A STUDY OF ITS ESOTERIC MEANING
BENJAMIN , HOARE
AUTHOR OF "THE PROTECTIONIST HANDBOOK" "A WHITE MAN'8 LAND '
" TWENTY-FIVE YEARS OF PROTECTION "
AND OTHER ECONOMIC WORKS
KEGAN PAUL, TRENCH, TRUBNER & CO. Ltd
DRYDEN HOUSE, GERHARD STREET, W.
(The rights of translation and of reproduction are reserved)
Thoughts of a thirty years' growth are here. They have come
£2 to me at all manner of times. In the hard grind of a daily
v> journalist ; in the reading and ponderings on books ; in the
fc conversation of friends ; in the whirl of platform politics ; in
gj the waking hours of the night. I can trust to their soundness
'** all the more because they have been of slow and even tardy
There was once a time when, in my earlier years, I was half
caught by the fascinations of some of the Cobdenic theories. I
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need not blush to admit it. Some of the reasonings of Mill and
Marshall are excessively alluring. Even more of Henry George's
speculations, owing to their literary charm and 1 their refreshing
frankness, are particularly seductive. One may very easily fall
o> into these intellectual pitfalls unawares.
1=0 This is really why I have written my book — to warn others
t3 off the quicksands and shallows of fallacy which were a some-
9 time lure and somewhat of a danger to me. Fortunately for me
the profounder reasonings of the German school of economists
came as a corrective. And so it happened that even while
coquetting with the danger I never actually fell a victim to it.
There was in it certainly one beneficial result. It made me
tolerant of even the intolerance of the average Cobdenist. There
2= is no department of knowledge, I should think, in which a little
gi learning is a more dangerous thing than it is in fiscal economics.
s Most certainly it is true respecting that study that
There shallow draughts intoxicate the brain,
And drinking largely sobers us again.
But a man must not drink too much and too constantly of the
same kind of intoxicant. Ruskin and Carlyle and List, diversi-
fied by Henry Carey and Judge Byles's " Sophisms," are a very
saving prophylactic when the mind is becoming a trifle hardened
in the sterility of the English classical school of the last
I have written very little that is original. But at this time
of day can anyone be original on such topics ? I have tried
rather to combine, compare, and analyse. I have not con-
sciously shirked any difficulty, though I have sometimes rather
indicated than fully stated the refutations of the less recondite
errors. Covering much ground, I have never lost sight of the
need of abridgment, and can only hope that I have not too much
sacrificed the argument to the imperious call for brevity.
I had designed to call my book by another name. But the
opportune revival of sound opinions in England has determined
the name of " Preferential Trade." In that name I recognise
the whole force and doctrine of Tariff Protection to National
Industry. National Trade is Preferential Trade, and the trade
of every nation within itself is the first consideration for
statesmen to aim at. Imperial Preferences are good, but not
so good as domestic Preference. My work is therefore for
Preferential Trade in its widest signification of a national
policy of Protection.
"Marinook," Kew, Melbourne:
December 30, 1903.
THE WANT OF A TRUE SCIENCE
LETTER I.— TO OPEIUS
The Root op the Tariff Controversy
1. Economic Science still a Riddle. 2. The Tariffs of the World.
3. A Clue to a Solution. 4. Deduction and Induction. 5. Opposite
Methods employed. 6. Advantage of Modern Research ... 1
LETTER II.— TO THE RIGHT HON. LEONARD COURTNEY
Clearing the Ground
1. Theories which help and Theories which hinder. 2. Is Political
Economy a Science? 3. The Doctrine of Selfishness Unscientific.
4. Man a Multiform Being. 5. Religious Motives modify Gain
Motives. 6. Mill's Mistakes of Definition. 7. Conflict in the Eco-
nomic Camp. 8. Political Economy in Chaos 10
LETTER III.— TO SIR HIGGLER OF THE MARKET
Cheapness — A New Juggernaut
1. The Free Trade Formula on Cheapness. 2. Two Kinds of Cheap-
ness. 3. Cheapness lessens Wages. 4. Cheapness of Production
based on Cheap Labour. 5. Cheapness not Abundance. 6. Cheap-
ness lessens Employment. 7. Cheapness which changes Wealth
into Poverty. 8. Carlyle and Carey on Cheapness. 9. Cheapness
deplored as Ruin by Free Traders. 10. The True Formula . . 18
viii PREFERENTIAL TRADE
LETTER IV.— TO THE WAR SPIRIT OF COMPETITION
Tium: Competition — The Great Demoraliser
1. The Deduct ionist Doctrine. 2. Defining Terms. 3. Trade Compe-
tition riot an Eternal Law. 1. Trade Competition tends to Destroy
it.-elf. .">. Trade Competition co-exists with Monopoly. 6. Com-
petition in Sale of Commodities. 7. Competition with the Mask off.
