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 STATE AID 
 
 STATE INTEKEEKENCE. 
 
 ILLUSTRATED BY RESULTS IN COMMERCE 
 
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 1882. 
 
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 London : 
 R. Clay, Sons, and Taylor, 
 
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 PREFACE. 
 
 There come upon nations epochs when, rising 
 superior to all experience, a blind dash is made in 
 some unlooked-for direction. This is an infatuation 
 of the national brain which destroys, in the brief 
 period of its rage, the hard-won results of centuries 
 of toil and progress. 
 
 A nation comes into being and grows with sur- 
 prising rapidity till it attains to great stature : it 
 puts on and uses the strength of a Samson. But, 
 in those days it not unfrequently happens that the 
 nation suddenly sets itself to sap all the foundations 
 of its greatness : to permit the cutting off of the 
 seven locks of its mightiness. And the Delilah 
 of its destruction is Government Interference. 
 
 Has England, in these latter days, fallen under the 
 glamour of such an influence ? Government Inter- 
 ference can only enter where pr ivate judgment has
 
 vi Preface. 
 
 been beguiled to place itself in the embrace of 
 Authority. And in England, in recent years, 
 Authority in Matters of Politics has striven, and 
 striven with some effect, to supplant in the affections 
 of the people that far more wholesome and beneficial 
 faith which rested upon the teachings of Political 
 Economy because these were based upon the sure 
 and certain warranty of experience. 
 
 But if Rationalism in Politics is thus flat heresy 
 in the eyes of this Authority, is it so in the eyes 
 of the great intelligent portion of the nation ? The 
 answer is to be found in the fast-growing public 
 appreciation of statistical information, and the wide- 
 spread study of this science legislators are called 
 upon to ignore. 
 
 One of the most important of the problems dealt 
 with by Political Economy is the question of the 
 effect of State action. And it is by the analysis of 
 achieved results that we can best tell whether, as a 
 matter of fact, the State assists most or injures most ; 
 whether its action is best described by the term Aid 
 or the term Interference. 
 
 The State, by direct action, influences the working 
 of land and labour and education, and other matters 
 of the first moment to Ireland and to Scotland and 
 t< England, as well as to all the world. But in this
 
 Preface. vii 
 
 volume I limit myself to results that have been 
 recorded of State action in regard to industries and 
 to commerce. 
 
 In the first chapter I summarise the general 
 conclusions to which the details of the succeeding 
 chapters lead. 
 
 Some of these detailed results I had already- 
 published in the Nineteenth Century for July, 1881, 
 and Fraser's Magazine for the same month ; and in 
 the Fortnightly Review and the Westminster Review. 
 The Editors of these various reviews have very 
 kindly granted me permission to republish these 
 articles in this book, and I take this opportunity of 
 recording my thanks for such permission. 
 
 G. B. P. 
 
 8, St. George's Place, London.
 
 CONTENTS. 
 
 CHAPTEE I. 
 
 PAGE 
 
 State Aid and State Interference 1 
 
 1. Political Economy and Ignorance 1 
 
 2. The Duty of the State 6 
 
 3. The Results of Protection 9 
 
 4. Bounties 11 
 
 5. High Tariffs for Colonies 14 
 
 6. Free Trade within the British Empire 15 
 
 7. Freedom for British Agriculture 18 
 
 8. Freedom for British Manufactures 22 
 
 9. State Interference with other States 25 
 
 CHAPTER II. 
 
 The Failure of Protection in the United States . . 30 
 
 1. The case of the United States Important 30 
 
 2. The Causes of their Prosperity 32 
 
 3. American Manufactures 37 
 
 4. Revenue from Customs Duties 48 
 
 5. Protection in each Case Hostile to Advance. Its 
 
 Future 53 
 
 1)
 
 Contents. 
 
 CHAPTER III. 
 
 PAGE 
 
 Bounties 64 
 
 1. Bounties not likely to Sncceed 64 
 
 2. The Shipping Industries of the United States . . 66 
 
 3. French Shipping Bounties 69 
 
 CHAPTER IV. 
 
 Sugar Bounties 73 
 
 1 . Cane-growing in the Colonies continually Advancing 73 
 
 2. Beet-growing not due to Bounties 88 
 
 3. Beet-growing and Refining do not flourish in 
 
 Bounty-giving Countries 94 
 
 4. How to do away with Bounties 102 
 
 5. British Sugar Industries more Prosperous than any 
 
 others 109 
 
 CHAPTER V. 
 
 Protection in Young Communities 112 
 
 1. Parallel Cases of Victoria and New South Wales . 112 
 
 2. The Promotion of Manufactures 121 
 
 3. The Raising of Revenue 124 
 
 4. The Promotion of General Prosperity 127 
 
 5. Value of this Test Case 135 
 
 CHAPTER VI. 
 
 One-sided Free Trade 138 
 
 1. Supposed necessity for Customs Duties 138 
 
 2. Hong Kong advancing and prosperous with no 
 
 Customs Duties 139 
 
 3. People Increasingly Employed in Arts of Civiliza- 
 tion 141 
 
 4. Ample Revenue Raised 144
 
 Contents. xi 
 
 CHAPTER VII. 
 
 PAGE 
 
 Low Tariffs fob the British Empire 147 
 
 1. Growth of our Trade with our Colonies 147 
 
 2. Need for England to recognise this 153 
 
 3. Most Nations maintain Free Trade within their own 
 
 Frontiers 156 
 
 4. All Colonies would Profit by Intra-National Free 
 
 Trade 160 
 
 5. Spontaneous Agreement of Colonies Necessary . . 168 
 
 6. Low Tariffs secure the Highest Prosperity of all . . 171 
 
 CHAPTER VIII. 
 
 Foreign Competition in Agriculture 177 
 
 1. The British Isles are becoming more Manufacturing, 
 
 more "Well-to-do, and less purely Agricultural . . 177 
 2. American Prairie Cropping must in a few years work 
 
 itself out 182 
 
 3. The Price of American "Wheat must Rise 186 
 
 4. America becomes rapidly Populated 194 
 
 5. Americans chiefly Compete with our other Foreign 
 
 Purveyors 198 
 
 6. Canadian "Wheat will not Permanently Lower Prices 203 
 7. English "Wheat Growing has many Intrinsic and 
 
 Local Advantages 205 
 
 8. Foreign Competition has roused English Agriculture 
 
 to Improve itself 207 
 
 CHAPTER IX. 
 
 Foreign Competition in Manufactures 213 
 
 1. What Foreigners are Doing and what they are 
 
 asserted to be Doing 213 
 
 2. Modern Tendencies of Foreign Tariffs 214 
 
 3. Modern Tendencies of Colonial Tariffs 221 
 
 4. Pauperising Effects of High Tariffs 224 
 
 5. Foreign Exporters of Manufactures 230
 
 xii Contents. 
 
 CHAPTER X. 
 
 PAOK 
 
 Foreign Competition in Manufactures 236 
 
 1. What we are Doing in England : our Home Market 
 
 and Foreign Purveyors 236 
 
 2. Percentage of Manufactures to other Imports . . . 240 
 
 3. Particular Examples : Hardware, Silk, Woollens . 241 
 
 4. English Labour Cheaper and Better 250 
 
 5. Failure of Foreign Competition 255 
 
 CHAPTER XI. 
 
 Interference with other Nations 258 
 
 1. Four General Principles of Foreign Commercial 
 
 Policy 258 
 
 2. Lowering Tariffs 263 
 
 3. Fighting Bounties 267 
 
 4. Commercial Treaties 273 
 
 Index 279
 
 STATE AID 
 
 AND 
 
 STATE INTEBFEBENCE. 
 
 CHAPTER I. ' 
 
 STATE AID AND STATE INTERFERENCE. 
 
 SI. Political Economy and Ignorance. 2. The Duty of the 
 State. 3. Protection in the United States, 4. Bounties. 
 5. High Tariffs for Young Communities. 6. Free Trade 
 for the British Empire. 7. Freedom for British Agriculture. 
 8. Freedom for British Manufactures. 9. State Inter- 
 ference with the Commerce and Industries of other States. 
 
 1. In these latter days signs are not wanting 
 of the reappearance of an influence that has before 
 now destroyed civilizations. It may be that in 
 England the people are endowed with strength 
 sufficient to combat and throw off this influence ; 
 but the struggle bids fair to be severe, even if 
 there be no doubt as to the final result. 
 
 B
 
 2 State Aid and State Interference. 
 
 Authority, in these latter days, is attempting, with 
 daily increase of force, to usurp the sovereignty of 
 liberty. And in England the evidence of this is 
 seen in the growing tendency to set up individual 
 men or individual ideas in the seats of power 
 that should be occupied by the cultivated national 
 opinion, or by personal knowledge of facts. In 
 England at the present moment the principles 
 and creeds of sections of the community, that claim 
 to be not .the least advanced, degenerate in reality 
 on the one hand into an unquestioning acceptance 
 and worship of mere words, and on the other into 
 an equally unquestioning and unthinking servitude to 
 men who are blindly supposed to embody some idea. 
 
 There is evidence that an appreciable portion of 
 the educated intellect of the nation may fall into 
 this bondage of hero worship. If the result be 
 of sufficient power to enable a Government to ride 
 roughshod over all principles and experiences that 
 would otherwise check some particular political move, 
 there is at once risk of an undoing of all that has 
 been done; of a loosening of the whole national 
 fabric. The turning into the road to ruin is made 
 immediately Government undertakes to do what 
 is, and has been, best left to private initiative. 
 
 Popery in politics is the resource of nations or
 
 State Aid and State Interference. 3 
 
 of individuals, of low intellectual calibre. Un- 
 questioning surrender of the political conscience to 
 some human high priest, is the refuge of the 
 incapable and the ignorant. Authority, in the matter 
 of politics, only becomes personal with those who 
 lack power or energy to think for themselves. 
 Authority may be well defined as "the allowing 
 some one else to think for you." And in this sense 
 it would appear, in these latter days, Division of 
 Labour has been carried to a pernicious extreme. 
 For instance, if Political Economy is banished by 
 Authority to Saturn, many there are, and these 
 passing for intellectual men, who have been found 
 to bring their lips to say, " So much the worse for 
 political economy." 
 
 There is but one silver lining to this cloud of 
 dependence on others. The cloud itself is some 
 check on that yet more baneful tendency of the 
 times the tendency of educated ignorance to 
 assert itself. Argument, snatched hurriedly from 
 the skurry of modern life, is mistaken for fact ; 
 second-hand and often interested explanations are 
 mistaken for the occurrences they would explain ; 
 and this half-knowledge, which is altogether worse 
 than no knowledge, is only too ready to pose before 
 the world as knowledge, and to usurp the place of 
 
 B 2
 
 4 State Aid and State Interference. 
 
 teacher that of right belongs to experience. In 
 
 reality, all this misleading mass of assumptions 
 
 and vain theorisings is after all only formulated 
 
 ignorance. It is thus possible even to welcome 
 
 Authority in politics if only it prove to be some 
 
 antidote to this other great political evil. But this 
 
 welcome is altogether soured when we find the 
 
 High Priest of this Authority himself suddenly 
 
 discarding knowledge and experience, ridiculing the 
 
 teachings of history, and telling us that the science 
 
 which collects and explains all that is known of 
 
 the results of human action, is no longer of any 
 
 service in mundane affairs. Such ideas can only 
 
 flourish where there prevails actual ignorance of 
 
 the true nature of the science of political economy. 
 
 The abstract principles of Political Economy are 
 
 nothing more nor less than logical explanations of 
 
 successful human work. The science is thus an 
 
 exact science in so far as it collates the recorded 
 
 results of such work. It can describe by analysis 
 
 and abstraction each of the conditions which when 
 
 co-existent make up necessarily a certain effect. 
 
 It can tell us, with all the certainty of mathematics, 
 
 that certain defined conditions existing together 
 
 are a certain total or effect, for this effect is merely 
 
 a bundle of conditions.
 
 State Aid and State Interference. 5 
 
 Ask Political Economy, " what is the cause of 
 manufacturing prosperity ? " It will reply : Take any 
 case of manufacturing prosperity and you will find 
 you have a community enjoying, as much as, or 
 more than, its possible rivals, a favourable climate, 
 skill in the people, energy in the people, an adequate 
 command of capital, an adequate command of raw 
 material, and liberty to utilise all these conditions. 
 Free Trade does not cause it : Protection does not 
 cause it : for it is nothing more nor less than the 
 realised co-existence of several conditions, each one 
 of which can be seen by analysis to exist in all cases 
 of manufacturing prosperity. 
 
 Political Economy unties for inspection the bundle 
 of conditions that, in its entirety, is some definite 
 effect or fact. It describes each of these conditions, 
 and it explains once and for all that if you take 
 these several conditions and make them up together 
 into a bundle you will have such and such a par- 
 ticular effect. It is a necessary truth. It is this 
 analysis of results which is the main function of 
 the Political Economist. His chief duty is to 
 explain economic experience. His " principles " are 
 the constants he finds in circumstances ; the sub 
 stantial conditions which underlie circumstantial 
 varieties. He does not explain on hypothesis ; he
 
 6 State Aid and State Interference. 
 
 simply draws up a list of the actual, conditions which 
 must *be present together if Ave are to have any 
 given effect. 
 
 2. So far as private acts go Political Economy 
 has less to say than in the case of public acts ; and 
 there is no more important problem to be explained 
 by Political Economy than the question how far the 
 common body politic the State is to do the 
 thinking for the community, and interpose in the 
 regulation of private acts. 
 
 If we look to history we find that all prosperity 
 is generated in freedom. Anything and everything 
 that interferes with freedom generates a negation of 
 prosperit} 7 . And the State, the expression of the 
 unity of any community of men, has the one 
 whole duty of securing the freedom of the indivi- 
 duals who make up the community. But it is a 
 community ; and the true freedom of the individual 
 is liberty for the full play of his own energies 
 limited by the precisely similar liberty for every one 
 of his fellow-citizens. The guardianship of these 
 liberties is the prime function of Government the 
 one great final cause of its existence. The State 
 has to hold the true and just balance between 
 the individual and collective liberties; and in the 
 economic quite as much as in the moral or religious
 
 State Aid and State Interference. 7 
 
 affairs of mankind, the State can do harm by 
 letting alone, but it also can do harm by not letting 
 alone. In other words, there can be State Aid as 
 well as State Interference. 
 
 It might be said that it is the duty of Govern- 
 ment to bring all previous experience of the human 
 race to bear directly upon the particular con- 
 ditions in which a nation may find itself, and so 
 forestall much lengthy trial and consequent waste of 
 energy. But it is often the case that Government 
 itself is in error, and is more liable to act on wrong 
 judgment than the private individual. And this is 
 specially the case in industry and commerce, because 
 these thrive best under the impulses, sacrifices, and 
 knowledge of the individual. Before now, States, 
 in their endeavour to promote some industry, have 
 choked out of it all its life ; States have succeeded in 
 setting up unprofitable industries ; States, in their 
 endeavour to hasten industrial development, have 
 been known to foster industries by no means profit- 
 able to the community at the sacrifice of those that 
 were in reality the most profitable. All this is 
 never possible if such development be left to in- 
 dividual initiative. The individual best discovers 
 what is profitable and what not : the individual 
 best bears the losses incident to failure. It is of
 
 8 State Aid and State Interference. 
 
 the first importance that every individual be left 
 free, and neither encouraged to take up unprofitable 
 nor hampered in the prosecution of profitable 
 industries. It is folly to encourage a man to make 
 hats when he might be more profitably employed 
 growing wheat. It is folly to check his making 
 hats when it no longer pays him to grow wheat. 
 
 It is held to be an open question whether in 
 actual life a man's ' acts are governed by reason 
 as often as they are directed by unreason. This 
 latter this unreason is the arch enemy of pro- 
 gress the subtle destroyer of systems of civilization. 
 And as reason is founded on experience, so is un- 
 reason founded on ignoring experience. And this 
 experience is a knowledge of the several conditions 
 that make up the bundle that is known as the 
 effect. Unreason is the negation of experience, and 
 thrives only under the supremacy of ignorance. 
 
 Luckily at the present day ignorance has acquired 
 the habit of formulating itself with as much exact- 
 ness as knowledge ; and we can cull from the 
 popular arguments of the day the definite conten- 
 tions advanced by this formulated ignorance, and 
 compare them with actual fact. 
 
 In analysing results it is right to go into detail ; 
 to separate the sticks of each bundle ; to enter at
 
 State Aid and State Interference. 9 
 
 length into the description of the many conditions 
 we find combined into each result. And I sum- 
 marise in this chapter the analysis of the bundles 
 or effects which are analysed in detail in the 
 succeeding chapters. 
 
 In Industry and Commerce there is one great 
 lever to State Interference, known to the world as 
 " Protection." It is the interference by Govern- 
 ment with what is imported into a country for the 
 avowed purpose of securing certain ends for the 
 home industries and commerce. It is thus that in- 
 vestigations naturally group themselves round the 
 problem Is Protection, in the popular sense of the 
 term, State Interference or State Aid ? Does it 
 assist or impede wholesome natural development ? 
 
 3. Among the formulas that have become the 
 stock-in-trade of this Ignorance none is more fre- 
 quently met with than the pointing to the United 
 Slates as an example contradictory of all that is 
 credited to Free Trade. We are told, How is it, if 
 all this be true about Free Trade, that the United 
 States, with their stringent Protection, develop so 
 fast, manufacture so much, and are generally so 
 prosperous 1 ? The sum total of the answer is that 
 in every point in which the United States do 
 flourish and prosper it is in spite of, and not
 
 10 State Aid and State Interference. 
 
 because of Protection. The chief sources of wealth 
 over the vast interior the foods and the raw 
 materials are being worked under the stimulating 
 aegis of absolute Free Trade. By the constitution 
 of the United States it is strictly forbidden for any 
 one of the States to levy customs duties on goods 
 entering from any other State. 
 
 And the United States are as large as Europe 
 and as rich in all natural wealth. The high tariff 
 can affect this community in two ways. In the first 
 place it affects alone by imports ; and the popula- 
 tion of the United States imports but 21. per head 
 as compared with the 101. per head imported in 
 the United Kingdom. In the second place, the 
 high tariff is supposed to yield revenue, and so 
 relieve the nation of other taxes. But if we look 
 to records, we see that within the last ten years 
 the customs revenue, from yielding 19s. per head 
 of population, has fallen to yield only lis. and that 
 the actual bulk of the annual yield has decreased 
 25 per cent. Thus the high tariff fails to relievo 
 the country of other taxation ; and at the same 
 time it presses comparatively lightly on a population 
 that buys so little abroad. 
 
 The question remains, What of the positive 
 effects? Protection was instituted to develop
 
 State Aid and State Interference. 11 
 
 manufactures, and yet the percentage of manu- 
 factures to the rest of the commodities exported is 
 not only insignificant in amount, but dwindling 
 year by year. Imported manufactures still hold 
 their own in the American market ; and all that 
 can be said in the summing up is that Protection 
 has fostered the growth in America of manufactures 
 that are a dead loss to the community at large, 
 and has stifled some industries that would have 
 been of the highest national advantage. 
 
 4. Formulated ignorance sometimes shifts its 
 ground. " It may be true, all this about Free 
 Trade and Protection ; but Bounties, at all events, 
 must be fought by direct action." To understand 
 this problem aright it is well to have before us 
 the whole details of some typical case ; and there 
 is no case more distinct, more recent, and more 
 fully recorded than that of the Sugar Bounties. 
 If we look into such details we at once find that 
 Bounties in the result do more actual harm to 
 the nations that give them than to the rivals they 
 attempt to overthrow. A Bounty is a portion of 
 the national wealth handed over by the State to 
 an individual. It is a tax on the nation in favour 
 of some individual. It is presented to the indi- 
 vidual for carrying through some industry. If that
 
 12 State Aid and State Interference. 
 
 industry be profitable in itself the Bounty is an 
 entirely gratuitous gift. If that industry be unpro- 
 fitable in itself the Bounty is merely a bonus on 
 pursuing an industry which decreases the national 
 wealth. A Bounty is thus a tax on the people, 
 which is at best an altogether unnecessary drain 
 on their resources, and which may be, and in many 
 cases is, a direct encouragement of a waste of the 
 nation's resources. A Bounty is indeed a political 
 sop that many a dishonest Government has thrown 
 with great " politician " effect. But in the end it 
 brings ruin and loss. It either encourages an in- 
 dustry that needs no encouraging, or it encourages 
 an industry that should never be encouraged. 
 
 In regard to Sugar Bounties we find that those 
 countries which give no Bounties possess the 
 most flourishing sugar industries. It is usually 
 found that where one industry or country receives a 
 Bounty other industries and other countries clamour 
 for them. The movement, like other Protective 
 measures, tends more and more towards a drain on 
 the popular wealth for the sake of a few individuals. 
 It is distinctly against the general prosperity, and 
 subversive of the conditions best for the particular 
 industry itself. If the Shipping Bounty in France, for 
 instance, proves a "success," it will be a new burden
 
 State Aid and State Interference. 13 
 
 of taxation on the French people equivalent to an 
 additional 4<d. in an Income Tax. So long as the 
 French are willing to support this burden, so long 
 do they handicap themselves in every industry to 
 this extent against English competition. The same 
 is the case with Sugar Bounties. We are told an 
 Import duty of 2s. a cwt. on all sugar we import 
 that has received any Bounty would countervail the 
 effect of the Bounty. In other words, if the English 
 taxpayer will kindly contribute a sum of 600,000/. 
 the effect of the Bounties will be effectually 
 neutralised. Because other nations handicap them- 
 selves in their sugar industries we are asked to do 
 so likewise. By their Bounties some nations send 
 us refined sugar at a price lower than they could 
 otherwise afford to sell at ; and other nations send 
 us raw sugar at a similarly reduced price. Con- 
 tinental taxpayers, in short, pay to the continental 
 refiners and growers part of the price the English 
 ought to pay for their sugar. This is the sum and 
 effect of their Bounty giving. And we find on the 
 continent a widespread and general outcry against 
 these Bounties, chiefly based on the fact that Eng- 
 land, the only country that has cut herself aloof from 
 all such restrictions on industry, is the only country 
 in which the sugar industries flourish and increase.
 
 14 State Aid and State Interference. 
 
 5. Formulated ignorance is fond of asserting 
 that Protection, though altogether wrong for fully- 
 grown communities, mag yet be beneficial for young 
 communities. Luckily recent history has provided 
 us with a test case. Two of our own colonies, of 
 sufficiently similar size and environments, have been 
 racing together for ten years, on the rival systems of 
 Free Trade and Protection. The value of this test 
 case has been fully acknowledged. Indeed the 
 comparison of Victoria and New South Wales 
 has recently become a commonplace with poli- 
 tical economists. At the meeting of the British 
 Association, in 1880, I first put forward some 
 statistics of the ten years' progress of these two 
 colonies. These figures I have since elaborated, 
 and they have been extensively quoted. I set them 
 out afresh in this book, as they prove conclusively 
 that in all desirable growths, in the details of revenue 
 raising and the promotion of manufactures, as well 
 as in the general advance in prosperity, a low tariff 
 does far more for a young community than a high 
 tariff. 
 
 Formulated ignorance is also fond of asserting that 
 a country that keeps its own tariff low while other 
 nations retain high tariffs is adopting a policy of 
 onesided Free Trade that must in brief space prove
 
 State Aid and State Interference. 15 
 
 its ruin. In answer to this popular fallacy it is well 
 to remember there are in this world Free-ports 
 communities that actually levy no customs duties 
 whatever. If we look to Hong Kong, for instance, 
 we find an island in close contiguity to a highly 
 " Protected " populous and industrious continent. 
 In Hong Kong there are no import duties whatever ; 
 and yet here we have a, community advancing fast 
 in prosperity ; raising an abundant revenue ; and 
 attracting a fast-growing population increasingly em- 
 ployed in the arts of civilization. Those who object 
 to a low tariff on the incomprehensible plea of 
 " one-sided Free Trade " will do well to ponder over 
 this instance of a country flourishing with no tariff 
 at all. 
 
 6. Formulated ignorance has, in these latter 
 years, become much enamoured of the idea of a Zoll- 
 verein for the British Empire. Free Trade within 
 the Empire to be extended to all foreign countries 
 willing to afford reciprocal advantage, but with a 
 rampart of protective duties against all others this 
 is the policy suggested. It is admitted that Free 
 Trade is best ; and next, the definition of Free Trade 
 is abandoned, and restrictions on commerce ad- 
 vocated. Free Trade is the doing away with all that 
 practically interferes with the fire course of industry
 
 16 State Aid and State Interference. 
 
 and commerce. .We are told this is impossible over 
 the whole world at the present but it is possible 
 over the wide British Empire. Next, the assumption 
 is made that all the Colonies are willing, provided only 
 we hedge the Empire round about with a wall of 
 protection. And we are told the whole of this grand 
 effect is to be produced by the imposition of customs 
 duties on certain commodities so long as they come 
 from foreign countries unwilling to concede reciprocal 
 trade advantages. 
 
 That Free Trade is possible over the wide British 
 Empire is perfectly true. Indeed, over the whole 
 Empire there are only two fiscal authorities out of 
 forty that are not at this moment pursuing the wise 
 policy of Free Trade. The advocates of a Fair Trade 
 Empire will find themselves grievously mistaken if 
 they rely on the illusion that the Colonies are 
 willing to join a Free Trade Bond, provided only it 
 be surrounded with a wall of higher duties to out- 
 siders. The Colonies understand their position too 
 well. They trade largely' with every nation under 
 the sun. It is true they buy most of their manu- 
 factures in England, but they send great proportions 
 of their own produce to foreign nations, and by 
 selling abroad they arc enabled to buy in the 
 mother country. All the Colonies wish for tariffs
 
 State Aid and State Interference. 17 
 
 everywhere as low as possible. With true practical 
 insight they will be found very averse to the 
 provoking a general raising of tariffs. It must also be 
 remembered that the imposition of customs duties in 
 England on certain goods, if of foreign and not 
 colonial origin, would be of no real effect. If such 
 a measure were to have its apparent effect, it would 
 enable the Colonies to send to England, for instance, 
 all their wheat, and with the profits they would 
 purchase the wheat they required for their own 
 consumption from foreign nations. The same 
 amount of -wheat would be grown in the same 
 places, but this interference with the free course of 
 commerce would force it into different markets. 
 
 The true foundation for a Free Trade Empire is 
 the national conviction that low tariffs are most 
 conducive to prosperity. This conviction is already 
 widely held by the free congenital communities of the 
 British Empire. The cases of Hong Kong and of 
 Victoria and New South Wales are evidences that 
 this conviction is sound and good. That the con- 
 viction should increase in strength, and spread till it 
 inspires the whole nation is dependent on the prob- 
 lem whether Englishmen all the world over will 
 shape their policies by the light of experience, or 
 grope, as other nations have done to their ruin, in 
 
 c
 
 18 State Aid and State Interference. 
 
 the darkness of fictions and fancies that are 
 pleasurable at the instant, but have no foundation 
 in fact. 
 
 7. Formulated ignorance is particularly strong 
 in its assertion that the policy of one-sided Free 
 Trade has at all events ruined the Industry of Agri- 
 culture in England. We are told that now when 
 lean years come the farmer gains no compensation in 
 rise in price for shortness in quantity. It may be true 
 that if we still levied a duty on foreign wheat, in 
 lean years prices would rise somewhat more than 
 they do in the absence of any duty. 
 
 But the extent of their rising would be small. Our 
 present surroundings force us and enable us to 
 import more than half of the wheat we consume ; 
 and the cost of production of these importations 
 would have a corresponding effect on prices in 
 England, duty or no duty. The enormous advance 
 in facilities of transport has had far more effect on 
 the wheat supply than any mere alteration of import 
 duties in any one country. If duties kept prices of 
 wheat high, it is perfectly obvious no duty-imposing 
 country would care to sell its wheat in the low- 
 priced English market. Supposing, however, a duty 
 is placed on imported wheat, the question remains, 
 would the farmer be better off? Beyond all doubt
 
 State Aid and State Interference. 19 
 
 he now-a-days obtains the " raw materials " of his in- 
 dustry at far less cost. Oil-cake of every kind, 
 Indian corn, and other foods ; manures ; implements, 
 both as to variety and quality ; all these he obtains 
 better and cheaper, because the supply is free from 
 all State Interference. Of his land it cannot as yet 
 be said that it is free from State Interference ; but 
 even in this respect the Free Trade of his country 
 has enabled him to acquire sufficient use of the soil 
 at very low cost. Wealth, acquired in so many other 
 ways than agriculture, seeks satisfaction in an owner- 
 ship of the soil, which has no ulterior object in making 
 use of the soil. Consequently it becomes true that 
 if we look to all the agricultural requirements to 
 proximity to good markets, to fertility of soil, to 
 climate, to supply of labour, and so forth, we find that 
 it is in England the farmer pays least for the use of 
 good agricultural soil. This is due to the general 
 prosperity. And the farmer feels the effect not only in 
 regard to land, but also in regard to labour. A very 
 fragmentary rise in the prices of food and lodging and 
 clothing would tell disastrously for the farmer in the 
 price of labour. So far, then, as the "raw materials" 
 of his industry are concerned, the absence of State 
 Interference is an unmitigated blessing for the 
 farmer. 
 
 c 2
 
 20 State Aid and State Interference. 
 
 There is the further important element of the 
 prices he can obtain for what he produces. We 
 hear frequently of the very low price of wheat. It 
 has been low lately, but it has been lower in previous 
 years, and there is compensation in the fact that 
 barley and oats are higher. The average prices per 
 quarter of wheat, barley, and oats for five year periods 
 during the last forty years have been as follows : 
 
 
 1841-45. 
 
