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The Americana: a universal reference library, comprising the arts ..., Volume 10 online

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They believe that Free Trade secures the Em-
pire of which they are so proud, and also gives
them that naval strength upon which in the last
resort that Empire rests. (3) They believe that
Free Trade prevents the growth and spread of
political corruption, — the chief danger of modern

Bibliography. — The main outlines of the
early free trade movement can be found in gen-
eral histories, such as ( The growth of English
Industry and Commerce,* vol. II, by W. Cun-
ningham; ( History of British Commerce, > by
Leon Levi. But the real relation of the move-
ment to English life and progress is nest seen
in the speeches of the politicians mainly
responsible for the carrying out of ideas into
practice. There is ample material of this kind
in the < Speeches ) of W. Huskisson (1831); of
Sir Robert Peel (1853): in the <Free Trade
Speeches> of Charles Villiers (1883); in the
c Life and Speeches of John Bright, } by G. B.
Smith (1881); and in the ( Life of Richard
Cobden,> by J. Morley (1881) ; the < History of
the Anti-Corn-Law Leagued by H. Prentice
(1853), and the ( History of the Free Trade
Movement in England, > by A. Mongredien, also
contain much information as to the earlier

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The revival of interest in the question in the
early eighties, the controversy as to the results
of English policy and the influence of the
example of foreign countries, are illustrated in
<Free Trade and Protection,* by H. Fawcett
(1878); and <Free Trade v. Fair Trade, > by
Sir T. Farrer (1885) ; <The Free Trade Move-
ment and its Results,' by G. Armitage-Smith
(1903); ^Elements of the Fiscal Problem,* by
L. G. Chiozza Morey (1003); *The Tariff
Problem,> by W. J. Ashley (1903); <The Rise
and Decline of the Free Trade Movement,)
by W. Cunningham (1903); <The Return to
Protection,) by W. Smart (1903) ; represent
from various points of view, the reviewed con-
troversy of the present day. An interesting
general view by a disinterested observer is
given in C. J. Fachs' <The Trade Policy of
Great Britain and her Colonies,) translated by
H. M. Archibald (1905).

John St. Lob Strachey,
Editor of <The Spectator?

41. Great Britain — The British Tariff
Movement: Its Origin, Theory and Pros-
pects. a For more penetrating observers/
writes Dr. Schulze-Galyernitz in the latest and
ablest study of the British economic situation,
*the overwhelming success of the Liberals in
the elections of January 1906, was less sur-
prising than the number of votes given against
Free Trade. 9 This is the verdict of the search-
ing and candid writer whose prepossessions are
all in favor of Free Trade. The remark shows
a genuine anatomical knowledge of British
politics and may be commended to Americans
who wish to penetrate surface impressions on
this subject and desire to grasp the underlying
facts. My purpose, so far as the brief space
permits, is to state the facts, to explain their
causes, and to indicate what seems to be their

The main fact is that England has ceased
to be a solidly Free Trade nation, though pos-
sessing at the present moment a Free Trade
majority of an insecure character. The state
of Parliamentary representation does not truly
reflect the balance of national opinion. In
England and in the United States a small ma-
jority of the nation may secure a dispropor-
tionate power in the Legislature. Any party
which could obtain a one per cent plurality
everywhere would obtain an absolute monopoly
of representation, although it had secured only
a little more than half the votes. Thus, as a
result of the recent General Election, the
Unionists, or Fiscal Reformers, were reduced
in the House of Commons to an unprecedented
minority. In Great Britain they secured less
than a quarter of the seats; but the important
point is that they obtained nearly 44 per cent
of the National vote. The balance of opinion
disclosed at the polls may be shown in round
numbers as follows:


Per cent.

