by a shortextract from a work with which I am sure you are familiar

The structure of human society,in so far as we can, by our own

conscious work , help to build it up and shape it to a glorious use ,is a structure rest ing on the universal facts of human nature .

They must be founded on the fact that society is in very truth an

organism—with its own natural laws of life and growth , and withits own insuperable cond it ions for healthy working among a great

variety of funct ional parts as members .1

Argyll , Unseen Foundations of Society .

THE PHILOSOPHY OF PROTECTION 41

In what has gone before we have seen that internal commerceis far more conducive to national prosperity than is foreign

9 . Fri .trade . Both may be needed in different degrees ; but

38

310111” the average home trade of nations is 85 per cent . of the

insuf. whole , the foreign trade being 15 per cent . The homefid ent ' trade is the essential adj unct Of the nation’s life . Itsforeign trade is accidental .Now

,in all new countries , mining and the raising Of raw pro

duce are the first sources of wealth ; and they are properly so .

In childhood the most elementary work is the earliest . The boyweeds the garden plot which his father has sown . But j ust asit would be unwise to keep a youth permanently engaged at aninfant’s task

,so national development demands higher and ever

higher grades of industry .

Possibly some advocates of unrestricted imports may assentto this

,and reply that such industries will grow of themselves .

But we must point to the proofs we have given that unrestrictedforeign trade is Often directed to stamping out domestic competition . Experience has been cited to show how this hasoccurred . England

,it is said

,has not added a single new

industry under her system Of free imports . She has lost a goodmany.

It may readily be conceded that domestic industries wouldgrow of themselves if there were no disturbing factors . The

village would spring up in the midst of the agricultural area ;land cultivation would become scientific instead of rude ; andthe farmer would find in the local blacksmith

,bootmaker

,and

carpenter at once a consumer of his crops and a caterer for hisneeds . This would be commerce , and commerce of the mostbeneficial kind . But then there are disturbing factors

,and

many of them . The foreign trader comes on the scene from the

workshops of the world .

” He undertakes to furnish ploughs,

boots,locks

,bolts

,doors

,and sashes under the “ law of the

surplus at a cost which cuts the village artificer out of productive life . He uses his capital as a great instrument of warfarehe crushes home commerce .

The farmer in such a case“

,instead of producing for a home

market,is taught to rely for one upon the foreign trader . He

is soon in the miserable position of a slave to a dominating

R


tyrant . This is the disturbing factor which blasts industrialinfancy and puts shackles on all progress wherever statesmen

,

who stand in loco parentis to the nation, neglect those providentsafeguards for the State waich the provident parent secures forhis child .

But 99 per cent . of the world’s statesmen have taken the

safeguards . They have framed protection tariffs, which pro

10 . Proclaim aloud from the statute books of almost all

tection 3 countrieshousefathen

We must guard our internal commerce against the

ravag ing raids Of the trader ! We must foster to the

utmost d iversity of industry ! We must treat our communit iesaccording to the Apostolic injunction ,

“as members one of another !

We must make all necessary sacrifices to th is great end.

Protection, then, as we have seen, does for the nation whateverybody at every stage of life does for those dependent onhim . Doing this , it is a principle which has its sanctions inhistory

,science , and philosophy .


think you can name to me anything of worth which is costless .The most bounteous riches of the earth come to men only at

2 Nothingthe cost of toil and abstinence . The sea yie lds its

g

'

ood harvest to the fisherman, but not until hardship andWithout danger have been overcome in pursuit of its spoils .cm '

Knowledge is plucked from its cave by the man ofscience , but only at the cost of many vigils . Experience , thebest guide to wisdom ,

has often to be dearly bought and paid for .To say

,then

,that sometimes protection may involve a

temporary sacrifice is merely to class it in the common categoryof all useful things . We Shall see by-and-by how stupendous isthe cost of free trade . But of that anon . All commerce and alltrade

,of whatever kind and in whatever clime , are carried on

at some permanent national cost . For example,the army

which protects the trader on shore , and the navy, which convoyshis argosies

,are all examples of protection , and they all involve

cost . But the cost we have to consider is the cost of a customstariff—what that duty is and where it falls . Every advocate offree imports will admit the general principles stated above . Ihave no doubt that you will . But as a school you have acurious habit

,in pursuing your reasonings , of letting these truths

slip out of your mind , and of thinking Of the cost of proteotion as if it were sui generis , and not an attribute of every othernational policy.

However,there are some exceptions to this . The Duke of

Argyll is such a one . He strongly believes in the principle of

3 . Free free exchange between nations ,” but he frankly recog

Trade ad mises that it is a question of expediency and not ofmis smns principle as to whether such trade should or shouldnot be restricted . He says

It ought, I think , to be admitted that protect iv e imposts may

sometimes succeed in plant ing industries—valuable in a nat ionalpoint of v iew—where they would have been crushed out at once byexposure to unlimited compet it ion in the ir infancy, but which ,

whenonce established

,are able to defy it . The establishment of the

beet -sugar cult ivat ion in France appears to be a case in point .

Again,I think it ought to be admitted as a fact that there are

industries which must be altogether extinguished in part icularplaces by exposure to unlimited compet ition from w ithout . More

over those places may be the whole area of a great country—the

THE COST OF PROTECTION 5

heme of a nation . Free Trade doctrines can say no more than thisthat if any nat ion wishes to prevent such results it must cons ent topay a price more or les s heavy for the necessary res trict ions .

Economic science po ints out that the cost may prove that it is muchgreater than it is supposed to be

,and may even endeavour to

estimate its amount . But it has nothing directly to say on the

question whether the cost , however great, ought or ought not to beincurred in certain cases .1

In that passage,as it seems to me

,the noble writer gives up

the whole of his Free Trade case . Certainly he cannot hold itas Cobden taught it

,or as the Cobden Club holds it to -day

,

though he may still remain in the same school with AdamSmith . Protectionists agree with him that it is the duty ofeconomic science to estimate the cost (if any) of all Protectionistduties . That is generally the purpose of thi s letter . But wedo not hold with him that economic science has nothing to sayon the question of whether the cost (if any) should be incurred ,because its duty carries it further—to say what is the economicvalue of the industry also

,as well as its cost .

There is one other observation I am tempted to quote fromthe same work . It is

Again, some new facts have arisen in the development of capital,

in its applicat ion through rings”and syndicates ,

”and through

indiv idual great wealth, which Open out some new sugges

3,XS’WS

t ions as to the weapons by which small industries may

statesman sometimes be inj udiciously suppressed , and against which

52311223119 it might possibly be sometimes expedient to protect them

on nat ional grounds .

Here we see the writer rising above his Free Trade environments . He regards the question of cost with the eye of a state sman rather than with that Oi the man behind the counter . Tothe one it has wide issues to the other it is merely a matter oftuppence ha’penny or tuppence .

”

From the same elevated plane Edmund Burke viewed thequestion when he said

It is one Of the finest problems in leg islat ion what the Stateought to take upon itself to direct by public wisdom,

and whatit ought to leave w ith as lit tle interference as possible to individualexert ions.

Argyll , The Unseen Foundations of Society.

2 16 l ‘l t l'l li‘E l liNT lA[ 1 TRADE

In that sentence we may perce ive the mode s t dillidenco o f

w isdom . It is the v ery anti thes is o f the port c e rtitude thatmarks the produc tions o f tho Cobden Club

,where the principle

of seeking the cheapest marke t co v ors everything , and infalliblydic tates the do ctrine tha t the S tate has no proper place in thedomain Of industry .

remembe r some low yoars ago reading an article in the

N (d iono l Ii’cvicw wri tten by Mr. l l

‘

rmlorick Groonwood. There isone pas sage in it that strike s me as quite ad rem. to wha t we are

now cons idering . l l o said

Boliov ing that e v ery kind of nat ive talent and national aptitudeshould havo tho ir chance for the common good , Aus tralians and

Amoricnns declino tho bono fit o f free trade,and do the ir bes t to

c herish a ll v aric tios of iiu‘

lus trios at homo . l l o nco “

pro tortivo

du tios” —dutios pro tm zt iv e o f part icular indus trie s while they nro

yo ung . And whe n tho Co lulouito asks whe the r thos o g rowing Statosare blind to tho pro d ig ious fact that they aro paying more fo r sco re so f art ic le s of consumption than there is any ne ed to pay, they roply in

o ll'

oc h tha t they nro no t'

.l‘

hoy nro qu ito aware o f the tnx thoy impus oon tlu—nusolvos ; but fee ling ablo to affo rd n present lo s s fo r the s akoo f future they s ink the money . “rhon to ld that theyare mis takon in imag ining that thoy c an afford the los s

,thoy

answor that w ith them it is n mattor o f oxpi-irionco rather than o f

inmg ination. In lino,the ir obj ec t is one which

,while it includes

nmtorinl profit in tho long run,trnns c onds that c o ns idora tion at

Various points .

That passage doe s no t qui te correc tly v oice Protectionistideas

,be cause it takes for granted that there i s more cost in a

Pro tectionist tarill’

than the fac ts give warrant for. But Mr.

Greenwood is right in saying that the Pro tectionist ideal is onethat transcends the que s tion o f immediate cost. It might becheap for a boy to remain ignorant rather than Spend ten o r

fifteen years at school,but it would be an evasion o f cos t that

mos t Free Trade rs would c ons ide r disastrous .It is c lear that ifwe would ge t corre ct v iews o n this subj ec t

5 , M ethod i t will be futile to pursue the a priori ocurso customaryto the fo re ign trade advoca te .

'

l‘

hoso people simply

oofi ofp,o_ add the du ty to the cus tomary privo o f free importa‘00fi 0 11 tions

,and say '

l‘

herc ! That is the c o s t of proteo

PREFERENTIAL TRADE

In that sentence we may perceive the modest diffidence ofwisdom . It is the very antithesis of the pert certitude thatmarks the productions of the Cobden Club , where the principleof seeking the cheapest market covers everything , and infalliblydictates the doctrine that the State has no proper place in thedomain of industry.