 1846-50. 
 
 1851-55. 
 
 1856-60. 
 
 1861-60. 
 
 1866-70. 
 
 1S71-75. 
 
 1876-f-O. 
 
 Wheat ... 
 Harley ... 
 Oats ... 
 
 s. 
 54-9 
 310 
 
 207 
 
 s. 
 51-11 
 3111 
 214 
 
 *. 
 56 4 
 31-2 
 2210 
 
 *. 
 53-4 
 38-9 
 24-5 
 
 s. 
 476 
 32-11 
 21-10 
 
 s. 
 547 
 3811 
 24-6 
 
 s. 
 54-7 
 3810 
 263 
 
 t. 
 47 6 
 365 
 21-3 
 
 Average \ 
 for all 1 
 grain j 
 crops ) 
 
 
 
 
 
 
 
 
 
 35-5 
 
 35-1 
 
 36 9 
 
 38-10 
 
 34-1 
 
 39-4 
 
 3911 
 
 361 
 
 
 
 , 
 
 , 
 
 
 
 
 
 Wheat follows the general modern tendency 
 towards lower prices in all things, but its price also 
 exhibits a tendency to greater steadiness, the more 
 its exchange is free. During the past forty years, 
 for the four decades, the range of wheat prices was 
 for the first decade, 25s. 6d. ; for the second, 36s. 2d. ; 
 for the third, 24s. 3(/. ; and for the last only 14s. lOd. 
 Moreover, there is little doubt but that the very low 
 cost of prairie grown wheat will soon be a thing of 
 the past. Rapid increase of population on the prairie 
 itself has run up the value of the land. This at
 
 State Aid and State Interference. 21 
 
 once makes it necessary to farm, and not merely to 
 crop. Moreover, fifty millions of people will soon 
 come to live on these prairies, and they will con- 
 sume a large proportion of the wheat there produced. 
 With the exception of this prairie cropping, wheat 
 is produced in England as cheaply as anywhere ; 
 and, with the prairie cropping at an end, there will 
 be no further fall in prices, but every certainty of 
 a moderate rise over the whole world. 
 
 And all this while, with continued fall in the prices 
 of his own " raw materials," the farmer has seen a 
 continued rise in the price of meat. This will not be 
 checked ; for in all new lands meat will never be 
 lower in price than it now is. 
 
 So far as the great industry of Agriculture in 
 England is concerned, its permanent success has 
 proved that it flourishes, because instead of State 
 Interference, it commands that State Aid which sets 
 about abolishing any impediments to the free course 
 of the industry. Here, indeed, there is grand scope 
 for reform in England. Several recent laws have 
 incidentally become unfair burdens on Agriculture ; 
 many old laws have survived the time of their useful 
 existence, and also grown to be burdens on Agricul- 
 ture. In both cases reform is urgently necessary ; 
 and in both cases Agriculture may look for very con-
 
 22 State Aid and State Interference. 
 
 siderable relief and assistance if the State will only 
 aid to abolish both new and old State Interference. 
 And the country will have to look for such reform to 
 some new party, for the agricultural legislation 
 recently initiated by one great party in the State is 
 marked not only by the banishing to Saturn of the 
 teachings of experience, but also by fundamental 
 ignorance of actual agricultural life. And as a 
 consequence, however good in intention, it fails to 
 achieve any practical end that is good. 
 
 8. We are told Agriculture is the greatest of 
 English industries, and we have seen that State 
 Interference is its bane. We are told we are a 
 nation of shopkeepers, and no one doubts but 
 that a policy of Free Trade promotes commerce 
 and exchange. We are told we are the work- 
 shop of the world. But here formulated igno- 
 rance steps in and tells us that the absence of State 
 Aid for our manufactures is rapidly ruining the 
 country in its capacity for manufacturing. We meet 
 with a variety of formulas. We are told "foreign 
 cowitrics shut us out with increasingly hostile tariffs'' 
 We are told our Colonies do the same. And yet if 
 we look round we find that, as a matter of fact, on 
 the continent of Europe there has been for many 
 years a growing tendency to lower tariffs, to reduce
 
 State Aid and State Interference. 23 
 
 the number of items in tariffs, and to grant to us 
 most favoured nation treatment. If we compare 
 continental tariffs of 1880 with those of 1860 we 
 find that in fourteen out of the sixteen countries 
 they have been lowered. In 1860 the average 
 number of items on these tariffs was 140 ; in 1880 
 it had fallen to 112. In 1860 seven out of the six- 
 teen countries granted us most favoured nation 
 treatment ; in 1880 fourteen granted us the favour, 
 and the remaining two had expressed their willing- 
 ness so to do. 
 
 And when we turn to our Colonies we find that 
 only two out of forty maintain tariffs that can 
 in any way be described as high or hostile. One of 
 these instances is that of Canada, and here the high 
 tariff was made to include English goods, not out of 
 hostility to English manufactures, but because the 
 Supreme Government of the Empire maintains the 
 theory that no duties within the Empire are to be 
 differential. Moreover, as a matter of fact, both 
 these high tariff Colonies continue to import more 
 and more of our manufactures. For instance, even 
 in effect, there is no hostility to British manu- 
 factures in the records of Canadian trade : English 
 imports are increasing and United States imports 
 decreasing steadily.
 
 24 State Aid and State Interference. 
 
 We are also told foreign countries are flooding us 
 with their manufactures. But foreign countries are 
 not increasing their export of manufactures so fast as 
 England increases hers. If foreign countries are 
 flooding England, England is flooding them in far 
 greater proportion. It is also remarkable to notice 
 that foreign countries increase their exports both in 
 quantity and kind in proportion as their tariffs are 
 low in the particular items exported. Nor is this 
 contrary to reason. A protective or high tariff is 
 only effective against goods that can be produced 
 cheaper elsewhere. Consequently these goods will 
 drive from all other markets similar goods made in 
 the protected country. 
 
 If foreigners were supplanting us as manufacturers, 
 not only in our own markets but in foreign markets' 
 we should at once see the effect in our imports and 
 our exports. Now, as a matter of fact, the per- 
 centage of manufactured articles to the rest of our 
 imports is insignificant only eight per cent., and it 
 does 'not increase. And, on the other hand, as a 
 matter of fact the percentage of our manufactures to 
 the rest of our exports is very great ninety-four per 
 cent., and does not decrease. 
 
 Other countries range through the whole gamut of 
 State Aid from the negative pole of Free Trade to
 
 State Aid and State Interference. 25 
 
 the most positive pole of Protection. But England 
 continues steadily at the head of the list of manu- 
 facturing peoples. Her supremacy seems to be 
 assured. And this for the chief reason that the 
 State sees the folly of attempts at Aid which are in 
 reality nothing but hurtful Interference. Wisely in 
 England the State confines itself to securing to 
 every worker as a consumer the advantage of 
 obtaining everything he uses or consumes at lowest 
 possible cost, and as a producer the security that to 
 whatever industry or task he may devote his 
 energies he may rest practically assured that his 
 energies are not being misapplied, for they are 
 applied under the searching influence of open com- 
 petition with all the world. In such a free atmos- 
 phere the risk of misapplication of energy is reduced 
 to a minimum ; and, at the same time, advantage is 
 taken of every facility of production the wide world 
 offers. 
 
 9. But in these latter days the State has been 
 asked to aid and to interfere, not only within its own 
 frontiers, but within the boundaries of foreign states. 
 England has been asked by a section of her citizens 
 to force foreign nations to lower their tariffs ; to 
 force foreign nations to abolish the Bounty system ; 
 and to bind foreign nations to admit English goods
 
 26 State Aid and State Interference. 
 
 on certain terms by the aid of commercial treaties. 
 The means that we are told are the only available 
 means mark the unwisdom of any such policy. We 
 declare that low tariffs are good and high tariffs bad ; 
 and then, in order to prevail on other nations to 
 lower their tariffs, we are to threaten to raise our 
 own. We declare Bounties to be bad ; and then, in 
 order to prevail on other nations to give up the 
 system, we are to threaten we will injure ourselves 
 to the exact amount that these Bounties injure the 
 nations that give them. We declare there should 
 be free exchange of commodities between all nations ; 
 and then, in order to obtain this free exchange, we 
 are to propose to bind ourselves to some particular 
 nation by a treaty arrangement of "reciprocal 
 advantages" specifically curtailing our freedom of 
 exchange with third nations. These means are, on 
 their very face, inconsistent with the attainment of 
 the end desired. They are means that have invariably 
 commended themselves to governments for many 
 years. They are means' that have invariably failed. 
 They are means that must be once for all discard ed. 
 The various States of the world are politically in- 
 dependent of one another. Any agreements between 
 them must be in the nature of free contracts. But 
 these contracts have this fundamental distinction from
 
 State Aid and State Interference. 27 
 
 contracts between individuals, in that there is no 
 superior compelling power to enforce their fulfil- 
 ment. War or necessity are the sole ultimate 
 arbiters. Conference, arbitration, and agreement 
 may be appealed to, but subject only to voluntary 
 concession. To injure ourselves in order that others 
 may not injure us is a course of policy neither wise 
 nor useful. And yet such a principle is the basis 
 of all these policies by which we are to interfere 
 directly to reform other nations in regard to com- 
 merce and industry. It is ultimately a waging of 
 war. We know it will cost us much ; we say we 
 must go to war, for there are no other means of 
 compelling nations to do what we wish them to do. 
 If, however, we turn more thought into our con- 
 sideration of the case, we discover that this kind 
 of warfare has never been successful ; that it not 
 only fails to attain its end, but that it necessarily 
 costs more than any gains it can win. 
 
 And all the while we forget that to keep the 
 peace will induce the very results we vainly seek 
 to bring about by war. We wish for freedom for 
 commerce and industry. We wish to see this 
 freedom prevailing in every State. We wish to see 
 no one state, by its individual action, curtailing this 
 freedom in all other states. We, and other nations,
 
 28 State Aid and State Interference. 
 
 have tried war for many years. We have endea- 
 voured to secure this freedom for all by denying it 
 to ourselves. Other nations, all the world over, 
 have done the same. More recently England has 
 turned back from these illogical courses. England 
 has said, " So far as in me lies I will commence by 
 giving myself this freedom. If it is this great good 
 we all conceive it to be, results will soon prove that 
 I am right." And results are conclusively proving 
 the wisdom of the new English policy. Other Euro- 
 pean nations are now beginning to ask how it is 
 that England and Belgium and Holland and Swit- 
 zerland are drawing right ahead of all others as 
 commercial and industrial nations. The Australian 
 colonies are asking why is it that New Zealand 
 and New South Wales are outrunning Victoria. 
 The United States are asking why is it that un- 
 protected England floods American markets with 
 her manufactures, and also drives American goods 
 out of neutral markets. The high-tariffed States 
 of South America are asking, " Why is it we have 
 to go to free-trading England for our manufactures 
 no less than for our capital ? " These results must 
 tell, and are telling. It is the force of successful 
 example which will lead other states to set them- 
 selves up free in commerce and industry. It is to
 
 State Aid and State Interference. 29 
 
 this teaching we must trust for a coming emancipa- 
 tion of nations from State Interference. The means 
 to this end is the spread of knowledge. Ignorance 
 is the arch enemy to the spread of commercial 
 freedom. Cynics may ask whether the printing 
 press has in the sum total done more to disseminate 
 and give authority to ignorance than to knowledge ; 
 whether it has established in the public mind more 
 untruths than truths. At all events, the printing 
 press may be made the vehicle of facts. And it is 
 to the wide, universal publishing of recorded facts 
 we must look for restoring to experience a measure 
 of its lost influence in public affairs. A public 
 opinion ignorant of and despising experience is the 
 canker that eats the heart out of a nation and 
 thereby brings about the ruin of its civilisation. 
 
 And experience tells us that in order to secure 
 the highest and most lasting prosperity for com- 
 merce and industry, State Aid should he invoked 
 or utilised for the sole purpose of disestablishing 
 State Interference.
 
 30 State Aid and State Interference. 
 
 CHAPTER II. 
 
 THE FAILURE OF PROTECTION IN THE UNITED 
 STATES. 
 
 1. The case of the United States important. 2. The Causes of 
 their Prosperity. 3. American Manufactures. 4. Revenue 
 from Customs Duties 5. Protection in each case hostile to 
 advance Its Future. 
 
 1. There are Free-traders and Free-traders. 
 Some men are Free-traders because they know 
 Free Trade to be best ; more men are so because 
 they think it to be best ; most men are so because 
 they believe in their chosen teachers. These two 
 latter classes are, indeed, imbued to the backbone 
 with the idea that Free Trade means wealth and 
 prosperity; but at certain seasons they become the 
 unwilling victims of most awkward questionings 
 both from within and without. Members of Par- 
 liament have been found to ask such questions; and, 
 in the Times, a " Letter from Mr. J. Bright on Trotec-
 
 Failure of Protection in United States. 31 
 
 tion " figures with strange frequency. These letters 
 are almost invariably in answer to the evident, 
 if cleverly concealed question, " If Free Trade be all 
 you say, how is it that the United States flourish 
 so under a regime of Protection ? " This question 
 implies either a sad lack of detailed knowledge 
 on the part of the interrogator, or a criminal ex- 
 pectation of such a failing on the part of his 
 victim. It is my present purpose to put forward 
 the plain matter-of-fact rejoinder to this specious 
 question. 
 
 Such an investigation has a present and particular 
 value in that incidentally it elucidates problems of 
 the first importance to our own farmers and land- 
 owners, no less than to our manufacturers and ex- 
 porters. The supply of the English market with 
 wheat and meat ; the supply of the United States 
 market (a vast market, embracing such items as 
 the construction and maintenance of the one hun- 
 dred thousand miles of rails that will soon be " in 
 work " in the States) ; the existence and growth 
 of manufactories of various kinds on the other 
 side of the Atlantic these and others are all pro- 
 blems closely connected with this investigation, and 
 problems of the first moment to all thinking 
 Englishmen
 
 32 State Aid and State Interference. 
 
 2. These inquiries range themselves under 
 several heads : (i.) How far is the prosperity of the 
 United States connected with the prevailing policy 
 of Protection ? (ii.) How far has Protection 
 succeeded in setting up native manufactures ? 
 (iii.) How far has Protection succeeded in supply- 
 ing funds to the revenue ? (iv.) How about this 
 Protection in the future ? 
 
 How far is the Prosperity of the United States 
 connected with the Policy of Protection ? This first 
 question lands us at once among the circumstances 
 that combine to bring prosperity to the United 
 States ; and if we look in vain among these for the 
 influence of Protection, it may surprise the thought- 
 less into attention to facts, but it will in no wise 
 run counter to the convictions of those who know. 
 
 Protection may be defined as the interference by 
 a Government with the influx of commodities pro- 
 duced in other States in order to serve certain ends 
 in regard to its own industries. It is obvious, then, 
 that Protection affects a country by the means of 
 its imports; and in judging of the causes of pros- 
 perity in different States, Protection will avail as 
 a factor in proportion to the comparative importance 
 of the imports. Fur instance, the British Isles 
 import annually an equivalent of 11/. per head of
 
 Failure of Protection in United States. 33 
 
 population; the United States import annually but 
 21. per head. Thus, it may be said that in the 
 United States the direct effect of a policy of Pro- 
 tection on prosperity (for or against) is only one- 
 fifth what it would be in England. 
 
 But this minimised influence of Protection is 
 further lessened by the fact that the United States 
 is eminently an underpeopled, undeveloped country. 
 This fact, it will be seen, is at once the basis of the 
 national prosperity and the more than sufficient 
 antidote to the action of Protection. 
 
 Evidence of this is seen in the recent high-pres- 
 sure development of the industry of supplying food 
 to Europe. For some years past this tillage and 
 pasturage of the prairie has produced an enormous 
 surplus of food supplies. These would have been 
 mere valueless commodities, or rather would not 
 have been produced at all in such quantities, but 
 for the fact that cheap means of transit happened to 
 coexist to convey this surplus to European and other 
 markets. Thus it became wealth ; and was used in 
 great measure to repay other nations some of the 
 capital they had advanced to render such things 
 possible. Of the total annual exports from the 
 United States nearly one-half consists of this food 
 surplus. It is thus evident that this production 
 
 D
 
 34 State Aid and State Interference. 
 
 alone of food from virgin soil supplying as it does 
 the first necessaries of the large home market, and 
 paying for two-thirds of what the nation buys abroad 
 is accountable for a major portion of the pros- 
 perity enjoyed by the United States. 
 
 But if to this food surplus we add the exports 
 of "raw-materials" of cotton, minerals, and so forth 
 we shall account for at least eighty per cent, of 
 the total annual exports from the United States 
 without trenching in the least on the domain " fos- 
 tered " by Protection. It is then not difficult to 
 see that the prosperity of the United States depends 
 on industries that have no cause whatever to thank 
 Protection. 
 
 These industries, however, are rapidly discovering 
 cause for curses and not thanks. Farmers find the 
 high tariff raise the prices of all agricultural tools 
 and implements ; millers complain of the high cost 
 of machinery for mills ; carriers of the high prices 
 of the metal-work for elevators and for railways. 
 Experience is proving that duties which protect one 
 class necessarily injure all others. The train of 
 cause and effect runs in the well-known circle. 
 Each manufacturer finds that, though the duties 
 that protect him are said to be ultimately paid by 
 the consumer, nevertheless the consumer has his
 
 Failure of Protection in United States. 35 
 
 natural revenge in that everything the manufac- 
 turer uses or consumes in the process is enhanced 
 in price. 
 
 It is no long task to show that the prosperity of 
 the United States exists in spite of, and not because 
 of, Protection. And this is so even when no men- 
 tion has been made of the most important fact in 
 connection with this prosperity. Too seldom do we 
 remember that absolute Free Trade has been long 
 and firmly established throughout the United States, 
 and that it exerts an influence many many times 
 greater than that exerted by Protection. Free Trade 
 reigns absolute and supreme within the frontiers of 
 the United States. This is a fact writers and 
 speakers on both sides the Atlantic are too apt to 
 overlook. The full import of this fact is seen when 
 we remember that the rapidly increasing population, 
 already numbering fifty millions, only imports from 
 abroad one quarter of the value of goods that the 
 thirty-three millions of the British Isles import. 
 And the vast and important home market of so very 
 large and so very self-dependent a population is regu- 
 lated entirely on principles of absolute Free Trade. 
 
 The importance of this fact is all the more evi- 
 dent if we remember that the United States is 
 about as large as Europe, but with only one-seventh 
 
 D 2 .
 
 36 State Aid and State Interference. 
 
 of the population. We have indeed a territory 
 equalling Europe in extent and in variety of soil, 
 climate, and product. But properly to picture the 
 case we must sweep out of Europe all the English, 
 Dutch, Danes, Swedes, Germans, Russians, Austrians, 
 Italians, Swiss, Spaniards, Portuguese, and Turks, 
 and then distribute and settle over the whole area 
 of Europe the population of France and Belgium 
 only. The British Isles would proportionally receive 
 about the population of London to work up their 
 prolific resources, their mines, their pastures, their 
 fertile soils, their ores, their fisheries, and so forth. 
 Then, if we add to such distribution of population 
 perfect freedom of interchange of products all over 
 this Europe, we have a picture of the condition of 
 the United States at the present day. It has been 
 the dream of Cobden's disciples to extend Free 
 Trade over Europe. Our American cousins have long 
 ago and definitively established Free Trade over an 
 'i ire equalling that of Uu?'opc. 
 
 It will be immediately evident that the prosperity 
 that ensues in the United States will be due to this 
 freedom of exchange and this comparative paucity 
 of people engaged in the highly profitable task of 
 developing vast virgin resources. Of a truth, so far 
 as its prosperity is concerned, the United States is
 
 Failure of Protection in United States. 37 
 
 a glaring instance of the high economic value of 
 Free Trade. In the United States we have a group 
 of communities, large and small, young and old, 
 under-peopled and fully-peopled, and with every 
 variety of human and natural forces, all bound one 
 to another in the fertilising bonds of Free Trade. 
 
 Such is the prosperity of the United States ; such 
 the foundations of this prosperity. Protection, in- 
 fluencing only by means of a comparatively insig- 
 nificant import trade, is but a weakly drag on this 
 prosperity, which thus rests in reality, both in 
 regard to home consumption and to export, on 
 Adam Smith's " plenty and cheapness of good land," 
 coupled with perfect freedom of exchange over the 
 length and breadth of this good land. Protection 
 in the United States occupies an altogether subor- 
 dinate position as a direct factor for or against this 
 prosperity ; and there is force enough at the present, 
 in the development of the splendid virgin resources 
 of this partially-peopled Free Trade continent, to 
 induce prosperity in spite of, but not in consequence 
 of, Protection. 
 
 3. How far has Protection succeeded in developing 
 Native Manufactures ? In disposing of this second 
 question we are faced at the very threshold by the 
 fact that the genesis of manufactures in the United
 
 38 State Aid and State Interference. 
 
 States occurred under exceptionally favourable 
 auspices. Gold and other populating magnets had 
 attracted across the Atlantic swarms of emigrants 
 from Europe. A very large percentage of these 
 were skilled mechanics and manufacturing hands, 
 and these were, frequently, the men of highest spirit 
 and energy in their various callings. Thus the 
 States had simply to utilise, and not to create or even 
 to introduce, the best skill, traditions, and experience 
 of the old-world manufactures. And there soon 
 came about a general willingness on the part of 
 these immigrants to revert to their old callings as 
 opportunity offered ; for the new toils of unwonted 
 agriculture, or the disheartening failures on multi- 
 tudinous dummy gold-fields, gave fresh prominence 
 to memories of former more lucrative and more 
 satisfactory work. Manufactures were engrained in 
 the people before arrival. These habits and tradi- 
 tions of work needed only time for their reappear- 
 ance ; but it was sought to hasten this reappearance 
 by the curious self-sacrifice of all other interests in 
 favour of these manufacturers. 
 
 And yet, if we look to the surroundings of the 
 manufactories of the United States, we see at once 
 that their very life is closely bound up with the 
 existence of undeveloped virgin resources. When
 
 Failure of Protection in United States. 39 
 
 bad times come and consumptive demand wanes, 
 then short time or stoppage of mills, and so forth, 
 merely throws more human energy into the opening 
 up of unbroken agricultural areas. A great increase 
 in agricultural output is the result, and, provided a 
 market be found for this, a recuperative force is at 
 once set in motion which shrouds the fact that 
 many of these artificially supported mills and 
 factories are not in unison with the true life of the 
 community. And, in addition, the ready supply of 
 food offered by virgin soil does away with any risk 
 of actual starvation. 
 
 In spite of these manifest " natural " advantages, 
 we nevertheless cannot be blind to the notorious 
 fact that in bad times there is more actual distress 
 in the manufacturing districts of the States than 
 in those of crowded but Free-trade England. The 
 special reason of this is that bad times prevent 
 production at profits ; and that although man can 
 cease being a producer for a time, he can only cease 
 being a consumer by leaving this world. And it is 
 on man as a consumer that Protection presses with 
 so heavy a hand. So far as Protection has any effect 
 in America, it enhances the price of everything to 
 the consumer, and this forces the manufacturer, 
 capitalist, and workman alike to suffer more than
 
 40 State Aid and State Interference. 
 
 need be when bad times force him to stand by in 
 idleness as a producer. 
 
 And again, in prosperous times American manu- 
 facturers enjoy very considerable advantages not 
 because of Protection, but because of this wealth 
 of virgin resources. A great store of provisions and 
 of raw material is readily amassed ; and the demand 
 of prosperous times readily converts this into wealth. 
 The workers on this raw material reinforce willingly 
 that class of consumers who are lavish and extrava- 
 gant in their expenditure. This style of improvident 
 consumption has, as a matter of fact, become a 
 marked feature in the United States whenever eras 
 of prosperity set in ; and it is a style which is 
 always above paying heed to the fact that prices 
 are so greatly enhanced by the incubus of any par- 
 ticular commercial policy. Home consumption 
 becomes thus specially brisk, even to the extent 
 of causing a decrease in exports. And so an 
 important but artificial and unwholesome stimulus 
 is given to the protected industries which completely 
 shrouds the evil results, to the consumer, of pro- 
 tective duties. This unnatural vitality is the certain 
 precursor of a crash such as that which fell upon the 
 American people in 1873. This wealth of virgin 
 resources at once nourishes and conceals that
 
 Failure of Protection in United States. 41 
 
 diseased condition of the body of manufacture which 
 is induced by Protection. 
 
 It is well also to consider the influence of this 
 protection of manufacture in the United States on 
 the supply of the home and the foreign markets. 
 In the first place, in the United States it has been 
 estimated that only one-tenth of the whole popula- 
 tion are even connected with manufactures. Such a 
 percentage, if we regard the records of other com- 
 munities, may fairly be set down as the unaided 
 issue of mere concentration of population : it certainly 
 shows that Protection has failed in any appreciable 
 manner to divert human exertion from its natural 
 channels. The attractions of an underpeopled soil 
 are too great to allow of the population being forced 
 to other labour. 
 
 Evidence of this is found in the failure of the 
 American manufacturers to supply their own home 
 market even with wares for which they enjoy special 
 facilities. This result is greatly aided by the fact 
 that high prices of American made goods consequent 
 on the high tariff act as an antidote to that tariff 
 so far as foreigners are concerned. English cutlery, 
 for instance, in normally prosperous times success- 
 fully competes with American even in the Western 
 States. Of Sheffield cutlery the States imported
 
 42 State Aid and State Interference. 
 
 74,000/. worth in 1880, as compared with 50,000/. 
 in 1879. The revival of trade last year immediately 
 doubled the importation of iron and steel from 
 England. It is a curious sight to see free Americans 
 submitting to the fact that English iron and steel, 
 burdened with cost of transit and a 40 per cent, 
 duty, can yet undersell American steel in the 
 American market. When tha. railway system of 
 the States is completed there will be about 100,000 
 miles of rails laid. The mere maintenance and 
 necessary renewals over these lines implies an 
 enormous and persistent demand for rails. English 
 makers continue to hold their own in this division of 
 the American market, and it is satisfactory to 
 remember that the low price at which their Free- 
 trade opportunities enable them to supply these 
 rails adds to the wealth-producing and purchasing 
 power of our friends the consumers of the United 
 States. 
 
 Increase of population creates new markets, which 
 the population naturally endeavours of itself to supply. 
 And wherever population congregates in sufficient 
 numbers, there the necessary industries arise if 
 tlici) can. In America the manufacture of iron and 
 steel has struggled into existence, but as yet it has 
 only so far succeeded as to compete as it were on
 
 Failure of Protection in United States. 43 
 
 sufferance with the supplies sent all the way from 
 England. Protection keeps the prices of labour and 
 of living so high, that the " prohibitive " duty on 
 English supplies, instead of keeping them out of the 
 market, simply becomes a bounty paid by the 
 inhabitants to enable the English manufactuer to 
 penetrate into the market. Meanwhile no one 
 knows whether the free manufacture of iron and 
 steel can be carried on in the States cheaper than 
 the importation of foreign iron and steel. If it can, 
 the Americans are buying their iron and steel now 
 at a dead loss to themselves. If it cannot, they are 
 paying to their manufacturers the annual losses on a 
 process of manufacture that does not pay. That 
 they lose by the transaction is evident ; the only ques- 
 tion is as to the greater or lesser amount of their 
 loss. 
 
 Thus Protection resolutely prevents the Americans 
 from obtaining the command of their own home 
 market even in those wares for which the country 
 may possess special aptitudes ; and at the same time 
 it prevents the Americans from finding out which 
 manufactures pay, and which do not. The great 
 fact remains that the high prices consequent on 
 Protection do actually act as a powerful antidote to 
 the high tariff, and pay for foreign manufactures the
 
 44 State Aid and State Interference. 
 
 entrance fees into the American market which 
 Protection extorts. 
 
 In regard to the supplying foreign markets, it is 
 but logical to suppose that if Protection have its 
 claimed success in starting within a community in- 
 dustries specially suitable to the circumstances of 
 the community, there will be some surplus products 
 of those industries for export. How do the manu- 
 facturers of the United States fare in foreign and 
 neutral markets ? That they penetrate to them is 
 not to be gainsaid. But that they penetrate in 
 insignificant quantities is seen from the fact that 
 only one-tenth at the most of the exports of the 
 United States are articles manufactured in the 
 States. And even this export trade is manifestly 
 a mere result of the peculiar conditions surrounding 
 manufacture in the States. Americans have deve- 
 loped an extraordinary ingenuity of invention ; 
 they have also developed a tendency to "do things 
 big." If the opportunity is favourable they thus 
 manufacture large stocks of articles whose novelty 
 and neatness is often their chief recommendation. 
 But for the present the export of many such articles, 
 often the mere realisation of some gigantic scheme 
 of advertisement, or the getting rid of articles 
 for which there is absolutely no sale in- the home
 
 Failure of Protection in United States. 45 
 
 market, is because of depression in the States. It 
 is clearly recorded that American drills and sheetings 
 only appear in the great China market when periods 
 of severe depression exist in American manufactur- 
 ing centres. The cost of production in normally 
 prosperous times is too high to favour export. The 
 stocks that even then accumulate become unsaleable 
 when good times return ; these are added to the 
 stock manufactured under the cheapening pressure 
 of depression ; and the whole " lot " is eventually to 
 be got rid of at abnormally low prices. 
 