For Liberals (Free Traders) 2,600,000, or 48.3

For Unionists (Fiscal Reformers).... 2,350,000, or 43.5
For Labor Party (Independents) 450,000, or 8.3

(1) The Labor party is chiefly a Socialist
party, though for reasons of policy it declines

that title. It is independent in its parliamentary
position and independent in its economic opin-
ions. Its support of Free Trade is tactical, per-
haps temporary. It assures the masses that
Free Trade alone is a failure; that the tariff
alone is no remedy; that both are unimportant
by comparison with the policy of Socialism ; that
either may be used to promote Socialist pnr-
. poses. The truth is, that in a period of trade
depression the tariff movement would try to
capture the Labor party while the Labor party
would try to capture the tariff movement. In
any case independent labor is not a fixed Free
Trade force ; and this being so, a glance at the
figures just given will 9how that Great Britain
no longer possesses anything like a fixed Free
Trade majority.

(2) The aggregate Liberal vote was less
than 50 per cent of the whole, though the
pendulum was swinging with very exceptional
violence against the late Government for
reasons largely unconnected with the Free
Trade issue.

(3) The Unionist, or fiscal reform party,
secured at the first trial of strength, within less
than three years from the beginning of Mr.
Chamberlain's tariff campaign, the support of
more than two-fifths of the nation. This is
the surprising fact, as Professor Schulze-
Galvernitz perceives. Seventy years after
Adam Smith's ( Wealth of Nations > had ap-
peared; nearly a quarter of a century after
Huskinson had commenced to reduce the obso-
lete tariffs raised to an exorbitant height by the
desperate revenue necessities of the Napoleonic
wars; seven years after Cobden had started his
violent and masterly agitation against the corn
duties, the country was still unconverted to the
Free Trade principle. It was suddenly moved
to throw open its ports by the Irish famine and
the crop failure of a disastrous season. *It
was the rain,* as Mr. John Morley remarks,
"that rained away the Corn Laws in 1846.*

By these comparisons the rapidity and ex-
tent of the progress made by the new move-
ment in Great Britain are to be measured. We
have a strong Free Trade party which is at
present in power. We have ceased to be a
Free Trade nation. That policy formerly de-
pended upon unanimous national support. It
now depends upon the odd man. Holding the
casting vote under the party system, the odd
man is no doubt omnipotent while he remains
of the same mind. But he determines the rise
and fall of Governments by changing his mind.

The predominant fact, then, of present
English politics is the rise of the tariff move-
ment. The history of this fact may be briefly
sketched. Its origins were slow and subcon-
scious. Mr. Cobden had always dwelt upon
the advantage of an unfettered exchange of
cotton for corn. England would manufacture
the cotton and other things; America and
other countries would £row the corn; there
would be an ideal division of labor from the
British point of view. Mr. Cobden prom-
ised that if England abolished her tariffs there
would not be a country in the world within
five years but would have followed her example.
Sixty years have elapsed; no country has fol-
lowed her example. A steady rise of national
tariffs, as elaborate and powerful as the fortifi-

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cations of Vauban, has dominated the inter-
vening period. The Far East is about to repeat
the example of the United States and, the o
European Continent. • Great 1 Britain' is only
one open island amid the dosing markets ol
the world. Free Trade, therefore, — exchange
equally unrestricted on one side and the other
as between two nations transacting — has
never yet prevailed anywhere. It is an un-
known condition. Even England has not had'
it She has instead the system of free imports
by which foreign competition is admitted with-
out interference to her market, while her own
competition is as far as possible suppressed in
foreign markets. That is not a satisfactory

Foreign protective tariffs are a disadvan-
tage to British trade. British free imports are
relatively an advantage to foreign trade. The
conditions are unequal. Unequal conditions
in commerce are not good. Free Trade writers
cannot be induced to examine the practical'
effect of the inequality — pivot-point never-
theless of the British economic controversy.
They simply restate, without modification of
any kind, the traditional arguments which
would apply to a genuine international system
of free exchange, but cannot apply in the same
measure — and, to a large extent, do not apply
at all — to the state of things prevailing in the
total absence of that system.

For a prolonged period (1846-1875), British
trade expanded with unexampled energy.
Agriculture flourished. The economic con-
ditions of the world were transformed by the,
Californian and Australian gold discoveries;
by railway construction in the United States
and upon the European Continent; by steam
shipping. But America and Europe alike
were convulsed by great wars. Their state
systems were refunded. Their tariffs were
readjusted in the spirit of Alexander Hamilton
rather than of Adam Smith. They were
equipped with railways and prepared for manu-
facture. England had remained at peace and
her workshops dominated all markets. But
her memorable period of uncontested suprem-
acy was over.

