The argument from the exchanges, which is now admitted to be wholly
false in practice, really brings us back to the old tariffist argument
that tariffs are required to protect us against the imports of countries
whose general rate of wages is lower than ours. On the one hand, they
assured us that a tariff was the one means of securing good wages for
the workers in general. On the other, they declared that foreign goods
entered our country to the extent they did because foreign employers in
general sweated their employees. That is to say--seeing that nearly all
our competitors had tariffs--the tariffed countries pay the worst wages;
and we were to raise ours by having tariffs also. But even that pleasing
paralogism did not suffice for the appetite of tariffism in the way of
fallacy. The same propaganda which affirmed the lowness of the rate of
wages paid in tariffist countries affirmed also the _superiority_ of the
rate of wages paid in the United States, whence came much of our
imported goods which the tariffists wished to keep out. In this case,
the evidence for the statement lay in the high wage-rate figures for
three employments in particular--those of engine-drivers, compositors,
and builders' labourers: three industries incapable of protection by
tariffs.
Thus even the percentage of truth was turned to the account of delusion;
for the wages in the protected industries of the States were so far from
being on the scale of the others just mentioned, that they were reported
at times to be absolutely below those paid in the same industries in
Britain. For the rest, _costs of living_ were shown by all the official
statistics to be lower with us than in any of the competing tariffed
countries; and in particular much lower than in the United States. There
were thus established the three facts that wages were higher in the Free
Trade country than in the European tariffed countries; that real wages
here were higher than those of the protected industries in the United
States, and that Protection was thus so far from being a condition of
good wages as to be ostensibly a certain condition of bad. All the same,
high wages in America and low wages on the Continent were alike given as
reasons why we should have a protective tariff.
There stands out, then, the fact that the payment of lower wages by the
protected foreign manufacturer was one of the tariffist arguments of the
pre-war period, when there was no question of unequal currency
exchanges. To-day, the argument from unequal currency exchanges is that
in the country where the currency value is sinking in terms of other
currencies the manufacturer is getting his labour cheaper, seeing that
wages are slow to follow increase in cost of living. Both pleas alike
evade the primary truth that if country A trades with country B at all,
it must receive _some_ goods in payment for its exports, save in a case
in which, for a temporary purpose, it may elect to import gold. But that
fact is vital and must be faced if the issue is to be argued at all.
Unless, then, the defender of the occasional tariff system contends that
that system will rectify trade conditions by keeping out goods which are
made at an artificial advantage, amounting to what is called "unfair
competition," and letting in only the goods not so produced, he is not
facing the true fiscal problem at all. Either he admits that exports and
freight charges and other credit claims must be balanced by imports or
he denies it. If he denies it, the discussion ceases: there is no use in
arguing further. If he admits it, and argues that by his tariff he can
more or less determine _what_ shall be imported, the debate soon narrows
itself to one issue.
The pre-war tariffist argued, when he dealt with the problem, that
tariffs would suffice at will to keep out manufactured goods and let in
only raw material. To that the answer was simple. An unbroken conversion
of the whole yield of exports and freight returns and interest on
foreign investments into imported raw material to be wholly converted
into new products, mainly for export, was something utterly beyond the
possibilities. It would mean a rate of expansion of exports never
attained and not only not attainable but not desirable. On such a
footing, the producing and exporting country would never concretely
taste of its _profit_, which is to be realised, if at all, only in
consumption of imported goods and foods. It is no less plainly
impossible to discriminate by classes between kinds of manufactured
imports on the plea that inequality in the exchanges gives the foreign
competitor an advantage in terms of the relatively lower wage-rate paid
by him while his currency value is falling. Any such advantage, in the
terms of the case, must be held to accrue to all forms of production
alike, and cannot possibly be claimed to accrue in the manufacture of
one thing as compared with another, as fabric gloves in comparison with
gold leaf. In a word, the refusal of protection to gold leaf is an
admission that the argument from inequality of currency exchanges counts
for nothing in the operation of the Safeguarding of Industries Bill. In
the case of any other import, then, the argument falls.