 As a general result it has been noticed that just 
 now in the United States with prosperous years the 
 imports increase and the exports decrease ; whereas 
 the contrary seems to be the case in years of 
 depression. Protection increases cost of living; it 
 raises prices all round ; wages come to be normally 
 at abnormal heights. In prosperous years the local 
 manufacturers having to pay higher wages can only 
 sell at excessive prices. Americans are asked to 
 pay these prices ; and they do so in prosperous times. 
 But these same high prices, instead of fostering local 
 industries, simply enable the less costly foreign 
 commodity to enter the market even though saddled 
 with the extravagant duty Protection imposes. The 
 result is that imports increase and the local manu-
 
 46 State Aid and State Interference. 
 
 facturers cease exporting. But they also cease 
 selling, even in the home market. 
 
 However, with times of depression these things 
 alter. Americans no longer buy. Prices are too 
 high. In their own phrase, they " scrape through " 
 till times mend. Imports decrease. Local manu- 
 facturers have stock in hand they are unable to 
 get rid of in the home market ; they also find 
 labour willing to put up with lower wages, and 
 it comes to be possible to export that for which 
 there is no sale whatever at home. Exports increase. 
 American manufacturers once more appear in foreign 
 markets. 
 
 It is necessary to remember, in this connection, 
 that in England, if industrial energy cannot find 
 vent in the creation of a margin at least of ex- 
 portable wealth, industrial pauperism must result. 
 In the United States, on the contrary, this 
 energy is not so confined ; it can and does seek 
 profit from the appropriation and development 
 of virgin resources. Labour and capital find 
 their natural field in the prairie and not in the 
 factory. It is only in abnormal times of severe 
 depression that these natural conditions are tem- 
 porarily suspended and industrial energy creates 
 any margin for export. Manufacturing enterprise
 
 Failure of Protection in United States. 47 
 
 thus harassed will never achieve any palpable place 
 in foreign markets till the United States become 
 fully peopled up. It would seem only natural 
 that, for the present, the export trade of this large 
 population should be almost all made up of the 
 crude products of the soil cotton, minerals (solid 
 and liquid), and food all endeavours of Protection 
 to the contrary notwithstanding. 
 
 This tendency is amply verified by records. The 
 United States Government publish what they term 
 a "percentage of agricultural products (including 
 products of the forest) to total of domestic products 
 exported every year." It is well, in order to elimi- 
 nate temporary influences, to take the average 
 annual percentage for four-year periods. For the 
 past sixteen years these averages have been "68, 
 "74, *76 and "79 per cent. Records show there 
 has been a steady rise of this percentage all the 
 while that stringent Protection has been endeavour- 
 ing to decrease this percentage. These are facts, 
 not fancies. 
 
 On the whole, then, Protection in the United 
 States, so far from encouraging and fostering the 
 growth of manufactures, seems, if we look to re- 
 suits, only to hamper and harass those to which 
 concentration of population has given legitimate
 
 48 State Aid and State Interference. 
 
 birth ; and at the same time to shield others which 
 have but doubtful claims to legitimacy. It shields 
 them from a justified death only with the assistance 
 of forced contributions levied as black mail from 
 a heedless and unthinking people. There may not 
 be consciousness of this in those who work these 
 industries ; but, they are the chiefs in the ranks 
 that oppose Free Trade ; and their impelling motive 
 is the sacred motive of self-preservation. 
 
 4. The Bevemie Argument. Protection in 
 America finds much political support in the plea 
 that money must be raised for carrying on the 
 government of the country. General Hancock's cele- 
 brated " Tariff letter," during the late Presidential 
 election, summarises this question in the words 
 
 " The necessity of raising money for the. admin- 
 istration of the government will continue so long 
 as human nature lasts. All parties agree that the 
 best way for us to raise revenue is largely by the 
 tariff. So far as we are concerned, therefore, all 
 talk about Free Trade is folly." 
 
 It is, at the least, remarkable to find such 
 language uttered by a prospective head of the 
 Democratic party ; but the sentence is a fair sample 
 of the plea put forward, even by the genuine 
 Protectionist, in favour of high tariffs. Americans,
 
 Failure of Protection in United States. 49 
 
 as a matter of fact, have exhibited marked distrust 
 of direct taxation. To escape that method they 
 seem to be content to make large sacrifices. They 
 are told with truth that much revenue may be 
 raised by customs duties. But to argue thence to 
 the conclusion that therefore "all talk about Free 
 Trade is folly," is to miss the point of the argu- 
 ment. The interested manufacturers contrive with 
 ease to fan this plea into the flame of stringent 
 Protection to their own special manufactures. With 
 ease they lead their fellow-countrymen who in the 
 vast majority have little direct connection with ex- 
 ternal commerce to the conclusion that if revenue 
 is to come of customs duties, the higher the duties 
 the greater the revenue. 
 
 This revenue argument has been urged by Prince 
 Bismarck in Germany, as well as by Americans, and 
 it is above all the one plea on which this retrograde 
 policy has now and then commended itself to the 
 practical British Colonist. " Theoretical " econo- 
 mists, indeed, point out that to tax your trade is to 
 destroy your trade ; that " where Protection begins 
 there revenue ends ; " that to hamper the entry 
 of goods into your market by heavy duties is to 
 starve the goose that is to lay the golden eggs of 
 revenue. More practical economists will hold that 
 
 E
 
 50 State Aid and State Interference. 
 
 it is a mere question of balances ; and that it is 
 conceivable that the duties may be so cunningly 
 adjusted, that while inevitably destroying some of 
 the trade incident to the smaller duties, they yet 
 suck more actual revenue out of what remains. 
 
 The question is really solved only by appeal to 
 experience. The United States, with all the 
 acknowledged evils of a high tariff, extract a revenue 
 of 27,000,000/. out of the trade of a population 
 of fifty millions. The United Kingdom, enjoying 
 the manifold benefits of a low tariff, extracts a 
 revenue of 20,000,000/. out of the trade of a popu- 
 lation of thirty-five millions. In either case the 
 populations contribute revenue through the customs 
 to the annual amount per head of eleven shillings. 
 But the English population enjoys in addition all 
 the pecuniary benefit of a trade three times that 
 of the Americans. 
 
 Besides this, if we compare the customs revenues 
 of England and the United States for even the 
 last ten years, we see that the English receipts 
 maintain a steady level of 20,000,000/. per annum, 
 while those of the United States have fallen steadily 
 from 37,000,000/. in 18G9 to 27,000,000/. in 1879. 
 During this period the English population increased 
 by four millions ; but no less than ten millions
 
 Failure of Protection in United States. 51 
 
 more human beings .have come to live in the United 
 States. In other words, by looking to these records 
 of what has been, we find that with a low tariff a 
 population contributes far more revenue through the 
 means of customs duties than with a high tariff. 
 The high customs duties in the United States have 
 failed altogether to provide tbat steady uniform 
 contribution to the revenue that the low English 
 duties have provided. They have in ten years 
 rendered this particular source of revenue 25 per 
 cent, less profitable, though population has increased 
 30 per cent. 
 
 This result is no doubt partly due to the fact 
 that high duties inevitably give birth to manifold 
 methods of evasion. It would be an interesting 
 calculation to discover how much the signal decrease 
 in American customs' receipts is due to this cause. 
 Smuggling only finds sufficient inducement under 
 high tariffs. And smuggling is nowadays of ex- 
 tensive variety, ranging from the simple landing 
 of a cask of spirits while the eyes of the revenue 
 are turned the other way, to the elaborate machinery 
 of dishonest middlemen who thrive by false pack- 
 ing and false " declarations." By this means silk 
 has been known to " pass " in casks " declared " as 
 bottled beer. And the extreme is reached in the 
 
 E 2
 
 State Aid and State Interference. 
 
 brazen-faced bribery which is so well known in 
 sundry of the more backward European ports, even 
 though we refuse to credit the tales of travellers 
 as to its existence in some of the landing places of 
 the most advanced community of this age of pro- 
 gress. These widespread systems of fraud can only 
 exist in the atmosphere of high duties; but in that 
 they flourish to artistic perfection. We hear, for 
 instance, of men who will buy steel rails in Europe, 
 " lay " them, run an engine and two trucks over 
 them, take them up again, and pass them through 
 any " amenable " custom-house as "old'" or "scrap 
 iron," thereby reducing the duty by three-fourths. 
 These things may be possible under the paramount 
 influence of railway " rings " ; or they may be facili- 
 tated by cases (however singular and rare) of guilty 
 connivance in the custom house. The importers 
 do not, probably, pocket the whole of the duty 
 evaded ; some of it, no doubt, disappears elsewhere ; 
 it is a tax on their trade, but it is a tax which 
 fails to swell the revenue. 
 
 Altogether it is found by the actual experience 
 of both methods that the contention of raising 
 revenue is altogether in favour of low tariffs. High 
 tariffs destroy the trade, and breed methods of 
 evasion. These methods reap no profits under low
 
 Failure of Protection in United States. 53 
 
 tariffs, while trade by low tariffs increases fast. 
 This question of revenue is settled no sooner than an 
 appeal is made to experience ; but hitherto in the 
 United States the great majority have confided 
 in the interested minority, and have failed to 
 satisfy themselves that high tariffs in any way 
 contribute to the revenue in proportion to the 
 asserted ratio. 
 
 5. The Future of this Protection. In conclusion, 
 it remains briefly to consider the future of Pro- 
 tection in the United States. We are met on the 
 threshold of this inquiry by the pertinent question, 
 How is it that, in the face of the proverbial 
 " Yankee 'cuteness," such a state of affairs should 
 be permitted in the United States ? It is, in truth, 
 not a little astounding that Protection should be 
 for one moment tolerated in States whose original 
 and grand historical claim to independence was 
 liberation from bondage to the mercantile theory. 
 It is a strange contradiction to have to recognise 
 the high intelligence of the citizens of the United 
 States, and in the same breath to detail the follies 
 and evils of the commercial policy which they have 
 adopted in their dealings with foreigners. It is a 
 strange contradiction (and one that has been pub- 
 lished in the States) to find the shrewd American
 
 54 State Aid and State Interference. 
 
 citizen allowing himself to be governed by men 
 who said some years ago, " You must not trade 
 with Texas it is not national territory ; " and who 
 this year say, " No impediment whatever shall be 
 allowed in the way of your trading with Texas ; 
 it is now national territory." 
 
 The primary explanation of this paradox is that 
 all evidences of evil are, as it were, gilded over by 
 the flood of wealth that overflows from the opening 
 up of new resources. It is true the high tariff 
 simply lessens, pro rata, the savings or profits which 
 naturally accrue from the employment of capital 
 and labour. But in a new country (and a country 
 whose soil yields annually some 10,000,000/. of 
 gold, besides abundance of other minerals and 
 endless agricultural products) these profits accu- 
 mulate with a rapidity altogether unknown in 
 fully developed lands : and the incidental loss 
 passes unheeded. 
 
 Again, in a land of unbounded virgin resources, 
 food, or the possibility of its acquisition, is ready to 
 the hand of every man. In such a land a number 
 of even useless manufacturers are supported with- 
 out complaint, for the stomachs of the people do 
 not feel the sacrifice. And it is an old tale that 
 when the more animal portions of the human
 
 Failure of Protection in TJjdted States. 55 
 
 body are in comfortable circumstance, the head is 
 inclined to deal indulgently by objectionable concerns 
 with which it has no palpable or immediate 
 connection. 
 
 These conditions account in great measure for the 
 fact that a large nation, ever clamorous for the post 
 of guardian of human freedom, should voluntarily 
 place itself in the bondage of Protection. Each 
 free American citizen at the present moment is in 
 the toils of a villeinage to his superior lord, the 
 fostered manufacturer ; week by week he hands over 
 to him, under the guise of increased prices, so much 
 of the earnings of his labour, or of the profits of 
 his capital. But he heeds not his position, because 
 his opportunities bless him with abnormally good 
 earnings and high profits. 
 
 The conditions under which Protection exists in the 
 United States may be grouped' in four categories: 
 (1) plenty and cheapness of virgin resources ; (2) 
 the inflow of foreign capital; (3) ultimate govern- 
 ment by manhood suffrage ; (4) vested interests 
 fostered by Protection. How long will these con- 
 ditions remain in effective co-existence ? 
 
 (1) The first of these groups will for years to come 
 divert the major portion of the national energies to 
 work that has little or no direct connection with
 
 56 State Aid and State Interference. 
 
 the foreign import trade. The farmers and miners 
 of the west and north, and the growers of cotton 
 and breeders of cattle in the west and south, will, 
 for years to come, have little personal feeling in the 
 matter of a policy directly affecting only the manu- 
 facturers of the east. But as population increases 
 and the process gives every sign of high-pressure 
 speed these now outlying districts will become 
 central ; and to their inhabitants will become obvious 
 and palpable the burden of a high tariff. Indeed 
 the farmers of the west are already complaining of 
 the high cost of the implements necessary to their 
 peculiar system of husbandry. And as population 
 increases, the inevitable increase in output of com- 
 modities will demand not only an outlet, but 
 some equivalent return trade. Already western 
 farmers are prognosticating a day when England 
 will be purchasing her wheat where she can pay for 
 it with her manufactures. This result will ensue 
 whenever a rise in the cost of American wheat raises 
 it to the same price in the English market as 
 Continental or Eastern wheat. 
 
 The Census of the United States, taken on June 1 . 
 1880, tells a significant tale. During the last decade 
 there lias been added to the population 10,000,000 
 souls. One quarter of this increase is due to immi-
 
 Failure of Protection in United States. 57 
 
 gration, and three quarters to national growth. In 
 the north-east, in the older, more fully peopled and 
 manufacturing States, there has been the least 
 increase, amounting only to 15 per cent. In the 
 south-east, among the older agricultural districts, 
 the increase is greater. But in the whole of the 
 wilder west, where manufactories are conspicuous by 
 their absence, there the populations have doubled in 
 many instances, trebled in Kansas, and actually 
 quadrupled in Nebraska and Colorado. Mining and 
 agriculture may be said to have absorbed eight out of 
 the new ten millions of inhabitants. This forebodes a 
 coming alteration in the balance of the forces that 
 naturally regulate external commercial policy. 
 
 (2) This rapid development of virgin resources is 
 assisted in its tendency to upset high tariffs by the 
 gradual cessation in the inflow of foreign capital and 
 the concomitant growth of the investment of 
 American capital abroad. This change in the tide of 
 capital has already set in. Protection has of late years 
 largely prevented repayment in kind. The foreigner 
 wishing to trade has had to finance : funds, securi- 
 ties, shares, have passed to American ownership. It 
 will thus come to pass, that if Americans wish to 
 export (and this wish will be largely stimulated as 
 their country becomes opened up) they will be
 
 58 State Aid and State Interference. 
 
 forced to import by way of repayment. This will be 
 possible only with a less prohibitive tariff. 
 
 (3) These tendencies towards Free Trade will have 
 a severe struggle with the two last of our four 
 groups. It has been said that wise men learn from 
 the experiences of others, but that fools can only 
 learn from their own. At the present time ultimate 
 political power in the States is largely in the hands 
 of those who ignore knowledge of ascertained human 
 experiences ; and who at the same time fail to 
 win the guidance of those possessed, aud disinter- 
 estedly possessed, of such knowledge. These masses, 
 it would seem, must in a measure await the teaching 
 of their own experience though the spread of 
 education will hasten their due recognition of the 
 experiences of others. But their present prospects 
 of good guiding are far from hopeful. Facts tell us 
 that they become the ready instruments in the hands 
 of those who trade upon their ignorance and upon 
 the essential human tendency to lend willing ear to 
 all that flatters innate selfishness. Thus, to win the 
 votes of wage-earners in America no more powerful 
 political cry has been devised than that of " pre- 
 serving Americans from the competition of the 
 underpaid labour of Europe." 
 
 It appears for the present hopeless to point out
 
 Failure of Protection in United States. 59 
 
 that, as a matter of fact, Protection does not accom- 
 plish this end. The wage-earner in the manufac- 
 turing districts is by no means so well off as he 
 would be in the manufacturing districts in England. 
 It has over and over again been pointed out how 
 well the American politician knows the electioneer- 
 ing value of appealing to the nominal rates of wages, 
 but carefully omitting all reference to relative pur- 
 chasing powers. The American wage-earner may be 
 sure of one point: whatever work Protection brings 
 him, whatever work he gets and would not get if 
 competition were free, has to be paid for by him out 
 of the wages he gets for doing it. Five cents per 
 yard on cotton prints is the duty charged to counter- 
 vail English facilities of production. The American 
 manufacturer thus charges four cents more per yard 
 for the cotton prints he makes. This protection 
 enables him to make cotton prints and employ 
 people in the factory. But the wage-earners so 
 employed have to pay four cents more for every yard 
 of cotton they buy. And, not only so, but, while they 
 get wages from one industry only, Protection influ- 
 ences many others as well, and all prices are enhanced 
 above what they otherwise would be. This extra 
 charge on all he buys is the direct effect of the com- 
 petition of the " underpaid " labour of Europe.
 
 60 State Aid and State Interference. 
 
 Protection is powerless to prevent the effect. All 
 Protection does is to shift the charge from the pro- 
 ducer to the consumer; and the wage-earner, if 
 a producer in the factory, is all the more a con- 
 sumer at home. Manhood suffrage in the less 
 settled districts is not yet sufficiently bound up 
 with the foreign trade to care to busy itself 
 with foreign policy ; manhood suffrage in the 
 more settled districts awaits the spread of know- 
 ledge to force on it a due appreciation of its real 
 position. 
 
 (4) For the present, the most serious and distinct 
 obstacle is the powerful one of vested interests. The 
 manufacturers, chiefly located in the eastern States, 
 derive most benefit and relief from protective duties. 
 These duties are paid by the nation at large, and a 
 major portion of the contributions come from other 
 distant districts. These manufacturers thus thrive 
 on the contributions they levy of their heedless dis- 
 tant countrymen. Protection institutes rates for 
 the support of two classes of persons the one class 
 consisting of those who could live, and live better, 
 without this aid : the other class consisting of 
 those who, without this aid, would have to turn to 
 other modes of livelihood which would be a gain, 
 and not a loss, to the nation at large. Industries
 
 Failure of Protection in United States 61 
 
 involving legitimate national superiorities would 
 nourish all the better without Protection. But 
 industries of the illegitimate kind, whose works are 
 so much waste of energy, inasmuch as they make 
 goods that can be made cheaper elsewhere at the pre- 
 sent ; industries which will come into being unaided 
 when times are ripe for them these would perish in 
 the absence of Protection. Such manufacturers owe 
 their all to Protection; of this they are well aware, 
 and they accordingly put forth every nerve to keep 
 their hold on a system, in the absence of which they 
 must devote their energies to other work. The 
 vested interests, of a type altogether pernicious to 
 the general well-being, thus exert their influence in 
 exact proportion to the harm they do to the State 
 as a whole. 
 
 Their power was exhibited in the late Presidential 
 election ; the Democratic candidate was forced to woo 
 their favour by a partial recantation of the wise 
 doctrine adopted by the Democratic party, that the 
 tariff should be arranged with a view to revenue 
 only. The sop of " incidental Protection " was 
 thrown, though without effect. These particular 
 vested interests know they stand or fall with full- 
 bodied Protection, and their present power is well 
 exemplified in this violent political endeavour to
 
 02 State Aid and State Interference. 
 
 win their favour by the surrender of an important 
 principle. 
 
 This necessarily cursory view of the facts of the 
 case brings us, then, to four conclusions : 
 
 (i.) The prosperity of the United States is due to 
 plenty of fertile virgin soil, to great mineral and 
 natural resources, and, above all, to the strict free- 
 dom of trade over the whole United States continent. 
 The protective tariff simply impedes this prosperity, 
 (ii.) In regard to the setting up of manufactures, 
 the high tariff succeeds in hampering those to which 
 concentration of population gives legitimate birth : 
 and in upholding those which are, at all events for 
 the present, a dead loss to the community at large. 
 
 (iii,) American (and other) politicians maintain 
 that the high tariff is a good method of raising 
 revenue ; but facts show us that even within the 
 last ten years this high tariff (in a variety of ways) 
 has cut down by nearly one-third the actual amount 
 of revenue formerly derived from custous duties, 
 and which, in a more healthy condition of things, 
 must have in some measure kept pace with an 
 increase of population during the same period <>f 
 more than one-third. 
 
 (iv.1 The intelligent American citizen puts up with
 
 Failure of Protection in United States. 63 
 
 Protection because it affects him but little in his 
 absorbing occupation of opening up the vast interior. 
 The assured success of this internal development, 
 coupled with the ebb of foreign capital, will gradually 
 overcome both the heedless vis inertice of manhood 
 suffrage and the knowing vis moliva of vested 
 interests.
 
 64 State Aid and State Interference. 
 
 CHAPTER III. 
 
 BOUNTIES. 
 
 1. Bounties never likely to succeed. 2. Attempts to revive 
 Shipping Trade in the United States. 3. Similar attempts 
 in France. 
 
 1. In Bounties, above all other schemes and 
 policies, State interference assumes most cunningly 
 and most successfully the trappings and outside 
 semblance of State aid. Under the guise of assist- 
 ance to the native and discouragement to the foreign 
 producer of a given article, many a Government has 
 won popularity for itself from an ignorant and 
 thoughtless people by the simple device of insti. 
 tuting a Bounty system. And the more their 
 ignorance of their own trades, the more their 
 innocence of their own true interests, the more 
 these fostered classes admire and support a Govern- 
 ment which promises to protect them by Bounties 
 against foreign competition.
 
 Bounties. 65 
 
 Happily in England most of us feel strongly that 
 Bounty-giving is nothing more nor less than taking- 
 money from the great body of taxpayers and handing 
 it over to a few privileged individuals, in order 
 that these latter may carry on industries that might 
 not otherwise pay. Even supposing that Bounties 
 give artificial advantage to any special industry, 
 yet this artificial advantage all comes out of the 
 pockets of the people at large. Bounties may for 
 a time give an artificial and temporary stimulus 
 to a trade, but such stimulus seems invariably to 
 suck the life out of the community, and to leave 
 the field eventually in possession of those foreign 
 rivals who have preferred the wholesome food 
 of free enterprise and the bracing air of open 
 competition. 
 
 Bounties are pleasing to the sense of self-interest, 
 to the selfishness of the class in whose favour they 
 are imposed. But this means, that if once you 
 allow or adopt the principle of Bounty-giving, the 
 oTanting a Bounty to one trade or industry simply 
 provokes other trades and industries to claim similar 
 treatment. The State which grants Bounties to 
 sugar-refiners soon finds itself compelled in very 
 fairness to grant Bounties to shipbuilders. And 
 the future looms dark with the forms of all other 
 
 F
 
 OG State Aid and State Interference. 
 
 industries, possible and impossible, hovering round 
 to claim their share in the generous distribution 
 of the public moneys. 
 
 And for similar reasons such a policy adopted 
 by one State provokes other States to similar action. 
 States are very apt to follow one another's blind 
 leadings. Sugar Bounties have been instituted now 
 in several European countries, simply by reason of 
 the strange idea that if Bounties are given to 
 foreigners Bounties must be given to natives as 
 a protection. And when this plea of "fairness" 
 >nce steps in, nothing more is heard of the fact 
 that Bounties do more harm than good to the 
 trade and to the country which the Government 
 seeks by their agency to aid. People forget that 
 Bounties come eventually out of the pockets of 
 the taxpayers; and tbey forget what is of yet more 
 direct importance, that Bounties have never yet 
 succeeded in winning a victory against those commu- 
 nities which refuse to have anything to do with their 
 suspicious aid. In this and the following chapter 
 I wish briefly to collect certain recorded results of 
 two illustrative classes of Bounties those given to 
 promote shipping and sugar industries respectively. 
 
 $ 2. It is probable that in few States have more 
 stringent measures been taken to foster a shipping
 
 Bounties. 67 
 
 trade than in the United States. It is certain 
 that in no States has there ever been a greater 
 collapse of the shipping trade than in the United 
 States. The facts of this collapse are the " common- 
 places" of all literature dealing with such subjects. 
 Here again there crops in and acts as a chief 
 element the necessary evil of all such State inter- 
 ference. With shipping, as with sugar and all 
 other industries, there are two distinct industrial 
 phases or divisions ; and they are, in their very 
 nature, antagonistic to one another if once they 
 are to be " fostered " out of any common funds. 
 These two phases are those of production and of 
 use. If you protect the production of ships, in so 
 far you limit their use; and if you protect the 
 use of ships, in so far you limit their production. 
 In the United States it was sought to encourage 
 shipbuilding in the country by prohibiting the 
 importation of ships and by encouraging the native 
 building of ships. Immediately the shipowners found 
 they were hampered in the supply of ships. Ships 
 cost American more than thev cost English owners. 
 American ships were no longer purchased, and 
 then, as a consequence, they were no longer built. 
 At the same time the shipbuilders had been pro- 
 tected, and so could nut object that other industries 
 
 F 2
 
 68 State Aid and State Interference. 
 
 should be protected likewise. And shipbuilders 
 found, to their cost, that they had to pay for their 
 material and for their labour far more than ship- 
 builders in other countries that had no protection- 
 And now all the American seaboard is crying out 
 for the remission of all duties on the materials 
 employed in shipbuilding, and for the removal of 
 all the burdens that Protection imposes on the 
 industry. 
 
 Meanwhile American shipowning has died down, 
 and shrunk to comparatively nothing from its former 
 dimensions. The Great War no doubt had consider- 
 able effect, but that effect should be past and gone 
 before now ; and the Americans must often sit down 
 and look at the flags flying thick in New York 
 harbour, and ask themselves how it is that they 
 are nearly all those of a nation which makes every 
 endeavour to free all its industries of all State 
 trammels, of all so-called State support. Xo doubt 
 England has unrivalled capacity for production in 
 her readily available stores of coal and iron, but 
 America also yields large quantities of coal and 
 iron, and her woods arc at least as good and as 
 plentiful as those of the British Isles. Her sea- 
 board is long, her harbours numerous, and her 
 population much given to maritime pursuits; and
 
 Bounties. 69 
 
 yet her shipping industries cannot do more than 
 struggle to maintain a precarious existence, clogged 
 and handicapped by vigorous State support, and 
 altogether unable to compete against the free 
 and altogether private enterprise of the shipping- 
 industries of the United Kingdom. 
 
 3. With this clear example before her we find 
 France, already with a very respectable marine, never- 
 theless deliberately devising a new scheme of bounty 
 protection to her shipping trades. As with all such 
 State interference so with this ; so great is the 
 number of technical and legal formalities, that the 
 effective operation of the law is seriously impaired. 
 However, after overcoming these, the French Go- 
 vernment offers definite money Bounties to those 
 who build vessels in France or to those Frenchmen 
 who own seagoing vessels. The Bounties are not 
 given to Lines otherwise subsidised by Government. 
 They are given on tonnage built in France and on 
 the number of miles run at sea by French-owned 
 vessels. It is at once evident there is considerable 
 contradiction involved. France pays nearly 1,000,000/. 
 per annum in subsidies to steamers for carrying 
 mails. By this new law a steamer, provided she does 
 not carry mails, becomes entitled to a subsidy or 
 Bounty. And then again a Bounty is given for
 
 70 State Aid and State Interference. 
 
 making long and numerous voyages. This bounty 
 is If. 50c. per ton per 1,000 miles. For a trip across 
 the Atlantic and back a French-built steamer of 
 3,000 tons receives 1,000/., provided she carry no 
 mails. If she be English-built she receives 500/. It 
 becomes a question of relative cost of English-built 
 and French-built ships. If the Bounty on building fail 
 to make good this difference, then the French ship- 
 owner may profit most by using English -built ships. 
 
 But suppose that this act succeeds to the full in 
 its purpose. Suppose it doubles the French mer- 
 cantile marine by adding one million tons of French- 
 built shipping, and sends this million tons voyaging 
 over the seas, at average voyaging pace. Suppose this 
 continues for five years. Then the French taxpayers 
 will have to provide say 15,000,000/., or, in other 
 words, pay to French shipbuilders and shipowners 
 3,000,000/. per annum for doing nothing but mind 
 their ow r n business. And this payment includes 
 measures for defeating its own end, because it 
 includes the enabling French owners to purchase 
 foreign-built ships even when these are dearer than 
 French-built ships. As we have seen in the Atlantic 
 trade, an owner may run an English-built steamer 
 for a year against French-built mail steamers on 
 equal terms, because he will obtain a Bounty which
 
 Bounties. 71 
 
 they will not obtain. If this Bounty-law were to 
 raise French shipping to anything equalling that of 
 English shipping a't the present moment, the French 
 taxpayer would find himself at least one hundred and 
 fifty millions sterling out of pocket. The question 
 remains, would there be any possibility of recouping 
 this sum out of any trade that could be developed ? 
 The chances are that the question will never be put 
 to the test, because there will be severe foreign 
 competition. France need not fear the kind of 
 competition threatened by Prince Bismarck a 
 competition in kind a retaliatory imposition of 
 countervailing Bounties by Germany. But France 
 will find competition very severe and hopeless with 
 England. It is. not by making the nation as a 
 whole pay for national shortcomings that any par- 
 ticular industry can be made successfully to compete 
 with countries enjoying greater natural facilities. 
 Shipbuilding has grown to be a great industry in 
 the British Isles, partly because of a natural wealth 
 in coal and iron ; partly because of a maritime 
 genius fostered both by geographical position and 
 by great and world-wide trading propensities ; 
 partly because of the policy of Free Trade, which 
 enables the shipbuilder to obtain all the materials he 
 uses at the lowest possible cost. Other countries cut
 
 72 State Aid and State Interference. 
 
 themselves off from those of these advantages that 
 can be acquired, and they are thus the less able duly 
 to utilise such of those advantages as they may 
 enjoy by the bounty of nature. If the French or 
 the United States wish to develop a profitable 
 mercantile marine, the only road is to reduce and 
 simplify their tariffs, and then see whether in the 
 consequent free course of commerce and industry 
 the shipping trade arise of itself or not. In other 
 ways they may give artificial fillips, but to the 
 nation at large the balance will be on the wrong 
 side ; the industry will be fostered at the expense of 
 the community ; money will be transferred from the 
 pockets of the people to those of a few individuals ; 
 French shipowners may buy more of English ship- 
 builders, and English shipbuilders may start yards 
 in France and gather in a harvest of French 
 Bounties ; but in the long run the French people 
 will find the millions they may spend disappear into 
 the pockets of builders and owners, and leave France 
 with no greater increase in her mercantile marine 
 than has come of all the strenuous efforts to 
 increase that of the United States.
 