I remember some few years ago reading an article in theNational Review written by Mr . Frederick Greenwood . There isone passage in it that strikes me as quite ad rem to what we arenow considering . He said

Believing that every kind ofnat ive talent and national apt itudeshould have the ir chance for the common good , Australians and

Americans decline the benefit of free trade,and do their best to

cherish~all variet ies of industries at home . Hence “ protect ive

dut ies ” —dut ies protect ive of part icular industries while they are

young . And when the Cobdenite asks whether these growing Statesare blind to the prod ig ious fact that they are paying more for scoresof art icles of consumpt ion than there is any need to pay, they reply ineffect that they are not . They are qu ite aware of the tax they imposeon themse lves ; but feeling able to afford a present loss for the sakeof future advantages , they sink the money. When told that theyare mistaken in imagining that they can afford the loss

,they

answer that with them it is a matter of experience rather than of

imaginat ion. In fine , the ir object is one which, while it includesmaterial profit in the long run

,transcends that considerat ion at

various points ;

That passage does not quite correctly voice Protectionistideas

,because it takes for granted that there is more cost in a

Protectionist tariff than the facts give warrant for. But Mr .Greenwood is right in saying that the Protectionist ideal is onethat transcends the question of immediate cost . It might becheap for a boy to remain ignorant rather than spend ten or

fifteen years at school,but it would be an evasion of cost that

most Free Traders would consider disastrous .It is clear that if we would get correct views on this subj ect

5 , M ethod it will be futile to pursue the a priori course customaryof estima to the foreign trade advocate . These people simplyt ing the

cost “ proadd the duty to the customary price of free importations

,and say : There That is the cost of protec

THE COST OF PROTECTION 7

tion on that hat, on that coat, on these boots . The result isalways a fallacy . They leave out two factors in the sum— the

effect of internal competition and the chance of the foreignerpaying the duty in order to secure -the market . And yet , JohnI hope to show you that both causes constantly operate .

We have known locally made boots selling in the Melbou

market at less than the amount of duty on this class of goods,

6. Con_

and far cheaper than the old importing price . We

crete have known a duty of 3s . per cask on cement causingexampl e s ‘ a fall in the price of the imported article from 183 . per

cask to 103 . The vendor of the foreign article simply gave upan extortionate profit and reduced his price below cost in orderto crush the local maker . This is done in varying degrees inalmost all trades , and therefore the initial assumption that aprotective duty is always an addition to the consumer’s cost isan error in fact .Nor will it be any more scientific to take a few articles here

and there and show that they have been increased in cost byprotective duties . The result of twelve months’ working mayshow increases here and decreases there , so that one list is afair offset against the other . The true method is a tedious one .

It is to take the whole list of consumed articles and comparetheir prices in neighbouring States, under like conditions ; orin the same State under free trade at one time and a protectivetariff at another .The world has abundant data for this . Fortunately it has

been collated . I begin here at home in Australia . For fiv eyears the six Australian States of Tasmania , SouthAustralia

,Western Australia , Victoria , Queensland,

and New Zealand were living under tariffs which gavean average of customs revenue of £ 2 14s . 5d. per head .

At that time New South Wales was a free-trade State , with atariff levied only on stimulants and narcotics , yielding 19s . l 0d.

per headThe Government statist of New South Wales , himself a Free

Trader, in his Seven Colonies gave a table of the cost ofliving in those States as a whole , and as compared with the

same cost in New South Wales . The comparison is strictly oflike with like

,because he was careful to say and to show the


conditions of life and standard of living are much the same inall the colonies .

” 1

Under these conditions Mr . Coghlan gives us the followingtable

N . S.Wales Aus tralas iaper Inhabitant per Inhab itant

Food and Non-alcohol ic beveragesFermented and spirituous l iquorsTobaccoClothing and draperyFurnitureRent or value of building s used as dwe l ling sLocomotion

Fuel and l ightPersonal attendance , s ervice and lodg ingMedical at tendance , medicine and nursingRel ig ion, churches , education (not includingStat e expenditure)Art and amus ement

Books , newspapers , &0 .

Pos tage and te legrams (not incidental to earn

ing the incomes)Direct taxe s , not fall ing on tradeHousehold expense s (not included el s ewhere) .

Miscellaneous expenses

Total per head per annum 39 14 1 1 36 19 5

Assuming that table to be accurately compiled (and it hasnever been questioned), it shows that the extra customs dutieslevied in the Australian State s did not increase the cost of living ,see ing that, the standard of living be ing the same , the cost was£ 2 15 3 . 6d. per head more under a free -trade tariff than under aprotective one .

An independent estimate made for New Zealand in 1894showed the cost in that colony to be £ 35 63 . 1d. per head . Imay add here that since October

_

l 900 there has been a tariffoperating to give New South Wale s a year additionalrevenue , and that it has not made one Six pence addition to thecost of living in that State . In like manner

,when the free

trade tariff was brought into Operation on January 1 , 1896, itremitted duties amounting to a year

,but no one found

the smallest diminution in household expenses . The traderspocketed the cash .

Coghlan, Seven Colon ies , p.


In 1902 a shilling per quarter was put on wheat as a war tax .

It brought in a year . It did not cause the smallestincrease in the price of bread . Wheat in England from 185 1 to1870 averaged 2 5 0 marks per ton, free of duty . In France

,

with a duty,the average price was 2 28 marks per ton . In

Prussia, plus a duty, it was 207 marks per ton .

Sir Edmund Monson has reported officially from Paris to theEnglish Board of Trade that the higher duties imposed byFrance on imported food since 1892 have not affected prices .Beef

,on the contrary

,fell in the interval to the extent of id.

per pound, while mutton remained stationary. The extra foodduties imposed by France , says the report, are paid by the

foreign producers .Mr . Robert Harper

,of Melbourne

,quotes London price lists

,

showing that the export price ranges about 2 5 per cent . under

0

home prices , proving that the exporter in all the cases

paysquoted pays the duty . As an illustration , Colman

’sCu

nfis starch is quoted in London at 343 . per cwt . it is listedfor export to Australia at 2 2 3 . This enabled the Mel

bourne grocer to buy his starch made under 66 per cent . proteotive duty more cheaply than London grocers buy the irs in afree -trade country . But this doe s not usually apply to exportswhen they are sent to a country where there is no local production .

If the dutiable articles imported are such as are largely produced in the country

,the fore ign producer always pays a large

part of the impost . In such cases foreigners actually contributeto the revenue of those governments whose markets they enter .This is j ust

,because otherwise they would have the benefit of

the foreign market for nothing . How is this provedIn several ways1 . The cost of living in highly protected countries is less than

it is in free -trade England .

2 . The cost of living in the protected States of Australiawas £ 2 15 s . 6d. less per head than it was in free -trade NewSouth Wales

,the standard of living being the same .

3 . By the number of cases we have shown in which the dutydid not put up the price .

4 . The experience of merchants and manufac turers of theUnited States is summed up in these words in Bliss’s Eu

cyclopaedia

THE COST OF PROTECTION 2 5 1

The duty is never added to the price except when the peopleare dependent on foreign supply. When they are not dependent

,

the dut ie s on goods sent there to compete are paid by the foreignersin the form of lower profits . This is no t only admitted by exportersto protect ive coun tries, but it is proved by prices , mos t of which are

as low as those abroad,all of which are lower after than before

protection,and many of

' which are actually lower than the dutiesthemselves .

5 . Mr . Williamson, the author of “ British Industries,sent

a circular to 350 merchants and manufacturers of Great Britainasking a set question . It was this : “ When you send goodsinto a fore ign protected market and sell them there , have youbeen able to recoup yourself the duty you have had to paybefore the goods could go into consumption ?” Every one ofthese merchants and manufacturers gave him an emphaticNo for an answer . 1

6 . Mr . Firth cites the instance of the D ingley tariff in America .

Before its introduction,the Wilson tariff made wool free . The

Dingley tariff put a duty on it . In another e ighteen monthsforeign producers dropped the ir price s so that it could be landed ,duty paid

,at the same price as under free wool . Mr . Firth

says That is a clear instance,and I can give you many similar

cases in which the duty has come off the price of the goodsexported ; and that those goods are not costing American consumers any more

,notwithstanding the D ingley tariff.”

I take it,therefore

,that these examples, so numerous and

so emphatic,are positive proofs that no law can be laid down

that a customs protective duty 13 always added to the price

paid by the consumer .I do not conclude that customs duties are never paid by

consumers . Indeed, I know that they sometimes are . These

cases should be clearly discriminated from the others .

Customs duties are very often paid by consumerswhen they are mere ly revenue duties —that is , whenthey encourage no internal competition .

The reason is fairly obvious . A duty on tea leviedin England or in Australia

,where there is no domestic

production of the article , may sometimes remain an addition to

Wil liams on, B ritish Industries .


In 1902 a shilling per quarter was put on wheat as a war tax .

It brought in a year . It did not cause the smallestincrease in the price of bread . Wheat in England from 185 1 to1870 averaged 2 5 0 marks per ton, free of duty . In France

,

with a duty,the average price was 2 28 marks per ton . In

Prussia, plus a duty, it was 207 marks per ton .

Sir Edmund Monson has reported officially from Paris to theEnglish Board of Trade that the higher duties imposed byFrance on imported food since 1892 have not affected prices .Bee f

,on the contrary

,fell in the inte rval to the extent of id.

per pound, while mutton remained stationary . The extra fooddutie s imposed by France

,says the report

,are paid by the

foreign producers .Mr . Robert Harper

,of Melbourne

,quotes London price lists ,

showing that the export price ranges about 2 5 per cent . underhome prices, proving that the exporter in all the cases

pays

0

quoted pays the duty . As an illustration , Colman’ s

“ 53333

18 starch is quoted in London at 343 . per cwt . it is listedfor export to Australia at 2 2 3 . This enabled the Mel

bourne grocer to buy his starch made under 66 per cent . protective duty more cheaply than London grocers buy the irs in afree -trade country . But this does not usually apply to expertswhen they are sent to a country where there is no local production .

If the dutiable article s imported are such as are large ly produced in the country, the foreign producer always pays a largepart of the impost . In such cases foreigners actually contributeto the revenue of those governments whose markets they enter .This is j ust

,because otherwise they would have the benefit of

the foreign market for nothing . How is this provedIn

'

sev eral ways1 . The cost of living in highly protected countries is less than

it is in free-trade England .

2 . The cost of living in the protected States of Australiawas £ 2 15 s . 6d. less per head than it was in free-trade NewSouth Wales

,the standard of living be ing the same .

3 . By the number of cases we have shown in which the dutydid not put up the price .

4 . The experience of merchants and manufac turers of theUnited States is summed up in these words in Bliss’s En

cyclopaedia


the cost incurred by the foreigner in reaching the consumer inthose markets . If the foreigner has had a monopoly of themarket, he can still retain it after the impost as before , andcan add the duty to his price without any competitive interference . Of course

,under the spur of private interest

,he will

do it, unless the enhanced price tends to limit his sales and hisprofits more than would his paying the duty. But this is notinvariably so . The last Federal Parliament took away 3d. per

pound from the tea duty, and it did not make any difference inthe price paid by the general consumer .If the foreign exporter of tea to England and Australia has

had many competitors in his trade,he will probably pay a part

of any new or increased tea duty under the stress of competitionwith his rivals

,always assuming that he had not previously

reached the bed-rock of the lowest possible profit consistentwith the solvency of his business . Even on revenue duties,therefore

,it sometimes happens that the foreigner pays a part

or the whole of them as a tell for the privilege of entering analready prepared market .There are

,however, some kinds of protective duties which

he does not pay . We may give as an example,say, a duty

levied on motor-cars or Special brands of bicycles in Australia ,where there are no manufactorie s of those articles . The machinemay be worth £ 500 or £ 50 , and the duty at 20 per cent . may be£ 100 or £ 10 . That duty will be paid by the local purchaser inevery case except where there is very keen competition amongstforeigners to get an entrance to the Australian market, or wheresome special firm is willing to incur a temporary loss in order toopen up what he hopes to make a profitable future trade . Inthat case the foreigner quotes a lower price for export to coverthe duty, as we have seen in the case of starch and other things .Other cases may be cited where protection may entail a tem

porary cost .When the Victorian Legislature devoted to paying

bonuses on the export of butter,that money was voted out of

the Treasury, and cost the taxpayers about 13 . per head allround . The first money cost was undoubted . But the consumer was very soon more than repaid in the abundance , cheapness

,and better quality of his butter in the local market, while

THE COST OF PROTECTION 2 5 3

the producer soon had an export trade of a million sterling ayear . The stock tax is another case . It was levied on stockcrossing the Victorian border from the other States of Australia .

