duty. For the shipper of wheat thing like the amount represented to England aud France, getting by the duty? That is so now; the same price in both markets, it was not so in the past. found his French account sales debited with a duty of 6s. on each quarter; and as the prices have averaged the same for thirty years, this one fact is of itself decisive of the question. France, which in 1884 imported over 8,000,000 quarters of grain and flour, wisely puts into her exchequer the value of the duty she imposes; while we hand over to our rivals the millions of pounds, which if retained, would enable us to greatly reduce imperial and local taxation. Mr Hepworth of Dewsbury, at the meeting of the York Chamber of Agriculture, stated, that "when the United States tariffs were increased, and again increased, his firm, in order to compete, had to decrease, and still again to decrease, its prices to retain its custom. Does this look as though the American consumers were paying the import duties? Mr Vickers, in his evidence before the Royal Commission (second report, page 10), after stating that the trade of his firm in bar and sheet steel with America had fallen from £83,000 in 1864 to £4000 in 1885, and during the same period in railway material from £100,000 to £1000, says, in answer to the inquiry as to whether the consumer paid the American duty on steel manufactures "Certainly not; they do not pay anything like the amount that is represented by the duty, because the works have been established, and their proprietors must now manufacture at a low price, in order to keep the works going: they do not manufacture at a large profit." Asked, "Is the effect of the American tariff to keep your goods out without raising the price in America to the consumer to any Mr Porter, member of the United States Tariff Commission, in his report on the working of the free-trade system in England and the protection system of the Continent, says: "I was assured by a score of manufacturers, when travelling in Lancashire and Yorkshire, that the recent increase in the French tariff came out of their pockets, and not the consumers of France; that they were compelled to sell their goods in France at the same price as before the increase of duty. In Germany I found precisely the same state of things. At page 19 of the final report of the Royal Commission on the Depression of Trade (74) after stating that the value of our exports to the principal protectionist countries was larger in proportion to our population in the years 188084 than in the three previous quinquennial periods, we find this admission: "But notwithstanding this increase, there can be little doubt that the obstruction to our trade, caused by the growing stringency of commercial policy of those countries, tends to make it far less profitable. This, from the free-trade majority who signed that report, is remarkable. We have understood them to hold, as an indisputable axiom, that there never was a duty which was not paid by the consumers. Here is a candid admission, that while the trade is larger the profits are less, owing to the growing stringency of the commercial policy-in other words, the importer has to pay more for the privilege of competing in the foreign market. He pays the duty and not the consumer. Even if we grant that the latter is at present benefited by free imports, he is not in the end likely to be so. Take the case of sugar. The bounty system is rapidly bringing about the ruin of this industry here and in the West Indies when foreign countries find it extinguished, the bounties will be dropped, and the higher prices the British consumer will then have to pay will be more than recoup these countries the sacrifices they are now making. But, we are told, they are taxing themselves for our benefit-that, in fact, these bounties are simply a gift to us. If this is so, how is it the British Government is constantly striving by diplomacy to obtain their abolition? If high tariffs so cruelly handicap our rivals in the great industrial race, why do our manufacturers so bitterly complain of them? Because experience is showing them that our so-called freetrade system is based on nothing but a bundle of exploded fallacies. But who is the consumer for whom his country makes such great sacrifices? If a mere drone who consumes but produces nothing, he is unworthy of consideration. a great industrial community like ours, producers are in an enormous majority. Working men, by the labour they contribute, estimated to amount to one-third of the cost of production, are much more producers than consumers. The investor in home railways, tramways, water-works, gas-works, mines, or any other kind of home stocks, is a producer; all, in fact, who earn from work done or capital employed in this country are producers, who would gain more in income by a general rise in prices than they would lose as consumers. The exceptions are those whose incomes are fixed, and the investor whose capital has gone abroad to assist the foreigner in crippling British trade, to whose care we may safely leave him. In The vast majority of the community, therefore, being much more producers than consumers, it requires but little reflection to see that a higher level of prices, induced by a judicious system of protection, would be a distinct benefit to the greatest number. As a question of fact, trade never was so prosperous as when wheat was at about 50s. The body politic is like the human body—when one member suffers, all the others suffer with it. If such an important member of the body politic as its agriculture is suffering, is