8. Competition in Wages, it. Trade itself not a Natural Law.
LO. The Waste of Trade Competition. 11. Trade Competition of
Two Kinds. 12. Competition when a Tonic and when a Poison.
13. Nature of Trade Competition 31
LETTER V.— TO THE FRATERNAL SPIRIT IN MAN
Co-operation — The Solvent op Competition
I. A Half way -house to Socialism. 2. How Industrial Co-operation
began. 3. The Social Condition it had to meet. 4. The Traders'
Remedy. 5. The Co-operators' Remedy. 6. The First Growth.
7. Early Testimony. 8. The Doctrine of Ability. 9. The Co-
operative Wholesale. 10. The Moral Achievements of Co-operation.
11. Co-operative Achievements on the Continent. 12. Ethical
Tendency of Co-operation. 13. Subsidiary Means .... 51
LETTER VI.— TO LORD ROSEBERY
Trade — Its Tendency and Nature
1. Trade not Altruistic. 2. Trade Idolatry. 3. Trade which is Hurtful.
4. Trade Roguery and Adulteration. 5. A Review of Trade History.
6. Trade and Slavery. 7. Commerce versus Trade. 8. Where Trade
TRADE VIEWED IN THE LIGHT OF HISTORY
LETTER VII. — TO MR, JOHN BULL
Building the World's Workshop
1. England's Early Social Condition. 2. Early Policy of Protection.
3. English Wars for Monopoly. 4. The Landed Interests of
England. 5. Wages and Food-cost at various Periods. 6. How
England used the Competitive System. 7. Trade Wars. S.England's
Wealth and Poverty. 9. England's Trade Decline. 10. A National
Dan S er 80
LETTER VIII.— TO MICHAEL DAVITT, ESQ.
Free Trade the Destroyer op Ireland
1. Ethics and Economics. 2. Early Irish Manufactures. 3. England
begins to destroy. 4. J. R. Green's Opinion of it. 5. The
Effects of Protection in Ireland. 6. The Death-blow. 7. As
Ruinous as War. 8. The Consequence of Free Trade Wisdom.
9. A Terrible Fact. 10. The Doctrine of Sacrifice. 11. Free Trade
the Mother of all the Evils. 12. Decline of the Population.
13. The National Aspiration. 14. Causes of Irish Decline . . 93
LETTER IX.— TO LORD CURZON
The Hindoo and the Trader
1. India before the Trader. 2. The British Trader in India. 3. Idle-
ness and its Waste. 4. The Mutiny and its Cause . . . .108
LETTER X.— TO PRESIDENT EMILE LOUBET
Why France abjured Free Trade
1. Her Policy of War and Trade. 2. Character and Policy of Colbert.
3. The Relapse of France to Free Trade. 4. The Revolution brings
back Protection. 5. Agricultural Progress. 6. France and England
compared. 7. Material Growth. 8. Wonderful Recovery from the
War. 9. French and English Wealth compared. 10. Pauperism in
France and England. 11. Concluding Reflections . . . .118
LETTER XL— TO PRESIDENT THEODORE ROOSEVELT
How America found her Fiscal Faith
The American Intellect. 2. The Effects of Custom. 3. The In-
fluence of Slavery. 4. The First Protective Tariff. 5. The Second
Protective Tariff. 6. The Third Protective Tariff. 7. The Free
Trade Tariff of 1846. 8. The Fourth Protective Tan if. '.». The Fifth
Protective Tariff. 10. The Population Test. 11. The Productive
Test. 12. The Pauper Test. 13. The Wages Test. 14. The Con-
sumers' Test. 15. A Comparative Period Test. 16. Imports and
Exports. 17. The Cultivation Test 136
x PREFERENTIAL TEADE
LETTER XII.— TO THE UNSPEAKABLE TURK
How n!i: Im'i;i:h;.n Trader blighted Turkey
1. Turkey's Gr« 2. Turkey's Decline. 3. Industrial Collapse.
1. Agricultural Decline. 5. National Bankruptcy .... 150
LETTER XIII.— TO THE PRIVY COUNCILLOR M. DE WITTE,
Ex-Minister of Russian Finance
The Rise of the Muscovite Manufacturer
1. Bnssla in the Past. 2. Russia's Trial of Free Trade. 3. Russia's
Start of the Protective Policy. 4. Vital Necessity of Manufac-
tures. 5. Slow Growth of Manufactures. 6. The New Protection.
