LET WELL ALONE.
The preceding chapters have been mainly statistical. Their object has
been to show, by producing the best evidence available, that alarmists
like the author of "Made in Germany" have no real ground for their
fears, that British trade is not going to the devil, but that, on the
contrary, the nation as a whole is in a condition of marvellous and
still rapidly-growing prosperity. If that be so, if there be no disease,
then obviously is there no need for the remedy which Mr. Williams and
other Protectionists are anxious to foist upon the country. But though
that conclusion will be sufficiently obvious to most minds, there are
among us hypochondriacal persons who never think that they are quite
well, and these unfortunates will still hanker after some patent
medicine to cure their imaginary ills. It is worth while, therefore,
briefly to point out how utterly unsuited to our alleged ailments, even
if they existed, is the remedy which the Protectionists propose.
THE CASE FOR PROTECTION.
Personally I am not a fanatical believer in Free Trade, or, for that
matter, in anything else except the law of gravitation and the rules of
arithmetic. I am quite willing to admit that there are circumstances
under which a Protectionist tariff might be advantageous to a country.
But the practical question is whether, under the present circumstances
of Great Britain, Protection is likely to bring any advantage to her. In
dealing with that question I will venture at the outset to deny that
Protection has been any real advantage to Germany. The Protectionists
are fond of arguing that the heavy import duties which Germany levies on
British goods have enabled German manufacturers in the first place to
secure their home market, and in the second place to build up an
enormous export trade at our expense. The argument is plausible, but it
suffers from one fatal defect: it is unsupported by facts. As one reads
the writings and listens to the talk of Protectionists, one's mind
becomes unconsciously saturated with the notion that British trade is
rapidly declining and German trade as rapidly increasing. It is upon
this implied proposition that all their arguments are based; this is the
primary postulate upon which rests their whole house of cards.
THE ALLEGED EXPANSION OF GERMAN TRADE.
But what are the facts? I have looked carefully through the figures
showing the progress of German trade during the last ten or fifteen
years, and I can discover no difference in character from the figures
which show the progress of British trade. Let the reader look for
himself. He will find the figures for fifteen years set out in the
following table, and a diagram to illustrate them. Let him notice that
what is called the _entrepôt_ trade, consisting of goods merely passing
through the one country or the other, is in these figures excluded from
the comparison. Thus "British imports" here means the total imports into
the United Kingdom, _minus_ those goods which are subsequently
re-exported; "British exports" means all articles of British production
exported from the United Kingdom. The same interpretation applies to the
German figures, all goods in transit through Germany one way or the
other being excluded. The comparison is therefore complete. And what
does it show? That, so far from Germany's export trade increasing by
leaps and bounds, while ours is steadily declining, German trade has
followed, though at a lower level, the same general course as British
trade. Therefore, whatever else Protection may have done for Germany, it
certainly has not improved her export trade as compared with that of the
United Kingdom. An even more striking demonstration of the utter
hollowness of the Protectionist case can be seen when we turn from
exports to imports. If Protection is to do anything for a country it
must at least diminish imports from abroad while increasing exports from
home. That is the whole object of Protection, the great ambition which
every Protectionist statesman sets before him. Has Protection done this
for Germany? Once again let the reader look for himself at the figures
and the diagram. He will see that while German exports have remained
stationary, German imports have very largely increased, and moreover
that their increase has been relatively greater than the increase of
imports into Free-Trade England.
BRITISH AND GERMAN TRADE COMPARED.
Fifteen Years' Imports and Exports, exclusive of Goods in Transit.
In Millions Sterling.