it possible the other members can escape suffering with it? Our exchequer would benefit by a largely increased revenue, one-half of which at least would be paid by the foreigner. Revenue must be paid somehow, and it seems but fair that the importer should be made to bear his share of the taxation at present levied from home producers. The injunction to "buy in the cheapest and sell in the dearest market," in itself admirable, did our system admit of our acting on it, is quite as misleading as the term free by which we persist in describing our fiscal policy, but which it would be more accurate to term, a system devised for the protection of the foreign producer. By it we are enabled to buy in the cheapest market, but at what a cost! We must sell before we can buy, either the merchandise we produce or the labour we contribute towards that production. By our thoughtful care for the consumer and cruel disregard of the producer, we have not only reduced the latter's profits to the smallest possible margin, but we have, as we have shown, materiallly enhanced his cost of production by curtailing his market. It is nothing short of mockery to tell him to sell in the dearest market, when by your system he is compelled to sell not in the dearest but the cheapest market. The case is thus stated by the writer in a pamphlet recently published, "Free Trade so called tested by Facts": abroad. 4 "To buy in the cheapest and sell in the dearest market is a perfectly sound recommendation, provided always it is in the power of a nation to do both. If not in its power to sell in the dearest market, by which we understand one from which a profit can be derived, what advantage does the producer derive from cheapness, when forced to sell not in the dearest, but the cheapest market? This is precisely the position of the producer in this country. Shut out from foreign markets by high tariffs, he has to sell in the cheapest, and that his own, made so by fierce competition from Cheapness, for which apparently one-sided traders think we should sacrifice everything, is an alluring term; but if we carefully consider it, we find it not only ambiguous but misleading. Cheapness may be caused by an excess in the supply of commodities generally (intensified, as we see at present, by our system of free imports, attracting to Our markets the over-production of the world); but inasmuch as it entails a diminution in incomes generally and less employment, it is not cheapness; for if the working man ceases to earn wages, of what use to him are the low prices of commodities he has no longer the means of paying for? In other words, the cost of living is to be measured not by what we pay for the articles we consume, but by the amount of income we possess out of which the payment has to come. If it declines more proportionately than the prices of commodities, they are dearer, not cheaper." The less the price of commodities, the lower must be the rates of wages, and the less the capacity of the masses to consume: a labourer has but his labour to sell, but our policy is to destroy his market.1 It has hitherto been.contended by the Cobden school that "British commodities are always paid for by foreign commodities, therefore the purchasers of foreign commodities encourages British industry as much as the purchaser of British commodities," and "that every export of goods must be balanced by an import of goods.” If by this is meant that a nation shall exchange that which it produces for something it does not produce, and were it as a question of fact true that British commodities exported are always paid for by foreign commodities, we take no exception to it; but whatever M'Culloch may have intended, we know this is not the meaning of the latter-day Cobdenite. His theory is, that if by exchanging a commodity produced at home for one produced abroad-whether the latter is a product of this country or not - you can do so on better terms than if you exchanged it for a commodity grown or manufactured at home, it is as great an encouragement to British industry as if you exchanged it for the produce of domestic industry. Let us hear what Adam 1 Mr Harris has shown us, in the Economist' of 29th January last, that from 1884-86 the annual consumption per head of population of wheat and flour averaged 337 lb., costing 1, 35. 4d., against in 1881-83, 354 lb., costing £1, 12s. Id.; from which it appears, if we take the average population of these periods, of which £2, 138, 348 was due to diminished consumption. These figures are remarkable as indicating the decreased spending power of the working classes, and that in reality they do not benefit by "the cheap loaf" they have no longer the means of paying for as of old. Smith says in Wealth of Nations,' book ii. chap. v. :— "The capital which is employed in purchasing in one part of the country, in order to sell in another, the produce of the industry of that country, generally replaces by such operation two distinct capitals that had both been employed in the agriculture or manufactures of that country, and thereby enables them to continue that employment. . . When both are the produce of domestic industry, it necessarily replaces by every such operation two distinct capitals which had both been employed in supporting productive labour, and thereby enables them to continue that support. The capital which sends Scotch manufactures to London, and brings back English manufactures and corn to Edinburgh, necessarily replaces by every such operation two British capitals, which had both been employed in the agriculture or manufacture of Great