7. Cobdenist Opinion of it. 8. Professor Mendeleeff's Official Report.
9. Mid-century and Fin-de-siecle Critics agree. 10. Cotton Growth
and Manufactures. 11. Siberia and its Economic Uses. 12. Popula-
tion and Area. 13. The Russian Farmer and Low Prices. 14. Russia's
Foreign Trade. 15. Russian Internal Policy 156
LETTER XIV.— TO KAISER WILHELM
German Ethics in Political Economy
1. German Method of Inquiry. 2. The National Method versus the
Cosmopolite Theory. 3. The Leading Features of National and
Historical Schools. 4. Lessons from German History. 5. German
Agriculture. 6. Return to Protection and its Results. 7. Free Trade
Explanations of the Success of German Protection. 8. Customs
Taxation in Germany. 9. The Growth of the Collectivist Idea . . 172
LETTER XV.— TO THE MINISTER OF THE INTERIOR OF THE
The Hanseatic League and the Netherlands
. The Hanseatic Traders. 2. Their Great Success. 3. Useful History.
4. Hanse Trade Decline. 5. The Rise of Holland. 6. Her Energy
and Riches. 7. Dutch Supremacy challenged. 8. Adam Smith on
the Carrying Trade. 9. Rival Tariff Systems compared. 10. Hol-
land's Failure. 11. The True Lesson taught 185
LETTER XVI.— TO DAVID SYME, ESQ.,
Pioneer of Australian Protection
Why Australia sued Cobdenism
1. Free Trade Energy. 2. Reason of the Revolt. 3. Victoria in Riches.
4. Victoria in Poverty. 5. The Want of a New Colony. 6. Protec-
tion in New Zealand. Queensland, South Australia, Tasmania, and
Western Australia. 7. New South Wales Tariff. 8. Contributory
Motives. 9. Population compared. 10. Other Marks of Progress.
11. Cost of Living 194
LETTER XVIL— TO THE RIGHT HON. JOSEPH CHAMBERLAIN
The World-wide Experiences of Free Trade
1 . Free Traders admit their own Decadence. 2. Instances of that Decay.
3. Opinions of Bismarck, Schmoller, and List. 4. Policy of Colbert,
Napoleon, and Thiers. 5. A Galaxy of America's Intellectual Stars.
6. English Thinkers and Statesmen 207
REACHING A CONCLUSION
LETTER XVIII.— TO SIR A. CON AN DOYLE
The Science of Protection
Word-worship an Ignis Fatuus. 2. Diversity of Occupation a Neces-
sity. 3. What hinders Diversity. 4. How to prove the Doctrine
of Diversity. 5. Diversity stimulates Ability. (5. Diversity is
Economic. 7. Free Trade opposed to Diversity. 8. Why not protect
the Provinces as well as Countries 1 9. Commerce versus Trade.
10. The Soldier and the Trader. 11. The Trader's Interests.
12. Adam Smith on Foreign Trade and Home Commerce. 13. Henry
George's Attempt to answer Smith. 14. Ricardo's Failure to answer
Smith. 15. Comparative Volume of Home and Foreign Trade.
16. Revenue Tariffs are not Free Trade. 17. The Conclusion . . 21J
,,,,,,• xix po THE RIGHT BON. ABTHUB BALFOUR,
Prime Minister of England
Tim: PHILOSOPHY OF PbOTKCTIOH
The Utet of PhiloBophy. 2. Politica] Economy the Science of
Bappineas, not of Wealth. 8. Human Motives for Actions. 4. Di-
B Philosophic Truth. 5. Philosophy inculcates
SOtion to the Boy and Man. 7. Protection to
the TMe and Flower. B. Parallel between the Individual and the
Production insufficient. 10. Protection a House
LETTER XX.— TO MR. JOHN BURNS, M.P.