 Sugar Bounties. 73 
 
 CHAPTER IV. 
 
 SUGAR BOUNTIES. 
 
 1. Cane-growing in the Colonies continually advancing. 2. Beet- 
 growing not due to Bounties. 3. Neither Beet-growing nor 
 Refining flourish in Bounty-giving countries. 4. How to do 
 away with Bounties. 5. Britisli Sugar Industries more 
 prosperous than any others. 
 
 1. The most remarkable case in regard to 
 Bounties is that of the Sugar Bounties. It is a case 
 which has all the advantages of having been well 
 ventilated. Its details have in every respect been 
 worked out and tabulated : and its value and im- 
 portance are best attested by the virulence of the 
 controversy to which it has given rise. There are 
 few results recorded in economic history that yield 
 such distinct and clear lessons. 
 
 It may be well to quote these results as I sum-
 
 74 State Aid and State Interference. 
 
 marized them in a recent article in the Westminster 
 Review : 
 
 " Mr. Kitchie's Committee was appointed ' to in- 
 quire into the effects upon the Home and Colonial 
 Sugar Industries of this country by the system of 
 taxations, drawbacks, and bounties on the exportation 
 of sugar now in force in various foreign countries.' 
 It is our present purpose to deal specially with the 
 second of these two provinces of inquiry. 
 
 But there seems to be some strange fatality that 
 appears to haunt the very term ' Colonies.' No 
 sooner is this term used than the affairs treated of fail 
 of just appreciation, not only here in England, but 
 even in the Colonies themselves. The very men who 
 should know most, are often misled themselves into 
 statements that are hard to reconcile with the records 
 upon which they themselves found these statements. 
 In the records of this particular committee there 
 occur instances of this ; and instances, moreover, 
 directly compromising the most important points 
 involved. For instance, in his answer to question 
 3,858, one of our most trusted authorities on West 
 Indian matters tells us that the ' diminished pro- 
 duction (of sugar in the West Indies) commenced in 
 1872.' But the figures of sugar exported recorded
 
 Sugar Bounties. 
 
 75 
 
 in the tables provided by this same authority are as 
 follows : 
 
 Sugar Exported trom the British West Indies in Tons. 
 
 British Guiana 
 West India) 
 
 Totals... 
 
 1871. 
 
 1872. 
 
 1873. 
 
 1874. 
 
 1875. 
 
 1876. 
 
 1877. 
 
 89,000 
 211,000 
 300, COO 
 
 76.000 
 173,000 
 
 84,000 
 195,000 
 
 84,000 
 1SS.000 
 
 80,000 1 102,000 
 237,000 j 214,000 
 
 96,000 
 181,000 
 
 249,000 ! 279,000 272.000 1 317,000 ; 316,000 
 
 i 1 ! 
 
 277,000 
 
 The ' diminished production that commenced in 
 1872' did not continue even till the following 
 year. 
 
 Again, the same high authority tells us (3,960) 
 
 ' I think that in, say, ten years, half the pro- 
 duction of the West Indies would be knocked on 
 the head altogether ; in fact it has begun already. 
 I do not think I should be outside the mark if I 
 stated that nearly fifty estates are in course of 
 abandonment now (1879). I think about fifty have 
 come under my own knowledge, principally in 
 Jamaica; about six or eight months ago, so far as 
 my recollection goes, twenty-six estates were 
 advertised for sale without any buyer.' 
 
 This latter sentence somewhat qualifies the 
 former ; but if we turn to the Jamaica Bluebook
 
 76 State Aid and State Interference. 
 
 itself, we find recorded in dry and hard official columns 
 that only four estates were abandoned during the 
 year 1879. And it is further to be noticed that these 
 four were of very small size, making altogether only 
 323 hogsheads of sugar, in an island which exports 
 annually over 30,000 hogsheads. Moreover, there 
 is, in the opposite column, the very significant entry 
 of one ' abandoned ' estate brought back into culti- 
 vation. 
 
 It is indeed high time that more attention was 
 paid to the actual condition and the actual prospects 
 of this sugar growing in the West Indies. We shall 
 here briefly lay out the facts of the case, collating 
 all by the aid of recent personal experience in almost 
 every West Indian island. We shall confine our 
 exposition, in the main, to these islands ; they yield 
 us three-quarters of our own colonial supply. 
 Sugar that is grown in the Mauritius and the East 
 Indies, in Natal and in Queensland, finds its chief 
 market in the Eastern Hemisphere. It may be 
 noticed incidentally that the local demand in South 
 Africa and in Australia is increasing rapidly, but it 
 is increasing out of all proportion to the increase of 
 sugar planting in these large colonies. In Australia, 
 at the beginning of this century, there was no 
 market for sugar. Now, in the Australias there
 
 Sugar Bounties. 77 
 
 has come to exist a rapidly increasing population 
 of nearly 3,000,000, and all great consumers of 
 sugar. Over the vast interior of the ' island con- 
 tinent ' sugar is among the most important of the 
 'rations,' which form part of the pay of shepherds, 
 stockmen, and others ; and in the cities, that are 
 appearing with such rapidity, well-to-do communi- 
 ties of Englishmen are vying with the mother 
 country in their large consumption of sugar per 
 head. But these West Indies these 'tropical 
 farms of the British Isles,' as they have been termed 
 are the English sugar colonies in most direct con- 
 nection with the English market, and therefore the 
 group of colonies most typical of our colonial sugar 
 industries, so far as they are influenced by European 
 Bounties. 
 
 At the very threshold we must notice that there 
 is one great fact persistent throughout the history 
 of West Indian sugar-planting, and that is the fact 
 of the perpetual plaint that all is going wrong. 
 The ' groans of the planters,' that made so great 
 a stir in 1670, have never ceased since then to 
 burden the atmosphere. This is, indeed, fresh 
 evidence in support of the plausible theory that 
 the secret of Englishmen's success is their native 
 propensity to grumble. West Indian planters, like
 
 78 State Aid and State Interference. 
 
 their fellow-agriculturists in England, are never 
 satisfied ; and it is well they are not. They will 
 have it that what they attempt is done better 
 elsewhere, and the consequence is that they do 
 things better than they are done elsewhere. They 
 grumble that the French have tramways in Guada- 
 loupe, and with this grumbling they introduce 
 better trams on their own estates. 
 
 The outrageous assertions of the present evil 
 effect of the Bounties do not surpass the frantic 
 anticipations of evil which centred, in days gone 
 by, respectively rouud the abolition of slave labour, 
 the competition of slave versus free-grown sugar, 
 and, more lately, the extinction of the sugar duties 
 in England. Forebodings just as dismal, arrays of 
 figures just as curious, arguments just as little 
 founded on fact, cropped up in these episodes, and 
 with the same urgency and the same need of ex- 
 planation as in this last. But the sugar-growing 
 industry has managed to survive. It may be it 
 has changed ; it may be it is destined to yet further 
 change ; but its destruction would seem to be as 
 far off as ever 
 
 The English public that abolished slavery and 
 the sugar duties, offered speedy compensation in 
 the greatly increased consumption of sugar in Eng-
 
 Sugar Bounties. 79 
 
 land that followed on each of these high-principled 
 acts. In 1840 the total sugar consumed in Eng- 
 land was 4,500,000 cwt., its value was about 
 10,000,000, and the consumption at the rate of 
 15 lbs. per head. In 1873 the consumption had 
 risen to 51 lbs. per head. The duties were finally 
 abolished in 1874, and for the year 1879 the total 
 of consumption was at the rate of 65 lbs. per head, 
 representing a total of 20,000,000 cwt., for which 
 no less than 27,000,000 was paid. 
 
 We are now face to face with the latest phase 
 of these complaints. We are told that the abolition 
 of these duties injured West India sugar-growing 
 by allowing unbridled play to the baneful effects of 
 Bounties that are given in sundry foreign countries 
 on the export of sugar. Incidentally, however, it 
 will be remarked that these very Bounties them- 
 selves only exist in countries where sugar duties 
 continue to be levied ; and the abolition of these 
 duties in England set up England herself as a most 
 successful example of a country thriving in an 
 atmosphere where Bounties are impossibilities, and 
 where the market for cane sugar is free of access. 
 That this example has not been without effect we 
 see in the fact that the French and other Bounty- 
 yielding countries, are already exclaiming they can
 
 80 State Aid and State Interference. 
 
 no longer compete with English refiners, or with 
 colonial growers of sugar. Thus this much-com- 
 plained of abolition of sugar duties has in itself 
 come to be one of the most powerful arguments 
 towards the destruction of these very Bounties 
 that are regarded with such pious and unfeigned 
 horror. 
 
 Before considering the Bounties themselves, the 
 real measure of their effect, and the best means to 
 their removal, it is well briefly to examine, by the 
 light of recent local knowledge, the present condition 
 of the industry of sugar growing in our West Indian 
 colonies. We shall at once find that these colonies 
 have, during the present century, passed through 
 three periods the one, of corruption and collapse 
 culminating in the abolition of slavery in 1838 ; the 
 second, of mismanagement and uncertainty, lasting 
 up to some ten or twelve years ago, when matters 
 became more settled ; the third period that has since 
 set in is of steady progress, and of a far more healthy 
 and hopeful tone generally of enterprise and man- 
 agement. The most significant feature of the middle 
 or transition period was the odd reluctance with 
 which those most concerned came to recognise the 
 dawn of new and more favourable conditions. It 
 has alwavs been common to confine causes to the
 
 Sugar Bounties. 81 
 
 single influence of slavery and emancipation. And 
 this common error is rarely rectified by the alto- 
 gether necessary, if forgotten addition of the fact, 
 that prices of sugar have seen as great changes as 
 this labour question. In the world's market, from 
 causes quite extrinsic to the West Indies, the price 
 of sugar has since the period of emancipation fallen 
 from 50/. to 20/. a ton. It is true, that here again 
 the vast increase in consumption which England's 
 free trade policy has enabled her to enter upon, has 
 in great measure compensated this enormous fall in 
 prices. Prices may have fallen to one-third of what 
 they were, but the Englishman consumes just three 
 times as much as he used to do. This would be 
 very palpable compensation, but for the fact that the 
 West Indian growers do not provide him with the 
 extra supply he now consumes. And this is in great 
 measure the fault of the West Indian grower him- 
 self: but it is a fault he is fast remedying. His chief 
 obstacle has, hitherto, been his being trammelled at 
 every step by the traditions and the arrangements 
 created by and for a state of affairs that has passed 
 away. And the dying voice of this old dispensation 
 is the present persistent outcry that Bounties are 
 creating much loss, suffering, and injury to our West 
 Indian su war-growers. 
 
 G
 
 82 State Aid and State Interference. 
 
 As a matter of fact the West Indian colonies, 
 even under present arrangements, seem capable of 
 producing sugar cheaper than it can be produced 
 elsewhere, or from other plants. Mr. Quintin Hogg 
 pointed out (Ques. 3871) : ' You get in saccharine 
 matter four times as much to the acre in Demerara 
 as you would get in France/ Any one conversant 
 with the West Indies will acknowledge that the 
 actual cost of growing and manufacturing sugar 
 ranges from 91. to 121. per hogshead. The cost of 
 putting this sugar in the English market ought not 
 to exceed SI. or 41. a hogshead. European beet-root 
 growers and manufacturers universally declare that 
 a price of 181. a ton is a price that will, if per- 
 manent, destroy their industry altogether. The 
 limit that will destroy beet-growing will only curtail 
 profit in cane-growing as at present carried on in 
 the West Indies. This fact should suffice to show 
 Bounty-giving countries the prompt necessity of a 
 reform of their ways. The boasted effect of these 
 Bounties is to lower prices in the great English 
 market ; but this, in the end, is to abolish Bounties, 
 by rendering impossible the industry they were insti- 
 tuted to support. The 'bounty-fed' refiners already 
 cry out. M. Leon Say himself complains: ' Ce qui 
 est certain, dans tous les cas, e'est qu'a l'inverse de
 
 Sugar Bounties. 83 
 
 ce qui existe pour les raffineurs Francois, les raffi- 
 neurs Anglais peuvent obtenir leur matiere premiere 
 a un prix inferieur a ce qui devrait etre son prix 
 norma].' 
 
 Growers are also discovering their error. In his 
 Report for Mr. Ritchie's Committee on the sugar 
 industry in Germany, our Secretary to the Embassy 
 tells us, 'the average cost of manufacturing raw 
 sugar from beet would be about thirty marks (30s.) 
 a cwt.' And at the present, whatever the actual 
 cost of production on the spot, the governments of 
 these countries allow the general public to sub- 
 scribe to make good any losses the refiners and 
 growers may become subject to, owing to the low 
 prices forced upon the market. How far, and for 
 how long, a confiding public will thus continue 
 this thankless and baneful charity time only can 
 prove. 
 
 It is well worth putting on record the figures 
 supplied to Mr. Ritchie's Committee by Mr. Hogg 
 of the export of sugar from the British West Indies. 
 They exhibit a marked, sustained, and definite in- 
 crease. They, of course, vary from year to year. 
 There are few crops more variable than the cane 
 crop. It will therefore be well to record the totals 
 for four-year periods, and so eliminate this element 
 
 g 2
 
 84 State Aid and State Interference. 
 
 Years. 
 
 
 1841-47 
 
 184851 
 
 
 185255 
 
 
 185659 
 
 
 186063 
 
 
 186467 
 
 
 186871 
 
 
 187275 
 
 
 187679 
 
 
 of uncertainty, and better fit the figures for general 
 perusal 
 
 Export of Sugar from the British West Indies. 
 
 Totals per four-year 
 periods, in Tods. 
 
 554,000 
 
 544,000 
 
 608,000 
 
 649,000 
 
 754,000 
 
 797,000 
 
 903,000 
 
 900,000 
 
 975,000 
 
 From 1844 to 1865 for twenty-one years the 
 actual annual total never reached 200,000. Since 
 1865 for sixteen years the annual total has never 
 been below 200,000, except in the two years 1869 
 and 1872. It will be observed, also, that in the 
 period 1872-75 there is a falling off, slight indeed, 
 but still not an increase. This is worth noticing, in 
 spite of the more than compensating increase in the 
 next period, 1876-79; this latter great increase, it 
 will be remembered, comes immediately after the 
 abolition of sugar duties when Bounties were said 
 to be of most effect. That this abnormal decrease 
 was the effect of seasons alone, we know when we 
 see that the crops of 1872 and 1873 were very much 
 below the average (amounting but to 400.000 for the
 
 Sugar Bounties. 85 
 
 two years) ; and there is further proof in the fact 
 that for those two years the prices of sugar were, 
 in the words of the Report of the Committee, 
 ' abnormally high.' 
 
 It is well to notice parenthetically, that, though 
 the present condition of the industry of sugar 
 growing in our West Indian colonies is in a con- 
 dition which enables it to contemplate without 
 anxiety the competition of beet-root in the future, 
 it is in a condition, nevertheless, which is itself 
 capable of vast improvement. Those concerned with 
 the West Indian industries themselves give palpable 
 proof of this in the vast sums annually expended 
 in machinery, and the introduction of improved 
 methods of cultivation and manufacture. In Bar- 
 bados, for instance, sugar land fetches nearly 100/. 
 an acre at this day. These prices would not be 
 maintained in a despairing community. 
 
 It has been remarked that the sight, not uncom- 
 mon in Jamaica, of a ruined windmill or watermill 
 is a welcome sight, inasmuch as it tells a tale, not 
 of relapse, but of advance ; a tale of the fertilizing 
 introduction of steam power and fresh skill and fresh 
 capital ; and, in a similar sense, it is true that of late 
 years the records of estates abandoned, and of estates 
 sold for what they would fetch, are signs, not of
 
 86 State Aid and State Interference. 
 
 demise, but of fresh life. In the days of slavery 
 and of high prices estates were started over large 
 areas ; in the coarse of years most of these became 
 encumbered with jointures and charges. In the 
 days of collapse that ensued, both in regard to* 
 the labour question and in regard to price, the 
 absentee proprietors of these charges and encum- 
 brances let matters ' drift ' in the hope of better 
 times ; they looked to the future to solve both the 
 labour and the price troubles. In most cases these 
 estates were owned in groups, and the very favour- 
 ably situated paid sufficient profit to cover, for the 
 time, the losses on the badly situated. By degrees 
 that were altogether too slow, estates were one by 
 one put out of cultivation or sold ; and it is one 
 great advantage of low prices that they considerably 
 accelerate this salutary process. There were many 
 estates continued io working that had yielded profits 
 when sugar was at 50/., but which had no chance 
 of doing so with sugar at 20/. There were many 
 estates that could well yield profits sufficient for one 
 or two incomes, even when prices had so fallen ; but 
 such estates only too often remained charged with 
 the supply of the five or six private incomes that 
 had of old easily been yielded by the higher prices. 
 It is, then, a gain to all to find the one class of estate
 
 Sugar Bounties. 87 
 
 absolutely put out of cultivation, and to find the 
 other sold for what it will fetch ; and sold, moreover, 
 to new owners who, no longer burdened with the old 
 charges and jointures, may proceed forthwith to 
 make excellent commercial profit out of the legiti- 
 mate advantages the West Indies undoubtedly 
 possess over most other countries in this matter of 
 sugar growing. 
 
 These high prices also helped to maintain among 
 many planters a proud abstention from attempting to 
 remedy the losses and difficulties that had come of 
 the abolition of slavery. There arose, not unnatu- 
 rally, a bitter class feeling, brooding over the fact 
 that in order to achieve a national object the indi- 
 vidual had been made to suffer ; there had been an 
 apparent breach of justice, and the injured class sat 
 down on their estates, and when things went wrong, 
 enjoyed an uncouth and baneful satisfaction in 
 proving to the world that the injury done was 
 material. These ideas are not yet completely 
 eradicated, and they are partly to blame for a 
 slowness, apparent most in Jamaica, among planters 
 to improve their cultivation. Already, however, 
 sufficient has been done to prove at once the actual 
 value of these improvements and spread the know- 
 ledge that they are possible. Ploughing, weeding,
 
 88 State Aid and State Interference. 
 
 manuring, and irrigation, have been proved to 
 greatly increase the quantity of cane to the acre. 
 Better breeding, better care, and better handling of 
 the ' working oxen,' have curtailed largely the 
 expenses of ' hauling ' or taking the cane to the 
 mill. Tramways, and ' wire railways ' for ravines, 
 have been introduced with similar effect. The 
 ' Usine ' system will probably pay in certain dis- 
 tricts when introduced. The railway extensions, and 
 new coastwise steamers, will largely relieve many 
 districts of their heavy expenditure in the matter of 
 the carriage of the sugar to the port of shipment. 
 Altogether, there are many prospects of considerably 
 cheapening the present cost of production. 
 
 It will be seen then, that, so far as facts go, the 
 West Indian sugar industry is in a far better and 
 far healthier plight than it has ever been before. 
 This industry has, indeed, suffered from two causes 
 natural and 'human.' Adverse seasons in the 
 one case, and our own widespread commercial de- 
 pression in the other, have acted most deleteriously 
 on production and on consumption. 
 
 2. These two -classes of causes have, however, in 
 recent investigations, been ignored in favour of one 
 small species of a third genus the political. And 
 yet it is difficult eminently difficult to trace any
 
 Sugar Bounties. 89 
 
 real effect of any magnitude directly to this parti- 
 cular division. The centre of the argument, at 
 which we have now arrived, is the fact that certain 
 foreign countries give Bounties, on the export of 
 sugar. We pass, then, to ascertain the real measure 
 of this effect, and the best means for the removal of 
 these Bounties. 
 
 The battle waged round these Bounties may be 
 well likened to some mediaeval struggle for a 
 standard, wherein leading knights find themselves 
 suddenly the cynosure of all eyes ; and when the 
 real contests and material combats of the rest of 
 the field are forthwith hushed and suspended, as if 
 by mutual consent, in order that all eyes may feast 
 on an intrinsically insignificant incident that has 
 now become the centre and point of all effort. The 
 possession of the standard in itself is of little value 
 so much wood and linen, or, it may be, silk. So 
 with these Bounties; all other arguments seem 
 suspended, and the contest centres itself on a some- 
 thing, which, the more we look into it, the less does 
 it prove to be of material value or influence. As 
 with the military standard, so these Bounties are 
 fought over with such fierce excitement that all 
 inquiry is for the time ignored as to the intrinsic 
 value of the Bounty itself. Many men rush to the
 
 90 State Aid and State Interference. 
 
 attack with the battle-cry, ' Bounties lower prices ; ' 
 they heed not, neither do they require proof of the 
 measure of this asserted influence, or of the con- 
 nection of the result with the asserted cause. 
 
 The whole influence of these Bounties needs to 
 be set out clearly. Many of those interested in the 
 trade have of late years sought to impress the 
 outside public with the idea that Bounties are the 
 cause of all these ills. The instinct of the outside 
 public has, as yet, refused to credit all this ; and it is 
 well, in the interests both of those concerned in the 
 trade as well as of the general consuming public, to 
 seek out the grounds on which this instinctive 
 reasoning is based. 
 
 The Bounties, in the first place, are supposed 
 greatly to encourage the production of sugar from 
 beet-root. Granting that this be so, it is obvious 
 the cane-grower cannot complain, unless this action 
 lowers prices. From some of the Tables in the 
 Appendix to this Report we can cull most apposite 
 figures, even though we regret that these tables fail 
 to bring results further than the year 1874. 
 
 Years 1664. 1S05. I860. 1867. 1808. 18ti:>. 
 
 s. (I. s. d. s. d. s. d. s. d. s. d. 
 
 Triers uf cane sugar ... 28 11 ... 23 S ... 22 2 ... J-J 5 ... LM 1 ... 25 10 
 
 Hundreds of ( of bee M * 5 .; 7 7 
 
 thousands of "* { 
 
 tons grown I '^'^ j 11 M 15 I! 10 10
 
 Sugar Bounties. 91 
 
 YeaYs (continued) 1870. 
 
 1871. 
 
 1872. 
 
 1873. 
 
 1874. 
 
 s. d. 
 
 . d. 
 
 s. d. 
 
 s. d. 
 
 s. d. 
 
 Prices of cane sugar ... 24 1 . 
 
 .. 26 3 ., 
 
 .. 26 11 . 
 
 .. 23 2 ., 
 
 .. 22 4 
 
 Hundreds of f of beet ) 9 
 thousands of s , u ar { 
 
 9 
 
 11 
 
 11 
 
 10 
 
 tons grown [ ot c j e j 16 
 
 16 
 
 18 
 
 18 
 
 17 
 
 We see there is a sustained increase, year by 
 year, in both crops till 1874, in which year there 
 is a slight falling off in both largest proportionately 
 in the beet crop. We see also that beet increases 
 far faster than cane ; and, in the ten years under 
 review, beet, from monopolizing in the first year 
 about 2-9 ths of the supply, comes in the last year 
 to monopolize over 3-9ths. But it will be noticed 
 that prices show no tendency whatever of Icing 
 affected by the alterations in the proportions of 
 beet and cane supplies. Commencing at a high 
 figure, prices fall rapidly ; but only to rise again 
 nearly to the same height, and then again to 
 fall. 
 
 And this relation of price to this beet v. cane 
 argument is further illustrated by a table supplied 
 by Mr. Lubbock. In this Mr. Lubbock gives most 
 interesting data in regard to the effect of the 
 detailed growth of the beet crop on detailed prices 
 of cane sugar, and the results are most sig- 
 nificant.
 
 92 State Aid and State Interference. 
 
 Years : 
 
 -1865. 
 
 1866. 
 
 1867. 1868. 
 
 1869. 
 
 1870. 
 
 
 s. rf. 
 
 *. d. 
 
 s. d. s. d. 
 
 s. d. 
 
 *. d. 
 
 Prices of cane (Trinidad) 
 
 21 6 . 
 
 .. 18 8 ... 
 
 20 10 ... 22 5 
 
 ... 22 11 , 
 
 ... 19 8 
 
 Beet crop ; increase or \ 
 decrease per cent. | 
 over previous year's j 
 crop. J 
 
 
 
 
 
 
 + 34 
 
 + 22 
 
 + 4 + li 
 
 + 27 
 
 + 11 
 
 
 
 
 
 
 Years (continued) :- 
 
 -1871. 
 
 1872. 
 
 1873. 
 
 1874. 
 
 1S75. 
 
 
 s. d 
 
 s. d. 
 
 s.d. 
 
 s. d. 
 
 s. d. 
 
 Prices of cane (Trinidad) 
 
 23 4 
 
 ... 24 10 
 
 ... 20 1 ... 
 
 19 7 ... 
 
 18 4 
 
 Beet crop ; increase or > 
 
 
 
 
 
 
 decrease p<r cent. ( 
 over previous year's j 
 crop. J 
 
 -7 
 
 + 31 
 
 -3 
 
 - 5 
 
 + 20 
 
 
 
 
 
 
 According to these figures, it would strangely 
 appear, increase in the price of cane sugar is usually 
 accompanied by increase in the amount of beet pro- 
 duced ; whereas, in two of the only three cases 
 when the crop of heet was less than the previous 
 year, there is a decided fall in price over that of the 
 previous year; and in the remaining case there 
 is a decided rise in price in the following year, 
 though the production of beet showed an increase 
 of no less than 30 per cent. We have seen that 
 the consumption of sugar in the world increased 
 during this same period from 18 to 27 ; that of these 
 proportions, cane supplied respectively 14 and 17, 
 while beet, supplying 4 in the first instance, came 
 to supply no less than 10 in the latter. Beet has 
 thus monopolized the supply of a great proportion 
 of this increased demand ; but the figures have yet 
 to be produced, it seems, which shall prove that this
 
 Sugar Bounties. 93 
 
 new supply is in direct connection with any definite 
 fall in price. Indeed, in the evidence before Mr. 
 Ritchie's Committee, the "West Indian planters over 
 and over again assert their confidence in their 
 ability successfully to cope with beet-root competi- 
 tion, ' provided bounties be done away with,' and 
 the two methods be left to unrestricted competition. 
 It would seem, then, that beet-growing in itself has 
 little to do with this loivering of prices. The question 
 remains do the Bounties affect these prices ; and 
 if so, to what extent ? 
 
 When one's own case is good, it is often well to 
 assume, for the sake of argument, the correctness 
 of the evidence brought forward by one's opponent ; 
 and in this present case we may even admit, with 
 the most eager opponent of Bounties, that a duty 
 of 2s. on every sort of sugar imported from Bounty- 
 giving countries would effectually ' countervail ' 
 the effects of this Bounty. But we must in that 
 case also make it clear that, as at most only one- 
 third of our sugar supply comes from Bounty-giving 
 countries, the actual effect of the Bounties, so far 
 as growers are concerned, is not 2s., but only 8d. 
 a cwt. Again, we see that if sugar (as was stated 
 in answer to question 6028) at the price of 18s. 6d. 
 was being grown 3s. below its cost price, Bounties
 
 94 State Aid and State Interference. 
 
 at their best, must be merely partial causes of this 
 effect, even when we allow them the full influence 
 attributed to them by their most ardent opponents. 
 And the advocates of this countervailing duty will 
 have to devise some remedy to correct this larger 
 class of influences, double the effect of the Bounties, 
 which, if true and lasting, must absolutely drive all 
 sugar out of cultivation." 
 
 3. But there are other matters in connection with 
 this asserted effect of Bounties which merit more 
 attention than they have received. If we look to 
 the condition of the industries in the Bounty -giving 
 countries themselves, we find much to countenance 
 Sir L. Mallet's opinion : 
 
 ' Ques. 6344. I myself greatly doubt whether 
 the effect of this Bounty is such as to enable the 
 receivers of the Bounty to sell their produce at a 
 very much lower rate than they would be able to sell 
 it without the Bounty.' 
 
 One thing is certain, that even the keen desire 
 to do away with Bounties exhibited by English 
 refiners and importers, is no whit keener than that 
 shown by Frenchmen, at all events, who are inter- 
 ested in sugar. And these Frenchmen have reason 
 for their keenness. Among others, they complain of
 
 Sugar Bounties. 
 
 the fact that the English refiner can, and the French 
 refiner cannot, avail himself of the Austrian Bounty 
 on raw sugar ; indeed, French statesmen have already 
 asserted that the Bounty given to French refiners 
 may be defended as the duty that countervails the 
 advantages reaped by the English refiners in 
 obtaining Austrian Bounty-fed raw sugar free of 
 duty. 
 
 The French authorities gave valuable evidence 
 before the Committee. M. F. Georges described 
 the position of the industry of growing beet for 
 sugar as ' extremely critical! The fabricants, he 
 declares, 'are almost at the last gasp, and if they 
 lower the prices of beet the farmers will entirely 
 leave off growing beet.' West Indian planters should 
 notice that, even while the dreaded Bounty system 
 lasts, prices are now so low that a fall, even frac- 
 tional, will prevent beet-growing altogether. Prices, 
 so far as beet-competition is concerned, are at their 
 lowest ebb. But the cultivation and manufacture 
 of beet is at its highest perfection. Neither of these 
 assertions can be made of sugar-cane growing in 
 the West Indies. 
 
