HOW TO KEEP FOREIGN TRADE
The problem is how to keep our foreign export trade.
We are told that unless we can compete in price with foreign nations we
must lose our foreign trade; and we are told that the only means of
competing with foreign nations in price is to lower the wages of the
British worker.
We will test these statements by looking into the conditions of one of
our great industries, an industry upon which many other industries more
or less depend: I mean the coal trade.
At the time of the great coal strike the colliers were asked to accept a
reduction of wages because their employers could not get the price they
were asking for coal.
The colliers refused, and demanded a "living wage." And they were
severely censured by the Press for their "selfishness" in "keeping up
the price of coal," and thereby preventing other trades, in which coal
was largely used, from earning a living. They were reproached also with
keeping the price of coal so high that the poor could not afford fires.
Now, if those other trades which used coal, as the iron and the cotton
trades, could not carry on their business with coal at the price it was
then at, and if those trades had no other ways and means of reducing
expenses, and if the only factor in the price of coal had been the wages
of the collier, there might have been some ground for the arguments of
the Press against the colliers.
But in the iron trade one item of the cost of production is the
_royalty_ on the iron. Royalty is a kind of rent paid to the landlord
for getting the iron from his land.
Now, I want to ask about the iron trade, Would it not be as just and as
possible to reduce the royalty on iron in order to compete with foreign
iron dealers as to reduce the wages of the iron-worker or the collier?
The collier and the iron-worker work, and work hard, but the royalty
owner does nothing.
The twenty-five per cent. reduction in the colliers' wages demanded
before the great strike would not have made a difference of sixpence a
ton in the cost of coal.
Now the royalties charged upon a ton of manufactured pig iron in
Cumberland at that time amounted to 6s. 3d.; whereas the royalties on a
ton of manufactured pig iron in Germany were 6d., in France 8d., in
Belgium 1s. 3d. Now read this--
In 1885 a firm in West Cumberland had half their furnaces idle, not
because the firm had no work, but simply owing to the high royalties
demanded by the landowner. This company had to import iron from
Belgium to fulfil their contract with the Indian Government. With a
furnace turning out about 600 tons of pig iron per week the
royalties amounted to L202, while the wages to everyone, from the
manager downwards, amounted to only L95. This very company is now
amongst our foreign competitors.
The royalties were more than twice the amount of the wages, and yet we
are to believe that we can only keep our iron trade by lowering the
wages.
The fact is that in the iron trade our export goods are taxed by the
idle royalty owner to an amount varying from five to twelve times that
of the royalty paid by our French, German, and Belgian competitors.
Now think over the iron and cotton and other trades, and remember the
analysis we made of the cost of production, and tell me why, since the
rich landlord gets his rent, and since the rich capitalist gets his
interest or profits out of cotton, wool, or iron, the invariable
suggestion of those who would retain our foreign trade by reducing the
cost of production amounts to no more nor less than a reduction of the
poor workers' wages.
Let us go back to the coal trade. The collier was called selfish because
his demand for a living wage kept up the price of coal. The reduction
asked would not have come to 6d. a ton. Could not that sixpence have
been saved from the rents, or interest, or profits, or royalties paid
at the cost of the production of other goods? I think you will find that
it could.
But leave that point, and let us see whether there are not other factors
in the cost of coal which could more fairly be reduced than could the
wages of the collier.
Coals sells at prices from 10s. to 30s. a ton. The wages of the collier
do not add up to more than 2s. 6d. a ton.
In the year before the last great coal strike 300,000 miners were paid
L15,000,000, and in the same time L6,000,000 were paid in royalties. Sir
G. Elliot's estimate of coal owners' _profits_ for the same year was
L11,000,000. This, with the L6,000,000 paid in royalties, made
L17,000,000 taken by royalty owners and mine owners out of the coal
trade in one year.
So there are other items in the price of coal besides the wages of the
colliers. What are they? They may be divided into nine parts, thus--
1. Rent.
2. Royalties.
3. Coal masters' profits.
4. Profits of railway companies and other carriers.
5. Wages of railway servants and other carriers' labourers.
6. Profits of merchants and other "middlemen."
7. Profits of retailers.
8. Wages of agents, travellers, and other salesmen.
9. The wages of the colliers.
The prices of coal fluctuate (vary), and the changes in the prices of
coal cause now a rise and now a fall in the wages and profits of coal
masters, railway shareholders, merchants, and retailers.
But the fluctuations in the prices of coal cause very little fluctuation
in rent and _none_ in royalties.
Again, no matter how low the price of coal may be, the agents,
travellers, and other salesmen always get a living wage, and the coal
owners, railway shareholders, merchants, landlords, and royalty owners
always get a great deal more than a living wage.
But what about the colliers and the carriers' labourers, such as railway
men, dischargers, and carters?
These men perform nearly all the work of production and of
distribution. They get the coal, and they carry the coal.
Their wages are lower than those of any of the other seven classes
engaged in the coal trade.
They work harder, they work longer hours, and they run more risk to life
and limb than any other class in the trade; and yet!----
And yet the only means of reducing the price of coal is said to be _a
reduction in the collier's wage_.
Now, I say that in reducing the price of coal the _last_ thing we should
touch is the collier's wage.
If we _must_ reduce the price of coal, we should begin with the owners
of royalties. As to the "right" of the royalty owner to exact a fine
from labour, I will content myself with making two claims--
1. That even if the royalty owner has a "right" to _a_ royalty, yet
there is no reason why he, of all the nine classes engaged in the
coal trade, should be the only one whose receipts from the sale of
coal shall never be lessened, no matter how the price of coal may
fall.
2. Since the royalty owner and the landlord are the only persons
engaged in the trade who cannot make even a pretence of doing
anything for their money, and since the price of coal must be
lowered, they should be the first to bear a reduction in the amount
they charge on the sale of it.