The Cost of Protection
1. Free Trade Objections. 2. Nothing Good without Cost. 3. Free
Trade Admissions. 4. Views of the Statesman and of the Counter.
5. Method of Estimating the Cost of Protection. 6. Concrete
Examples. 7. Some Australian Examples. 8. An American
Example. 9. Some English Examples. 10. Who pays Customs
Duties? 11. Cases where Customs Duties are paid by Consumers.
12. Theories and Facts concur 243
LETTER XXL— TO THE GENIUS OF THE COBDEN CLUB
Tiie Cost of Free Trade
The Agricultural Debt. 2. Cost of Navy for protecting Transport.
3. Loss of Industries. 4. Loss by Unnecessary Transport. 5. Loss
of Man's Time. 6. The Cost of the Soil. 7. Loss in the Want of
Diversity of Avocation 256
LETTER XXII.— TO SIR FREDERICK HOLDER,
Speaker of the Australian Parliament
Tiie Free Trade Case Summarised
1. Focussing tint Pointe of Dispute. 2. Why Free Trade ignores History.
Maxim-. 4. Henry George on Free Trade.
5. Free Trade Methods 263
LETTER XXIII.— TO W. D. BEAZLEY, ESQ.,
Speaker of the Victorian Parliament
The Protectionist Case summarised
Want of a Science. 2. Cheapness, Competition, and Co-operation.
3. Trade and its Tendency. 4. Historical Resume — England.
5. Ireland's Ruin. 6. India's Ruin. 7. The Fiscal Story of France.
8. The Fiscal Story of America. 9. Turkey's Decline. 10. Russian
Industrial Growth. 11. The German Lesson. 12. The Hanse Towns
and Holland. 13. Why Australia is Protectionist. 14. The World's
Teaching. 15. The Science and Philosophy of Protection. 16. The
Cost of Protection. 17. The Cost of Free Trade. 18. Free Trade
Admissions of Protection 273
LETTER XXIV.— TO THE HON. ALFRED DEAKIN,
Prime Minister of the Australian Commonwealth
Reaching the Goal
1. Laissez /aire condemned. 2. The State in loco parentis. 3. Ethics
in Political Economy. 4. Diversity of Avocation. 5. But Trade 1
6. Who pays Customs Duties ? 7. The Lessons from History.
8. Preferential Trade : what it Means. 9. The Conclusion . . 280
A STUDY OF ITS ESOTERIC MEANING
THE WANT OF A TRUE SCIENCE
Letter I.— To OPEIUS
THE ROOT OF THE TARIFF CONTROVERSY
Wise men learn by other men's mistakes ; fools by their own. — Proverb.
My dear Harry, — You and I have spent many an hour in
lively cracks over what Carlyle called the " Dismal Science,"
1. Eco- without finding it in the least dismal. I always
nomic arraigned you for holding the text writers too cheaply,
still a But in turn I have to confess that had Pope lived in
riddle. our d a y h e might certainly have described Economic
Science as The glory? j egfc> and riddle of the W01 . ld
A few men, such as Adam Smith, Ricardo, Bastiat, Carey,
and Mill, have deemed the study of it a glory. To many — as
to Carlyle, Ruskin, and Argyll — it has appeared a jest. To the
great mass of men it is still an unsolved riddle, too dismal to
approach the solution of.
After all that you and I have said together, you will scarcely
ask me, as some might — Why add another knot in this tangled
skein of sophistication ? You know that I am not unmindful of
the Pythagorean wisdom, that " we ought either be silent, or
speak things that are better than silence." I cherish a hope
that, instead of adding to the tangle, I may, in part at least,
All men are agreed that on the question of a trade that is free
nist a trade that is restricted, the world is still full of con-
troversy, as it has been during most of the last century. States-
men, economic doctors, and thinkers have ranged themselves
on both sides. For the Restrictionists the mind most readily
to such names as Colbert, Napoleon, Pitt, Alex. Hamilton,
Clay, List, Greeley, Webster, Carey, Bismarck, and Thiers. On
the side of Free Trade we think of Adam Smith, as long as
peace lasted, McCulloch, Mill, Peel, Cairnes, Cobden, Bright,
Fawcett, Bastiat, Say, and others. All of these have spoken
thoughtfully, some eloquently, and most of them have acted
as well as preached. Yet still the contest continues, without
exhibiting any very decided indications that its end is defi-
nitely approaching. The statesmen of the world are as busy
as ever putting up tariffs and pulling them down.