It was a first charge on that part of the Victorian meat whichcame from beyond the State . It may

,in part

,have been added

to the market price of stock . True , no one was ever able to seewhere the buying price was raised by it and the probability isthat it was mostly paid as an entrance fee to the Victorianmarket . But a portion of the impost may have reached theconsumer . It prevented great rushes and gluts of foreign stock

,

and so acted as an encouragement to the raising of home -grownstock .

We may take other examples . The moneys voted to agricultural societies and national shows have been a first direct costto the taxpayer . But, in so far as they have stimulated theproduction of superior stock and grain

,they have made more

plentiful the supply of meat and wheat, and the consumer hasbeen recouped for his outlay.

All this,in principle , was present 112 years ago to the mind

of America’s great thinker and statesman,Alexander Hamilton

,

12 , Theo the Secretary to the Treasury in George Washington’s

gis

t?“ administration, when he wrote

00mm“ Though it were true that the immediate and certaineffect of regulat ions controlling the compet it ion of fore ign withdomest ic fabrics was an increase of price

,it is universally true that

the contrary is the ult imate effect with every successful manufacture .

When a domest ic manufacture has a ttained to perfect ion,and has

engaged in the prosecut ion of it a competent number of persons,it

invariably become s cheaper. The internal compet it ion which take splace soon does away with everything like monopoly, and by degreesreduces the price of the art icle to the minimum of reasonable profiton the capital employed .

1

Those words really contain the whole science of the incidenceof protective duties . If the protective duty creates a localmonopoly

,it is a charge until that monopoly is broken down .

If it create s a brisk internal trade , it is no charge , but a relieffrom costs .I will quote to you, John, only one more testimony to this .

Alex. Hamilton,Treasury R eport , Dec . 5 , 179 1 .


A Victorian Tariff Board made an elaborate report in 1895 .

Inter alia, it said

On the vexed quest ion of whether goods have been made deareror cheaper by the imposit ion of protect iv e dut ies

,we have a deal

of evidence . It is an established fact that such goods are as a rulecheaper to the public than they were before the imposit ion of suchdut ies, and the recent increases of rate have not

,except in iso lated

cas es,been followed by corresponding increases in price to the

public .

Various causes have no doubt combined to bring about thisresult, but the most potent factor has undoubtedly been thebreaking up of rings or monopolies of importers . The report

continues

Many instances have been brought under our not ice where theestablishment of a local factory has at once brought down the priceof the art icle produced in a remarkable degree .

All calculat ions based upon the price at which goods could besold if the import trade were not restricted or prohibited by dut ies

,

are valueless in face of the d irect ev idence before us that when suchdut ies are not imposed the goods are not sold at the ant icipated lowprices .

The net result of the facts which have been elicited is toshow that only in a few instances do protective duties involvea cost ; that in some of those cases where the cost is quite cer

tain,it is more than compensated by ultimate gain ; and that

only in exceptional cases where there is danger of Protectionistmonopolies and rings can the Protectionist duty degenerate intoan absolute cost . On the contrary, protective imposts, in thevast maj ority of cases, result in real cheapness by breaking up

the extortion of importing firms and saving to consumers the

charges of transportation .

If,my dear John , you will permit me a final word of plea

santry,I should say that you Cobdenists , in too much counting

the cost of protection, remind me of a certain over-thriftybusiness man . He had a pressing invitation from a wealthy

friend to marry that friend’s daughter . The invitation ran

Be sure to come ; my daughter is an acknowledged beauty, andwill be sure to please you . The man of thrift wrote back

m a m m mmus

fl an—u m “

b u t fi fl d mh M -Tum

“ W h m m mfiea

" D‘ H - yw u n

” You h e talked to

b hfl o n t m g mrh vsry tme

” ' i

i h b a h beh th bepmwn of'rmde

and that

magmamem e

bat he

Value d

Landon

Mar-him


LETTER XXI .

To THE GENIUS OF THE COBDEN CLUB

THE COST OF FREE TRADE

Failure is success to thee if thou couldst read al l the truth .—TUPPER .

Knowledge humbleth the great man, astonisheth the commonman, puffethup the l itt le man—Ax iom.

Mosr SUBLIME SELF-0 0 NFIDENCE ,—I would ask you in the

words of Antony to lend me your ears .” You have talked tome a great deal about the cost of protection .

” Will you letme give you a sober catalogue and account of the Cost of FreeTrade It is indeed a very long account, and a very trueaccount

,and I am persuaded I can prove it at the bar of the

Court of Reason, and get a verdict against you upon it .The first item to which I will inv ite your attention is one

that you will not dispute . Indeed,you have already confessed

j udgment upon it . It is the loss which free trade hasinflicted upon the British farming industry . Sir JCaird

,in his evidence before the Depression of Trade

Commission,said that the English farming industry

between 1876 and 1886 lost a year,and that

of this loss had fallen on the farmers,

on the landlords, and on the farm labourers .Your sometime president

,Lord Farrer

,quotes this evidence

,

accepting it, though he tries to throw some of the blame for iton bad seasons ,

” which Sir J . Caird does not . On the contrary,

Sir J . Caird proved as the principal causes for it the facts thatthe English wheat supply had fallen from cwt . in185 2 to cwt . in 1883, and that the imports hadrisen from cwt . in the first year to cwt .in 1883 .

Another expert witness before the same Commission,Mr .


For my present purpose I am not very anxious to decidewhich of these authorities is more accurate . Another authorityin the National Review, Mr . Palgrave , estimates the loss duringthe last twenty years at The loss in e ither caseis prodigious

,and has to be set down to the debit of free

trade . This is beyond doubt, because the value of land inFrance and other protected countries has appreciated in thesame period . This shows the ruinous depreciation in Englandto be the effect of unchecked foreign competition .

The enormous imports of foreign foodstuffs and the decay ofhome productions make England dependent for her daily bread

2 Cost ofon keeping her supremacy of the sea. Hence the cost

n'

avy for of her navy has doubled in twenty-fiv e years, while in

£32321?the same period her foreign trade has not risen morethan about 15 per cent . , and in Europe has actually

declined. That outlay is a consequence of the fiscal policy . Itis an expenditure as an insurance fund to prevent Englandbeing starv ed in case of war . It is a free -trade tax that hasreached to at least in twenty years .A writer in the British Trade Journal gives five separate

items of national loss in this connection1 . The heavy taxation for protecting food convoys .2 . The danger of coalition amongst foreign States supplying

England with food .

3 . The loss to the home manufacturer of a home market forhis products .

4 . The loss to the national physique from the decay of farmlabour.

5 . The deterioration to the town from the deterioration inthe country .

1

There are various industries which have been injured inEngland by the system of free importations . Amongst these

3 . Los smay be mentioned the chemical industry

,the paper

of indus industry, the silk industry, the linen industry, the bottletries ‘ industry, the sugar-refining industry, the watchmakingindustry

,the tinplate industry

,and the steel industry. In all

these England has suffered from the dumping ” of foreign goods .

Quoted by J. T. Young in Proteetion and Progress from British Trade

Journal , March 1898.

THE COST OF FREE TRADE 2 5 9

At one time the United Kingdom stood first in them all . Nowshe is not so in any of them. Our brief history has shown thelosses from free trade which the industries of other nations havesuffered .

It is a self-evident proposition that every ten of goods whichis carried an unnecessary mile is an economic loss to the world .

While facility of transport has greatly conduced to the4 . Loss by“m ew s development of industries the process of carrying

ifixisportcoals to Newcastle ” is an admitted waste of e ffort.Mulhall estimates that there are persons

in the world engaged in the carrying trade that they earnevery year, or an average of £ 135 each . The

bulk of goods carried now is seven or eight times as great as itwas thirty years ago . There are four carriers in the world toninety other workers, and they employ 11 per cent. of the aggregate capital employed in industry . The capital employed bycarriers averages £ 900 to every hand employed to other workersonly £ 320. The average earnings of carriers are £ 135 of otherworkers only £ 5 2 each .

‘

We see , therefore, that the transport trade is a very profitableone and it is always tending to extend itself beyond the needsof other industries . By just so much as the trader and carriercan prevent the growth of domestic industries, and concentrateproduction in given places far apart, transport becomes necessary ,and the carrier thrives . There was a time when Americanfarmers had to sell their grain at 16 cents per bushel at home

,

while it brought a dollar in London .

Cotton was once abundant in India , and its weaving was astandard industry. The East India Company

,in the interest of

the carrier and of English trade, taxed every Indian loom . Intwenty years Indian cotton-weaving was killed

,and the natives

were compelled to sell their raw material at a penny a pound tobe sent to England, woven there, and returned in the piece .

That meant miles of useless transport.In Australia your Sublimity has always aimed at the same

thing . Wool,hides

,and tallow used to be the staple products

of Australia . Free Traders have always contended that the rawwool should be sent to England or Germany, manufactured

Mulhall , Industries and lVealth of Nations , pp. 38—9 .


there,and returned in piece goods that the crude tallow should

be exported, and returned in the form of soap and candles andthat the same process should be repeated with our hides . Allthat signified miles of useless transport . Over thatquestion the fiscal fight has raged and still rages . Protectionistshave insisted on establishing and protecting domestic woollenmills

,candle and soap factories

,and tanneries . Free Traders have

denounced every such effort as a robbery and a fraud . Theywished to perpetuate the unnecessary carriers, every one of whomearned an average of three times as much as other workers earn .

We get here a pretty fair insight as to why shippers andcarriers

,the world over, tend to free trade . And we see equally

well why it is the interest of producers and consumers,who

work for an average of £ 5 2 per annum each , to minimise trans

portation in which the workers take a toll of £ 135 each . Inthese heavy transport charges we have an explanation of whyit is that the cost of living under free trade is greater than underprotection . We learn here why, when the Protectionist dutieswere taken off in New South Wales, prices were not lowered tothe consumers ; and why, when they were put on again, priceswere not increased . The taxpayers in New South Wales are

now getting a year in the Treasury which they didnot get before , and without any cost to themselves . That wasa loss they suffered from free trade .