Britain. "The capital employed in purchasing foreign goods for home consumption, when this purchase is made with the produce of domestic industry, replaces, too, by every such operation, two distinct capitals, but one of them only is employed in supporting domestic industry. The capital which sends British goods to Portugal, and brings back Portuguese goods to Great Britain, replaces by every such operation only one British capital. The other is a Portuguese one. Though the returns, therefore, of the foreign trade of consumption should be as quick as those of the home trade, the capital employed in it will give but ONE-HALF THE ENCOURAGEMENTS TO THE INDUSTRY OR PRODUCTIVE LABOUR OF THE COUNTRY." Or as stated in the pamphlet from which we have already quoted : "Let us consider what the term 'replace capital' means. For example, suppose we can produce an article for £100, and can import it for £95. If we import it we gain £5, and though we pay for it with our own manufactures we lose 100 of wealth, which we might have created less the £5, or a net loss of £95, which we might have saved by producing both commodities at home. Suppose hosiery to the value of £300,000 produced annually in Birmingham, and exchanged for lace produced annually in Nottingham to the amount of £300,000; all classes engaged in the production in Birmingham and Nottingham are benefited to the extent of £600,000. But if Birmingham exchange its hosiery for lace made in Saxony, Nottingham will have £300,000 less to spend; for let it be carefully noted that it is not only the profit Nottingham loses, for the entire value of the domestic product would have been net income to its people, benefiting bakers, grocers, butchers, tailors, shoemakers, and others." 1 Or as stated at much greater length in the fourth chapter of Sophisms of Free Trade,' published shortly after the repeal of the Corn Laws-a work well worthy of careful study by all desirous of arriving at the truth of this all-important subject. the interest on loans, and dividends on British investments in foreign countries, estimated at 60 millions; and as, of course, they do not do so in specie, the excess of their export over what we send them, plus the charges and profit, if any, is merely a remittance in payment of a debt due for something else. Driven from their position by such figures as these, one-sided free-traders contend that, let that be as it may, the growing excess of the import over the export, inasmuch as it shows foreign countries are getting more and more indebted to us, only points to increased national wealth. Is this certain? Is there not strong reason to believe that we have, as Mr. Medley appears to admit in his controversy with Lord Penzance, been recently parting with foreign securities? but whether or not, it is not with the accumulation of wealth in the hands of a few we are here concerned, but with industrial progress and the wellbeing of the masses. Lord Penzance, in his reply to Mr. Medley in the Nineteenth Century' of last September, shows the absurdity of our trying to persuade ourselves that accumulation of wealth (if indeed it be accumulating) from such sources is indicative of increased national prosperity. He says:- light. Suppose the great American millionaire Mr Vanderbilt had been able and willing to buy the entire Isle there, and lived a life of opulence and of Man, and built himself a palace luxury, importing everything that such a life demanded from England or from abroad. If he lived there to the age of Methuselah, what was there to prevent his spending his vast income in the purchase of foreign imports, without exporting a single bale of goods, paying his way by bills drawn of the New York Central Railroad ?" on America, representing the earnings Having regard to the interest of the working classes, what does the decrease in the export, and rapid increase in the import of manufactured goods, but too clearly point to? It points to diminished work for them. That America for instance, aided by her protective system, and assisted by British capital, the interest on which she pays by enormous importations of grain as well as manufactures, is not only manufacturing for herself much she formerly took from us, but is sending, in spite of having to pay double what we do for labour, her manufactures to compete with ours, and that successfully, in our home and foreign markets! A startling and flat contradiction to the dictum of the Cobden school, "that duties imposed for the protection of home industries, increase the cost of production, and make it more difficulty for us to compete Imports are paid for, he (Mr with foreign producers;" for be it Medley) says, either by the export of observed, it is only since American merchandise or by securities. Be it industries have been by a high tariff so. In the word 'security' he includes, I presume, bills of exchange, which I protected, they have been able to have shown to be the ordinary method compete with ours. If the excess of payment in point of fact, and then of the import over the export is a what does it all come to? Why, no- certain proof of increasing national thing but this; that imports are paid wealth, it follows that the greater for somehow, either by goods or se- the excess, the greater should be curities, or something of value. All the amount of that wealth, and this is plain and simple enough as a matter of reasoning and experience, that we shall only have attained but let me imagine a state of things the zenith of our prosperity when which will illustrate it in a practical we have ceased to export, and im " |