-------------+----+---+---+---+---+---+---+---+---+---+---+---+---+---+---
|1880|'81|'82|'83|'84|'85|'86|'87|'88|'89|'90|'91|'92|'93|'94
-------------+----+---+---+---+---+---+---+---+---+---+---+---+---+---+---
Brit. Imports| 348|334|348|362|327|313|294|303|324|360|356|373|360|346|350
Brit. Exports| 223|234|242|240|233|213|213|222|234|249|263|247|227|218|216
Ger. Imports| 141|148|156|163|163|147|144|156|165|201|208|208|202|199|198
Ger. Exports| 145|149|160|164|160|143|149|157|160|158|166|159|148|155|148
-------------+----+---+---+---+---+---+---+---+---+---+---+---+---+---+---
These figures may be illustrated diagrammatically as follows:--
[Illustration]
WOULD PROTECTION HELP US?
So far, therefore, as Germany is concerned, Protection has been, for the
general ends for which it was intended, a complete failure. Is there any
reason to believe that it would be more successful in Great Britain?
Every consideration of common sense points the other way. What Germany
had to do was to build up comparatively new industries, in face of the
overwhelming competition of Great Britain. In some instances she has
been successful, and in some instances it is possible that Protection
may have helped her by giving particular manufacturers an advantage in
their home market at the expense of the whole German nation. But in
England we have no such task to undertake. Our industries are already
established; our wares are already known in every quarter of the globe;
it is our competition that every other manufacturing country dreads. Nor
is that the only difference. In Germany and in France and in the United
States it is the home market that Protectionist manufacturers and
Protectionist statesmen are anxious to secure. All their efforts are
directed towards preventing their own citizens from purchasing British
or other foreign goods. But with us the home market is not the primary
consideration. Our business is with the whole world: our customers are
of every race and colour from the patient Chinaman to the restless New
Englander, from the supple Bengalee to the African savage. If we can
keep their custom we need have no fear of our power to satisfy the wants
of our own countrymen.
ON WHAT SHALL WE LAY A TAX?
It is, indeed, just because the advance of Germany in a few limited
directions has scared some people into the belief that we are losing our
foreign trade, that such books as Mr. Williams's "Made in Germany" are
written. The whole point of their lament is that Germany is ousting us
from neutral markets. Assume that it is so--though it is not--what then?
How will Protection help us to maintain the hold we are said to be
losing? All that Protection can do is to make more difficult the entry
of foreign goods into our own country. But what are the foreign goods
that enter our country? Four-fifths at least are food or the raw
materials of manufacture. In support of this statement I must refer the
reader to the Custom House returns to make his own classification. After
going through the figures carefully I arrive at the following rough
result for 1895:--
----------------------+--------------
| Million £'s.
----------------------+--------------
Food and Drink | 177
Raw Materials | 163
Manufactured Goods | 76
+--------------
Total Imports | 416
----------------------+--------------
Colonel Howard Vincent, I see, puts the total of manufactured goods at
80 millions. His figure will serve as well as mine. Either shows clearly
enough the character of the great mass of our imports. On which of the
two main branches, on food or on raw materials, do the Protectionists
propose to levy a tax? It is a strange way of helping our manufacturers
in their struggle for the markets of the world to impose additional
taxation on the food of their workpeople or on the raw materials of
their industry.
A NEW ROAD TO FORTUNE.
There remains the comparatively small amount of manufactured goods we
import, representing articles which our manufacturers cannot or will not
produce at all, or cannot produce so cheaply as the foreigner does.
Supposing we taxed every one of these articles as it entered our ports,
where would the advantage be to British manufacturers whose main
ambition is to send their goods abroad? There is, it is true, just one
possibility of benefit to them. It is possible that the imposition of a
tax on some of these foreign manufactured articles would enable the
British manufacturer so to raise his prices in the home market that he
could afford to forego all profit on his sales abroad and sell to his
foreign customers at or below cost price. That is the only conceivable
way in which a Protective tariff could help the British manufacturer in
his rivalry with his German competitors for the markets of the world. As
for the cost of this topsy-turvy system of trade it is to be borne of
course by that patient ass the British public. The British consumer is
to be compelled to pay more dearly for certain goods in order that some
other people, Japs or Chinamen, may be able to buy those goods below
cost price. Here, again, I will not assert that such an apparent act of
folly is not worth committing under given conditions. I can imagine a
firm or a country consenting for a time to work for less than no profit
in order to get a foothold in a new market. But we already have the
foothold, and have already worked it for what it is worth. If now we
discover that, for one reason or another, there is no more profit in it,
surely our wisest policy is to try something else. Otherwise we might
continue for ever to sell at a loss--individual or national--for the
sole pleasure of adding to the total figures of our turnover. Even the
Protectionists would hardly contend that along such lines lay national
prosperity.