It is not easy to ascertain what proportion of transportationis useless . The total money said to be Spent annually on thecarriage of goods or persons is If we estimatethat one-fourth of this transport is unnecessary, that gives us arough idea of the aggregate waste—a sum of ayear . I have no hesitation in saying that Cobden

’

s pestiferousconception about world’ s workshops specially located

,and

the international division of labour, is responsible for a largeproportion of that economic waste in useless transport .It has been well said that of all prodigality that of time is

the worst . Of this the free -trade carrier thinks little . And

5 . L0 5 8 yet there has been a disastrous loss of time in everyofman’

s phase of the industrial decline in agriculture and in thetime ' useless transport we have Spoken of . That annualdisplacement of worth of agricultural produce in


in saying that one country ought not to bemade “ a draw farm for

another, and that a true economy of the powers of nature wouldbring factory and field closer together.

1

What is singul ar about this is that Mr . George does not seethat it is the policy of free imports which is mainly respons iblefor this reckless profligacy.

” Of course his remedy was landnationalisation

,but at least he frankly admits the great loss in

this unnecessary transport of the land’s fertility. Experts haveestimated that the United Kingdom coul d easily feedto of her people , ins tead of, as now, aboutYet Free Traders have declared that if English agriculture

cannot accept the British Free Trade system it must perish.

This I shall merely mention here becaus e it has been fullyargued in previous Letters . Still , it cannot be omitted by any

7 , Loss in one who desires to sum up fairly the disadvantagesthe Want which have to be debited to the policy of free imports .

So far as I know there is no dispute about this item in” mm“ the account . The Free Trader generally admits, whatCobden proclaimed

,that he desires to make each country a

Specialist in some particul ar branch of production . So far assuch a ridiculous policy could be successful , it would necessarilystunt and limit human capacities, inasmuch as it woul d dwarfthe very race itself by depriving men of the quickening impulseto invention and the play of thought.To me this seems to be a terrible bill of indictment . The

agricultural decline of England, with its hundreds of millions

of proved and admitted losses ; the insatiable demand of thenavy for more and more Ships for protecting the food supplies ofthe nation ; the vast sums Spent in the unnecessary carriage ofgoods ; the number of useless carriers employed, and the lossof their time ; the drawing of one country

’s fertility for the

benefit of another ; and the inj ury done to the mental statusof the unprotected people—the sum is inexpressible in mere

figures ; but when presented in detail as we have presented itin this Letter

,it accounts fully for the historical fact that free

trade has been the deterioration of every nation which haspursued it .

Henry George , Protection or Free Trade, p. 175 .

LETTER XXII—To SIR FREDERICK HOLDER,

SPEAKER or THE AUSTRALIAN PARLIAMENT

THE FREE TRADE CASE SUMMAR ISED

Laugh where we mus t , be candid where we can,

But vindicate the ways of God to man—POPE.

DEAR MR . SPEAKER,—I have always observ ed in you what

seems to me the virtue of a most frank sincerity, and yet I thinkthat you have leanings towards Cobdenism . I should like inthis letter to you to present the Free Trade case in as strong alight as you yourself would put it in the same limi ted Space .

I would desire to omit nothing that a Cobdenist regards as ofreal importance .

1 . You start by saying that trade is a beneficent thing initself, and that as such it ought to be unhampered as broad

and general as the casing air .” In answer to that 1ask your perusal of Letter VI .2 . You are in the habit of regarding cheapness in

money price as something to be placed in the forefrontof economic effort . Will you peruse Letter III .3 . Cobdenists speak of the principle of competition with the

reverence due to the Decalogue . I ask your attention toLetter IV .

4 . You quote the marvellous expansion of British tradeunder free imports .” Your statements are mainly true, butalways the record of one side only of the shield . Please readLetters VII ., VIII . , IX .

,and X . These will show the reverse

of the Free Trade Shield in England and the success ofProtection els ewhere .

5 . Free Traders have said that Australia has thriven bestunder unrestricted trade . Letter XVI . , I think , treats thisphase of the subj ect with fair impartiality.


in saying that one country ought not to bemade “ a draw farm for

another, and that a true economy of the powers of nature wouldbring factory and field closer together.

1

What is singular about this is that Mr . George does not seethat it is the policy of free imports which is mainly responsiblefor this reckless profiigacy.

” Of course his remedy was landnationalisation, but at least he frankly admits the great loss inthis unnecessary transport of the land’s fertility. Experts haveestimated that the United Kingdom could easily feedto of her people , instead of, as now, aboutYet Free Traders have declared that if English agricul ture

cannot accept the British Free Trade system it must perish.

This I shall merely mentionhere because it has been fullyargued in previous Letters . Still, it cannot be omitted by any

7, Los s in one who desires to sum up fairly the disadvantages

21

2332? which have to be debited to the policy of free imports .my of So far as I know there is no dispute about this item inaV°°ati°m the account. The Free Trader generally admits, whatCobden proclaimed, that he desires to make each country aspecialist in some particular branch of production . So far assuch a ridiculous policy could be successful, it would necessarilystunt and limit human capacities, inasmuch as it would dwarfthe very race itself by depriving men of the quickening impulseto invention and the play of thought.To me this seems to be a terrible bill of indictment. The

agricultural decline of England,with its hundreds of millions

of proved and admitted losses ; the insatiable demand of thenavy for more and more Ships for protecting the food supplies ofthe nation ; the vast sums spent in the unnecessary carriage ofgoods ; the number of useless carriers employed, and the lossof their time ; the drawing of one country’s fertility for thebenefit of another ; and the inj ury done to the mental statusof the unprotected people—the sum is inexpressible in merefigures ; but when presented in detail as we have presented itin this Letter

,it accounts fully for the historical fact that free

trade has been the deterioration of every nation which haspursued it.

Henry George, Protection or Free Trade, p. 175 .


6 . Classical and literary authority , it is sometimes said ,greatly preponderates on the side of free trade . May I ask youfor a candid perusal of Letter XVII .

7 . Free trade is sometimes described as the true scientificfiscalism—as the logical doctrine par excellence. I ask specialattention to Letter XVIII . and I would add Letter XIX . also .

8 . But protection , you say, however theoretically good, is arobbery of the consumer—of the many for the few . I ventureto invite a candid study of Letter XX .

9 . Free trade can claim the great merit that it inj ures no

one and taxes no one . Well, I think Letter XXI . places thatcontention on the defens ive .

10 . Then, in addition to these positive virtues of free trade ,you urge that protection , if consistent, would protect one sideof the street against the other as much as it protects one countryfrom another ; that it encourages monopolies, trusts, and combines against the general we lfare of the people .

There is a doctrine of the R icardian school which was for along time very much esteemed . It was : Take care of theimports

,the exports will take care of themselve s .” That has

been so entirely falsified by events that it is mostly given up .

There is another still in use even in the present controversy . Itis that the best way to fight hostile tariffs is by free imports .This also stands contradicted by the facts of German, Americanand British experiences . These points are mostly embraced inthe treatment of one or other of the to pics already mentioned .

I have been listening to Free Trade debates in Parliament fortwenty years

,and I have read most of the books of the Cobdenists

available to me , and I do not recall any other main points urgedin your Free Trade apologetics . Of course, I frankly confess thatthe points mentioned have been treated amply in hundreds ofvolumes but I think no inj ustice will be done to you in sayingthat not one of your writers has ever made a serious effort toinvestigate free trade historically .

2 WhyThere is

,of course

,a reason for this . The free-trade

F

i

ree'

l‘

rade doctrine , in its very nature , stands above history . Itignores is built upon theses which, if true , would be true inhi story.

spite of hi story. Your own Professor Jevons may, Itrust

,be taken as your exponent of those theses—that men

THE FREE TRADE CASE SUMMARISED 265

pursue the creation and acquisition of wealth apart from all otheremotions and influences ; that all men will in similar circumstances act in the same manner ; that they will always labourfor the largest money ;profit , obey the laws of supply anddemand

,buy in the cheapest market and sell in the dearest one

,

choose the apparent good, reject the apparent evil, and strive to

yield a minimum of labour for a maximum of pay .

McCulloch further postulate s for you that the labour oftransportation is as profitable as that of production ; and thereyou have formulated a code of doctrines which

,if accepted as

true to start with,places you beyond the need of historical

inquiry.

My present obj ect is to focus your contentions . Most ofthem are ostensibly reasonable ; but none of them are demonstrahle

,and few

,if any

,are true . I say

,therefore

,that you

never had any warrant for adopting these premises as a substitute for historical investigation . I concede most readily that ifthe Cobdenist have his premises allowed

,his general conclusions

will follow logically enough . But no true science can afford toignore the records of the world’s facts .I think that

,in addition to Jevons

,already quoted

,Lord

Farrer and Henry George are not unfair expositors of theCobdenist doctrines . Farrer disclaims any Special liking for

3 ‘ Some cheapness, but at the same time is content to sacrificeFree

'

l‘

rade English agriculture rather than put on a corn duty ;maxims ' and all Free Traders oppose protective duties on thescore of cheapness alone . Then , -on the question of trade , LordFarrer states : All duties are impediments to trade . The fewerthe duties

,the fewer the impediments .” There it is mere ly

assumed that impediments to trade are evil . Why should trade

not have impediments'3

There is an anecdote telling us that soon after Mr . FredericLucas

,who was reared a Quaker, had j oined Rome , John Bright

met him and inquired : We ll,friend Lucas , how dost thee like

thy new superstition '

4 Why,friend Bright

,

” retorted Lucas ,I like it better than I did our old hypocrisy. Now it is not

necessary to suppose that the Free Trader has any hypocrisyabout him ; but his new superstition that trade is somethinggood

, per 36 , has led him a very ignoble dance . The Free Trader


thinks of trade , speaks of it, reasons about it. as something initself beneficent . Yet it would be impossible to demonstratethat the mere act of buying and selling ever increased the sumtotal of the world’s wealth by a single maravedi whilst it is easyto show that this rage for buying and selling has often inj uredproduction .

Now for one or two other contentions of Lord Farrer

N o tariff is an absolute barrier ; and a free country has suchadv antages in production that it can compete with a Protect ionistcountry even for the home market of the latter.

If Lord Farrer had understood what is now known as theLaw of the Surplus

,he could not have written the above .

Dumping often takes place at prices below the cost of production, and it dislocates home trade most disastrously.

(a) There are many free and neutral markets , and in all of thema free trading country has advantages over a Protectionist rival .

The answer is contained in the fact that Germany andAmerica are both cutting England out of neutral markets .

(6) Protect ion has not,so far as w e can j udge , advanced trade

and manufac ture in France , Germany, or the United States, but thereverse .

A reference to my historical letters will show the detailsgiven in which protection has built up those countries when freetrade had failed .

(0) The trade of a country depends on many things besidesfree trade . Free trade only removes impediments . What can be

claimed for free trade is that a country is better with it thanwithout it . The prosperity of the United States does not affect thequest ion .