 M. F. Georges also gives evidence to the effect 
 that sugar-beet production in France is even 
 diminishing, and certainly not increasing. West
 
 96 State Aid and State Interference. 
 
 Indian growers should pay attention to question 
 6074 : 
 
 ' Ques. I understand, to summarize your evi- 
 dence, you believe that Austrian and other Bounties, 
 if they continue, will greatly damage the French 
 growers of sugar ? ' 
 
 ' Ans. It will destroy the French manufactures 
 entirely in a certain number of years ; that is to 
 say, that the productions will be reduced to a certain 
 extent every year. I would add that, if the price 
 of beet were to be lowered, the farmers would not 
 be able to grow it any more.' 
 
 This means the lapse of 400,000 tons of sugar 
 now grown annually, and whether the French re- 
 finers are to continue to refine by importing cane 
 sugar (and probably to abolish import duties on 
 it), or whether France has to buy her sugar else- 
 where either way cane growing would be largely 
 benefited. 
 
 This is a most useful example of the com- 
 plexities and intricacies that come of State inter- 
 ference with production. If we abolish the Austrian 
 Bounties, French refiners and French growers con- 
 tinue as now ; if we do not abolish the Austrian
 
 Sugar Bounties. 97 
 
 Bounties, English growers and English refiners both 
 prosper over French. 
 
 And another French authority, M. Fouquet, gives 
 it as his opinion : ' If all the Powers, Austria, 
 Germany, and Belgium, continue to have Bounties, ' 
 Ave shall be in a very short time obliged to leave off 
 entirely making sugar in France! 
 
 And M. L. de Mot, on being asked 
 
 ' Why should the production fall off so much 
 in France while the home consumption is so large 
 as it is at present,' replied, ' Because of the actual 
 price. We sell under cost price actually ; and there 
 is no doubt that, if things are to go on as they are, 
 
 in two or three years production will diminish 
 
 We expect, if things go on as they are, that, next 
 year at least, probably 40 factories will he closed. ' 
 
 From Belgium, the Secretary of Legation re- 
 ports : ' Very small advantages indeed must have 
 been derived by Belgian refiners from the surpluses 
 (Bounties) they obtain, judging from the fact that 
 for the last fifteen years sugar refining has steadily 
 diminished in Belgium! It is not surprising to find 
 Belgium, as a Bounty-yielding country, eager to 
 abolish Bounties ; they do her no good, for she 
 imports but little sugar. From the Hague comes 
 
 ii
 
 98 State Aid and State Interference. 
 
 the same tale of diminishing exports, in spite of 
 the Bounty which exporters can secure by means of 
 the drawback. In Italy there is great dread of 
 Bounties; and both Government and Legislature 
 recommend 'that no time should be lost by the 
 Government in entering into negotiations with other 
 States interested in the sugar question, with a view 
 to taking measures for guarding against the con- 
 version of drawbacks into Bounties.' In Germany, 
 as the industries, both of sugar growing and of 
 refining increase, so does the revenue derived from 
 ,sugar fall off, because incidentally the exports in- 
 crease and take so much the more in drawbacks. 
 And the German refiners themselves make an in- 
 teresting complaint. They say, concerning 'moist' 
 sugars : 
 
 ' Nor can the German refining industry compete 
 in these products with English refiners drawing 
 their supplies of German raw sugars from Germany, 
 inasmuch as Germany pays a larger drawback of 
 duty on the export of raw sugar than would be 
 paid proportionally on the export of the refined 
 sugar produced from it.' And their report pro- 
 ceeds : 'The German refineries buy duty-paid raw 
 sugars. . . . The German refining industry employs,
 
 Sugar Bounties. 99 
 
 spread over upwards of fifty establishments, a large 
 capital (3,000,000 florins), invested in buildings, 
 fixtures, and stock. The sad results obtained on 
 an average from these institutions during the last 
 few years, threaten this capital with annihilation.' 
 And again, further on : ' The condition of German 
 sugar refineries has been for a long time, not only 
 an unfavourable one, but, indeed, has declined from 
 year to year! 
 
 Lastly, we come to Austria. Our Secretary, 
 Mr. Jerningham, reports : ' The drawbacks allowed 
 hitherto, instead of remaining that which they 
 were intended, viz., a true return of the excise 
 duties, have in reality proved Bounties to the 
 manufacturers ; and the history of sugar taxation is 
 that of the struggle of the Government to remedy 
 this.' The system of assessment was necessarily 
 at fault, and encouraged fraudulent practices. 
 Matters came to a crisis in 1876, when it was 
 discovered that on the system in vogue, Govern- 
 ment paid 947,000 florins in drawbacks on sugar 
 exported, and which had only paid 931,000 florins 
 duty and taxes. Government has consequently 
 interfered in self-defence of its own revenue, and 
 ordained that eventually sugar is to pay annually 
 
 h 2
 
 100 State Aid and State Interference. 
 
 a contribution to the revenue of 10,000,000 florins. 
 This revenue argument is thus one of im- 
 mense cogency. The Belgian Government have 
 similar experience ; they know that some two 
 million francs more revenue ought and could be 
 obtained from sugar, but that this now finds its 
 way into the pockets of the growers, because of 
 the insuperable difficulties of collection wherever 
 sugar is concerned. Russia is in similar evil 
 plight. 
 
 But the success of the Austrian growers and 
 refiners at the expense of their country, has in its 
 course roused and frightened other nations. Thus, 
 M. Jacquemont, speaking on behalf of French 
 sugar manufacturers, after describing these results 
 in Austria, recommends, on behalf of France, 
 ' That in all treaties of commerce which may be 
 negotiated, measures be taken to suppress Bounties 
 on export generally. If not, we may expect to see 
 our great agricultural industry succumb in this 
 struggle, so strangely unequal, which it sustains, 
 not only against rival industries, but against the 
 revenues of the different European States.' 
 
 And it may be noted incidentally that this 
 action of the Austrian Government will have the 
 effect of almost doing away with the asserted
 
 Sugar Bounties: 101 
 
 outside effect of the Bounty ; for, if we judge by 
 the present state of the industry as pointed out 
 by M. Jacquemont, ' If the proportion of the 
 exportation to the total production should diminish, 
 the Bounty would increase ; if, on the contrary, 
 the proportion should increase to 60 or 70 per 
 cent, of the total production, the Bounties would 
 decrease/ Thus, the case in Austria is at the 
 present moment eminently favourable to English 
 refiners and. growers. 
 
 It would thus appear that in one and all the 
 countries that now give Bounties there is a strong 
 desire, on the part both of Government and of 
 manufacturers, to abolish any Bounties on the ex- 
 portation of sugar, whether raw or refined. 
 
 It is remarkable to trace in the history of the 
 negotiations to put an end to Bounties that have 
 already taken place between the Governments 
 interested, that they have invariably originated 
 in the desire of these Governments to remedy 
 defects in their own financial arrangements. The 
 advantage to the sugar industries was merely in- 
 cidental, and, indeed, only brought to the light 
 of day by the sugar manufacturers and refiners 
 themselves. 
 
 It is also remarkable to notice that in all these
 
 102 State Aid and State Interference. 
 
 countries where Bounties are gained, the sugar in- 
 dustries are in a precarious condition ; refining 
 dwindles where Bounties exist, while it is on the 
 increase in England. Growers of beet all the Con- 
 tinent over declare themselves ruined by the Bounty- 
 fed competition of each other. It is, therefore, 
 exceedingly remarkable to find so many of the wit- 
 nesses before the Commission, ' interested in sugar,' 
 so persistently, in the face of the figures they have 
 themselves produced, declaring that refining must 
 die out in England. It was shown them that, 
 on their own calculations, the Bounties received 
 annually in England was so many million pounds 
 sterling ; that every few years these Bounties paid 
 into England as much capital as all that invested 
 in English sugar industries : that thus, even sup- 
 posing the Bounties did destroy the industry, never- 
 theless they would have paid for both capital and 
 ' good-will ' over and over again. 
 
 4. It is, then, evident that all the countries in- 
 terested are anxious to do away with these Bounties. 
 There are but two methods of procedure desirable. 
 The one is the freeing of sugar from all connection 
 with the Exchequer. This has been accomplished in 
 England ; but it is not within the range of ' practical 
 politics' that this should be accomplished in many,
 
 Sugar Bounties. 103 
 
 still less in all, of the States that at present, in spite 
 of themselves, grant Bounties. 
 
 We are compelled, then, to fall back upon the 
 second and less satisfactory of the two desirable 
 methods that of manufacturing and refining' in 
 bond. Here again we find much happy unanimity 
 arising among the various Governments interested. 
 When this remedy was broached years ago there 
 were many more or less idealistic objections put 
 forward, on the score of the evils of direct Govern- 
 ment interference in industrial details. Some evils 
 are, however, necessary evils. Taxation itself is one 
 of these ; and it is not altogether illogical to infer 
 that the collection of taxes should follow suit in this 
 respect. But even in France refiners themselves 
 have withdrawn their objections, and chiefly by 
 reason of the experience there gained since 1852 by 
 the manufacturing in bond of beet sugar. On this 
 point the authorised evidence of M. Georges is 
 conclusive : 
 
 ' Ques. 4047. In the opinion of the fabricants in 
 France is the refining in bond the only efficient mode 
 of abolishing bounties ? ' ' Yes ; it is the sole one, in 
 their opinion. For ten years past they have been 
 soliciting this measure. At the Trade Congress, at
 
 104 State Aid and State Interference. 
 
 Brussels, they passed a resolution that refining in 
 bond was the only means of abolishing bounties.' 
 
 M. Fouquet handed in to the Committee the 
 joint agreement entered into by the refiners and 
 the fabricants of France advocating refining in 
 bond. Already, in Austria, the excise authorities 
 test sugar, supervise in the factories, and examine 
 books. The factory-owner is required by law to 
 provide accommodation for these officers. The 
 Austrian Government and the fabricants are thus 
 already working without trouble a system of Govern- 
 ment inspection, which involves more interfering 
 than even the refining in bond calls for. But after 
 all has been said to show the desirability of re- 
 fining in bond, there remains the difficult task of 
 realizing the proposal. And the apparent difficulty 
 hinges on the desire or demand that any action in 
 the matter must be action accepted and joined in 
 by all the sugar-growing States. Here again crops 
 up the great difficulty of all general international 
 action the absence of what in law would be 
 termed the sanction. There is need of a common 
 compelling power. 
 
 The decision has now been come to that a 
 Conference of the Powers interested will have no
 
 Sugar Bounties. 105 
 
 good issue, unless they meet on the understanding 
 that they will create some sanction as a common 
 defence of themselves against those who may elect 
 not to join such a convention as may be agreed 
 upon. It has, therefore, been suggested that the 
 Powers joining such a Conference shall agree 
 beforehand to the insertion of a 'Penal Clause.' 
 
 Of what nature is this clause to be ? The 
 French Government maintains that it should im- 
 pose a specific duty on any sugar imported from 
 the recalcitrant country or countries. It has, 
 indeed, been held that the mere insertion, or even 
 intention to insert such a clause, will accomplish 
 the desired effect, and scare all the Powers inter- 
 ested into joining the Convention. For an English 
 Government, however, to assent to such a clause 
 is simply impossible in the present temper of the 
 English people. They will not impose fresh import 
 duties for any other than revenue purposes. The 
 English people are happily well aware of the 
 prosperity and growth that has followed on their 
 definite adoption of free trade principles; and to 
 go back to interferences with trade for industrial 
 purposes is a retrograde step that is happily an 
 impossibility in the England of to-day. 
 
 There is another penal clause that is worthy
 
 106 State Aid and State Interference. 
 
 of mention, and that is the declining to receive 
 sugar from the erring State. This would be a 
 specially powerful weapon in the hands of Eng- 
 land. It would encounter many difficulties such 
 as those that cluster round ' certificates of origin ' ; 
 but both as a threat and as a check it would 
 in all probability have much direct success. Con- 
 cerning the principles on which it is founded, it 
 is no doubt an interference with the free course 
 of trade, but we are working for concert with 
 Powers that follow a policy of protection. We 
 do not levy a duty ; we do not seek or obtain 
 revenue ; there is nothing fiscal in the whole ar- 
 rangement ; it is merely, as it were, joining in the 
 concerted blockade of a nation that is generally 
 felt to be acting contrary to the best interests of 
 all. Such a clause has the merit of assured effi- 
 cacy, if of nothing else. But it is a measure of 
 warfare and not of peace. 
 
 The question remains, what have we left Ave 
 can trust to in the absence of a penal clause ? We 
 have, on the one hand, the welcome fact that all 
 the nations interested are in favour of establish- 
 ing the manufacture and refining in bond. The 
 history of previous sugar conferences is the history 
 of the elimination of objections to such united
 
 Sugar Bounties. 107 
 
 action. In 1862 attention was drawn to the fact 
 that the various arrangements of drawbacks and 
 duties on sugar were practically Bounties. Each 
 country soon saw the error of its ways, and ex- 
 pressed its intention to do away with Bounties. 
 But the one great obstacle was the fact that other 
 countries might continue in their independence. 
 The Conference in 1862-1863, was occupied in the 
 main on the futile search for some method of ex- 
 actly measuring percentages of sugar, either raw or 
 refined. The standard of colour was adopted ; and 
 the consequent greater exactness certainly reduced 
 the effect of the Bounty system. But it was soon 
 seen that colour was no reliable test of strength ; 
 not only was it liable to ' manipulation,' fraudulent 
 or otherwise, but sugars from different countries 
 and of the same strength are often differently col- 
 oured ; and again, sugars of the same colour are 
 often of different strengths. 
 
 These, and other practical obstacles arose, and 
 gave rise to fresh Conferences each of them a 
 step in the right direction. By the year 1872 a 
 fresh Conference was proposed, in which the British 
 delegates were instructed to ask for refining in 
 bond. Nothing came of that Conference save a 
 recommendation for further investigation.
 
 108 State Aid and State Interference. 
 
 The following year, 1873, another Conference 
 was held ; and at this, ' saccharimetry ' of a highly 
 scientific type was proposed as a method of deter- 
 mining with all-sufficient accuracy the relative per- 
 centage of sugar in the raw material. England 
 this time withheld her consent. 
 
 The Conference in 1875 led to the Convention 
 of that year which was to establish refining in 
 bond in France and Holland. Holland withdrew 
 on the plea of a misunderstanding as to her re- 
 tention of her liberty at any time to abolish her 
 sugar duties altogether. France then defended 
 herself by establishing Saccharimetry. 
 
 Next followed the Paris Conference of 1876. 
 At this conference Saccharimetry was carefully 
 inquired into and declared finally to be a failure. 
 The Conference eventually suspended its sittings 
 without any agreement having been arrived at, in 
 order to report to the respective Governments, with 
 a view to the subsequent resumption of the Con- 
 ference, to which it was proposed to invite Austria, 
 Germany, and Italy. This Conference was resumed, 
 but the three new States declined to send dele- 
 gates : and eventually, after the fashion of its pre- 
 decessors, it separated without visible effect. 
 
 During these eighteen years of effort much
 
 Sugar Bounties. 109 
 
 advance was, however, made. The Dutch and the 
 French Governments declared in favour of refining 
 in bond, and the other sugar-producing countries 
 were invited to join. Moreover, the first motion 
 was then made towards discussing Bounties on raw 
 as well as on refined sugar. The Governments 
 of Italy and of Austria are in favour of abolishing 
 Bounties. These are new developments ; and yet 
 there still remains the hard task of prevailing on 
 these various States to carry out in combination 
 what each one individually desires to see realized. 
 
 5. England comes to a new Conference with clean 
 hands. She has taken what is admittedly the very 
 best course ; she has suppressed sugar duties alto- 
 gether. And in her hands she wields the powerful 
 lever of the recorded success attending on this 
 move. Our very sugar refiners, despite the real 
 effects of bad times and low prices, and despite 
 the more supposititious effects of Bounties, are doing 
 far better than the refiners of these Bounty-pro- 
 tected States. We continue to make use of more 
 and more raw sugar, to consume more and more 
 sugar. But we also export more and more re- 
 fined sugar ; and we also import less and less 
 refined sugar. The very latest figures are those 
 for the first five months of 1881 ; it is well to
 
 110 State Aid and State Interference. 
 
 put these side by side with those of the last two 
 years : 
 
 The first five Months In 
 1879 1 S^o 1SS1 
 
 * ^mlheXtat!^} 728 '^ " 617 > 000 " ^> 000 = " HS,000to n , 
 "' TonfFranfe^.!} 47 ' 000 " 31 > 000 ~ 2S.000 = - 19,000 
 
 m * R fro"rL s gund E !!!} 197 ' 000 - 167 ' 000 - 203 ' 000 = + 6 > 000 
 
 French refiners in these respects are stationary, 
 and Dutch and Belgian actually retrogressing. Our 
 West Indian producers also continue to increase 
 their output ; and these facts give the lie to the 
 supposition that Bounty-fed beet-growing is or can 
 be in any way successful in supplanting the cane- 
 growing of the tropics. 
 
 It is in these facts that England has her most 
 powerful argument her one great lever. We 
 could even contemplate the substitution for the 
 troublesome penal clause, in a convention of this 
 example, of the pre-eminent success of England's 
 freed production of sugar, both raw r and refined. 
 So may England, in years to come, bring the 
 Bounty-giving States to see that, while they dis- 
 cover that Bounties injure their own native indus- 
 tries, and become a terrible drag on their own 
 exchequers, yet that these Bounties are quite 
 incapable of making anything like a ' disastrous
 
 Sugar Bounties. Ill 
 
 impression ' on the ' Home and Colonial Sugar In- 
 dustries of this Country/ for the reason that these 
 industries in the British Empire are free of the 
 baneful incubus of the Bounty system. With these 
 facts in our pockets we may safely face negotia- 
 tions for a new convention ; we may trust, even if 
 with hope rather than with confidence, that other 
 Governments will in due course pay heed to their 
 experience in their own exchequers, and to the 
 unanimous opinions of their own sugar growers 
 and refiners, as to the deleterious influence of the 
 Bounty system, and that they will follow the 
 successful lead of England in removing all that in 
 any way directs or restricts industrial energy and 
 deprives it of its essential liberty to follow its 
 natural bent.
 
 112 State Aid and State Interference. 
 
 CHAPTER V. 
 
 PROTECTION IN YOUNG COMMUNITIES. 
 
 1. Parallel cases of Victoria and New South Wales. 2. The 
 Promotion of Manufactures. 3. The Raising of Revenue. 
 4. The Promotion of General Prosperity. 5. Value of 
 this test case. 
 
 1. John Stuart Mill has told us that Protec- 
 tion, altogether demolished as a general principle, 
 might be found under certain conditions economically 
 defensible in a young community. This hypothetical 
 concession on Mill's part has had a direct and 
 practical effect on the commercial policies adopted 
 in some States notably in one or two of our own 
 Colonies and in the United States. But Mill in this 
 argument expressly declares he is only dealing with 
 what might be, ami that the whole argument only 
 applies, provided certain conditions come to be 
 realized. Professor Sumner, of Yale, one of the
 
 Protection in Young Communities. 113 
 
 ablest economists in the United States, well sums 
 up the point in the words, " In these, as in other 
 matters, we cannot argue with certainty from what 
 might have been." Both he and Mill regret the 
 absence of recorded facts on this point of Protection 
 in Young Communities. 
 
 Recent experiences enable me in some measure to 
 make good this deficiency, and to fill up this gap in 
 the experiential foundations of Political Economy, 
 with what, for all practical purposes, is a test case. 
 For this purpose I simply summarise facts recorded 
 in authoritative official records. 
 
 The history for the past ten years of our two great 
 Colonies of Victoria and New South Wales provides 
 us with the necessary records. This is the first time 
 in history that we meet with the story, told in the 
 details of actual fact, of two young communities 
 growing up side by side with practically similar eco- 
 nomic environments and opportunities, but pursuing 
 the one a Free Trade and the other a Protectionist 
 policy. In Victoria, in the year 1865, Sir J. Mac- 
 Culloch introduced a modified form of Protection, 
 and since 1871 there has prevailed that very inten- 
 sified form of which the late Premier, Mr. Graham 
 Berry, has been the persistent advocate. Over this 
 same period, and more especially since 1874, New 
 
 I
 
 114 State Aid and State Interference. 
 
 South Wales has followed an essentially Free Trade 
 course. 
 
 It may be added that I had the good fortune to 
 sojourn in these Colonies in the year 1870, and 
 again in the year 1878. This implies the advantage 
 of personal and local experience of the two Colonies, 
 and of the two Colonies at two periods separated by 
 an appropriate interval of eight years. 
 
 So far as the purpose in hand is concerned, these 
 two Colonies were in the year 1870 sufficient 
 counterparts of each other in regard to economic 
 environments and opportunities. Either community 
 may be described as a pioneer band of the great 
 English nation, engaged in opening up virgin lands 
 rich in all natural wealth. Our fellow-countrymen 
 in Victoria and in New South Wales had provided for 
 themselves all the aids and advantages our present 
 civilisation offers. Eoads, railways, telegraphs, postal 
 arrangements, sea communications, education, and so 
 forth, were all in a high state of perfection. All the 
 facilities of life under the care of energetic adminis- 
 trations had developed with marked rapidity. At 
 the same time these two Colonies yield to no country 
 in the world in the richness of their natural endow- 
 ments. Both above and below ground the soil is 
 pregnant with wealth ; and the climate is all
 
 Protection in Young Communities. 115 
 
 Englishmen can desire for the due exertion of their 
 productive energies. Thus in these two Colonies 
 the scientific industry of this nineteenth century 
 had found its most favourable opportunities. 
 
 In the nature of things, these two Colonies are, for 
 the present, producers mainly of raw material which 
 they exchange for the manufactured products of more 
 populous centres. Thus we find the inhabitants of 
 these Colonies import twice as much value per head 
 as the inhabitants of the British Islands. This is a 
 fact of much value to our present purpose. The 
 United States have been perpetually put forward in 
 the Free Trade controversy. But the United States 
 only import a value of 21. per head of population 
 per annum. We in these British Islands import, 
 say, 10/. per head. But in these two Colonies the 
 imports are, in value, 20/. per head of population 
 per annum. Consequently, the direct effect of high 
 or low tariffs is ten times as great in these instances 
 as in that of the United States, and the value of 
 these instances ten times as great to the economist. 
 
 The necessary starting-point of the comparison is 
 the determination that at the beginning of the 
 decade these two young communities were the 
 sufficient counterparts of each other in regard to 
 economic environments and opportunities. The 
 
 I 2
 
 116 State Aid and State Interference. 
 
 Protectionists of Victoria offer justification or 
 apology for their swerving from the straight course 
 pursued by New South Wales on the three pleas 
 of lesser extent of territory, larger population, and 
 absence of coal. 
 
 In regard to this lesser extent of territory, we find 
 that Victoria has sold 11,000,000 acres, and has 
 45,000,000 still unsold ; and that New South Wales 
 has sold 33,000,000 acres, and has still 165,000,000 
 acres unsold. In each case the State has sold, or 
 in other words has settled, from one-fourth to one- 
 fifth of its area. In each case there remain over 
 three-fourths of the area open for settlement. At 
 present the population to the square mile in Victoria 
 is ten persons, and in New South Wales three 
 persons. In the United Kingdom the proportion 
 is 270. Both Colonies are thus only on the 
 threshold of their career as populated and developed 
 countries. There is the real difference that the 
 future capabilities of New South Wales are greater. 
 But the present case refers solely to the past ten 
 years. And during that decade the extent of the 
 unoccupied lands is not so much to the point as 
 the fact that in either case there are three-fourths 
 of the soil of the Colony still open for settlement. 
 In each Colony men are pushing on with their
 
 Protection in Young Communities. 117 
 
 flocks and their herds to occupy new areas of 
 virgin soil, and the plough follows in their track 
 to pioneer agricultural settlement. In neither 
 case has this operation as yet advanced over the 
 whole. That is the condition at the present ; and 
 we are dealing with the past, and not with the 
 future. 
 
 In regard to the larger population of Victoria, 
 that also is a relative matter. Each Colony is but 
 sparsely populated. Victoria, the size of England, 
 Wales, and Scotland combined, is at the present 
 peopled by a population equalling that of Kent 
 only. New South Wales is about three times the 
 size of Victoria, with a somewhat smaller population. 
 In either case, after deducting the quarter of the 
 population that congregates in the capital of each 
 Colony, we have but a very sparse and scattered 
 population over the interior. It must be conceded, 
 however, that in so far as the population of Victoria 
 is relatively denser than that of New South Wales, 
 in so far manufactures, or revenue, or prosperity, or 
 growth should develop with greater natural speed 
 in Victoria than in New South Wales ; in so far 
 as Victoria had a larger or a denser population than 
 New South Wales, in so far Victoria started with 
 superior natural or inherent advantages in those
 
 118 State Aid and State Interference. 
 
 very objects to foster which Victorians instituted 
 their policy of Protection. 
 
 In regard to the great superiority of New South 
 Wales in the production of coal, it is well to re- 
 member that this coal is produced on the Hunter 
 River, and has to be earned thence by sea to 
 Sydney, which is the centre of manufacturing 
 enterprise. It is well known that when once coal 
 has to be shipped the difference in length of voyage 
 of one day to Sydney or three days to Melbourne 
 makes but little difference in actual cost. So that 
 in the question of fuel for manufacturers there is 
 little practical difference in regard to coal supply 
 in the two Colonies. As a wealth-yielding force 
 against the coal of New South Wales must be set 
 off the great superiority of Victoria in the produc- 
 tion of gold. It is true that the gold industry has 
 declined rapidly in Victoria in output, and in 
 number of men employed. But we must 
 remember there is also a gold-mining industry in 
 New South Wales which has also declined. This 
 decline is due to the fact that gold was first dis- 
 covered in alluvial soil, disintegrated from the quartz 
 by the action of nature. Alluvial diggings provided 
 a rich harvest ; but they soon became exhausted, 
 and miners had to turn to extracting the gold from
 
 Protection in Young Communities. 119 
 
 the primeval envelope of quartz. This led to a 
 complete revolution in the mining industry. The 
 falling off of the output in gold consequent on this 
 revolution was not the annihilation of capital, nor 
 was it the forcing labour to leave the Colony in 
 search of employment. The city of Ballarat survived 
 and continued to thrive as the great centre of the 
 investment of capital in mining, which had super- 
 seded 'digging.' Quartz reefs had to be attacked 
 instead of alluvial plains, and this change involved 
 investment of more capital : powerful engines, 
 colossal stamping machinery, and miles of tunnelled 
 galleries and shafts had become necessary, and gold 
 mining needed and absorbed a far greater amount of 
 capital than in the old days when picks and shovels 
 and wooden cradles were all the plant and imple- 
 ments requisite. Much of the very capital that the 
 rich gold ' diggings ' had yielded was at once in- 
 vested in these new works. But there remained 
 over much capital so accumulated which was not 
 thus utilised, and which was there ready to start or 
 promote any new industries. 
 
 Labour, too, was set free. In 1871 there were over 
 57,0U0 gold-miners in Victoria, By the year 1878 
 the number had dwindled to 37,000. This had set 
 free in Victoria some 20,000 men of the artisan and
 
 120 State Aid and State Interference. 
 
 mechanic class of a class, too, which was originally 
 recruited very largely from the manufacturing dis- 
 tricts of the Old Country. There was thus provided 
 during this decade, labour of a very applicable type 
 for those very manufactories which were now to be 
 fostered by Protection. Thus in this respect, in this 
 very failure of the gold industry, Victoria gained 
 over New South Wales in this supply of capital and 
 of appropriate labour for those purposes for which 
 the high tariff was imposed. 
 
 Besides this, the greater amount of gold obtained 
 in Victoria had attracted at once a far larger popula- 
 tion, and yielded forthwith much capital. This led 
 to the fact that in Victoria, at the beginning of the 
 decade under review, the railway system, and indeed 
 all the facilities of life, had reached a higher stage of 
 development than those of New South Wales. In 
 every respect, then, we see that if there was any 
 difference between the two Colonies ten years ago, it 
 was a difference in favour of Victoria, so far as the 
 starting manfactories, the affording revenue, or the 
 promoting the general growth of prosperity were 
 concerned. And these were the objects fur which 
 the high tariff was imposed. 
 
 In 1870, then, such were the relative economic 
 positions of Victoria and New South Wales. What
 
 Protection in Young Communities. 121 
 
 happened during the succeeding decade is set out in 
 a variety of official documents and records, in greater 
 part issued by the Victorian Government. These 
 results range themselves conveniently under the 
 heads Manufactures, Revenue, General Prosperity 
 and Growth. 
 
 2. Manufactures. When Protection speaks of 
 fostering manufactures it speaks of fostering those 
 industries which result in the production of commo- 
 dities other than food and raw materials. And the 
 plea is that, except for such fostering, these industries 
 will be slow to arise in the community. Do we find 
 justification of this in fact ? The evidences are to 
 be seen in the employments of the people and of 
 capital ; in the output of manufactured articles ; and 
 in the number and kind of manufactures developed. 
 