Next to the landlords and royalty owners I should place the railway
companies. The prices charged for the carriage of coal are very high,
and if the price of coal must be reduced, the profits made on the
carriage should be reduced.
Third in order come the coal owners, with what they call "a fair rate of
interest on invested capital."
How is it that the Press never reproaches any of those four idle and
overpaid classes with selfishness in causing the poor workers of other
trades to go short of fuel?
How is it that the Press never chides these men for their folly in
trying to keep up profits, royalties, and interest in a "falling
market"?
It looks as if the "immutable laws" of political economy resemble the
laws of the land. It looks as if there is one economic law for the rich
and another for the poor.
The merchants, commission agents, and other middlemen I leave out of the
question. These men are worse than worthless--they are harmful. They
thwart; and hinder, and disorder the trade, and live on the colliers,
the coal masters, and the public. There is no excuse, economic or moral,
for their existence. But there is only one cure for the evil they do,
and that is to drive them right out of the trade.
I claim, then, that if the price of coal must be reduced, the sums paid
to the above-named three classes should be cut down first, because they
get a great deal more, and do a great deal less, than the carriers'
labourers and the colliers.
First as to the coal owners and the royalty owners. We see that the
_whole sum_ of the wages of the colliers for a year was only L6,000,000,
while the royalty owners and the coal owners took L17,000,000, or nearly
three times as much.
And yet we were told that the _miners_, the men who _work_, were
"selfish" for refusing to have their wages reduced.
Nationalise the land and the mines, and you at once save L17,000,000,
and all that on the one trade.
So with the railways. Nationalise the railways, and you may reduce the
cost of the carriage of coal (and of all goods and passengers) by the
amount of the profits now made by the railway companies, plus a good
deal of the expense of management.
For if the Municipalities can give you better trams, pay the guards and
drivers better wages for shorter hours, and reduce penny fares to
halfpenny fares, and still clear a big profit, is it not likely that the
State could lower the freights of the railways, and so reduce the cost
of carrying foods and manufactured goods and raw material?
Our foreign trade, and our home industries also, are taxed and
handicapped in their competition by every shilling paid in royalties,
in rents, in interest, in profits, and in dividends to persons who do no
work and produce no wealth; they are handicapped further by the salaries
and commissions of all the superfluous managers, canvassers, agents,
travellers, clerks, merchants, small dealers, and other middlemen who
now live upon the producer and consumer.
Socialism would abolish all these rents, taxes, royalties, salaries,
commissions, profits, and interests, and thereby so greatly reduce the
cost of production and of carriage that in the open market we should be
able to offer our goods at such prices as to defy the competition of any
but a Socialist State.
But there is another way in which British trade is handicapped in
competition with the trade of other nations.
It is instructive to notice that our most dangerous rival is America,
where wages are higher and all the conditions of the worker better than
in this country.
How, then, do the Americans contrive so often to beat us?
Is it not notorious that the reason given for America's success is the
superior energy and acuteness of the American over the British manager
and employer? American firms are more pushing, more up-to-date. They
seek new markets, and study the desires of consumers; they use more
modern machinery, and they produce more new inventions. Are the paucity
of our invention and the conservatism of our management due to the
"invincible ignorance" or restrictive policy of the British working man?
They are due to quite other causes. The conservatism and sluggishness of
our firms are due to British conceit: to the belief that when "Britain
first at Heaven's command arose from out the azure main" she was
invested with an eternal and unquestionable charter to act henceforth
and for ever as the "workshop of the world"; and say what they will in
their inmost hearts, her manufacturers still have unshaken faith in
their destiny, and think scorn of any foreigner who presumes to cross
their path. Therefore the British manufacturer remains conservative, and
gets left by more enterprising rivals.
A word as to the superior inventiveness of the Americans. There are two
great reasons why America produces more new and valuable patents. The
first cause is the eagerness of the American manufacturer to secure the
newest and the best machinery, and the apathetic contentment of the
British manufacturer with old and cheap methods of production. There is
a better market in America for inventions. The second cause is the
superiority of the American patent law and patent office.
In England a patentee has to pay L99 for a fourteen years' patent, and
even then gets no guarantee of validity.
In America the patentee gets a seventeen years' patent for L7.
In England, out of 56,000 patents more than 54,000 were voided and less
than 2000 survived.
In America there is no voiding.
One of the consequences of this is that American firms have a choice of
thirty-two patents where our firms have _one_.
According to the American patent office report for 1897, the American
patents had, in seventeen years, found employment for 1,776,152 persons,
besides raising wages in many cases as much as 173 per cent.
These few figures only give a view of part of the disadvantage under
which British inventors and British manufacturers suffer.
I suggest, as the lawyers say, that British commercial conservatism and
the British patent law have as much to do with the success of our clever
and energetic American rivals as has what the _Times_ calls the
"invincible ignorance" of the British workman who declines to sacrifice
his Union to atone by longer hours and lower wages for the apathy of his
employers and the folly of his laws.
I submit, then, that the remedy is not the destruction of the Trade
Unions, nor the lowering of wages, nor the lengthening of hours, but the
nationalisation of the land, the abolition of royalties, the restoration
of agriculture, and the municipalisation or the nationalisation of the
collieries, the iron mines, the steel works, and the railways.
The trade of this country _is_ handicapped; but it is not handicapped by
the poor workers, but by the rich idlers, whose enormous rents and
profits make it impossible for England to retain the foremost place in
the markets of the world.
So I submit to the British workman that, since the Press, with some few
exceptions, finds no remedy for loss of trade but in a reduction of his
wages, he would do well to look upon the Press with suspicion, and,
better still, to study these questions for himself.