The impediments to foreign trade are the very things neededin order to promote internal commerce and production.

(d) Every man knows better what he wants to buy and sellthan his government can possibly know for him . He will buy and

sell to the best advantage if left free to buy and sell as he chooses.

Every man will always act for his immediate interests ordesires

,but those interests or desires may be opposed to the


But George had a mind too clear,it would seem

,to be im

posed upon by even his own sophistries . Everyone who hasread his book to the end knows how

,in the closing chapters , he

has ruthlessly demolished his own handiwork by proving whata sham

,as applied to daily life

,is this same free trade which he

had been developing as a theory of truth . He admits at p . 240

that, in view of the practical facts of life such as those whichwe have been developing

,there is a hopeless “ inadequacy in

the arguments which Free Traders rely on .

” Contemplating hisown work

,he asks

But what have w e proved as to the main issue ? Merely thatit is the tendency of free trade to increas e the product ion of wealth .

But from this it does not fo llow that the abolit ion of prote ct ionwould be of any benefit to the working clas s . The tendency ofa brickpushed off a chimney top is to fall to the surface of the ground .

But it will not fall to the surface of the ground if its fall beintercepted by the roof of a house . The tendency of anything thatincreas es the product ive power of labour is to augment wages .But it will not augment wages under condit ions in which labourersare forced by compet it ion to ofi

"

er the ir serv ices for a mere liv ing.

In this is the invalidity of the Free Trade argument , and

here , and not in the ignorance of the masses,is the reason why al l

attempts to convert working men to Free Tradeism,which would

subst itute a revenue tariff for a protect ive tariff,must , save under

such condit ions as ex isted in England forty years ago , utterly fail .

This is the language of a man who was the world’s foremostFree Trader . He proceeds to show that protection has surv iv ed long and wide discussion,

” and that it has arisen spontaneously in such free lands as America , Canada , and Australia,and then expressly admits

The real quest ion is whether the reasoning on which Free Tradersrely takes into account al l exist ing cond it ions ? What the Pro

t ectionist means when he talks of the d ifference betweentheory and fact is

,that the free trade theory does not take into

account all exist ing facts . And this is true It would be as

rat ional to expect any thorough treatment of the social quest ionfrom the well - to -do class represented in the English Cobden Club

as it would be to look for any thorough treatment of the

subject of personal liberty in the controversies of the slave -hold ingWh igs and slav e -hold ing Democrat s of forty years ago .

THE FREE TRADE CASE SUMMARISED 269

Now,sir

,when a Free Trader write s in this way

,what have

your revenue tariffi sts to reply'

4

Though some kind of Free Traders may deeply difier fromHenry George , they are not likely to invalidate his right to speakas to the merits of their cause , and this is the manner in whichhe speaks of the free trade as taught in the school of Manchesterby men like Lord Farrer

Even from the total abolit ion of protect ion,it is imposs ible to

pred ict any general and permanent increase of wages , or any

general and permanent improv ement in the posit ion of the workingclasses .Here is the weakness of free trade , as it is generally advocated

and understood. The working man asks the Free Trader : “ How

will the change you propose benefit me ? The Free Trader can

only answer “ It will increase wealth and reduce the cost of

commodit ies.But in our own t imes the working man has seen wealth

enormously increas ed without feeling himself a sharer in the gain .

He has seen the cost of commodit ies greatly reduced withoutfinding it any easier to live . He looks to England , where arevenue tariffhas for some t ime taken the place of a protect ive tari ff,and there he finds labour degraded and underpaid

,a general

standard of wages lower than that which prevails here , while suchimprovements as have been made in the cond it ions of the workingclasses since the abolit ion of protect ion are clearly not traceableto that

,but to trade unions , to temperance and benefit societ ies

,to

emigrat ion, to educat ion,and to such acts as those regulat ing the

labour of women and children,and the sanitary cond it ions of

factories and mines .

1

I have reproduced these passages here because they go moreto the root of the free-trade case than most Free Traders havedone . The same writer adds

American reformers delude themselves if they imag ine thatprotect ion can now be overthrown in the United States by a

movement on the lines of the Cobden Club . The day for that haspassed . Instead of the abolit ion of protect ion in Great Britainbeing followed , as was expected

,by the overthrow of pro tect ion

everywhere , it is not only stronger throughout the civ ilised worldthan it was then,

but is again raising its head in Great Britain.

George , Protection or Free Trade , p. 2 44.

2 IMd . pp. 2 47- 8 .


To j ustify this summing up of the merits of the fiscal question

,Henry George gives a reason which he has emphasised in

another work, in these wordsFree trade has enormously increased the wealth of Great

Britain without lessening pauperism.

”

In the above we have the views of two typical Free Tradersas to what Free Trade is expected by them to accomplish . Lestwe might come short of what you consider an adequate statement of your case

,let us see what Cobden’

s workshop theoryreally aimed at. It may be stated in the language of Broughamand Hume , two Protectionists who were earlier intent on theaims which Cobden later developed . Brougham said

,in 1815

England could afford to incur some loss on the export of English goods

,for the purpose of destroying foreign manufactures

in the ir cradle . And Hume , ten years later, in the sameplace

,said that the manufactures of the Continent should be

strangled in the cradle .

”

Such,I think

,is a fair statement of the Free Trade case

,with

out,of course , the arguments stated at length that support that

5 . Free case . It is interesting to see by what methods FreeTrade Traders generally commend their teachings and meetmeth°ds ‘ Protectionist arguments . If we call Lord Salisbury asa witness

,he tells us : “ Whenever the evil of the present state of

things is pointed out to them [Free Traders], they, instead ofreplying, call us lunatics, or beat the great tom-tom of free tradein order to drown our voices .”

Both English witnesses testify to the same thing . Mr.Frederick Greenwood , speaking of the disposition of Cobdeniststo abuse the ir opponents rather than argue with them,

says

They maintain that the free trade system proceeds uponcertaint ies as clear and inevitable as any that proclaim a law of

nature ; that its observance at every point is essent ial to the

welfare of every human society at every stage ofits existence ; that noconsiderat ion that is or that can be advanced is sufficient to j ustifydeviat ion from it ; that every deviat ion from it call s down apunishment for which adequate compensat ion is impossible ; thatthough hundreds of mill ions of men in all parts of the civil isedworld declare that , trying the deviat ion, they don

’

t feel the penalty,

George , Progress and P oe erty , p. 180.


oranges would make William Waldorf Astor’s pocket-book sick .

(Laughter.) You can raise elephants in the j ungle of Vermont,

but it woul d take all the inheritance tax on the Gould estate to paythe cost . (Laughter.) You can raise polar bears on the equator ifyou spend money enough , but it would take a king

’s ransom to do

it . (Laughter.) Whom the gods destroy they first make mad,and

that ’s what ’s the mat ter with the Pro tect ionists . Your greed growsby that on which it feeds . You refused the Morrison Bill with itslittle reduct ion . You rejected the Mills Bill with its small changes,and now you are kicking at the moderate Wilson Bill. You maybeat this Bil l by the help of the assistant R epublicans . (Laughter.)But if you do , you w ill build a Free Trade party

,and the men with

brains and hearts and love of humanity W ill rend the Temple of

Protect ion t ill not one stone remains upon another in that robber’sroo st . (Laught er.)

There is such a Free Trade flavour about this that it wouldbe an inj ustice not to have given it a place . That disclaimerthat the trader does not want to hog everything is exquisite

,

since we have seen that his whole aim has ever been to crushout all rivals .In Australia Protectionists have met with precisely the same

treatment . Free Trade orators take the platform and make upin strength of epithet for the ir weakness of argument . One

,for

example,calls us Protectionists dolts ,

” loafers ,” ignorant

asses,and describes their arguments as bosh

,

” rubbish,

”

and idiocy .

”

Another eminent Free Trade barrister thinks the moste ffectualway of silencing dissent is to call his opponents puddingheads

,

” and he winds up a Free Trade lecture with a gem like this

Free T rade is the policy of educat ion and enlightenment . Proteot ion is the policy of ignorance . All men of high educat ional acquirements, un iversity professors, supreme court judges, barristers, doctors ,clergymen ,

et hoe genus omne, are Free Traders to a man . Protect ionists are made up ofTrades Hall loafers

,ignorant asses, and idiots .

Such are Free Trade doctrines , and such the methods of the irpropagation . The samples given are , I think, varied andtypical . In the next letter I hope to examine them in thelight of Protectionist methods , and then we shall see clearly, Itrust

,why it is that Free Trade has failed utterly to make any

impression on the intellectual world .

LETTER XXIII—To W . D . BEAZLEY, ESQ.

,

SPEAKER or THE VICTORIAN PARLIAMENT

THE PROTECTION IST CASE SUMMARISEDO

Who ever knew Truth put to the worse in a free and open encounterAreopagit'led .

Our history now arrives at the confines , where Truth and daylight mee t us

with a clear dawn—MILTON .

DEAR MR . SPEAKER ,—I can safe ly assure myself of your entire

sympathy in the matter of this Letter . Truth to say,I could

not think of anyone to whom I could more appropriately addressit . You have presided over many meetings of the Prote ctionistCouncil of this State , and I may say without the least suspicionof flattery that you have always adorned the debate s with something better than the flourish of words—with sound counsel andsuggestion . I know,

therefore , I shall have an indulgent, thoughpossibly a critical listener, while I summarise the case for Prote ction as presented in the foregoing Letters . The plan of mywork was first to clear the ground of some fallacies .We saw on the testimony of the free-trade economists them

selves that there is no agreement amongst them . While some

1. Want believe all human motive can be reduced to a formula0a based on selfishness

,others introduce some elements

“C’ence ' of ethics . We established,as I contend

,the fact that

any treatment of the fiscal science by deductionist methodsmust fail and that induction is the true mode of procedure .

We devoted a good deal of space and effort to destroying thefalse notion that cheapness measured in coin is a desirable end

2 . Cheap to striv e for . A true conception of cheapness is anessential pre liminary to the study of political economy .

£331

23?

We found that there are prevalent equally loose and°Pemti°n l ppy views concerning competition . When permittedunrestricted Operation it is a blighting and destroying influence


crue l,remorseless

,and relentless . We found that when applied

in a restricted manner to domestic commerce it may bebeneficial, if employed as is emulation in the deedsof virtue ; that it is like some poisons which may be used asmedicines in infinitesimal quantities . D iscussing what shalltake the place of competition , we showed that cc -operation mayin many cases act as an efficient substitute ; and that wherecompetition enters into the domestic economy of the nation itmust be regulated by such safeguarding laws as those of trade sunions

,the minimum wage principle , compulsory arbitration .