 In regard to the employment of the people, we 
 find that at the end of the decade there were 25,000 
 persons making their living in manufactories in New 
 South Wales, equivalent to 37 per cent, of the total 
 population. In Victoria there were 28,000 persons 
 so employed, equivalent to 3*2 per cent, of the larger 
 population of that Colony. This so far disposes of the 
 argument so often advanced that Protection pro- 
 motes civilisation by providing civilised employment 
 for the people in a new community.
 
 122 State Aid and State Interference. 
 
 Again, in Victoria during the decade, population had 
 increased by one-eighth ; but the number of hands 
 employed in manufactures had increased one-third. 
 Side by side with this we remember the very pertinent 
 fact that the greater falling off in gold-mining had 
 set free a large body of appropriate labour. There 
 was this transference from one congenial occupation 
 to another, but no development of any new class of 
 operatives. By this transference of forces Victorian 
 manufactures received an impetus totally uncon- 
 nected with any fiscal or commercial policy. 
 
 Unfortunately the official records are in number of 
 manufactories, and they afford no evidence of the size 
 of the units so recorded. The number of foundries, 
 clothing manufactories, agricultural implement and 
 other works, has largely increased in both Colonies. 
 So far as kind goes we find that as great a variety 
 of manufactures has come into being under the 
 low as under the high tariff. In either case the 
 development as compared with the great natural 
 industries of the country is insignificant. In 
 one or two instances such industries have as- 
 sumed larger dimensions in Victoria than in New 
 South Wales. There are now, for instance, 
 750 hands employed in woollen manufacture in 
 Victoria as compared with the 300 in New South
 
 Protection in Young Communities. 123 
 
 Wales. But then, to counterbalance this, we find one 
 manufacturing industry which has grown up in the 
 Free Trade and dwindled in the Protectionist Colony, 
 and that is the important industry of shipbuilding. 
 Ten years ago Victoria built 800 tons of shipping, and 
 New South Wales built 1,800 tons. Now the annual 
 output is only 400 tons for Victoria, while it has risen 
 to 3,000 in New South Wales. Under the low tariff 
 this important industry has doubled itself; under 
 the high tariff it has diminished by one-half. 
 
 As an example of what is at present proceeding we 
 have a report of its committee to the Association of 
 the protected bootmakers at Melbourne, in which the 
 following passage occurs : " Our travellers report to 
 us that they find very great difficulty in placing our 
 goods on the neighbouring markets, -principally 
 through the ' competition of Sydney with their own 
 manufacture, and European imported, sold suffi- 
 ciently low to secure the custom. It must be 
 remembered that Sydney has always had a steady 
 export of her own manufactures, and that her 
 manufacturers are giving inducements to our best 
 workpeople to remove there. It also must be re- 
 membered that all leathers the boot manufacturer's 
 raw material are admitted free into the port of 
 Sydney, while an import duty of 7^-, 10, and 20 per
 
 124 State Aid and State Interference. 
 
 cent, is enforced in Victoria, thereby placing the 
 Sydney manufacturer at an advantage." 
 
 It is not easy, in the absence of definite records, 
 to estimate the actual output from these manufac- 
 tories, and in neither Colony is there any appreciable 
 export of commodities locally manufactured. But 
 if we compare the articles which are imported into 
 Victoria under a heavy duty, and which enter New 
 South Wales free, we shall find that, in spite of the 
 increase in price, Victoria still is forced to supply 
 herself with these ' prohibited ' or ' weighted ' 
 foreign articles ; and imports of these classes, on an 
 annual average, about as much as the unprotected 
 New South Wales. 
 
 Consequently, in regard to the development of 
 manufactures in these new communities, we find 
 there is not much difference in results between the 
 Free Trade and the Protectionist policy if we look at 
 the employment of people, output of manufactured 
 articles, and number and kind of manufactures 
 actually developed. 
 
 $ 3. Revenue. Protection, especially for young 
 communities, is over and over again defended on the 
 plea that revenue must be raised. This plea is 
 common with statesmen not only in one or two of 
 our own Colonies, but in the United States. It is
 
 Protection in Young Communities. 125 
 
 the great plea set up in Germany by the Bismarck 
 party. This plea proceeds on the assumption that 
 the higher the tariff the greater must be the revenue 
 derived from the customs duties. Theoretical econo- 
 mists point out that " to tax your trade is to destroy 
 your trade ; " that " where Protection begins there 
 Revenue ends ; " that " to hamper the entry of goods 
 into your market by heavy duties is to starve even 
 unto death the goose that is to lay your golden 
 eggs of Revenue." More practical economists 
 hold that it is a mere question of balances, and that 
 it is conceivable so cunningly to adjust the duties 
 that, while inevitably destroying some of the trade 
 existing under a lower tariff, this higher tariff yet 
 sucks more revenue in the aggregate out of the 
 lesser trade that remains. The question is really 
 solved only by appeal to experience. And ex- 
 perience tells us that a low Customs' tariff 
 yields most actual revenue. It appears, if we look 
 to the records, that the annual revenue derived 
 from the high tariff in the United States has fallen 
 steadily during the last decade from thirty-seven to 
 twenty-seven millions sterling. During the same 
 period the English low tariff steadily contributed 
 and still contributes an annual contribution to the 
 revenue of twenty millions sterling. During the
 
 126 State Aid and State Interference. 
 
 decade the population of the United States has been 
 increased by ten millions of people, that of the 
 United Kingdom by only four millions. So the 
 English people, with all the acknowledged advantages 
 of a low tariff, contribute, pro rata, actually more 
 revenue by the means of customs duties than the 
 citizens of the United States, who are hampered 
 by all the acknowledged evils of a high, a very 
 high tariff. 
 
 The recorded results over the same decade in 
 Victoria and New South Wales corroborate in a 
 striking manner this matter-of-fact conclusion. 
 During the decade the amount derived from customs 
 duties in New South Wales has gradually risen 
 from 950,000/. to 1,300,000/. Over the same period 
 the high tariff' has provided to the Victoria revenue 
 annual contributions which, if they have fluctuated 
 at all, have shown a downward tendency, and now 
 yield annually 1,400,000/. It will be observed that 
 the smaller population of New South Wales con- 
 tributes as much to the revenue by the means of its 
 low tariff as the larger population of Victoria con- 
 tributes by means of its high tariff. These are facts 
 and not fancies, and it is only by ignoring them or 
 being ignorant of them that any responsible authority 
 can put forward this revenue argument.
 
 Protection in Young Communities. 127 
 
 4. General Prosperity and Growth. I have said 
 that Victoria and New South Wales each imports 
 twice as much per head of population as we do in 
 these islands. It is obvious that any policy which 
 affects their imports must affect their general life 
 and well-being to a degree unknown even in these 
 commercial islands. And I pass to compare the two 
 Colonies in regard to general prosperity and growth. 
 The signs of this are external and internal; the 
 signs are to be seen in their dealings with the out- 
 side world and also in their domestic condition. 
 
 Firstly, then, as regards their dealings with the 
 outside world. This is a most significant index of 
 their actual welfare, seeing that their external trade 
 is double in value per head of population to what it 
 is even in England. This trade is a sure indicator 
 of prosperity, inasmuch as it is a sure indicator of 
 any increase or decrease in consumption and pro- 
 duction, the two visible factors of prosperity. Ten 
 years ago New South Wales was doing an external 
 trade of the annual value of 19,000,000/. A 
 decade of steady increase brought this total up 
 to 29,500,000/. in 1880. Ten years ago Victoria 
 was doing an annual external trade of 27,600,009/. 
 In the succeeding decade a wavering line of 
 rise and fall brings us to an annual total of
 
 128 State Aid and State Interference. 
 
 30,500,000/. for 1880. Under the high tariff external 
 trade increased during the decade by one-ninth 
 only. Under the low tariff external trade increased 
 by more than one-half of its previous annual total 
 The full significance of this is seen when we find 
 New South Wales, at the end of the decade, doing 
 10,000,000/. more annual trade than at the begin- 
 ning, while Victoria was only doing some 3,000,000/. 
 more. Ten per cent, profit on such trade would 
 mean an addition to the annual national income of 
 New South Wales of 1,000,000/., and to that of 
 Victoria only some 300,000/. 
 
 Incidentally it is worthy of note that the German 
 Government, perhaps the best informed Government 
 at present in existence, has chosen for the head- 
 quarters of its Consul-General for Australasia the 
 capital of the low tariff Colony, although the high 
 tariff Colony is at the present moment ahead in 
 number of population and in value of external trade. 
 The Germans evidently judge of the certain future 
 by means of the recorded past. 
 
 Further instruction follows on further analysis of 
 this external trade. If we turn to the exports we 
 find that ten years ago the value of articles, the 
 produce or manufacture of the Colony itself, was 
 exactly 77 per cent, of the total value exported from
 
 Protection in Young Communities. 129 
 
 each Colony. At the end of the decade we find the 
 amount of this native produce exported had risen to 
 83 per cent, in New South Wales, but had fallen to 
 68 in Victoria. In other words, under the low tariff 
 there had been increase, and under the high tariff 
 decrease, in the exportable surplus of native products, 
 a most important sign of prosperity and growth. 
 
 If we turn to the imports we find that ten years 
 ago there entered New "South Wales goods to the 
 value of 9,000,000/. At the end of the decade this 
 annual value had mounted to 14,000,000/., an increase 
 of 60 per cent. Ten years ago the imports into 
 Victoria were of the value of 12,500,000/. At the 
 end of the decade this 'annual value had mounted to 
 14,600,000/., an increase of 20 per cent. only. In 
 other words, not only the power but the using of 
 the power to purchase foreign produce (and there 
 was profit accruing to each purchase made) increased 
 by about three times the speed under the low tariff 
 to what it did under the high tariff. 
 
 There is another point in this external trade of 
 much significance. In New South Wales there has 
 been an increase in the tonnage of the shipping- 
 visiting the Colony during the decade, from 1,500,000 
 to 2,600,000 tons. In Victoria the increase has been 
 from 1,300,000 to 2,200,000. It may be said that 
 
 K
 
 130 State Aid and State Interference. 
 
 this difference in growth is inevitable under a low as 
 opposed to a high tariff, but it none the less repre- 
 sents a fountain of popular well-being, drawn upon 
 in the one case to a much more profitable extent 
 than in the other. 
 
 In connection with this shipping there are the 
 very important records of ballast. There came to 
 New South Wales during the decade 3,000,000 tons 
 of shipping in ballast. There left New South Wales 
 during the decade 117,000 tons of shipping in ballast. 
 There came to Victoria during the decade 113,000 tons 
 in ballast. There left Victoria 2,500,000 tons, the 
 greater proportion of which proceeded to New South 
 Wales. Empty ships arriving in New South Wales 
 have increased from an annual tonnage of 220,000 
 in 1870 to a tonnage of 320,000 in 1880. Empty 
 ships leaving Victoria have increased from an annual 
 tonnage of 198,000 tons in 1870 to a tonnage of 
 250,000 in 1880. 1 It will be observed that the con- 
 ditions are exactly reversed in favour of the growth 
 of the low-tariff colony. 
 
 1 The Sydney Morning Herald, in an able loader on my article, 
 very properly suggests that some of this ballasting may be tine to 
 the fact that vessels freighted to Melbourne afterwards come on to 
 New South Wall's for coal. But the Herald p lints out that hesides 
 this Sydney is rapidly becoming the one mercantile centre of tin- 
 Australian seas.
 
 Protection in Young Communities. 131 
 
 The domestic or internal condition and progress of 
 these two Colonies will complete the illustrations we 
 would give of their growth and prosperity. 
 
 In the first place, in regard to poipidation, we find 
 that that of New South Wales has increased from 
 520,000 in 1870 to 740,000 in 1880, an increase of 
 48 per cent. The population of Victoria has in- 
 creased from 730,000 in 1870 to 860,000 in 1880, 
 an increase of only 17 per cent. In the second 
 place, in regard to wealth, already we have seen in 
 every point we have touched upon the far greater 
 rapidity with which wealth-producing developments 
 have been proceeding in New South Wales than in 
 Victoria. From this we infer the fact that wealth is 
 being produced in similar ratio. And when we read 
 that the value of rateable property has doubled in 
 New South Wales in the decade, and only increased 
 by one-half in Victoria, we have our inference 
 signally verified by recorded facts. 
 
 Singular evidence is afforded, also, by the statistics 
 of the Savings Banks. In New South Wales the 
 deposits have increased from 930,000/. to 1,500,000/. ; 
 and the number of the depositors from 21,000 to 
 32,000. In Victoria the deposits have increased 
 from 1,100,000/. to 1,000,000/.; but the depositors 
 have increased in number from 38,000 to 70,000. 
 
 k 2
 
 l:>2 State Aid and State Interference. 
 
 In other words, the average amount deposited has 
 risen in New South Wales steadily from 44/. per 
 head to 47/. In Victoria the average deposited per 
 head has fallen from 29/. to 15/. This is evidence 
 corroborating the fact so commonly asserted that in 
 democratic Victoria wealth is accumulating in the 
 hands of the few. This is a result generally asso- 
 ciated with a high tariff by all writers on political 
 economy. It is a result which, in its direct an- 
 tagonism to the wholesome principle of equable 
 distribution of wealth, stamps it as one of the most 
 injurious results of a high tariff. 
 
 Illustrative of this tendency is the fact that the 
 average wages of skilled labour grew in New South 
 Wales, during the decade, from being lower to being 
 higher than similar wa<res in Victoria. That wages 
 should have risen under a low tariff faster than 
 under a high tariff is a fact of great importance, 
 especially to countries wherein manhood suffrage 
 gives to the wage-earner so much political power 
 and responsibility. But it is a fact of which most 
 people are ignorant. 
 
 It is well also to notice that the prices of the 
 necessaries of life of wheat, tea, and provisions 
 and tools and implements are generally lower in 
 New South Wales than in Victoria. This, of course,
 
 Protection in Young Communities. 133 
 
 adds much force to the before-recorded results in 
 the nominal rates of wages, for it adds the essential 
 element of greater relative purchasing power under 
 the low tariff. 
 
 In order to form an exact estimate of social well- 
 being we must build a general judgment on numerous 
 details ; and among these details marriages afford 
 apposite information. In New South Wales during 
 the decade the annual number of marriages has 
 steadily increased from 3,800 to 5,100 an increase 
 of one-third ; in Victoria the increase in annual 
 number has been from 4,700 to 5,100; an increase 
 of one-eighth only. While in New South Wales 
 marriages are in the proportion of 7 to every 1,000 of 
 population; in Victoria they are but 6 per 1,000. 
 And this is the more remarkable when we remem- 
 ber that in New South Wales there are 80 women 
 to every 100 men, whereas in Victoria there are 
 90 women to every 100 mem 
 
 Ample details have thus accumulated during the 
 past decade to show that in regard to all outward 
 signs of prosperity and growth social, industrial, 
 commercial the Colony with the low tariff has pro- 
 gressed with far greater rapidity than the Colony 
 with the high tariff. This exhibits the great prac- 
 tical use of statistics. They are thus brought to
 
 134 State Aid and State Interference. 
 
 substantiate, by the cold logic of recorded acts and 
 facts, the reports and rumours that have been rife in 
 these two Colonies. The newspapers, it is true, had 
 provided from day to day pictures of New South 
 Wales altogether devoid of the sombre economical 
 colouring that had become the salient feature in the 
 accounts of Victoria. Nor has there been in New 
 South Wales that general outspoken discontent 
 among capitalists as well as among working men 
 which has from time to time manifested itself in 
 Victoria. Under the high tariff each industrial 
 class in Victoria has in its turn bitterly complained 
 of the duties that specially weigh upon it. The 
 latest information carries on the tale to deputations 
 of miners demanding of Government a lowering of 
 duties on imported mining machinery and tools. The 
 farmers have been for some time threatening to give 
 up their farming because of the high prices they are 
 forced to pay for their implements and materials 
 high prices unknown over the border in the low 
 tariff colony of New South. Wales. Multitudes of 
 labourers, the very men who by their votes supported 
 the policy of "Protection" to native labour, have 
 had from time to time to stave off starvation at relief- 
 work wages. It has been for some time more than 
 suspected that capital had set in a strong current
 
 Protection in Young Communities. 135 
 
 towards other Colonies ; it was not, however, known 
 that the current of labour, far less easily transferable, 
 had set in the same direction. The skilful and 
 conscientious estimates of population made from 
 year to year by the Victorian Statistical Depart- 
 ment, under the guidance of that very able statist 
 Mr. Hayter, proved, when the actual records of the 
 census of this year came to be taken, to be no less 
 than 76,000 of people over the mark in a population 
 of 850,000. Mistaken popular opinion refused to 
 recognise the enormous emigration of labouring men 
 and their families that had been proceeding all the 
 while. But by this official recording of facts this 
 popular error has now been set straight. 
 
 5. It is well, in conclusion, to summarise the 
 general lessons of these recorded results. In his 
 address to the Economic Section at the jubilee meet- 
 ing of the British Association, Mr. Grant Duff put 
 forward as a text the sentence, " Methods that 
 answer follow thoughts that are true." This idea 
 may be profitably amplified into the corollary, 
 " Thoughts that are true follow knowledge of 
 methods that do not answer." It has been my 
 object to afford knowledge of methods that answer 
 and also of methods that do not answer; and this 
 knowledge has been sought in the recorded results
 
 136 State Aid and State Interference. 
 
 of rival methods. This knowledge, when acquired, 
 must be followed by thoughts that are true. In 
 Victoria itself it is hoped this record of what has 
 already taken place will give fresh impulse to the 
 reactionary movement in favour of a lower tariff. 
 Signs of this movement are already apparent. The 
 new Premier, Sir Bryan O'Loghlan, has issued a 
 Royal Commission to inquire into the working of 
 the tariff, and he apologetically promises the people 
 of Victoria ' a free breakfast - table.' These are 
 thoughts that are true, and they seem to be following 
 on the knowledge of methods that do not answer. 
 
 In the wider sphere of the British Empire these 
 recorded results may stimulate local Parliaments 
 to maintain low tariffs. We must look to the 
 spread of sound knowledge and to the honest 
 subordination of class interests to the common 
 national good rather than to fostering duties on 
 foreign wheat, if we would successfully set the great 
 and growing commerce of the empire on sound and 
 profitable economic foundations. Until the Canadian 
 Dominion, for political rather than economic pur- 
 poses, not long .ago swerved from the right path, 
 there was but one Colony, and that one the unfor- 
 tunate Colony of Victoria, among the eight great 
 self-governing Colonies enjoying independence of
 
 Protection in Young Communities. 137 
 
 fiscal action, that had burdened itself with a high 
 tariff. It would seem that Victoria has paid the 
 penalty of its backsliding. That the others did not 
 follow suit is plain evidence of the great practical 
 common sense and public loyalty of the majority of 
 British Colonists. To this and to the spread of 
 knowledge of recorded results we may look for a 
 continuance of this tendency towards low tariffs 
 throughout the British Empire. This tendency, if 
 persevered in, will enable every Englishman, no 
 matter where he may be domiciled over the wide 
 empire, to thrive on the fact which has done England 
 itself such unbounded material good, that whatever 
 he uses or consumes is obtained by him at the lowest 
 possible cost. Such action is urgently recommended 
 by economic science, for it must contribute to the 
 material prosperity of every industrial worker 
 throughout the who]e British Empire.
 
 138 State Aid and State Interference. 
 
 CHAPTER VI. 
 
 ONE-SIDED FEEE TRADE. 
 
 1. Supposed necessity for Customs Duties. 2. Hong Kong 
 
 growing and prosperous with no Customs Duties. 3. People 
 
 increasingly employed in Arts of Civilization. 4. Ample 
 Revenue raised. 
 
 1. Four of the commonest pleas put forward in 
 defence of the imposing a high tariff, at all events in 
 Colonies, are 
 
 (1.) We must have Revenue, and we can best get 
 it by the means of customs duties. 
 
 (2.) Even Mill allowed there might be something 
 to be said for protecting, by a high tariff, the 
 industries of a rising community. 
 
 (3.) If you don't protect by customs duties, you 
 will have a merely barbarous state with no manu- 
 facturers, no civilized industries. 
 
 (4.) You must protect yourself by a high tariff 
 when you have a much more populous neighbour 
 rigidly protecting himself by a high tariff.
 
 One-sided Free Trade. 139 
 
 These are the pleas we have heard used by states- 
 men in Germany, Victoria, the United States, Canada, 
 and other places ; and we know they are pleas that 
 are acted up to. 
 
 I would call the attention of those who hold such 
 views for one moment to certain recorded results, in 
 which they will find ample food for reflection. 
 
 2. I would ask them to consider the one instance 
 of Hong Kong. Here is a small community, intimate 
 neighbour to an empire which is out of all compari- 
 son more populous and which protects itself by every 
 means of restriction and exclusion. And yet this small 
 community is in a most flourishing condition; thriving 
 in all civilized industries, manufacturing much, and 
 contributing a sufficient revenue of 1/. Is. per head of 
 inhabitants; although it levies no customs duties 
 whatever. These are recorded results that Pro- 
 tectionists everywhere should carefully weigh and 
 ponder over. I do not for one moment say that all 
 the prosperity of Hong Kong is due to her having no 
 customs duties. All I wish to point out is, that a 
 young community contributes a very large revenue, 
 and flourishes in all civilized prosperity, not even 
 omitting manufacturing industry, though it imposes 
 no customs duties whatever. It flourishes in all these 
 respects without the aid of that shield of Protecting
 
 140 State Aid and State Interference. 
 
 duties which Protectionists tell us is vitally essential. 
 It flourishes in every way, though it pursues a policy 
 of what some call ' one-sided Free Trade/ that is, 
 about as one-sided as such a policy can well be. 
 
 Full details of all this happens to 'have been 
 recently published in an Official Report, by the 
 Governor, Sir John Pope Hennessy, on the condition 
 of Hong Kong in the year 1876, and again in the 
 year 1881. This official comparison is both suggested 
 and rendered possible, because it so happens a census 
 was taken in the year 1876, and again in 1881, when 
 all the British Empire underwent the same process. 
 
 In the absence of a customs tariff, it is scarcely 
 surprising to find trade and commerce increase at a 
 rapid rate. Nor is it surprising to find a concomitant 
 development in all the divisions of social growth. 
 On the one hand we find that the boats used in the 
 harbour for landing and transferring cargoes, which 
 numbered 1,860 in the year 1876, had, by the year 
 1881, increased to a total of . 2,780. There are tour 
 times as many steam launches in the latter as in the 
 former year. And the Chinaman traders the busy 
 Hongs, who introduce English manufactures into 
 China and the various branches of money-lenders 
 and local traders, and dealers, had risen iu number, in 
 five short years, from 1,200 to 4,000. It seems but
 
 One-sided Free Trade. 141 
 
 natural to read after these figures, that in all details 
 of social growth considerable and corresponding pro- 
 gress had taken place. For instance, during the last 
 year to which the Report refers, Chinese had pur- 
 chased landed properties in the Colony to no less 
 an amount than 600,000/. This is a very surprising 
 growth ; but Free Traders will only say of it that it 
 was but to be expected. 
 
 And yet when we look further into details, we see 
 much that must interest those who allow there is 
 something in the four contentions mentioned at the 
 commencement of this chapter. We find that the 
 population had increased from 139,000 to 160,000, 
 and that the increase was largely accounted for by 
 an increase of 20,000 in the number of Chinese. 
 Many of these were immigrants from China, and the 
 remainder natural increase of previous arrivals, who 
 preferred Hong Kong to China. And yet in China 
 all industries are hedged round with a wall of Pro- 
 tection, to defend them from those breezes of free 
 competition to which all industries in Hong Kong 
 are so fully exposed. 
 
 3. In each census elaborate details are given of 
 the employment of the population. We may con- 
 veniently class these under four heads. Commerce 
 and Trade, will include the Hongs, money-lenders,
 
 142 State Aid and State Interference. 
 
 dealers, traders, merchants, and all engaged in ex- 
 change especially in such Chinese commodities as 
 birds-nests and joss-house requisites. Manufacturing 
 will include the numerous makers of innumerable 
 articles of boats, cigars, glass, matches, sails, boxes, 
 lanterns, rifles, sauce, soap, spectacles, sugar, tooth- 
 powder, umbrellas, and vermilion. Among mechanics 
 and artisans we find carpenters, smiths (of all metals), 
 masons, rice-pounders, stone-cutters, and tailors. 
 And lastly, we have a large class more intellectually 
 employed as doctors, druggists, dentists, architects, 
 fortune-tellers, schoolmasters, portrait-painters, stu- 
 dents, and photographers. Placed in a tabulated form 
 these records yield a significant lesson. 
 
 TABLE. 
 Employment of Chinese in Hong Kong, 1876 and 1881. 
 
 Employment. 
 
 No. in 
 1870. 
 
 rernentni e 
 
 of Total 
 
 Pornlo- 
 
 tion. 
 
 No in 
 
 ISM. 
 
 IYr'TTltv."l' 
 
 of Total 
 i Popula- 
 tion. 
 
 i Commerce 
 
 1,400 
 
 1 
 
 1,300 
 
 10 
 
 Manufactures 
 
 9S0 
 
 t; 
 
 in 
 
 1,490 
 
 1 "'.a 
 
 Mechanics 
 
 r,os i 
 
 ' 10 
 
 10,200 
 
 '' "' 10 
 
 i Intellectual Occupations 
 
 1,CG0 
 
 10 
 
 3,240 
 
 2 
 
 Totals 
 
 10, 520 
 
 "Ys 
 
 19,230 
 
 12
 
 One-sided Free Trade. 143 
 
 There has thus been a steady and large growth in 
 the employment of the natives in the arts and 
 industries of civilization. No doubt much of this is 
 due to the particular encouragement given by a 
 free port to commerce and shipping. We read, for 
 instance, in the description of Hong Kong, given in 
 the Colonial Office List : " Hong Kong is well pro- 
 vided with dock accommodation. There are five 
 docks and three slips, which are well supplied with 
 shears, engineers' and carpenters' shops, foundries, 
 and every requirement for making large repairs to 
 ships of war and merchant vessels." But if we add 
 to the list the European adults, we shall find engaged 
 in these and numerous other industrial and manu- 
 facturing works more than 20,000, in a total popula- 
 tion of only 160,000. Such a result compares very 
 favourably with what has been attempted in the 
 Colony of Victoria in Australia for instance. There 
 a high protective tariff has been set up, specially for 
 the purpose of fostering manufactures, and yet we 
 find that there only 56 ; 000 people are employed in 
 manufacturing industries out of a total population 
 of 860,000, one for every 15. In Hong Kong, with 
 no tariff whatever, and with an enormous densely 
 populated protected country of similar race in close 
 proximity, there are 12 ; 000 people so employed out
 
 144 State Aid and State Interference. 
 
 of a total population of 160,000, one for every 
 13 of total population. Thus not only in the 
 matter of prosperity but of employment as well 
 there exists a state of things in Hong Kong the very 
 reverse of what the advocates of Protection tell us 
 must occur in young communities unless they set 
 up protective customs tariffs. 
 
 4. Another class of theorists, many of whom arro- 
 gate to themselves the functions and fame of states- 
 manship, tell the world "We leave to academic 
 political economists this question of high, low, or no 
 tariffs ; we are concerned with every-day life ; we have 
 to raise revenue ; and our academic friends involved 
 in the clouds of abstract theory will not condescend 
 to allow us the means of raising revenue." Many 
 have said and written, that customs duties, and high 
 customs duties too, are absolutely necessary in Colo- 
 nies, for the purpose of raising the necessary revenue. 
 And yet we find Hong Kong, like the Colony of the 
 Straits Settlement, successfully raising a very con- 
 siderable and an elastic revenue, without the aid of 
 any customs duties whatever. I do not for one 
 moment advance this in evidence as to the universal 
 and absolute condemnation of customs duties, but 
 merely as proof, by recorded results, that revenue 
 can be raised, and successfully and abundantly raised,
 
 One-sided Free Trade. 145 
 
 in their absolute absence. The following short table 
 exhibits clearly the relative Revenues derived from 
 taxation in four of our Colonies, per head of 
 population : 
 
 Revenue 
 
 Revenue. Population. Per Head. 
 
 s. <t. 
 
 Victoria High Tariff . . . 1,700,000 ... 850,000 ... 2 
 
 New South Wales Low Tariff. 1,400,000 ... 720,000 ... 1 19 
 
 Hong Kong No Tariff . . . 221,000 ... 160,000 .. 1 7 
 
 Straits Settlements No Tariff . 366,000 ... 270,000 ... 1 7 
 
 When we remember that the Straits Settlements 
 and Hong Kong have little or no interest to supply 
 on any public debt but that both Victoria and New 
 South Wales are considerably burdened in this 
 respect, we shall see that these two free ports obtain 
 ample revenue without resort to customs duties. 
 
 It is often supposed that Hong Kong can afford to 
 do without customs duties, because of her rich opium 
 monopoly. It is therefore worth while noticing that 
 the opium taxation only yields one-fifth of the total 
 Revenue. The bulk is derived from licences of vari- 
 ous kinds and stamps, house-duty, and sundry small 
 fees. And, after all, this opium revenue is 40,000/., 
 from a population of 160,000, or 5s. per head ; and 
 the revenue from tobacco in England is 8,000,000/., 
 from a population of 34,000,000, or as nearly as 
 possible the same amount per head. An adequate 
 
 L
 
 146' State Aid and State Interference. 
 
 revenue is raised without appeal either to customs 
 duties or income-tax ; and the experience of Hong 
 Kong is, so far, a recorded result of the highest 
 value, no less to the practical statesman than to the 
 student of political economy. 
 