In 1878 — exactly a generation after Mr.
Cobden's triumph — a period of commercial
depression reached its depth. Crowds of in-
dustrial workers were unemployed in the cities.
The old prosperity of British agriculture was
broken and the rural population began rapidly
to diminish. From that moment through
another quarter of a century cf trade fluctua-
tions, the truth of the free import theory was
questioned by an increasing number of English
thinkers. Popular distrust, however, preceded
scientific opposition. The ^National Fair
Trade League* was started in July 188 1, and
carried on for more than a decade a formidable
political agitation, stimulated by some able
controversial literature and a vigorous weekly
paper. This protectionist movement, how-
ever, failed to find a great leader and died out
in the early nineties. Its only chance of suc-
cess lay in converting one of the great political
parties. The Conservative rank and file were
generally predisposed to protection. The Con-
servative leaders patronized the Fair Trade
movement while the Liberals were in power,
Vol. iu — 13

and stifled it when they had obtained office
themselves. Nevertheless, other influences con-
tinued , almost , imperceptibly to> -diiJiolve Free
Trade conviction throughout the country. The
British < Trade Consular Reports' became a
serial narrative of the advance of protectionist
competition, American and German, in markets
where British manufactured exports had re-
cently been supreme. The immense progress
of the United States and the new German
empire showed at last that free imports, or
half-free trade, was not a certain recipe, as-
suredly not the sole recipe, for commercial
success, and that protection was not necessarily
a prevention of progress. There was a gen-
eral mood of profound anxiety as to the posi-
tion and prospects of British commerce, and a
widespread scepticism as to the theoretical
truth of Free Trade and the practical advan-
tage of free imports.

All the previous scepticism and mistrust
which had existed upon the question of Free
Trade were crystallized in 1903 when Mr.
Chamberlain created the new hscal reform
movement. His Birmingham speech on May
15 in that year was one of the dominating
events of English politics. In the limits of
this article it is impossible to trace the history
of his agitation. The result has been noticed.
There has been a small schism of very dis-
tinguished persons. There is some difference
between Mr. Chamberlain and Mr. Balfour as
to the sort of commercial system to be substi-
tuted for the existing one. But the Unionist
(or "Conservative* or "Imperialist") party is
committed to some form of tariff policy. The
Liberal - Irish Nationalist - Independent Labor
Coalition which conquered at the last General
Election is not morally solid against the tariff.
The present writer believes that Mr. Chamber-
lain's policy is the policy of the future. Eng-
land, let us repeat the fact, has ceased as a
whole to be a Free Trade nation though still
containing a great free trade party whose parlia-
mentary predominance rests upon a compara-
tively slight majority of popular votes.

We now pass from the history to the theory
of the movement Free Traders say: (a)
that tariffs restrict trade. The reply is that
exports and imports alike are increasing in
every considerable protectionist country. Ger-
many's break with the Cobdenite system in
1879 — America's adoption of what Englishmen
call McKinleyism — have been followed not by
commercial restriction, but by a greater ex-
pansion of production, foreign exchanges,
employment, population, and wealth than has
taken place in Great Britain during the par-
allel period. No Free Trade writers grapple
with the fact — few ever notice the fact —
that the fundamental principle of a scientific
tariff is the free importation of raw material,
side by side with the taxation of foreign com-
petitive manufacture. The tariff idea aims # at
restricting the least advantageous kind of im-
ports in order to develop the most profitable
kind. So far from implying restricted trade,
it means, when competently adjusted, the
largest volume of the best exchanges.