INTER-IMPERIAL TRADE.
There is, however, another, though not entirely distinct, proposal for
dealing with the alleged mischief of German competition. It is
this--that we should try and persuade our Colonies and Possessions to
give preferential treatment to our goods in return for a similar
preference accorded by us to their goods. It would be unfair to call
this scheme Protectionist in the ordinary sense of the term, for it is
inspired as much by the desire to bring about a closer union of
different portions of the empire as by the fear of foreign competition;
but as it is with the question of foreign competition that we are here
primarily concerned, we will deal first with the Protectionist side of
the proposal. On this side the object aimed at is the destruction or
diminution of foreign competition in our Colonial markets. Undoubtedly,
were the Colonies willing to make the necessary tariff adjustments in
our favour, that object could be attained and our German rivals could be
excluded in part or in whole from Canada, from Australia, from India, or
from the Cape. So far so good. But what would that exclusion be worth to
us? In a previous article I referred to figures showing how
insignificant as compared with our own is German trade with our
Colonies. It is worth while to present these figures in a fuller form.
They will be found in the following table:--
IMPORTS INTO THE FOLLOWING BRITISH POSSESSIONS.
Average of the Three Years--1890, 1891, 1892.
In Millions Sterling.
-------------------------+----------+--------+--------+--------+--------
| Total | Amount | Amount | Amount | Amount
| Imports | from | from | from | from
| from all | United | United |Germany | France.
|Countries.|Kingdom.| States.| |
-------------------------+----------+--------+--------+--------+--------
India | 84 | 58·9 | 1·5 | 1·6 | 1·2
Australasia | 66·6 | 28·4 | 2·6 | 1·6 | ·3
South Africa | 12·7 | 10·3 | ·4 | ·2 | ·04
North America | 24·6 | 9·2 | 11·2 | ·8 | ·5
West Indies | 6·4 | 2·8 | 1·9 | ·05 | ·1
Other British Possessions| 31·4 | 6·6 | ·6 | ·4 | ·6
+----------+--------+--------+--------+--------
Total | 225·7 | 116·2 | 18·2 | 4·6 | 2·8
-------------------------+----------+--------+--------+--------+--------
These figures are, unfortunately, two or three years behind date, and
probably a later return would show that the proportion of British
exports to our principal Colonies had fallen off and the German
proportion somewhat increased, but this change has certainly not been
sufficiently great to affect the general aspect of the table. That table
shows that more than half of the total import trade of our Colonies is
in our hands, and that our three principal rivals together have little
more than a tenth of the whole trade. Indeed, were it not for the
inevitably big trade of the United States with Canada, our three rivals
together would only have about one-fifteenth of the trade of our
Colonies. As for Germany in particular the table shows that the amount
of the trade she has so far been able to secure is absolutely
insignificant in comparison with our figures.
THE COST TO THE COLONIES.
"But," argue the preferentialists, "German trade with our Colonies has
been growing rapidly, and may continue to grow." Possibly it may, if our
manufacturers go to sleep; but what we have here to consider is whether
it is worth while to take any political action to stop the possible
growth of a competing trade which at present is insignificant in amount.
Remember that if such action is taken by the Colonies to please us, we
shall have to pay a price for their complaisance--for their loss by the
exclusion of German or any other foreign goods would be twofold. In the
first place the Colonial consumer would suffer. He now buys certain
German goods because they suit him best, either in quality or in price.