 The four objects mentioned at the beginning of 
 this chapter ; the raising of Revenue ; the starting 
 industries ; the promotion of the arts of civiliza- 
 tion in a young community ; and the defending a 
 young community of small size against the over- 
 whelming influences of a mighty Protectionist neigh- 
 bour ; are found, in the recorded case of the recent 
 growth of Hong Kong, to be obtainable without the 
 aid of any customs tariff whatever. This is a lesson 
 which may well and wisely be taken to heart by 
 many statesmen, not only of our own Colonies but of 
 the United States, and even of the Mother country 
 as well and it is a lesson which should be specially 
 valuable to those who talk and write so much 
 on the subject of " One-sided Free Trade."
 
 A Low Tariff Empire. 147 
 
 CHAPTER VII. 
 
 A LOW TARIFF EMPIRE. 
 
 1. Our Trade with our Colonies is growing faster than our Foreign 
 Trade, and more steadily. 2. We are not as yet properly 
 alive in England to the importance of securing this New 
 Trade. 3. We are the only nation that does not endeavour 
 to secure Free Trade within its own frontiers. 4. We have 
 several Classes of Colonies all of which would profit by Intra- 
 national Free Trade. 5. The several Colonies should unite 
 with England in spontaneously agreeing to keep their tariff's 
 low. g 6. Then they need not fear outsiders, but will one aud 
 all secure their own highest prosperity. 
 
 1. It is commonly acknowledged that since its 
 adoption of the principles that now regulate its 
 commercial policy, the English nation has enjoyed 
 forty years of unexampled growth and prosperity. 
 But what is not so often acknowledged is the equally 
 important fact that the nation in this prosperous 
 development has appropriated vast unoccupied tracts 
 of the earth's surface ; and that these appropriations 
 which, not many years ago, were penal settlements, 
 
 l 2
 
 148 State Aid and State Interference- 
 
 struggling whaling stations, or distant trading fac- 
 tories, have now grown into communities, whose 
 wealth, success, and importance already give them 
 claim to take rank among the prominent States 
 of the earth. 
 
 This rapid growth of the oversea portion of our 
 Empire is at the present moment silently but surely 
 making its weight felt in the most important 
 interests and works of the nation. Among these 
 none holds so important a place as the interchange 
 of the products of industry. ^Natural and human 
 forces exist in so vast a variety of combinations that 
 each country seems always able to supply to every 
 other country some definite products at a profit ; 
 and it is on this natural exchange that the progress 
 of the human race in prosperity seems to depend. 
 These forces at present at work in England make us 
 produce a large surplus of manufactures. And if we 
 cannot sell this surplus, so much of our labour is 
 in vain, and the product of so much of our energy 
 absolutely valueless. What we must have is access 
 to outside markets. But if we sell in markets in 
 other communities we can only do so by obtaining 
 access on terms settled by these other communities, 
 and often dictated by considerations which have 
 but little relation to commercial or even to economic
 
 A Low Tariff Empire. 149 
 
 needs. The terms of this access in Holland not 
 so long ago, and in France at the present moment, 
 depend rather on the political strategy of ministries 
 than on the economic advantages of the nations 
 concerned. 
 
 And yet our export manufacturers are putting 
 forth all their vigour to prevent a rise in the French 
 tariff. Our whole manufacturing body freely and 
 liberally support the efforts and expenditure of our 
 Foreign Office in its endeavours to keep low on the 
 European continent the " price of access to conti- 
 nental markets." England spares no effort and no 
 expense to maintain this established " custom." But 
 up to the present, England has paid only too little 
 heed to a new " custom," springing up in unlooked- 
 for directions, a new "connection" which bids fair 
 year by year to rival and to supplant this older 
 connection. 
 
 Probably few of our manufacturers are aware of 
 the following recorded results : 
 
 TABLE I. 
 
 Value of English Manufactures Exported to 
 
 Europe. Other Foreign Countries. Our Colonies. 
 
 1S70 . . 54,600,000 34,600,000 44,200,000 
 
 18S0 . . 52,400,000 32,900,000 58,500,000 
 
 Decrease 2,200,000 Decrease 1,700,000 Increase 14,300,000
 
 130 State Aid and, State Interference. 
 
 TABLE II. 
 Valce of Total Trade of United Kingdom with 
 European Neighbours.* Other Foreign Countries. Our Colonies. 
 
 1873 . 157,000,000 373,000,000 152,000,000 
 
 1877 . 150,000,000 332,000,000 165,000,000 
 
 Decrease 7,000,000 Decrease 41,000,000 Increase 13,000,000 
 * France, Belgium, Holland, and Sweden and Norway. 
 
 From these two tables we learn two lessons. The 
 first is that our own Colonies are growing into 
 markets not only already equalling in magnitude the 
 older established markets of other lands, but pos- 
 sessed of the further admirable attribute of unlimited 
 future growth. Our trade with France is practically 
 stationary ; our trade with our Australian Colonics by 
 itself already equals our trade with France. With 
 France we have no reasonable prospect of a larger 
 trade, because France is fully peopled and fully 
 developed. With Australia our prospects of increased 
 trade are commensurate with the fact that in 
 Australia we have a continent capable by its own 
 inherent fertility of supporting in prosperity a popu- 
 lation of 200,000,000 human beings, and at pre- 
 sent yielding wealth to a bare 3,000,000 of human 
 workers. We make every effort to secure access to 
 the dwindling French market : we make no public 
 or appreciable effort to secure access to this real 
 " market of the future " that invites us in Australia.
 
 A Low Tariff Empire. 151 
 
 And what holds true of France and of Australia 
 holds true of the whole of Europe contrasted with 
 the whole of our Colonial Empire. In Europe we 
 have a market old-established indeed, but in com- 
 munities themselves fully developed, and moreover 
 of natural and human forces very similar to those of 
 our own islands. In our Colonies we have all this 
 new grand possibility of markets (of which we have 
 an earnest in their present rapid growth) in com- 
 munities differing essentially in the character of 
 their natural and human forces ; and therefore of far 
 more certain value in the natural interchange of 
 products of industry and enterprise. The Australian 
 continent is overrun to grow wool, but its sparse 
 workers in such industries congregate only reluc- 
 tantly with sufficient concentration to produce con- 
 ditions favourable to the genesis of the industries 
 that find favour with the close- packed population 
 of these islands. The areas we occupy in the tropics, 
 where white labour is impossible, can be our allies 
 but never our rivals. They can supply us with cotton 
 and with sugar. But it will require a new civiliza- 
 tion, a new order of mankind, to enable them to make 
 for themselves machinery or even clothes on terms 
 that can at all compete with the human vigour and 
 the applicable mineral resources these islands possess.
 
 152 State Aid and State Interference. 
 
 Nor is it only of trade between England and the 
 Colonies that cognisance is being forced upon us. 
 There exists also a rapidly growing inter-colonial 
 commerce already of vast dimensions. The tonnage 
 of the shipping employed in this trade alone already 
 excels that of France and Germany added together. 
 The great Australian tea-market is now being largely 
 supplied from Ceylon and Assam. The very life 
 of some of our West Indian Colonies depends on 
 the fact that ships bring them continual supplies 
 of labour from India. As the British Empire grows, 
 so is it proved that the mainspring of its prosperity 
 is free intercourse between its parts. 
 
 The second table supplies us with a second lesson, 
 significantly witnessing to these things. We see in 
 this table the recorded effect of commercial depres- 
 sion on our trade. The Colonies record a protest, 
 and no mean protest, in our own favour. During 
 the four years of depression immediately succeeding 
 to that notorious period of inflation culminating in 
 the year 1873, we find our trade with our Colonies 
 continued to incitase to the amount of 11 per cent. : 
 we find our trade with foreign countries continued to 
 decrease to the amount of 11 per cent. If we pay 
 heed to it, we have here an invaluable hint as 
 to the compensating influences resulting from width
 
 A Low Tariff Empire. 153 
 
 of area and diversity of forces, both natural and 
 human, provided their individual energies contribute 
 in mutual union. 
 
 2. The surface of the World, so far as Englishmen 
 are concerned, is held by two classes of communities ; 
 the one class altogether independent one of another 
 in sentiment and kinship, and only held together in 
 any kind of forbearing union by the selfish interests 
 of each individual community. The second class is 
 a whole made up of homogeneous parts bound to one 
 another by the powerful ties of national character and 
 sentiment, as well as by the selfish interests of each 
 individual community. This former class presents a 
 mere discrete agglomeration of Foreign States ; the 
 latter class embraces the wide-spreading provinces 
 of the British nation. The one class Englishmen 
 seem to be able to affect only by the means of 
 threats and destructive retaliation ; the other class is 
 directly ruled and controlled by Englishmen. 
 
 It needs to insist upon the strange fact, that while 
 England is maintaining at great effort a precarious 
 and utterly untrustworthy commercial connection 
 with foreign states, the average public seems dog- 
 gedly to shut its eyes to the opportunities afforded 
 by England's extensive empire. It is true this 
 unaccountable error disappears when we look to
 
 154 State Aid and State Interference. 
 
 that main but silent current of industrial endeavour, 
 which runs its course, fed by every streamlet and 
 font of individual interest and enterprise, consistently 
 in the true direction of success. This current has 
 long ago recognised that within the frontiers of its 
 own empire the lively productive enterprise of the 
 English race has plenty of scope for the profitable 
 exercise of all its powers : there are long years, long 
 centuries of work, before these ample resources shall 
 be, all of them, opened out. The Australias, by 
 themselves, are equal in area and in natural capacity 
 to the whole of Europe. In the Canadas and the 
 districts of South Africa the English race possesses 
 yet another potential Europe. And in India and the 
 various tropical Colonies the nation possesses surface 
 and wealth of resources equalling those of Europe. 
 TJie nation owns, then, an extent of surface and a 
 variety of natural resources equal to three Uuropes 
 conjoined. Here then we have a field not altogether 
 insufficient for employing the best energies of a 
 nation of 50,000,000 people, and for providing 
 unlimited scope for an unlimited increase of this 
 nation. 
 
 Mr. Neufchatel in Endymion makes the appro- 
 priate and wise remark, " We do not want measures ; 
 what we want is a new channel." At the present
 
 A Low Tariff Empire. 155 
 
 moment our manufacturers and our exporters want 
 for their relief not measures but new channels ; and 
 trade, if we look to figures, is endeavouring to carve 
 for itself a new channel in the mutual supplying of 
 our wide empire. The great engine to the successful 
 development of a vast mine of rich natural endow- 
 ments is assured freedom of exchange. Labour and 
 capital, energy and enterprise, skill and abstinence 
 these bases of successful production must be assured 
 their opportunities of exertion over this vast field. 
 In such case, and in such case alone, there opens out 
 for Englishmen a new future of signal prosperity. 
 
 But the fact is that although England enjoys free 
 trade, Englishmen do not. There is free trade in 
 Great Britain ; there is free trade in the Britsh Isles. 
 But there exists also a greater Britain ; there are 
 British Isles, ay, and British continents, over the 
 Atlantic and the Pacific, that at the present have not 
 the assured advantage of free trade, and thus every 
 moment run the risk of a relapse to the evils of 
 fettered production and fettered exchange. It is 
 undoubtedly true that the British Empire is, in itself, 
 for the next century or so at all events, a complete 
 world of production and consumption. But it is a 
 world which does not at the present enjoy that true 
 commercial union which insures freedom both of
 
 156 State Aid and State Interference. 
 
 exchange and of production. And yet it is a world 
 so circumstanced that it may, immediately if it will, 
 institute for itself the undoubted benefits of such 
 union ; for it is a world inspired at the present by 
 the two essential bases of human union, community 
 of material interests and community of national 
 spirit. 
 
 3. The very prime question in the whole matter 
 is the reason why there is not this free trade. And 
 the answer is simple. Under present conditions any 
 ' self-governing ' Colony finds itself free to adopt a 
 policy of protection if it will. Consequently English 
 merchants, manufacturers, or producers, no matter 
 where they may 'build their castles within the 
 Queen's dominions,' have at the present no guarantee 
 that they shall enjoy freedom of exchange in regard 
 to other portions of these same dominions. This is a 
 statement that can be made of no other nation past 
 or present, and it states a condition of things diame- 
 trically contrary to all accepted principles of national 
 union. 
 
 It was a quarrel about duties that caused us the 
 irreparable loss of the United States. And the very 
 first action taken by the citizens of the New Republic 
 was solemnly and irrevocably to institute perfect 
 freedom of exchange within the frontiers of their
 
 A Low Tariff Empire. 157 
 
 own new empire. Within those frontiers customs 
 duties are to this day an impossibility. This emi- 
 nently wise resolution has been one main element in 
 the growth and prosperity of the United States. In 
 all ages so soon as and whenever industry and com- 
 merce win for themselves a supremacy in the face of 
 politics and war, at once extended freedom of com- 
 mercial intercourse is sought as an essential to exist- 
 ence. A Customs Union was the first sign of a 
 modern German nation. The jealous ' national 
 independence ' of the petty German states in the 
 early years of this century soon discovered the fact 
 that free interchange of products was the one great 
 mutual interest none could afford to forego. 
 
 Moreover, at the present moment, if we look Iq 
 foreign nations, we see everywhere signs of a ten- 
 dency towards 'customs union.' Italy is straining 
 every nerve, by the curious means of an elaborate 
 reciprocity, to bind up as many nations as possible 
 in close intercourse with herself. Belgium and 
 Holland, and also Austria and Germany, are con- 
 templating closer customs union. The United States 
 is eager to obtain secured commercial footing in 
 Europe. Spain is in earnest struggle to adjust the 
 commercial connections of her colonial empire. 
 
 Thus the English nation stands at the present
 
 158 State Aid and State Interference. 
 
 moment in a very singular position. It is an 
 anomalous and a self-contradictory position, but yet 
 one of those that recur in the history of nations that 
 grow, and are not manufactured. The thoroughly 
 English principle of self-government has now de- 
 veloped to such perfection in the larger provinces of 
 the English Empire, that the fiscal policy of each 
 province is Tegulated by the local Parliament. But 
 this development has had an unlooked-for, an 
 unexpected issue. 
 
 There have arisen cases in provinces where this 
 self-government rules, in which the fiscal liberty has 
 run to seed, and become fiscal licence. The con- 
 sequence is that what was originally a grant or 
 concession of liberty to the individual has threatened, 
 in these latter days, to become a liberty that is 
 destructive of the same liberty granted to the other 
 individuals. 
 
 It seems to me that so long as this nation remains 
 a nation it is not only its interest, but its paramount 
 duty, to see that the liberty of any of its component 
 parts be not in any way infringed by the action of 
 other parts. Moreover, the fiscal liberty originally 
 granted was merely and simply the handing over, 
 tor geographical reasons, to each separated commu- 
 nitv <f Englishmen their right to devise and supply
 
 A Low Tariff Empire. 159 
 
 the means to their own local government. To use this 
 liberty for other purposes, such, for instance, as the 
 discouraging the importation of particular products 
 from some other English community, seems to me a 
 direct subversion of this liberty, a distinct breach of 
 the grounds on which the nation made the conces- 
 sion. And the proof of this is the fact that the 
 using of it for these other unforeseen purposes at 
 once interferes with the grant of this liberty to the 
 other English communities. 
 
 Earl Russell in one of his speeches about the time 
 of these concessions, distinctly acknowledged this 
 principle : 
 
 " With regard to our colonial policy, I have already 
 said that the whole system of monopoly is swept 
 away. What we have in future to provide for is that 
 there shall be no duties of monopoly in favour of one 
 nation and against another, and that there shall be 
 no duties so high as to be prohibitory against the 
 produce and manufacture of this country." 
 
 Earl Russell, with penetrating foresight, saw the 
 high commercial value our Colonies were to be to us. 
 And yet Canada has set up a high tariff, shutting 
 out some of our products ; and Victoria has done the 
 same. It is, however, satisfactory to hear in mind
 
 1G0 State Aid and State Interference. 
 
 that of our eight self- governing Colonics, only these two 
 have as yet stepped aside from the right path. Canada, 
 however, proffers the somewhat valid excuse of 
 special necessities, bred of her political contiguity to 
 a 'foreign' state of peculiar commercial views, and 
 Canada has taken the lead in demanding free trade 
 for all within the Empire. Victoria has no excuse 
 but the fact that a crude but specious theory com- 
 mends itself for the present to a majority of her 
 manhood-suffrage rulers. 
 
 The awkward question remains, why, when with 
 self-government the nation conceded the obvious 
 addition of fiscal liberty so far as the raising of revenue 
 was concerned, the nation did not rigorously watch 
 that any other fiscal action, which in any Avay cur- 
 tailed the liberties of other sections of the nation, 
 and for purposes other than revemic, should have been 
 allowed or disallowed as a totally distinct question. 
 
 4. To the practical politician the interest centres 
 in some adequate remedy: for the evil is accom- 
 plished : and any analysis of its demerits and its 
 causes is only of use so far as it enlightens us in 
 regard to its removal. 
 
 Inadequate information or thought leads many to 
 forget that an authority still exists supreme over ;i!l 
 others within the Empire. It is, indeed, only under
 
 A Low Tariff Empire. 161 
 
 the shield of this central authority that the various 
 self-governing provinces enjoy this liberty to govern 
 themselves. But these various self-governing bodies 
 are constitutionally subordinate to the Imperial 
 Parliament ; the true explanation of their virtual 
 independence is the fact that the Parliament has 
 delegated, for the sake of obvious expediency, some 
 of its powers to certain bodies of Englishmen, segre- 
 gated by long distances of ' disassociating ' ocean. 
 But the natural tie of supremacy remains ; sanctioned 
 by the indisputable fact of the far greater material 
 and human power congregated in the centre of the 
 Empire ; and illustrated both by the eager willing- 
 ness of the mother-country, on the first suspicion of 
 danger, to spare no exertion to render adequate 
 assistance to her oversea provinces, as well as by 
 the wise habit of colonial statesmanship to look to 
 the St. Stephen's Parliament for political inspiration 
 and guidance. 
 
 Nevertheless self-government, implying self-sup- 
 porting government, involves self-taxation, and so 
 the self-adjustment of fiscal policies. Each com- 
 munity of Englishmen may tax themselves how they 
 will to maintain their community in its corporate 
 concerns; but to strain fiscal policies beyond the mere 
 maintenance of government is a course of action legal 
 
 M
 
 162 State Aid and State Interference. 
 
 only on the condition that it do not touch upon the 
 independence of otlier provinces of the Empire, and 
 so interfere with the grant of self-government to the 
 other provinces. 
 
 It is against the equity no less than the interests 
 of the Empire as a whole that any one band of 
 Englishmen should impede the industrial progress of 
 any other band. It is by the crediting aid and 
 material support of the rest of the Empire that our 
 Colonies spring into being and continue to rise in 
 stable prosperity. England sent money, brains, skill, 
 and muscle to Victoria, as she is now sending them 
 to Natal. So is a prosperous community originated. 
 Is that community to turn round and, with scant 
 thanks, say, ' Now you have given us all we require, 
 we will, if you please, keep all this for ourselves, and 
 not allow the rest of the Empire to participate in the 
 benefits it has conferred on us ' ? Communities of Eng- 
 lishmen, at all events, are not likely to proceed on 
 these pleas. They may, for the nonce, be led astray to 
 consider they are doing themselves good by protec- 
 tion or other such policy, but they will recognise, at 
 the same time, that not only their duty but also 
 their interest lies in maintaining the spirit and the 
 principles that have brought their race all its signal 
 prosperity. It may be hold, thou, that with all the
 
 A Low Tariff Empire. 163 
 
 various grades of self-governing communities which 
 form the British nation at the present time, some 
 means of expression is surely attainable which shall 
 make all acknowledge in their various degrees of 
 constitutional spontaneity the essential utility and so 
 the absolutely binding nature of freedom of exchange 
 within the boundaries of the Empire. 
 
 The St. Stephen's Parliament takes direct fiscal 
 charge of most of our Colonies. Many of these have 
 been with extraordinary success made into abso- 
 lutely free ports. Such are the thriving entrepots of 
 commerce, Hong Kong, Singapore, and Gibraltar. 
 There remain those groups of Colonies possessing the 
 right of spontaneous action in this matter in 
 Canada, in Australia, and in South Africa. 
 
 These three cases differ essentially from one 
 another. In Canada we have a community of some 
 four millions in political contiguity to an energetic 
 foreign state of some fifty millions. This state, 
 keeping closed its own markets against Canadian 
 produce, attempted to flood Canadian markets. The 
 Canadians, in natural pique, raised up the wall of a 
 high tariff to stay this evil. This policy has been 
 inspired by two motives, the one to force the United 
 States to a policy of reciprocity at all events, if not 
 of mutual free trade ; the other simply to reserve 
 
 M 2
 
 164 State Aid and State Interference. 
 
 the Canadian market at all events for Canadian pro- 
 duce. This latter is no doubt the policy most in 
 favour with Canadians. They feel there is dangerous 
 similarity between the products of Canada and of 
 the States, these being the resultants of similar 
 natural and human forces. They know the compe- 
 tition of the larger threatens to swamp that of the 
 smaller. Canada feels that if she be shut out from 
 her own market her case is hopeless. And yet the 
 case is little mended by her shutting herself up in 
 her own market. Happily for Canada she yet 
 retains, if she will, the market of the world through 
 England. England is eager to buy of Canada if 
 Canada will only buy of England ; and in this case 
 there is no destructive competition because the pro- 
 ducts exchanged are the resultants of very diverse 
 natural and human forces. Such a policy at once 
 opens up the whole world as a market for Canadian 
 produce. It enables Canada to compete, at insuper- 
 able advantage, with the United States for Eng- 
 lish custom. Englishmen will naturally purchase 
 American produce where they can pay for it 
 ' in kind.' Trade always flows in those channels 
 where it maets with least obstruction. The ship 
 that leaves England to load with wheat will 
 always go by preference to that port where an
 
 A Low Tariff Empire. 165 
 
 outward cargo of English products can be sold 
 with. least obstruction. 
 
 The case of the Australians is of a totally different 
 character. Here we have seven large Colonies at the 
 present existing in total fiscal independence of one 
 another. But as these seven Colonies fill up with 
 population they feel more and more their geo- 
 graphical contiguity ; and already in addition to the 
 increasing expense of collection of duties along thou- 
 sands of miles of border, all the evils incident to 
 fettered intercourse are rapidly developing. At the 
 recent conference in Sydney every Colony, with the 
 single exception of Victoria, strongly supported a 
 movement in favour of a uniform and low tariff 
 for all the Australasian Colonies. 
 
 And Australians are looking further afield. They 
 know that each . one's staple products wool, and 
 wine, and gold, and wheat, and meat are exactly 
 similar ; the resultants of precisely similar natural 
 and human forces. Thus, if they would achieve a 
 right prosperity, they must exchange them with 
 other commodities, the resultants of differing natural 
 and human forces. This is necessary if they would 
 secure the rewards due to their peculiar productions. 
 Australians, both before and after the question of a 
 customs union amongst themselves, will be ready to
 
 166 State Aid and State Interference. 
 
 acknowledge the high benefits of assured freedom of 
 exchange in the widespreading and varied market of 
 the British Empire. 
 
 The case of South Africa just now occupies promi- 
 nent public attention The quarter-million of Euro- 
 peans colonising South Africa have been and are 
 unable to hold their own physically with the vast 
 hordes of natives within and -without the territory 
 they have taken on themselves to civilize. The rest 
 of the Empire aids them in this their uphill task. 
 Were it not for this aid, the European element in 
 South Africa would long ago have been driven into 
 the sea. The people of England are paying to retain 
 South Africa as a market for their wares and as an 
 area of supply. They have the right, let us hope 
 they will have the reason, to see to it that they are 
 repaid by the mutual benefits of freedom of com- 
 mercial intercourse. The Cape Colony, alone in 
 South Africa, has fiscal independence of the Home 
 Government. But the Cape is as much interested 
 as any to secure permanent European supremacy 
 over the African natives. This can only bo secured 
 by the permanence of English aid, and the price of 
 this, a price the wise men at the Cape will, for their 
 own interest, willingly pay, is the secured assurance 
 of freedom of exchange with the rest of the Empire.
 
 A Low Tariff Empire. 167 
 
 All the Colonies must feel that commercial union 
 is even more important for them than for England. 
 They know they obtain, by means of continued con- 
 nection with England, safety and credit ; those two 
 pillars of prosperity which alone support a com- 
 munity from sinking under hostile aggression or 
 commercial restriction. But this connection is a tie 
 which must defend in the main on identity of material 
 interests. And this identity can only be preserved 
 by the means of commercial union. 
 
 All these Colonies do feel that commercial union 
 is desirable. Indeed we have just witnessed in 
 England what may be described as the first com- 
 bined act of our Colonies on approaching manhood ; 
 the first great move in Imperial politics that has 
 originated in the Colonies. Accredited representa- 
 tives of their interests have met in London, and with 
 the assistance of leading Englishmen have founded 
 an association " for the promotion of the commercial 
 interests of the British Empire, and for the preserva- 
 tion of its unity and integrity to draw closer the 
 trade relations between its various component terri- 
 tories." This is a startling reply to those who in 
 ignorance conceived that the colonists, the very men 
 who, by the indubitable standard of practical success, 
 were admittedly the best judges, made no move in
 
 168 State Aid and State Interference. 
 
 the matter. That the Colonists should come to 
 England and agitate in favour of low tariffs through- 
 out the Empire is a most welcome sign of the increased 
 vitality of the English race. It remains for those to 
 whom the prosperity of their nation is matter of 
 concern to support and recognise this wholesome 
 movement. 
 
 5. The British Constitution has, then, to be drawn 
 upon to provide for a new development which has 
 grown up with the growth of the Empire, and which 
 presses on us as the inseparable accompaniment of 
 the continued prosperity of the Empire. It needs 
 no keen sight to see that community of material 
 interests is crying aloud for unfettered commercial 
 intercourse; and we know that community of 
 national sentiment and tradition, as well as of enter- 
 prise and industry, yet flourishes in the nation ; and 
 that this community is the one powerful agent in 
 any national effort. We have a national conscious- 
 ness of the right end : statesmanship has to see that 
 efficient means are adopted to give effect to this 
 consciousness. 
 
 I must own that the one main fact graven on my 
 own mind after sojourning in nearly every one of our 
 Colonies is the fact that the English nation, if it 
 remains in close commercial union, is only in the
 
 A Low Tariff Empire. 169 
 
 infancy of its career. All great statesmen who have 
 understood our Colonies have come to this con- 
 clusion. Earl Russell summarised the case in the 
 strong words, " There is no greater benefit to man- 
 kind that a statesman can propose to himself than 
 the consolidation of the British Empire." 
 
 And great statesmen have discussed the means to 
 this end. Lord Grey, in an article in the Nineteenth 
 Century, has shown most amply and conclusively the 
 great material injury that attempts at Protection in 
 our Colonies have done to their own individual pros- 
 perity as well as to the commerce and industries of 
 Great Britain. He laments with great power of 
 reason the policy that has prevailed in late years of 
 relinquishing the control previously exerted by the 
 Imperial Parliament over the commercial policies of 
 our Colonies ; and he would resuscitate the ancient 
 ' Committee of Council for Trade and Plantations ; ' 
 and, with the aid of the various Agents-General of 
 our self-governing Colonies, set up in England a body 
 of such authority and influence as to justify Imperial 
 supervision of all Colonial commercial policy in the 
 spirit of justice to all members of the Empire. 
 
 It may not be without advantage to set side by 
 side with this yet another scheme with similar aim. 
 The essential principle of procedure is simple. The
 
 170 State Aid and State Interference. 
 
 Imperial Parliament resumes its supreme control 
 over the commercial as distinct from the fiscal 
 policies of the Empire ; but in so doing it takes 
 ample cognisance of the fact that large portions of 
 the Empire have a prescriptive constitutional voice 
 in this rearrangement. Indeed, action should be 
 taken on the invitation of the various self-govern- 
 ing Colonies. There must be combination and 
 mutual agreement, quasi- diplomatic if necessary, in 
 favour of low tariffs throughout the Empire. And 
 the Imperial Parliament will be charged with the 
 task of defending and maintaining for the future 
 this new charter of industrial prosperity. It is true 
 the United States will not allow local tariffs even for 
 the purpose of raising revenue ; but the low tariff 
 necessary for revenue purposes is practically but little 
 hindrance to trade. All that is necessary is that, by 
 the direct means of the spontaneous action of enlight- 
 ened local government, and by the indirect influence 
 of advice and information, the various communities of 
 the British Empire may come to subscribe, each in its 
 own degree of autonomous action, to an agreement to 
 keep its tariffs low. For this purpose one of two prin- 
 ciples would suffice. Earl Russell suggested the one, 
 viz., that no customs duties should exceed a certain 
 ad valorem percentage. A second principle would be
 
 A Low Tariff Empire. 171 
 
 the rule that no customs duty be levied for any pur- 
 pose save that of raising revenue. Thus could be 
 secured the inauguration of that free exchange of 
 products between all Englishmen which, if we regard 
 the teachings of the past, augurs a future of unpre- 
 cedented prosperity. 
 
 6. I have reserved till the last what is perhaps 
 the most important point in the whole case ; and 
 that is the question as to the position such a com- 
 mercially unified Empire is to hold to outsiders. 
 The courses possible are practically reduced to two 
 the one the exclusion of outsiders, the other the 
 non-exclusion of outsiders. 
 
 To exclude outsiders is to appeal to the selfish 
 concurrence of one or two interests affected favour- 
 ably by such action. It is not and cannot be denied 
 that the nation as a whole must be the loser. All 
 see there is no reason in a policy which shuts off 
 supplies and custom other communities are willing 
 to afford. The advocates of this policy have but one 
 plea that is likely to obtain patient hearing. This is 
 the plea that high duties to those outside the union 
 are the sole means to inducing those outsiders to 
 lower their tariffs and join the union. 
 