(b) That imports must be balanced by ex-
ports — tlwt goods received must be paid for
by goods returned — and that as all inter-

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national exchange will arrange itself in an
ideal manner, if you let it alone, the State
ought not to interfere with it. The reply to
these statements is that they are to a large
extent altogether inaccurate, and for the rest
are superficial half-truths of a singularly de-
ceptive character. Imports may or may not be
completely paid for by exports (including
shipping freights and foreign investments).
The account may be cancelled by the transfer
of securities. An excess of imports may re-
main as invested capital, the interest only be-
ing returned, and the complete ^balancing®
being indefinitely deferred. England, for in-
stance, formerly sent a steady excess of im-
ports into the United States. The excess re-
mained for the most part as British capital in-
vested in America. America ceasing to be a
debtor nation has cancelled a good deal of
that British capital by the excess of her own
exports in recent years. Thus while imports
and exports may appear to balance more or
less all the time, according to the conventional
Free Trade theory, a movement may be gradu-
ally going on under the surface which actu-
ally reverses the position of the two countries
concerned; and transfers the commanding ad-
vantage of economic relations from one coun-
try to another. Again, no Free Trader asserts
that like is paid for by like — that the import
of foreign manufacture produces an equivalent
export of home manufacture. A country which
formerly exported raw produce in exchange
for finished manufacture may rise in the social
scale and export in its turn finished goods to
pay for crude material. So far as the maxim
tells upon the practical controversy, it tells
both ways. Imports and exports do not bal-
ance better under free imports than under the
tariff. America pays for her imports with her
exports and has a probable margin to spare!
America entrenches her own trade in its posi-
tion and makes it as difficult as possible for
foreign competition to displace it The Eng-
lish system makes it as easy as possible for
foreign manufacture to displace home industry.
Under Free Trade the products of certain in-
dustries may pay for the competitive imports
which are steadily weakening other industries.
To sum up, the tendency of isolated free im-
ports is to undermine the national defensive
position in trade after trade. America and
Germany under the tariff are making new
conquests in trade after trade. "Where or-
ganization becomes necessary , w said Brunei,
^laisscs faire becomes impossible.*

The British tariff movement, however, lays
more stress upon its constructive principles
than upon its replies to the sophistry of Cob-
denite syllogisms. It is maintained that the
tariff under British conditions would mean the
maximum increase and the best distribution of
wealth. An isolated free import system implies
the narrowest and least secure market. A
competitive import only enters by displacing
the home supply against which it had com-
peted. There is a gain to some home con-
sumers but a loss to some producers. The
nominally counterbalancing export follows at
the second remove, though meanwhile a net in-
jury to the productive power of the import-
ing country may have been inflicted. Home

capital may have been sterilized; home labor
displaced. How different under the American
or German national systems. There, imports
are mainly non-competitive; they must either
stimulate home production or supplement it.
The possibility of loss at this first stage is re-
duced to a minimum: the return export fol-
lows in the ordinary course, and benefit ac-
crues at each stage of the transaction. The
percentage of unemployed persons (skilled arti-
sans and laborers) is considerably greater in
England than in the United States or Ger-
many. For in the former case the Cobdenite
system facilitates slow but steady displacement
of home labor and arrests the development of
all trades against which foreign finished goods-
compete. Again, under the present conditions
free imports actually restrict British industry
to the smallest market and secure foreign com-
petition in the possession of the largest mar-
ket. America has free sale within her own
market and ours, among 125,000,000 of people;
Germany has free sale in her own territory
and equally in the United Kingdom — a similar
double-market of over 100,000,000 of people.
England has no free sale for her goods outside
her own home market of 40,000,000 of inhabit-
ants, and does not reserve any advantage to
herself even upon her own soil. The con-
ditions are not equal; the inequality means a
steady discount upon British national pros-

The argument may be reviewed succinctly.
For the island and the empire fiscal laisscs
faire is now a principle of minimum develop-
ment. We must seek in another policy the
principle of maximum development. The
principle of maximum development in econo-
mics demands the maximum efficiency of
capital. In every country which admits the
raw material of industry free, but discrimi-
nates against foreign finished goods, the activity
of capital is more decisively encouraged than
under Cobdenite conditions, where the British
manufacturer is excluded by foreign tariffs
abroad, and attacked at his own home base by
protected competition. Cobdenism gives away
the whole case when it declares that capital
under the tariff is stimulated. We are told, it
is true, that the stimulus is secured by pillaging
the consumer. That is rather demagogically
stated than commercially reasoned. For if capi-
tal is stimulated at all, its operations must be
extended; its efforts in developing the produc-
tive capacity of a country must be more power-
ful; it must create the maximum amount of
employment ; it must tend to raise wages by the
most certain of all methods — that of increasing
the demand for labor; and it is not possible,
if the chain of reasoning be sound, that the con-
sumer can lose in the long run by the policy of
maximum development.