That privilege it is proposed to take from him. His loss is therefore
certain. Secondly, there is a considerable danger of injury to the
Colonial producer. If the Colonies close their markets to German goods
Germany may retaliate by closing her markets to Colonial goods; and
Germany is, so far as the trade goes, a fair customer to the British
Colonies. Here are the figures:--
TRADE OF BRITISH POSSESSIONS WITH GERMANY.
Average of Three Years (1890, 1891, 1892).--In Thousands Sterling.
--------------------------+--------------+--------------
| Imports from | Exports to
| Germany. | Germany.
--------------------------+--------------+--------------
India | 1,556 | 5,338
Australasia | 1,631 | 1,106
South Africa | 228 | 113
North America | 781 | 113
West Indies | 52 | 85
Other British Possessions | 351 | 691
+--------------+--------------
Total | 4,599 | 7,446
--------------------------+--------------+--------------
WHAT CAN WE OFFER?
This table shows that the Colonial producer stands to lose as much, or
more, than the Colonial consumer by cutting off trade connections with
Germany. What can we offer in return? It is suggested by the advocates
of preferential trade that we should offer better terms to Colonial
products in our markets. But already all Colonial products, except tea
and coffee, enter the United Kingdom free, therefore we can only give
better terms to the Colonies by imposing a tax on those foreign products
which compete with the principal Colonial products. What, then, are
these competing products? With some trouble I have extracted from the
Custom House returns the following list of articles in which there seems
to be tangible competition between foreign countries and British
Possessions:--
COLONIAL _VERSUS_ FOREIGN GOODS.
Principal Competing Articles Imported into the United Kingdom in 1895.
Millions Sterling.
---------------------------+--------------+--------------
| From Foreign | From British
| Countries. | Possessions.
---------------------------+--------------+--------------
Animals, Living | 7·5 | 2·4
Bacon and Hams | 10·1 | ·7
Butter and Cheese | 14·8 | 4·0
Caoutchouc and Guttapercha | 2·9 | 1·2
Copper | 3·9 | 1·1
Corn and Flour | 44·0 | 5·7
Dye Stuffs and Dye Woods | 2·3 | 2·5
Fruits | 5·8 | ·6
Hides, Skins, and Furs | 3·8 | 3·6
Leather | 4·6 | 3·5
Linseed | 2·3 | 1·1
Meat, Salt and Fresh | 6·9 | 4·8
Oils | 2·9 | 1·6
Rice | ·6 | 1·4
Sugar (Unrefined) | 6·8 | 1·5
Tallow and Stearine | ·4 | 2·1
Wood and Timber | 12·4 | 4·0
Wool | 4·6 | 22·8
| |
Coffee | 2·6 | 1·1
Tea | 1·6 | 8·7
| |
Cotton (Raw) | 29·6 | ·8
Jute (Raw) | ·0 | 4·3
| |
Other Articles | 150·8 | 16·0
+--------------+--------------
Total | 321·2 | 95·5
---------------------------+--------------+--------------
It will be seen that without exception the articles in the above list
belong either to the category of raw materials or to that of food. Any
taxation therefore imposed upon any portion of these articles for the
benefit of the Colonial producer would be a disadvantage to the British
manufacturer, either by increasing the cost of his raw material or by
diminishing the effective wages of his workpeople. Remembering that the
main object of the British manufacturer is to keep his hold on the
markets of the world, is it likely that he would ever consent to allow
himself to be handicapped by such taxation? For all you can offer him in
return is preferential treatment in Colonial markets, whereas more than
three-quarters of the trade he wishes to retain is with foreign
countries.
DIVERGENT AMBITIONS.
There is, however, an even more fundamental difficulty, which neither
Colonial nor British preferentialists have yet had the courage to face.