We devoted some considerable space to this subj ect . We

found it quite useless to proceed with our inquiry until we got

3 . Trade clear views concerning the nature and tendency ofand its trade . Men are so commonly prone to accept tradetendency ‘ as something good perse, that it is clearly impracticableto intelligently discuss free trade or restricted trade without anaccurate conception of trade itself . We found trade to be thevery reverse of beneficent . Its tendency, when free , is to stunt,not promote , production—to play the tyrant, the oppressor .Its nature is like that of fire and water, to be good under restraint,bad when unimpeded . If these views be correct it i s thereforefalse economy to remove impediments from trade . On the contrary , trade without impediments is maleficent .

Having thus cleared the ground of confusing misconceptions,we went straight to history . Our obj ect was to try how far the

records of various climes and times would bear out ourdata and reasonings respecting cheapness, competition,cc -operation

,and trade . We found that Great Britain

is an eminent example of a State which grew into absolute industrial pre-eminence under trade restriction the mostrigid that the world ever saw. We found that when she hadarrived at a stage where she was superior to all rivals she adopteda policy of free imports

,hoping that the rest of the world would

follow her example . That expectation was not realised . The

nations grew more and more protective . They flourished underthat proctiteon so much as to overtake her and challenge herin neutral markets, so that she has lost a great deal of her European trade , and is every day losing more . It is shown thatGreat Britain has become prodigiously wealthy, but not pro


a consistent course of high and almost prohibitive tariffs . She

has overtaken Great Britain and passed her in productivenessand manufacturing prosperity.

The chronicles show that Turkish trade decline is easilytraceable to the influx of foreign goods, under a reci

procal trade treaty, coming in and killing off the Turkishmanufactures .

The lesson in Russia is not by any means so obvious as inother cases . But if looked into with a student’s eye it is quite

10 Rwas significant . Russia tried protection at the imperious

sign in bidding of Napoleon . Having no local industries,the

dustrial hardship resulted in smuggling, and when Napoleonn th '

fell,the Russian Empire reverted to free trade for seven

years,from 1815 to 182 2 . She was reduced almost to beggary.

She framed a protective tariff, and her internal industries gradually expanded . By the middle of last century she began tolessen her protective duties, and by 1877 she found herself ingreat industrial trouble . She then reverted to protective duties

,

increasing them ever since . Her industrial condition to-dayshows as much relative progress as that of any nation in theworld save America .

In Germany we have a literature on the fiscal question thatis worthy of the philOSOphic intellect of the Teutonic race . The

11 . TheGerman classical economists are diametrically opposed

German to those of England on the root principle of all true19 880“ political economy having an ethical basis . The Germanmind has been led irresistibly to the protective doctrine

,and the

country has thriven under it to an extent which is in the sharpestcontrast to its failure under free trade .

This story is told for quite another purpose . Both thesepowers set out to achieve Opulence as carriers

,not as manufac

12 . The turing nations . They both succeeded,j ust so long as

$1

0?lthey could hold mercantile naval supremacy. The

and Hanseatic League had at length to strike its flag toH°uand° Holland as Holland had to England . The seriousl esson deducible from this is that England is now in the sameprocess of relative declension as Holland was, and from the

same causes . As other nations begin to do their own transportwork the world

’s carrier declines .

THE PROTECTIONIST CASE SUMMARISED 2 77

All the colonies of Australia began their history with leaningsto free trade . They sent all their raw produce to Eng land and

13 Whyreceived back payment in manufactured goods . But

Adstm l ia they found their people often idle for want of employis PFO'

,ment in the few primary industries

,and that while the

tectioni st .goods were Imported which they ought to have made

for themselves . Victoria first became Protectionist under thestress of her gold decline . She had a far larger population thanany other State in the group . She must either lose it or findmeans of employing it . She chose protection . It succeededmarvellously. She retained most of her population

,which is

now three times as dense as that of any Australian State . One

by one all the other States followed Victoria’s example,having

found the universal te stimony of nations to be true that countries which are enclosed prosper, and they which are Opendecline .

We have devoted one Letter to the evidence supplied by theworld at large, ancient and modern . It contains some exceed

14 . Theingly cogent testimony. The indolent may pass it by .

world’s The prej udiced may misread it . The wise man whoteaChmg ' desires to reach the goal of safety should study it asclosely as any other portion of the book .

I venture to think, sir, that in the two Letters on these sub

jects you will find more that interests you than in any other

15 . Thepart of the book . There we have striven to reach to

science the sure grip of science . We find in protection the

mix; underlying principle which governs the world in all itsof pro great undertakings . In the principle of diversity oftec’mn’ avocations

,as there expanded and enlarged , we find an

essential of national and racial progress ; and we find thatwhile free trade is the natural enemy of diversity, protectionalways aims at it .In the twentieth Letter we have examined in detail the

question as to what amount of burden in the way of taxationthe protective policy imposes on a protective people .

$2336I venture to think the result is a little striking . While

protec it is true that in a few cases a protective duty raisesmm

the cost of the protected article , in the great maj ority of

examples its effect is an almost immediate cheapening of the goods


so protected . Examples are given of the cost of living in variouscountries under protection and under free trade . The result isinvariably in favour of protection . N0 amount of theorisingas to what ought to follow the imposition of a duty can overridethese wide demonstrations from history to which the FreeTrader shuts his eyes .In this Letter

,the twenty-first

,we have virtually the climax

of my argumentative system . It is the corollary of much that

17 Thehas gone before . It shows why living in a country of

cog, of free imports is more expensive than in one where thefree Customs duties are high . The question of transport

is dealt with in detail,and it is shown that transport

services are,per worker

,more than twice as costly as are pro

ductiv e services . This brings out the view of the economicwaste that goes on in a country which produces raw materialsfor export to have them returned again to her in manufacturedgoods . Some attempt has been made to estimate the meremoney cost to England of the futile attempt to make her theworkshop of the world .

We have given in various places some striking admissionsthat a protective policy

,under given circumstances, may be

18. Free necessary . I may as well add here the well-knownTrade ad passage from John Stuart Mill’s earliest edition of his

31

211

552; Political Economy.

” He saystion '

The superiority of one country over another in a branchof product ion often arises only from having begun it sooner. Theremaybe no inherent advantage in one part or disadv antage in the other,but only a present superiority of skill and experience . A countrywhich has this skill and experience yet to acquire may in otherrespects be bet ter adapted to the product ion than those which wereearlier in the fie ld and besides it is a just remark that nothing hasa greater tendency to produce improvement in any branch of

product ion than its trial under a new set of cond it ions . But it

cannot be expected that ind ividuals should at their own risk,or

rather to the ir own certain loss , introduce a new manufacture , and

bear the burden of carrying it on unt il the producers hav e beeneducated up to the leve l of those with whom the processes havebecome trad it ional . A protect ing duty cont inued for a reas onablet ime will somet imes be the least inconvenient mode in which a

country can tax itself for the support of such an experiment .


LETTER XXIV .—TO THE HON . ALFRED DEAKIN

,

PR IME MIN ISTER OF THE AU STRALIAN COMMONWEALTH

REACHING THE GOAL

Plato is my friend , Socrates is my friend , but Truth is more my friend .

Max im.

MY DEAR PR IME MIN ISTER,—Even as I pen the closing words

of this book you are Spending freely of your e loquence in defence

1 . Laissez of the doctrines contained in it . To no one , therefore ,faire con can I more fittingly address this Letter . I would faindemned' put into it the essence of forty years of fiscal studyCertainly

,it carries with it my heart as well as my intellect . I

am deeply persuaded that the school of laissez faire has been theexponent of a sad and blighting error . Your whole politicalrecord shows that in this you are at one with me .

When dear old Sam Johnson wrote

How small of al l that human hearts endureThat part which laws or kings can cause or cure !

he taught a very pernicious doctrine . On the contrary,good

government is the first factor in all national prosperity. Badgovernment is the deepest and darkest curse with which thegods can afflict us . Wise rulers and benign laws can convertthe barren rock into fertility, whilst oppression in high placesmay pervert a paradise to a wilderness .Labour

,we are told, Should be left free to flow into its own

natural channels . Free trade , it is asserted, leaves it so , whileprotection diverts capital from its legitimate course to the protected course . I say that in this assumption, that labour andcapital left to themselves will flow into the most productivechannels

,we have one of the most astounding examples of Free

Trade nescience . The words seem to have been adopted parrot

REACHING THE GOAL 281

like,without an effort to look abroad and square them with

facts .Let us look at the distribution of the population in

England . Some parts Of the map are black with density .

Others are white and unpopulated . Why ? Simply becausethings have been permitted to drift unregulated . While Englishfields are left untilled, the cellars and garrets of great cities arechoking with the pestiferous stench of an idle and congestedpopulation . That is laissez faire . These noisome dens wantbreaking up and the people require planting on the land . Theywill not break up of themselves

,or “ by leaving capital and

labour to their natural channels .”

Millions of English and Irish acres await the husbandman,

and the husbandman gasps for the acres and cannot reach them .

Ireland might support ten millions of people in prosperity iflabour and capital had not been left to drift without guidance .

And even where population has emigrated,how has it emigrated

Mr . Chamberlain has recently shown us how it has gone toforeign governments instead of to British colonies . It has beenlost to the Empire where it would have been most valuable andwealth-producing .

What has scourged the emigrants out of the United Kingdomof Great Britain ? The furies of want and famine

,of misery

and idleness . Every man and woman of them was worth solidgold to the Empire

,and they were huddled away pell-mell to

the United States . Even in new countries the evil soon beginsto assume the same features . Great cities grow congested , andthe lands are half tilled—all the result of this insensate doctrinethat labour and capital can best provide for themselves , andhave an infallible instinct for the most profitable outlets . Andwhat is true of land and population is equally true of industry .

The governments which protect and foster production have itin abundance . The government which lets it alone loses it , asevery free -trade country on earth has lost it, or is losing it .

Ireland was well adapted to the linen and woollen industry , butforeign trade diverted capital and industry from those naturalchannels .But if the State is to be constant and ready in action , in

what capacity should it stand towards its children Unless my


efforts have been wasted,we have reached to the conclusion

that every State government ought to be a general housefather .The citizens of the State are but children in the bodypolitic . Each of them is pursuing his isolated andprivate aims . The wisdom of the wisest of them isoften but as foolishness contrasted with the deep

though often dim perceptions of the great aggregate,stretching

out in pathetic dumbness towards a distant dawn .

The greatest tribune that ever raised his voice in a parliamentof mediocrities was never so wise as the sum total of the bucoli cintelligence which he influenced . There never yet was an oratorso inspired but he learned more from others than he taught them .

Had Michael Angelo been born in a tribe of Hottentots,he could

never have painted the Holy Family .

” Had Shakespeare ,with all his gifts, seen the light amidst a tribe of Australiannatives

,he could never have conce ived Hamlet or King Lear ;

and even if the conception came to him it must have fallen stillborn . The greatest of men owe more to the State than theState owes to them . But if great geniuses can develop the irfaculties onl y in the society of the State in which are included

the mute mi llions who seem fit only to toil,suffer

,and enj oy

,they

owe their best gifts to the State which evolved them . Fromthis we deduce the conclusion that the State’s duty is not tostand high above and apart from its people

,merely holding a

balance of cold law amongst them . It is to enter as minutelyinto the interests of its concomitant parts as an intelligentfather would amidst the designs of enterprising sons anddaughters .The father will not be a deus ex machine , reducing his family

to pawns and ciphers,as the Socialist-communists would have

it in the State . But he will advise,contrive , and assist at every

turn where advice and assistance are effective for good . Thatis amongst the very foremost of the deductions which I wouldwish to have drawn from the studies of this book .