Finally, there is a moral question rather un-
pleasantly introduced in a manner which can
only be called a little insular. It is said that
the tariff would introduce corruption. I do not
believe it. In economic controversy it is
especially desirable to "clear our minds of
cant. M In spite of free imports, gross frauds
are perpetrated in English finance and a con-
siderable amount of petty dishonesty prevails
in business. Human nature is tinctured in the

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ordinary way, and to revive the old pose of
superior virtue is a proceeding which appears
to be a little deficient in humor. Corruption
m America, if I judge aright, is due to the
concentrated passion of the money-hunt, to
the vehemence of the desire to succeed, and
the sheer difficulty of bringing public opinion
steadily to bear upon any one aspect of this
evil amid a heterogeneous society in a state of
violent material development. Corruption
rages in every phase of expansion and exploita-
tion. It will be eliminated as the conditions
of American society become more settled.
Where it prevails it is apt to taint everything.
It will taint the tariff if it touches the tariff;
but nothing could be more unhistorical or less
» imaginative than to represent whatever com-
mercial and political corruption there is in
America as due to the national economic policy
founded under Alexander Hamilton and re-
stored under Lincoln. For the rest the Ameri-
can habit of making public confession under
a sounding board creates an exaggerated im-
pression in Europe where the admitted evil
is popularly believed to be far worse than it
is. Shipping and revenue will be more prop-
erly dealt with in another section. The aim here
has been to show that the tariff movement in
England depends upon a theory of develop-
ment, not of restriction ; that the political pros-
pects of that movement are good; and that the
real strength of the foundation of the free-
import system, national unanimity in support
of it, has irrevocably disappeared.

See Great Britain — Free Trade; Pro-

Bibliography. — ( Reports of the Tariff Com-
mission > (London) ; Ashley, ( The Tariff
Problem* (London) ; Cunningham, <The
Rise and Decline of the Free Trade Move-
ment 5 (London) ; Garvin, ( The Principles of
Constructive Economics } (in ( Compatriots
Club Lectures,' London); Bying, Protection:
The Views of a Manufacturer > (London) ;
'The Coming Reaction : A Brief Survey and
Criticism of the Vices of Our Economic Sys-
tem,* by Legislator (London) ; Sir John Barnard
Byles, ( Sophisms of Free Trade and Popular
Political Economy Examined, > a new edition
with an introduction and notes by W. S. Lilly
and C. S. Devas (London 1904).

J. L. Garvin,
Author of ( Economics of Empire.*

43. Great Britain — Reaction of British
Imperialism Upon the Mother Country. The

maintenance of the British Empire is not merely
the great problem of the King's dominions as a
whole. It is the vital problem of British domes-
tic politics. We shall proceed to regard it under
this latter aspect. What the shores of the Baltic
were after the fall of Rome, the United King-
dom has been in the last few centuries — a
nursery of nations. The area under the flag is
about 12,000,000 square miles, or not much less
than a quarter of the earth's land surface. Two-
thirds of this area consists of territory more or
less suitable for white settlement and more or
less occupied by white races. These are the
^Colonies.* The other thira includes India, al-
ways to be regarded as a world within a world,
and the undeveloped tropical possessions. These

are the ^dependencies.* The dependencies pre-
sent a strict Imperial problem. The colonies, on
the other hand, present a Federal problem. That
distinction should be clearly grasped and borne
always in mind. These two very different sets
of facts have exerted a double and parallel
reaction upon insular conditions, mental, moral
and material. Great Britain cannot continue
to exist as a great power unless she can induce
the colonies to enter with her into a political or
a commercial partnership ; or into a Defence
Union and a Customs Union combined, such as
the thirteen colonies formed when they adopted
the American constitution and became the
United States. It is improbable, however, that

Online LibraryWilfrid RichmondThe Americana: a universal reference library, comprising the arts ..., Volume 10 → online text (page 51 of 185)