It is this:--That the Colonist and the Britisher are aiming at different
ends. The Britisher wishes to expand in ever-increasing proportions his
manufacturing business, and it is solely because he thinks that he may
possibly get a better market for his manufactures in the Colonies than
in foreign countries that he gives even momentary approval to the idea
of preferential trade. But no Colonist looks forward to his country
remaining for ever the dumping ground for British manufactures. He
wishes, and wisely wishes, to manufacture for himself, and he has
deliberately arranged his tariffs with that end. Towards realising this
ambition it will advance him nothing to shut out the puny Teutonic
infant and let in the British giant. In like manner, if we turn from
manufactures to agriculture we find the same essential divergence of
view. The Colonial producer regards England as the best market for his
meat and corn and butter. But the British farmer wants none of it. If he
is to be ruined by competition from abroad he would as lief that the
last nail were driven into his coffin by Argentine beef as by New
Zealand mutton.
A DREAM OR A NIGHTMARE?
These objections go to the root of the matter, and show how futile it is
to hope that the Mother Country and the Colonies will ever agree on any
scheme of preferential trade. But need we, therefore, sit down
sorrowing? Does the dream of inter-Imperial trade, if we come to
examine it closely, really hold all the beauties that its shadowy shape
suggests? Take it either way. Take the scheme either as an end in
itself, or as a means to an end. As for the first hypothesis, if trade
is itself an end, it matters to us nothing whether we trade with
foreigners or fellow subjects; all we have to think of is the
profitableness, immediate or prospective, of the trade itself. And from
this point of view a growing trade with Germany is worth a good deal
more than a declining trade with Australasia. But most advocates of
inter-Imperial trade would not admit that their dream is an end in
itself. They adopt the second of the two hypotheses just mentioned, and
look upon the expansion of inter-Imperial trade as the most convenient
means of drawing the Colonies closer to the Mother Country, and to one
another.
DOES TRADE UNITE?
With that end no one will quarrel; but how will preferential trade
promote it? The preferentialists assume that mutual trade must of
necessity promote the closer union of different parts of the Empire.
Neither in individual life nor in national life can any fact be found to
support that assumption. A man does not necessarily make a bosom friend
of his baker and his butcher; he may even be at daggers drawn with his
tailor. As for nations it might almost be said that there is the least
love exchanged between those who exchange most goods. We are splendid
customers to France; we buy French goods with open hands and ask for
more, yet where is the love of France for England? Never for a moment do
the French cease to gird at us and to try and thwart our national
projects solely because we are doing in Egypt what they have done in
Tunis and are on the way to do in Madagascar. Germany, on the other
hand, is one of our best customers; yet at the beginning of this year,
when there seemed to be a chance of war with Germany, a feeling of
elation ran through the whole of England. One more illustration: when in
December, 1895, President Cleveland's Message aroused all decent folk on
both sides the Atlantic to protest that war between the United Kingdom
and the United States was impossible, was it of trade interests that all
men thought, or of the tie of common blood? Or, again, did Canada pause
to calculate that her best customer was her Southern neighbour, or did
she for a moment weigh that fact against the loyalty she owed to the
Mother Country?
A NEXUS STRONGER THAN CASH.
The simple truth is that trade has no feelings. We all of us buy and
sell to the best advantage we can, and on the whole we do wisely. It is
a shrewd saying that warns men to beware of business transactions with
their own kinsfolk; nor do we need a prophet to tell us that an attempt
to fetter Colonial trade for our own benefit may lose us more affection
than it wins us custom. After all, why worry? Our world-embracing
commerce is to-day as prosperous as ever it has been. The loyalty of our
Colonists no one questions. Let well alone. Our industrial success has
not hitherto been dependent on favouring tariffs, nor is there the
slightest evidence that old age has yet laid his hand upon our powers.
As for the closer union between our Colonists and ourselves, it will
hardly be promoted by asking them to sacrifice their commercial freedom
to increase the profits of our manufacturers, nor by taxing our food to
please their farmers. It is indeed a sign of little faith to even look
for a new bond of empire in an arrangement of tariffs. The tie that
binds our Colonists to us will not be found in any ledger account, nor
is ink the fluid in which that greater Act of Union is writ.