Another leading principle of our political economyis that it cannot be divorced from ethics except at thecost of its own emasculation . The theories of Jevons ,Mill

,Bagehot

,and others—that a true political economy

can be constructed based on man as a being actuated only by


naturally reaches the conclusion that the quantity of thatwealth is the goal to be aimed at .The Cobdenist accordingly deprecates what he calls arti

ficial trades, on the ground that they are less wealth-producing ,head per head of the workers in them

,than are some others .

From his own standpoint he is quite correct . A little reflection ,however

,ought to teach a man that there is not in the world

a trade which is not artificial . If the mere bulk of production in a State were the thing to be most considered

,it does

seem to follow that a few staple callings conducted on a mammoth scale would be more likely to effect that obj ect thanwould a multiplicity of minor avocations . There are

,however ,

considerations which render even that conclusion doubtful .Want of employment is the great drawback to all society . The

day in which a workman stands idle is for him and for the Statefor ever lost economically

,never to be regained . The more a

nation tries to carry all its eggs in one basket,the more danger

it incurs of periods of alternate glut and famine . In everyperiod of glut the artisan stands idle and starves .There is another cause tending towards this same end.

The society whose industries are confined to a comparativelyfew staple employments cannot hope to offer suitable labour tothe various capacities of its people . That is another enormouscause of economic waste . There are people fit only for indooremployment

,and others adapted for outdoor labour . A purely

pastoral or agricultural country has no scope in it for the manpossessed of artistic and constructive talents . Are all thosetalents to rot or rust The Cobdenist replies that they are ofminor consequence

,as compared with the greater maximum

production of wealth . That seems to the Protectionist thepoint at which the foreign trade advocate breaks down mostcruelly in his theorisings . His doctrine is one that ignoreshuman wants and human capacities . It makes no account ofthe character of the race or its training . It treats every manas a wealth-producer of the same precise type

,and would squeeze

him through the same mould and crucible . It stands to reasonthat just as the most perfect instrument or product of any kindis that which is most varied in its parts

,SO the most perfect

society is that in which diversity is carried to its greatest develop

REACHING THE GOAL 285

ment . A piece of fine Silk in its production may call into activityqualities which would otherwise be entirely lost to the nation

,

and which are of the greate st use to other branches of industry .

In the same way a nation which employs artificers in the fashioning of fine gold provides customers for those engaged in silk andlinen weaving . Each promotes internal commerce

,and in

doing so create s a new wage fund,which multiplies itself even in

the spending .

Of all the people of a nation agriculturists reap most benefitsfrom the diversity of employments . This may be seen in acountry which is almost purely agricultural

,like Ireland or

India . A failure or partial failure of the creps casts the landinto a condition of famine . In times Of abundance the farmer ispossibly as badly off as in seasons of scarcity . If he has to dependentirely on a foreign market, his prices may be ruinously loweven when his yields are most abundant. There can be nocommerce where there is no diversity

,and where there is no

commerce there is no true national li fe .

Are we to Shut our eyes to the manifest evils that springfrom the business of the mere trader and transporter ? It is

,

5 , But of course,admitted that the carrier and trader are

Trade ? useful in their sphere . But it has been shown thatthey are a tax and an imposition on the producer immediate lythey step beyond that Sphere . The most economi c and profitable kinds ofall production and all exchange are those in whichno transport at all is needed . But it must happen that foreigntrade is sometimes necessary owing to the products of theEquator being impossible of indigenous production in the frigidzones . But in these cases the efforts of the race would be wellexpended to reduce such trade to its minimum .

Horace Greeley has suggested one method by which thismight be regulated . It is that the exchanges should take placealong lines of longitude rather than along lines of latitude

This,then (he says), is our pos ition respecting commerce

that it Should interchange the productions of divers e zone s an d

climates,following in its trans -oceanic voyages lines of long itude

oftener than l ines of lat itude .

Greeley, P olitical Economy, p. 39, quoted by Henry Georg e in P rotec tion

or Free Trade.


There is more in this than meets the eye at first . The samelatitudes

,soils

,and rainfall ought to be adaptable to the same

class of industries,and transportation accordingly along parallels

of latitude may be said generally to be an economi c waste ofe ffort . It may be , of course , that great mineral deposits, orcopious water-power or water-supply, may cause an exceptionto this rule but as a rule it may be laid down that the carriageof grain across a continent to be consumed in the same latitudein which it is grown has been very frequently a waste of humanpower .Along the lines of longitude it is different, and Professor

Thompson recognises the validity of this distinction in hi s

Political Economy,

” where he says Legitimate and naturalcommerce move s rather along meridians than along the parallelsof latitude .

” But even in this trade along meridians vigilantobservation has to be kept upon the trader and carrier to see

that neither pushes his own unproductive business at the expenseof local resources . It is this which caused Blanqui in his Histoire de l ’Economie Politique to say that experience has alreadytaught us that a people ought never to deliver over to the chancesof foreign trade the fate of its manufactures .”

George quotes Greeley as saying that as he bought his ironwork and machinery, not with money ultimate ly, but with hisnewspapers, he could better afford to pay 70 dollars to the readersof his papers than 5 0 dollars to the foreigner who never boughthis papers . George seems to think that he has refuted Greeleywhen he says that the abili ty of certain persons to buyAmericannewspapers does not depend on their making presses, but ontheir making anything at all .” Newspaper presses

,he says

, are

not bought with newspapers, nor are newspapers bought withpresses .

If (says George), instead of making iron ,the men to whom M r.

Greeley refers had made something else which was exchanged forBrit ish iron ,

M r. Greeley’s purchas e of this fore ign iron would have

been just as truly an exchange of his product for the irs.

I venture to observe that George’s answer assumes several

things to be true which are not true . His first error is that theAmerican workers in iron could at will get other profitable work


as the toll of his entrance . Prices did not rise in America afterthe passage of the McKinl ey tariff .

1 British manufacturers soldmore cheaply to America in order to hold their markets . Thisis why importers are always hostile to protective duties, becausethose duties are almost always paid by them

,or by the exporting

house,or shared between them . That is the experience of

exporting manufacturers all the world over .Curtiss quote s an English tinplate maker as saying , when

America raised her duty on tinplates , that

English manufacturers would have to reduce the cost of product ion if they were to maintain the ir hold Of the American trade , andhe knew no other source from which relief coul d be got than therate Ofwages.

Indeed,Mr . Gladstone himself is cited as having laid down this

doctrine in a speech in the House of Commons in Hansard,

’

vol . lx v i . p . 5 03 .

I have treated this subj ect so fully in its proper place that Iwill not further dwell on it here

,and only mention it now as

forming one of those fatal lapses in the Cobdenist argumentwhich have vitiated the soundness of the whole superstructure .

I am sure,my dear Prime Minister

,that you feel with me

that there is nothing on which we have a greater right to arraignthe free-trade advocates than on their ignoring theteachings of history . To me that fact appeared anincredible one until I perceived that it springs directlyout of their use of the deductionist method of argu

ment . Nevertheless it ought to be enough to convince anydispassionate thinker that an industrial science which ignoreshistory is a priori in error .Sir John Macdonald

,when in London

,discussed with an

English Free Trader this fiscal question as it affected Canada .

The Englishman was quite ready to prove to Sir John thatfree trade must of necessity be the more profitable system forCanada . The Canadian Premier replied : I know Canada .

You do not . I know the marve llous change which has occurredsince She adopted a tariff.

” It was a question of theory versus

experience .

Curtis s , P rotection and P rosperity, p. 320.

REACHING THE GOAL 28 0

John Bright once boasted that free trade would raise wage s .Lord Masham asked him How can the importation ofFrenchboots possibly raise the wages of a London shoemaker If youwill reply to this I will distribute some OOpies of youranswer .” It is needless to say that John Bright never venturedon the perilous feat of a reply .

Curtiss points out an early English experience . Protectionwas introduced into England under the leadership of LordBacon . The country had been filled with tramps and beggarsout of work .

A populat ion of unskilled,ignorant , and dependent people was

transformed under the st imulat ing influences of protect ion intoskill ed artisans, industrious, enterpris ing , and ambit ious citize ns .

Flourishing manufacturing centres sprang up in every part o f the

realm,and England entered upon a career of indus try

,thrift

,ente r

prise,and grandeur which lifted it above all o ther nat ions .

On this phase of the value of the teaching of experience,

Mr . Frederick Greenwood once wrote very aptly in the N ationa].

Review :

Trade in every variety is carried on e lsewhere than in the

Brit ish Islands . It is the grand pursuit of all civ ilised nat ions,and

of every offshoot from them,in new countries ; ye t none of them

accept free trade . These various nat ions and communit ies are no t

all in one stage of commercial growth , nor subject to ident icaleconomic cond it ions, nor bred in the same habit s and prej udices . On

the contrary they are very d ifferent in thes e part iculars ; butthough it does happen that some are circumstanced almos t prec is e lyas we are in relat ion to commercial affairs , yet none of them acceptfree trade . The forms of government als o vary in these difl

'

e rent

commun it ies : absolute autocracy in one plac e , something less autocrat ic in another, e lsewhere various degrees of democ inc y down to

the most extreme ; but no mat ter what the form of government

may be , no mat ter whether the decis ion is made in the und is turbedcabinet of a czar, or in the roaring tumult of s treet politics , the re isno acceptance of fre e trade . The mos t frequent answer of Fre c

Traders to all this is that they have heard it before , which is t ruebut when are they going to ac count for it ? It is t ime for them to

beg in upon that business , for, as surely they mus t know , universa lU


repudiat ion of their grand dogma affects the general imag inat ion inEngland very much .

1

The practical man will always refuse to ignore the lessons ofexperience . Mr . R ichard Pearson

,one of the superintendents

of the Bridgeport factory,is quoted by Mr . Curtiss as saying

I us ed to be a Free Trader at home . I be lieved in it ; but whenI found that Germany was s end ing ve lvets into England , and

practically shutt ing us out of the business right at our own hearths tone

,I got t ired of free trade .

2

And now,what is the true meaning of preferential trade ?

I shall not profess,much as I admire the courageous action of

3 , Prefg Mr . Chamberlain,that I mean by the term exactly

mutial what he does . With me protection to national industrade.

What it tries is preferential trade,and preferential trade

,in its

mean8 ° first and most important meaning,is protection to

national industry . Henry George himself,Free Trader as he

is,has declared :

“ Those Protectionists are right who declarethat protect ion is the only j ustification for a tariff.In preferential trade we have enunciated the principle that

lay at the root of List’s National System .