I have got out for you a sort of classification of the nations,
as they range at present, under the two banners. It is true
that customs duties exhibit all varieties, ranging from
the sternest prohibition to an almost imperceptible
impost. But, taking in one group all those tariffs which
are levied purely for revenue purposes, and in another
those where the duties are levied with a view to foster industry,
the classification is as follows :
Free Trade and Revenue
I tinn .
D( mnark .
THE EOOT OP THE TARIFF CONTROVERSY
Free Trade and Revenue
France and Colonies
Great Britain :
British Crown Set
tlements in Europe
America & Oceana
exclusive of self
New Zealand .
Cape Colony .
Holland and Colonies
Persia . -
Portugal and Colonies
Spain and Colonies
Sweden and Norway
U. S. America .
4 PKEFERENTIAL TRADE
Here, then, we find the facts summarised to stand thus : —
Area in square
I am not going to predicate that this overwhelming preponder-
ance of Protectionists is any proof against the soundness of
free trade. You used often to remind me of Oxenstiern's
proverbial saying about the wisdom of government; and he
but confirmed Pope's reflection : " Thou little thinkest what
a Jit tic foolery governs the world." But all will concur that
our first duty is to get a grip of the facts as they exist, and of
the forces which have to be reckoned with. I am quite aware
that this table needs discounting on both sides. India's 290
millions are largely governed by the interests of Manchester
and Bradford. The myriads of China and Russia have almost
as little voice in determining the policy under which they live
as has the Indian ryot. Still, the fact remains that, in most of
the States of the world, minds of light and leading have guided
the national policy, whether on the side of Restriction or of
Freedom. Consequently, the problem before us is how, in the
light of knowledge, to decide the question on which so many
eminent doctors disagree.
I can well remember a remark of yours on the wisdom of
the sage, that " talking comes by nature, silence by wisdom " ;
a. A clue and trul y en °ugh I do not forget that " the fool shineth
to a no longer than he holdeth his tongue." Yet, as I am
persuaded that I spy a clue out of the labyrinth, it
seemeth to me that I had better follow it a little.
The first step, I take it, in order to find the path of truth,
ia to affix finger-posts on the by-paths of error. Wherever
eminent thinkers arrive at opposite conclusions there must have
been some false factor in the sum of their reckonings. That
error may have arisen in several ways. It may have come
from a defective method of investigation, or from a true method
defectively treated; or it may have arisen in errors both of
method and treatment. We have often together looked at the
methods employed, and what have we found ? We discovered,
THE BOOT OF THE TARIFF CONTBOVEBSY 5
at the very outset, a fact which is sufficient to account for all
the honest differences of opinion between the two schools of
Restriction and Freedom. Free Traders, with perhaps the sole
exception of Marshall, adopt the method of the Deductionist
school, and Protectionists are almost invariably Inductionists,
though often unconsciously so. In this fact, followed up, I
am persuaded you will find some pregnant meaning.
All men will agree that both these methods of inquiry are
legitimate processes of investigation; but all will readily con-
cede that they are not equally applicable to all inquiries. By
the inductive process, which reasons from a multiplicity of
small facts to a general law, Franklin showed electricity and
lightning to be identical. By the deductive method, which
reasons from a general law to minor conclusions, he inferred
that iron rods would protect buildings from the lightning
The deductive method uses the syllogism. That is well
enough, provided only that the syllogism be sound. The weak-
. _ , ness of some schools is that they have too often assumed
tion and a series of general propositions as " axioms," and, from
induction. suc ] 1 assume( J truths, have reasoned down to particulars
by means of a middle term. Granted the premises be true,
the process is infallible. Everything depends on whether the
major premises be merely assumed or be validly proven. Adam
Smith, for example, built his system on the proposition that
The effort of every individual to better his own condition, when
suffered to exert itself with freedom and security, is so powerful
a principle that it is alone, and without any assistance, not only
capable of carrying the society to wealth and prosperity, but of
surmounting a hundred impertinent obstructions. 1
Another economist says : " The laws of the market . . . are
precisely those which tend best to the universal benefit." 2 " Every
man desires to obtain additional wealth with as little sacrifice
as possible." 3 This, says Senior, is " the corner stone " of every
system of exchange in trade.
1 Adam Smith, Wealth of Nations, Book 4, ch. 5.
2 Newman, Lectures on Political Economy, p. 63.