” It is that the firstduty of every community is to itself . In Australia it takes theform that the Australian tariff must take primary note of

Australian industrial requirements . With Mr . Chamberlain itmeans that the Empire at large is to take first care of itself .The root principle is the same in e ither case ; but with Mr .Chamberlain it is less scientific than it is with us in Australia .

If List’s principle of the National System of PoliticalEconomy . is a true one

,the unit of protection must always be

the government of the State . In Australia the Commonwealthis the unit of protection . In the United States it is the Federalarea . In Great Britain the unit is the United Kingdom and theCrown-governed dependencie s . The reason is obvious . Eachautonomous authority is intrusted with the safeguarding ofits own people as against all other people . When that has beendone in Canada, at the Cape , and in Australia , by such a tariffas will give the first preference to domestic production, it is

N ational R ev iew , 1893 .

2 Curtiss , P rotection and P rosperity , p. 687 .

3 George , P rotection or Free Trade, p. 87


them We have examined competitive cheapness and found it

9 . Theto be something not to be sought for

,but sedulously

conclu avoided . We have looked into the nature of unreSi°n‘

stricted competition and proved it to be fraught wi ththe most merciless inj ustice and oppression . We have studiedBritish classical political economy and shown that its professorsare at war on first principles . We have seen that laissezfaire is afallacy

,and that the State owes a very real and ethical duty to

its children . We have examined the trade history of the worldat large and found that it teaches one consistent story

,punctuated

at every turn with proofs of the destructiveness of free trade .

Indeed,we have analysed trade itse lf and found its methods

to be as deadly to human happiness as war ; that it is no morefit to be free than fire and water ; that, like those e lements

,it

is a necessity of human progress ; but that it requires as stricta regulation and confinement as e ither of them ; that the bestof trade is a preferential commerce within the domain of eachseparate government ; and that the next best is a preferentialtrade carried on between the units of empire . The worst of alltrade is that which is carried on between distant fore ign countries

,where a single profit at each end is secured at the cost of

great expenses of transport . We have seen that in these casesforeign producers have almost always to pay customs dutiesto the countrie s whose markets they exploit

,and that in that

respect it is always possible to make the fore igner provide a partof the national needs in finance . But above all we have provedthat any people who neglect to establish amongst themselvesa wide diversity of industrial production

,even though it entail

great cost, lay an embargo on the national expansion of humantalents and capacities, and so stunt and cripple their own higherqualities .With all these cumul ative proofs of the errors and falsities

Of Cobdenism,it is not too much to hope that the world wi ll

soon see the end of what has been to it an economic blight asdeadly to many countries like Ireland as the Black Death .

When that truth has thoroughly se ized upon mank ind as ascientific certainty

,based upon evidence repeated a millionfold,

we may expect to see realised even in England the lesson taughtby List a half-century since of a national system Of politicaleconomy .

”

I N D E X

ABILITY , 5 5 , 136, 2 18 sqq.

Acland, 46Agriculture , 94 , 95 , 12 4 , 12 5 ,139 , 149 , 178 , 2 5 6

and Protection, 109 sqq., 167

decline in Eng land, 88 sqq. ,

2 5 6 sqq.

and price s , 105 , 106America, Free Trade in, 136 sqq. , 2 75 ,2 76

her s tatesmen, 2 11 sqq.

Protection in, 139 sqq.

Production, 144

Aquinas , Thomas , 36

Argyll , Duke of, 1 2 , 2 40, 2 44 , 2 45

Arnold , Matthew, 61

Athenians , 37 , 65 sqq.

Augus tine , St . , 36

Aus tralia, Free Trade in, 194 5‘

q 2 77

Protection in,2 00 egg .

and g old, 194 aga. 2 03

BAST IAT , 31 , 34Beaul ieu, Leroy , 24

Beckett , Sir E . , 34 , 60

Bismarck , 130 , 179 , 2 09Blanqui, 12 1 sqq. , 2 83

Bright , John, 39 , 64 , 65 , 2 65

Burke , Edmund, 2 9 , 2 13 , 2 45

EDICT OF NANTES, 12 2CAIRNES, Prof , 62 , 63 Eng land, 70 , 80 sqq . ,

Canada, 2 07 Protect ion in, 2 74 , 2 75

Carey , Henry C . ,2 8 , 48 , 76 , 83 , 98 , E thics , 60 sqq . ,

9 3 , 2 82 , 2 83

99 , 106, 109, 12 0 , 137 , 138, 140 , Exports (see Imports )15 0 , 15 3 , 2 2 3 , 2 2 4

Carlyle , Thomas , 1 , 13 , 2 8 , 43

Carthag in ians , 37Chatham , 2 13

Cheapnes s , 18 sqq. , 2 73, 2 74

true and false formulae, 18 , 30China, 2 08Clay , Henry ,

2 11

Olive , 110 sqq.

Cobden, 6 , 15 8 , 2 15 , 2 2 1

Colbert , 120 , 2 10

Commerce , 75 . 76 , 2 2 3

Compe tition, 3 1 izq 2 73 , 2 71

in sale and wage s , 39 sqq.

suicidal , 36 Egg .

Cons ervatism , 5 7 sqq .

Consumers , 146

Co -operat ion, 5 7 sqq. , 2 73 , 2 74

moral effect of, 5 77 sqq.

Cos t of Free Trade , 2 5 6 sqq .

of l iving , 85 , 2 05 , 2 4 7 egg .

of Protect ion, 2 43

Cot ton, 165

C ounter, views of, 2 4 5Courtney , Right Hon. L . , 10

Cromwe l l , 8 1 , 2 14Curtis , G . B . , 162

DANGER , 9 1

Debt , 12 5 sqq. , 147

Deduction and induct ion, 4 , 5

Defoe , 78 , 84Denmark and Sweden, 2 08

Divers ity , 202 , 2 16 sqq.,2 36 ,

2 83 sqq.

Dupin, 12 4

Dutie s , Who pay ? 2 5 0 sqq . , 2 8 7.

FANATICISM , 7. 18 1 , 2 70 sqq .

Farrer, Lord ,2 1

,2 8 , 2 9 ,

3 1, 10 5 ,

179 , 2 14 , 2 6 5

Fawce t t , Henry , 17 £ 1

Fluctuation,14 7

France and Fre e Trade , 1 16 aqq . , 2 7

and Pro tection, 1 16 aqq.


France , Colbert , 120compared with Eng land , 12 4 sqq.

los se s by war, 12 8 sq.

Franklin, B . , 5 , 2 12

Free Trade , 1 sqq. ,15 8 sqq.,sqq.

fanaticism of (see Fanaticism)los ses from , 2 07 sq. , 2 5 6 sqq. ,

2 67 sqq.

cos t of, 2 5 6 sya, 2 78

Froude , 95

GEORGE , HENRY , 2 0 , 30 , 98 5'

q1 15 , 2 2 8 , 2 30 , 2 61 , 2 62 , 2 67 sqq.

Germany , 172 sqq. , 2 76

Glads tone , 5 4 , 2 07Gold , 194 sqq. ,

2 03

Grattan, 96

Great men’

s opinions , 2 09 sqq.

Green , 94 sqq. ,1 10 , 120 , 189

Greenwood, Fred , 2 14 , 2 46, 2 70 egg .

Guyot , Yves , 2 18 , 2 33

HAMILTON , Al ex , 136 , 2 13 , 2 5 3

Hamilton, SirW. , 2 33

Hanse Towns , 185 sqq. ,2 76 , 2 77

Happines s , 12 , 2 33 , 2 34Harris , W. J ., M .P . , 130

Harrison, Fred . , 44

Has ting s , Warren,1 10

Hearn ,Dr. , 32

His tory , 64 sqq. , 187 , 2 64 , 2 65 , 2 88 NAPOLEON , 12 3 , 12 7 , 2 10

Hol land, 188 sqq. National sys tem , 2 2 2

rise and decline of,188 , 191 sq . Navigat ion laws , 82 sqq .

Holyoake , G . J 62 N ewman , 31

Home trade (see Trade)Hughes , Thos , Q .C ., 5 2

Huguenot s , 1 2 2 OPIN ION S, 2 09 sqq.

IDLENESS, 1 12 sqq. , 2 60 , 2 6 1

Import s and exports , 109 3114 ,

148 , 1 5 1 , 15 2 , 167 sq . , 179

197 sq. ,2 2 6 sqq.

India, 108 sqq.

wrong s of, 108 sqq. ,2 76

mutiny of, 1 15 3g .

Ireland , 93ruin of, 93 sqq. , 2 76

population of, 103 sqq.

JEFFERSON ,THOS. ,

2 12

Jerro ld, Douglas, 2 16Jevons , Prof , 11

KINGSLEY, 43

LAISSEz FAIRE , 2 17 , 2 37 sqq. ,2 42

2 80 sgg .

Lecky , W. E . H. , 5 8 , 5 9

Leo the Great , 36Leo XII I .

, 42

Levi, Leone , 14 5Lil ly , W. S. , 39 , 64 , 93

Lincoln, Abraham , 2 11

List , Prof. , 82 , 172 , 174 , 176 , 2 10

Living wage , 63Living , cos t of (see Co st)

MACAULAY, THOS.,1 1 1

,189

Maine , SirH. , 35

Man, 11 , 34 , 2 37 , 2 38

Manufactures , 86, 87 , 94 sqq. ,

2 5 9 , 2 60

Markets , 75 , 76, 89 , 90 , 2 2 3 egg .

Marriage , 110 , 1 1 1

Marshal l , Prof. , 1 1 , 16, 33

M cCul loch , 81 , 1 14

M cKinley , 143 , 2 12

M ichelet , J., 1 15

M il l , J . S. , 1 1 , 1 5 , 32 , 35 , 103 ,2 33 , 2 34 , 2 78

M onopoly , 82 , 83Motives , 1 5 , 2 34 sgg .

Mulhal l , 12 6, 2 2 9 , 2 5 7 , 2 5 9 , 2 60Mutiny ,

1 15 8g .

PALEY, Dr., 5 3

Pauperism , 88 , 89 , 99 sgg . , 134 , 144

Peruvians , 65 , 70Peter the Great , 1 5 6

Phill ips , Wil lard, 2 1 1Philos ophy ,

2 32 sgg . ,2 77

Pitt , W. , 96 , 97

Plunkett , 97Pol it ical economy , 8 , 12

Pope , 4Populat ion ,

2 egg , 103 , 104 , 143 3g ,166

Portugal , 2 09

Poverty , 7 , 8 , 9 sgg . , 2 6 , 88 , 89 , 97 , 98 ,

1 12 3g . , 1 18 sg.,1 5 1 sgg .

,196

Prot e c t ion and wag es (see Wages)authorities , 4 , 162 , 172 sgg .

benefits of, 64 sqq. , 2 80 sgg .

cost Of (see Cost)

CAL-1159 1112 1A

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