 It is even said that without some such national 
 fence Colonies themselves will be loth to join. I
 
 172 State Aid and State Interference. 
 
 have already given the grand answer to this conten- 
 tion in noting the recent actions and expressions 
 proceeding from the Colonies themselves. This point 
 is sometimes not quite grasped in high places ; the 
 feelings and acts of two only of our forty Colonies, 
 because they chance to be feelings and acts that run 
 counter to the general national tendencies, are apt 
 to assume undue prominence, and have even been 
 regarded as typical of the acts and feelings of the 
 whole. They are distinctly not so. All the en- 
 couragement our Colonies require is the guarantee 
 that low tariffs shall exist en permanence in all 
 British markets. 
 
 The alternative plan, the non-exclusion of out- 
 siders, implies a low tariff for all without exception. 
 It is a plan which will ultimately prevail if only we 
 pay any heed whatever to reason, experience, and 
 expediency. A low tariff all over this vast agglo- 
 meration of English markets will supply all these 
 markets with products at their lowest cost of pro- 
 duction. Each English community will then batten 
 on the fact, which has done so much to enrich 
 England, that whatever it uses or consumes will be 
 obtained ;it the lowest cost possible. This is the 
 one main condition of profitable production. This 
 plan prevents any portion of the nation wasting its
 
 A Low Tariff Empire. 173 
 
 energies on products that can be produced cheaper 
 elsewhere. 
 
 For instance, for many years to come the Colonies, 
 if they judge aright of their real economic position, 
 will be the natural markets for manufactures, the 
 natural producers of raw materials. Manufactories 
 only thrive in centres of dense population. Sparse 
 populations, occupying vast tracts of fertile and 
 virgin soil, if they would profit most will produce 
 cotton, and wool, and wheat, and minerals. Among 
 such populations, if there is no baneful interference 
 of high tariffs to subvert the natural order of pros- 
 perity, our home manufacturers will be assured 
 natural and extensive markets for their wares, and 
 reliable and inexhaustible supplies of those raw 
 materials and food-stuffs which we are prevented 
 producing in these islands by reason of the fact that 
 our manufactures employ a population too dense for 
 so utilising our limited area of soil. We have to live 
 on and not out of our soil, because we are in the 
 manufacturing and not the pastoral or agricultural 
 stage. Our Colonies are in these other stages, 
 and to keep tariffs low is to enable all to profit by one 
 another s opportunities through the medium of free 
 exchange. 
 ; That a high tariff for outsiders is unnecessary, we
 
 174 State Aid and State Interference. 
 
 see when we remember the natural expediency of a 
 low tariff. Trade is forced, by the insuperable power 
 of its own inherent attributes, to flow along that 
 channel which has fewest obstructions. Interchange 
 of products always does and always will thrive and 
 increase most where there are fewest restrictions. 
 To that community, in which low tariffs are esta- 
 blished with certainty of no upward change, trade 
 will be diverted by the damning obstructions of 
 high tariffs elsewhere. In this we shall find the 
 natural ' sanction ' that low tariffs, permanently 
 established over the British Empire, will increase 
 the interchange of products, and in so far develop 
 every industry and enterprise. 
 
 There will be a natural tendency to buy our 
 wheat of Canada and not of the States when we 
 know our manufacturers meet with no obstruction 
 in the one case, and with every obstruction in the 
 other. And we shall take not only wheat but 
 watches, or lard, or any other specialty of American 
 production for which Canadian soil or people may 
 develop special aptitude. And so with Australia, 
 or India, or the Cape, we shall go to them naturally 
 for our wool and our tea and our wine, if outward 
 cargoes of manufactures can be sent in the ships 
 that fetch home these goods.
 
 A Loiv Tariff Empire. 175 
 
 With low tariffs so established over the British 
 Empire we shall win the vast advantage of being 
 less affected by the actions of foreign and inde- 
 pendent countries. These actions, by the reason of 
 their uncertainty, have been our bane in the past, 
 and bid fair to be our bane in the future. We made 
 treaties to obtain for ourselves wider markets and 
 wider areas of supplies in the days when we had 
 only foreign countries open to us. But now our own 
 kith and kin, we ourselves, have become possessed of 
 countries offering in the future more than the equi- 
 valent of these markets and these areas ; and by the 
 simple expedient of preventing the rise of restrictions 
 on commercial intercourse we are likely to secure 
 these markets and these areas, and to win for our- 
 selves exemption from the only compelling power 
 that of old forced us to seek to conciliate foreign 
 powers. We can now, if we will, take our stand on 
 our own self-sufficing independence. On this secure 
 ground we can tell foreign nations we have no need 
 of treaties. We are our own market and our own 
 source of supply ; and if foreign nations bar them- 
 selves by high tariffs from the great benefits of free 
 intercourse, it concerns them indeed, but it concerns 
 us no longer. The new British Empire affords us 
 other avenues and other openings.
 
 176 State Aid and State Interference. 
 
 The malign influence of differential duties, elabo- 
 rate treaties, bounties, reciprocity, retaliation, and 
 even protection itself, together with all the evils 
 incident to the interference of policies having no 
 political, national, or economic connection with 
 countries they deleteriously affect, will all be 
 banished from within the frontiers of the British 
 Empire. Their evil results will recoil on the 
 foreigners alone, and leave the reproductive energy 
 of our vast Empire to work out its own great 
 prosperity untrammelled and unimpeded ; with that 
 true freedom of action which consists in the power 
 of acting independently of foreign determining 
 causes, and which is the condition most essential 
 to the success of that human co-operation or ' band- 
 work' which has been shown to be the one main 
 lever of human prosperity.
 
 Foreign Competition in Agriculture. 177 
 
 CHAPTER VIII. 
 
 FOREIGN COMPETITION IN AGRICULTURE. 
 
 1. The British Islands are becoming more Manufacturing and 
 well-to-do, and less purely Agricultural. 2. American 
 Prairie-cropping must in a few years wear itself out. 3. The 
 price of American "Wheat must increase. 4. America be- 
 comes rapidly populated. 5. Americans really compete 
 chiefly with our other Foreign Purveyors. 6. Canada will 
 supply Wheat, but not at permanently lower prices. 7. Eng- 
 lish Wheat-growing has many intrinsic and local advantages. 
 8. Foreign Competition has roused English Agriculture to 
 improve itself. 
 
 1. Not long ago it was held that Agriculture 
 was by far the largest of English industries. 
 And although, since these good old days, we have 
 become more than ever a nation of shopkeepers, and 
 carriers, and manufacturers, we nevertheless con- 
 tinue to farm, and to farm well, as much land in 
 these islands as we can obtain for the purpose. It 
 may be true nowadays that but a portion of the 
 
 N
 
 178 State Aid and State Interference. 
 
 population is really connected with the land, so 
 far as the earning its livelihood is concerned. But 
 then the whole of the rest of the population lives 
 by eating the produce of the soil ; and so, after all, 
 the utilisation of its soil is, to Britain as to every 
 other nation, a primary concern. It is no wonder, 
 then, that our agricultural prosperity or depression 
 affects every fraction of the community, and that 
 the recent bad seasons have stirred up a wide- 
 spread public agitation on the subject of land 
 generally. 
 
 Pending the results of the labours of the Royal 
 Agricultural Commission, much good and useful 
 work has been done towards creating a correct 
 public opinion in this matter ; and yet, if we may 
 judge by their utterances, both public and private, 
 it is only too common to find a most gloomy view 
 of things which materially affects their energies and 
 their enterprise, taken by the two classes more 
 directly concerned the great farming class on the 
 one hand, and, on the other, that large proportion 
 of wage-earners in this industry, whose winnings 
 only too frequently barely cover the expenses of 
 subsistence. To dispel this unnecessary but not 
 unnatural gloom there is only needed the light 
 of a wider knowledge of facts; and a more thought-
 
 Foreign Competition in Agriculture. 179 
 
 ful heed to the actual conditions, past, future, and 
 present. 
 
 This atmosphere of gloom is greatly brightened 
 if we pay even momentary attention to the history 
 of the past twenty years. Hereby we immediately 
 recognise the radical modifications that have been 
 imposed on English agriculture by increase of popu- 
 lation plus increase of wealth. These two must 
 be taken together. Even in the last ten years, 
 while population has been found at the Census 
 of 1881 to have increased about 11 per cent., 
 wealth has increased 30 per cent. Trade, com- 
 merce, manufactures, and facilities of communi- 
 cation have all increased with even greater speed. 
 This is no mere increase of mass of human beings, 
 but of spending, and, above all, of working human 
 beings. The British hive has not only increased 
 in numbers, but both the reason and the result of 
 this increase in numbers is increased production of 
 wealth. The population is not only larger, it is also 
 more busy and more well-to-do. 
 
 The direct effects of this growth on agriculture 
 are twofold : on the one hand we have a new use 
 for large areas of soil ; on the other hand we have 
 greatly increased means for the purchase of food grown 
 elsewhere. We have manufactories, railways, canals, 
 
 x 2
 
 180 State Aid and State Interference. 
 
 docks, mines, and so forth, ousting agriculture from 
 areas of soil that in the aggregate sum up an 
 important total. We have cities, towns, far-reaching 
 suburbs, garden-surrounded villas, and great parks 
 rapidly extending themselves over the land. And 
 these carry in their hands the proof of their utility in 
 the higher price by which they buy out agriculture 
 from its occupation of the soil. The nation has so 
 developed that it becomes more profitable to utilise 
 the soil for these productive or residential purposes 
 than for the growth of food alone. It will be found 
 on calculation that the land so occupied is a no 
 inconsiderable portion of the total area in our 
 islands that can produce food. But this new occu- 
 pation is a type or sign of what is going forward 
 among us. 
 
 Another sign of progress is the fact that annually 
 we import as much wheat as we grow, simply that 
 the population may be fed. The signal import- 
 since of this fact will be appreciated by farmers 
 when they bear in mind its necessary corollary, 
 that if wo would food Englishmen on home-grown 
 bread and no other we must actually double the 
 acreage devoted to wheat-growing. On this analogy, 
 in regard to the food-supply generally, we must 
 double the area we farm. But we already farm 50
 
 Foreign Competition in Agriculture. 181 
 
 of the 80 millions of acres, which is all the sea allows 
 these islands to possess. It is then a physical 
 impossibility to double the area, and to double the 
 whole production is certainly beyond the dreams 
 of the most extravagant of 'scientific farmers,' 
 considering the fact that, acre for acre cultivated 
 for the purpose, English farmers already produce 
 far more than farmers of any other nation. We 
 may, as knowledge advances, increase our total 
 produced ; we cannot do so to any large extent ; 
 nor can we extend the productive area to any large 
 extent. We must be content, as a prosperous, 
 industrial nation, to buy much of our food elsewhere. 
 That the nation accepts and makes the most of 
 these incidents of its growth is seen in the fact 
 that of the food we import one-third at the least 
 is food of a kind euphemistically described in the 
 returns as that ' not usually produced ' in the 
 British Islands. We are not only importing food, 
 but we are enjoying, in addition, that variety and 
 plenty which results from our ability to lay under 
 contribution the uttermost ends of the earth. 
 Iceland moss and Ascension turtles, Canadian apples 
 and Guinea cocoa-nuts, Australian meat and Cali- 
 fornian barley, assure for the English market not 
 only variety but certainty of supply.
 
 182 State Aid and State Interference. 
 
 Thus, while the producer has continued to produce 
 as of old, the consumer has asserted the natural 
 order of things, and sought abroad for the supplies 
 necessitated by the great increase in demand. New 
 developments in industry and commerce supply 
 the wherewithal for the purchase of this extra food. 
 And if we thus give proper prominence to the 
 immediate past, and recognise the true nature of 
 the national growth, we see that foreign supplies 
 of food are a necessity of our new position, and 
 that ' foreign competition ' in this supply is in 
 very great measure no competition at all, but merely 
 the supply in quantity, no less than in kind, of food 
 that the physical limits of British agriculture forbid 
 the English farmer to supply. 
 
 2. But this appearance of the foreigner in the 
 English food market has created a kind of panic, 
 and for the nonce the British agricultural brain 
 appears to be bereft of its accustomed shrewdness. 
 Among the more important foundations of a sound 
 judgment of the present, is a proper estimate of 
 the probabilities of the near future. This is an 
 estimate which has been strangely ignored. Un- 
 kindly seasons and low prices seem to have riveted 
 attention on the gloomy present, and the eye of 
 intelligence is thereby prevented from looking
 
 Foreign Competition in Agriculture. 183 
 
 into the past for the sure and only prognostics of 
 the future. For instance, 'American competition' 
 is a bugbear only if we disregard the future as 
 well as the past of the United States. Prairie- 
 farming for the supply of the home and the European 
 market is an industry of recent growth and 
 developed under most peculiar conditions. Meat 
 and wheat are produced on the spot at low prices. 
 In twenty or thirty years' time at the most this 
 industry will be at an end, so far as the maintenance 
 of the present prices is concerned. 
 
 The United States at the present is an under- 
 peopled but fertile country. At present there are 
 vast tracts of virgin soil awaiting development. 
 With Nature so favourable to its advances, a large 
 community, with every appliance of an eminently 
 practical civilization at its command, has but little 
 difficulty in at once and with ease procuring a lavish 
 supply of foods. But in such cases there exists 
 a tendency and the United States are no exception 
 to the rule for this very facility of production to 
 outrun prudential methods of production. Wheat- 
 growing in the United States has afforded a notable 
 example of this tendency. The more settled and 
 populated districts on the east coast had developed 
 a system of farming but little differing from that
 
 184 State Aid and State Interference. 
 
 prevailing in the fully-peopled communities of the 
 European continent. But, as the increasing popu- 
 lation pushed westwards, vast tracts of wheat- 
 producing soil were opened up by energetic men 
 greedy of present results. Wheat became, to adopt 
 SirT.Brassey's happy phrase, 'the ready-money crop 
 of the pioneer farmer.' But the system of cultiva- 
 tion adopted was the ' earth-scratching ' of Gibbon 
 Wakefield ; and the profits of the system hung 
 on the very roughest cultivation and the very 
 cheapest access to the soil. 
 
 But even so, this rough prairie-cropping was soon 
 found to be liable to unexpected risks. Success in 
 the ' Far West ' was frequently checked by causes 
 to which the English farmer is happily a stranger. 
 The farms are necessarily extensive ; and, with this 
 cropping on a vast scale, weeds, as if inspired by 
 the surroundings, appear in quantities commensurate 
 with the true magnitude of American operations, 
 and on a scale inconceivable in carefully cultivated 
 England. Weeds have been known so to choke 
 a whole crop as to render it absolutely not worth 
 the ingathering. And there are plains in California 
 State, all part and parcel of the boasted ' wheat 
 area,' which enjoy a rainfall sufficient for a crop 
 only once in four or five years. And there are
 
 Foreign Competition in Agriculture. 185 
 
 seasons when all the scanty crops are consumed by- 
 locusts and grasshoppers. Again, the danger of 
 prairie fires is greater the greater the area covered 
 by wheat. 
 
 These and other risks are further supplemented 
 by the fact that the supply of labour in these 
 wilder States is not only precarious, but is very 
 frequently absent at the critical times. A new 
 mining rush, busy times reviving suddenly in other 
 districts, or other counter-attractions, not infre- 
 quently force the farmer to leave good crops to rot 
 where they stand from the sheer absence of the 
 physical labour necessary for the harvesting. And 
 there are other surroundings of this prairie-farming 
 that do not readily occur to the English mind. 
 Thus, for instance, it is found that for every four 
 acres devoted to wheat one acre has to be cropped 
 in fodder for the support of the horses or cattle 
 necessary for carrying on the farming operations. 
 Or, again, grain has been often known to ripen too 
 quickly and to turn out ruinously light in the ear. 
 
 These are among the drags peculiar to the rough 
 cropping of the prairie. But, by way of antidote to 
 these, we find access to the soil is remarkably 
 cheajj ; labour is only needed in small quantities ; 
 machinery can, in great ^measure, be made its
 
 186 State Aid and State Interference. 
 
 substitute ; and little more capital is invested or 
 risked than suffices to pay for sufficient seed. Thus 
 in lucky seasons the price of wheat on the spot is 
 proportionately low under present conditions. 
 
 3. But it is important to remember that the 
 price of this wheat on the spot and its price in 
 England are two totally distinct facts. And, again, 
 the price in England now and the price in England 
 hereafter are no less distinct. And, after all, this 
 price is the main item for the British farmer. It 
 is well, then, to note the facts and prospects of 
 the several elements of this price of American 
 wheat in the English market ; among these we find 
 cost of production on the spot, cost of carriage, 
 influence of middlemen, and, lastly, the fact that 
 numerous other countries supply our markets with 
 wheat. 
 
 In regard to the first of these elements, the 
 paradox may be advanced with truth that the 
 cheaper wheat is produced in the prairie the sooner 
 will it disappear from the English market. The 
 low price on the spot prevailing at present depends 
 on the abnormally cheap use of good virgin soil, 
 and on the possibility of a system of cropping, (for 
 it cannot properly be termed cultivation,) which 
 obtains large present returns on insignificant
 
 Foreign Competition in Agriculture. 187 
 
 outlay. This method necessitates a continual taking 
 up of new land and a continued abandoning of that 
 which has been cropped. And even in the United 
 States there is a physical limit to virgin prairie- 
 lands that will grow wheat. The saying is attributed 
 to the eminent American economist, Carey, that by 
 thus growing wheat for export, Americans were 
 exporting their own soil. The truth of this saying 
 may be seen in the impoverished tracts from which 
 all the good has already been literally exported. 
 The cheaper wheat can be produced by this system 
 of cropping the more rapidly does this wave of 
 exhausting energy pass over the land. 
 
 Several results follow. In the first place, so far 
 as this pioneer wheat-growing and prairie -grazing 
 succeeds (or, in other words, pays) in the same 
 proportion does it attract people. For, as Adam 
 Smith puts it, people congregate where they can 
 live cheapest. This incidental increase of popula- 
 tion on the spot, due to the lowness of cost of 
 production, at once raises cost of production. The 
 first pioneer takes up his 10,000 acres, and for his 
 first year's crop he feeds his cattle and horses on 
 hay, cut gratis on the surrounding prairie but in 
 a year or two these surrounding prairies are also 
 taken up, and he is forced to devote 2,000 of his
 
 188 State Aid and State Interference. 
 
 acres to growing fodder he is deprived of so much 
 of his ready-money crop. The price of the re- 
 mainder must rise if he is to reap the same profits. 
 And again, this cropping is the work of man, and 
 this increase of population largely stimulates the 
 consumption on the spot of food produced in the 
 district for both man and beast. And again, the 
 competition incident to this increase of population 
 sends up the value of this access to the soil ; culti- 
 vation has to succeed to cropping ; the terms 
 ' manure,' and ' drainage,' and ' water-supply ' are 
 introduced to common use ; and the farming that 
 ensues produces wheat but little cheaper than it is 
 produced in more fully peopled lands. 
 
 In the second place, this cheap production of 
 wheat on the prairie is a result which acts as a cause 
 of the rapid increase of the population of the States. 
 The United States in good years produce at the 
 present 350 million bushels of wheat, which, at the 
 English average of consumption, is sufficient for, 
 say, 70 million people. This conclusion is verified 
 by the fact that the United States, with a population 
 of 50 millions, exports one-third of the wheat 
 produced. But if we calculate on the average 
 increase of the population of the United States 
 for the past eighty years, we see that the number
 
 Foreign Competition in Agriculture. 189 
 
 of the population twenty years hence will be 100 
 millions. In other words, by the close of this 
 century there will be added to the population of 
 the United States a mass of human beings con- 
 suming three times the amount of wheat the United 
 States now export. If the European market is still 
 to receive the amount of wheat that now comes to 
 it from the United States, Americans will have to 
 produce about double the amount of wheat they 
 now produce ; and they will have to produce it at 
 the same low price if English farmers are to be any 
 way concerned. 
 
 But it may well be asked where in the United 
 States are new fresh wheat-producing areas to be 
 found sufficient for this gigantic purpose ? Even the 
 short history of this prairie -farming incontestably 
 proves that as this cropping-wave succeeds in over- 
 running new ground out West, it recedes, pari passu, 
 from old ground, so far as this cheap method of 
 cropping is concerned. In the doubling of the area 
 at present in use we must allow for what is deserted 
 in the process. For if we include the farming of 
 the old ground we find at once increased cost of 
 production. 
 
 But even if we grant the most extravagant 
 anticipations of prairie-farmers, and agree that this
 
 ]90 State Aid and State Interference. 
 
 cheap production of wheat will still be possible, we 
 are faced by another fact of experience already 
 amply demonstrated. The cheaper the production 
 of wheat in the prairie, the less the production of 
 wheat in better-farmed districts in America itself. 
 The home market, rapidly increasing in its con- 
 sumptive demands, rapidly loses its former sources 
 of supply. To feed itself only, the American nation, 
 by the end of this century, would have to nearly 
 double its present production of wheat. If this is 
 all to be accomplished by the prairie process, this 
 process will have to be trebled in effect by reason 
 of its incidental action in destroying other national 
 sources of supply. The very cheapness of this prairie 
 method, if continued, would cause it more and more 
 to confine its energies to the supply of the home 
 market. And this home market of the United 
 States is in its infancy, and it will be centuries 
 before even the ' magnificent resources ' of this 
 large area can be so utilised as to outrun these 
 local demands in the supply of wheat. 
 
 But at the least as important an element in 
 this matter of price is the cost of carriage. There 
 is truth here, also, in a paradox. The cheaper the 
 cost of carriage in the present the sooner will it 
 rise to a height barring present prices. If freights
 
 Foreign Competition in Agriculture. 191 
 
 and rates had been at normal heights a long-con- 
 tinued and steady trade might have been possible ; 
 but freight and rates have been the resultant of 
 altogether abnormal conditions ; and their very 
 lowness will largely stimulate and hasten the ma- 
 turity of normal conditions altogether prohibitive 
 of such facilities for export. 
 
 However true it may be that, at the present, in 
 favourable years wheat and meat are produced on 
 the spot at remarkably low prices, yet the market 
 for such large supplies of food is a long way off, 
 and the very industry itself would never have come 
 into being but for the fortuitous co-existence of 
 altogether abnormal facilities of carriage. The 
 people of the United States early determined to 
 spread over their vast territories an elaborately 
 planned network of waterways and railways. Means 
 of communication were not only devised but per- 
 fected long before the necessities of communication 
 had grown up. This proleptic action owed the fact 
 of its realization to the abundance of capital, chiefly 
 in other lands, that chanced at the moment to be 
 anxiously looking for employment. But the rail- 
 ways were before their time ; no dividends were 
 forthcoming ; and they passed, for the most part, 
 into the hands of mortgagees. Much of their first
 
 192 State Aid and State Interference. 
 
 cost was dropped in the operation. The immediate 
 future seeks only to provide interest on this dimin- 
 ished capital. Thus, for the present, over such 
 portions as are now completed it positively pays 
 to carry goods at rates a few years ago deemed 
 inconceivable, and which, not many years hence, 
 will be altogether impossible. 
 
 The very lowness of these rates was thus the 
 opportunity of prairie -farming. Thus is supplied 
 the incentive and, in addition, the means to popu- 
 lating large areas. The march of the invading 
 
 
 
 immigrants has already reached far into these 
 wheat-producing districts. Towns, or rather cities, 
 have sprung up with the proverbial American 
 rapidity. Thus the very lowness of rates will 
 hasten the development of the social conditions 
 for which the railways have been planned and 
 constructed. But this pioneer wheat-growing has 
 been more than mere result, it has also been cause 
 of more vigorous extension of railways. It has 
 afforded forcible pretext for the present and hasty 
 realization of plans schemed for more populated 
 times. And even the very abandonment of cropped 
 for virgin areas has further stimulated this move- 
 ment. Competition among the railways, with a 
 view to securing future benefits, the excuse of
 
 Foreign Competition in Agriculture. 193 
 
 promoters that their schemes must be realized in 
 full before they can pay, the forced interposition 
 of the mortgagees, and other causes, intrinsic and 
 extrinsic, have enabled American railways in recent 
 years to lower their rates beyond all belief. These 
 causes are temporary, and contingent upon the 
 peopling up of the country. There are powerful 
 groups watching for their long-deferred profits. The 
 finance of American railways is now chiefly in the 
 hands of such groups. It stands to reason that if 
 wheat can now be thrown upon the European 
 market shillings per quarter below average prices, 
 these railway financiers, if they retain any spark 
 of the astuteness for which they have been famed 
 in the past, will of a certainty judiciously tap this 
 new source of revenue. In due measure will this 
 action raise again the price of American wheat in 
 foreign markets. It will be the object of these 
 financiers to maintain the price of wheat at the 
 highest rate commensurate with the continuance 
 of the trade. The details of sharing the new pro- 
 fits will have to be arranged between the farmer 
 and the companies, but the price will and must be 
 enhanced in the operation. 
 
 But even this arrangement as to price is sub- 
 ject to another important factor, viz., the influence 
 
 o
 
 194 State Aid and State Interference. 
 
 of the indispensable middleman. A commodity 
 in general demand, and produced in such vast 
 quantities and in large proportion for distant 
 markets, must necessarily pass through the hands 
 of middlemen. The prices must be regulated in 
 accordance with what are or may be the needs of 
 distant communities. The prescience on which 
 these middlemen must needs depend is often at 
 fault : now it is too daring, now insufficiently so. 
 This raises the ultimate price of the commodity 
 dealt with. It thus comes to pass that wheat has 
 actually been purchased in Liverpool for less than 
 was paid for it in Chicago. And, on the other 
 hand, large fortunes have been made out of wheat 
 by buying it in Chicago and selling it within the 
 month in Liverpool. The recent gigantic specula- 
 tion known as the ' Keene wheat corner ' is typical 
 of these things. The partners in this ' pool ' held 
 at one time as much as sixteen million bushels 
 of wheat, and thus obtained complete command of 
 the market for the sake of their own advance- 
 ment. 
 
 4. The last element of this important feature 
 of price to which we need revert is the fact that the 
 English market numbers among its purveyors others 
 besides Americans. We in England have for years
 
 Foreign Competition in Agriculture. 195 
 
 past imported wheat on an annual average sufficient 
 to feed fifteen millions of people. Last year, because 
 of short harvests, we imported sufficient for twenty 
 millions. The United States, in good years, produce 
 an exportable surplus sufficient to feed twenty 
 millions of people ; but a large proportion of this 
 does not reach the English market. The great 
 sting of this American competition will be felt by 
 our foreign purveyors, more especially in all such 
 years as we ourselves are blessed with good harvests. 
 
 I have adverted to the fact that this prairie- 
 farming has already scotched one source whence 
 supplies would have reached the English market. 
 The New York and New England farmers have 
 been forced to cease competing with the wheat 
 supplies from the West. Prairie-farming has thus 
 created for itself a great gap in the supply of the 
 American home market, and in so far has diverted 
 from export a large amount of its own produce. 
 
 But it is further necessary to remember that, 
 although under these present exceptionally favour- 
 able conditions the United States grow one quarter 
 the wheat the Western World consumes, yet not 
 more than one quarter of what they grow is ex- 
 ported. The price of the wheat thus exported must 
 become regulated by the prices prevailing in the 
 
 o 2
 
 106 State Aid and State Interference. 
 
 European markets. The United States supply to 
 Europe one-twelfth only of the annual supply. The 
 price of this twelfth must assimilate to that of the 
 remaining eleven-twelfths. The only imaginable ob- 
 stacle in the way of this assimilation of prices is the 
 resolution of Americans, once they are established 
 iu the European market, to refuse to take as much 
 as they can get for their commodity. The history 
 of American enterprise does not warrant such 
 expectations. The English farmer must remember 
 that American competition affects all the purveyors 
 of the English market, and not only of that, but of 
 the whole European market ; and that, in this 
 larger view of the actual facts of the case, it will 
 at once be seen that even the low prices possible to 
 the present system of prairie-farming have a merely 
 fractional effect on the European market. What 
 then becomes of the claims put forward by 
 enthusiastic Western farmers to the effect that 
 their prairies are to become the granaries of the 
 world, and their capital the flour metropolis of 
 humanity? These sanguine anticipations, in the 
 ratio of their successful realization, would drive 
 wheat-cultivation out of Europe. The monopoly of 
 supply, and so of price, would fall to Americans. 
 But we must remember that the very existence of
 
 Foreign Competition in Agriculture. 197 
 
 the industry, and so of the monopoly, depends 
 altogether on the continuance of those low prices 
 which enabled it to come into existence. In a word, 
 if these sanguine anticipations are to be realized 
 Americans must accomplish the dual feat of quad- 
 rupling their present produce of wheat, and at the 
 same time of maintaining the population of their 
 country at the exact figure at which it stands at 
 present. If they fail in either task the price 
 of wheat must rise ; and this rise would be 
 the signal for the re-appearance of wheat-growing 
 in Europe, and of the consequent fall of their 
 monopoly. 
 
 The conditions I have now detailed combine to 
 render possible for the present this large export of 
 breadstuffs and food. The main fact for English 
 farmers and landowners is that this export is from a 
 fund on which Americans will not be able to draw 
 much longer. Even under the present most favour- 
 able conditions of access to pasture and of freights, 
 sound meat cannot always be placed in the English 
 market below the price of better grown English 
 meat. And similar conditions will soon arise in 
 the supply of wheat. Thus a careful survey of the 
 facts of the case brings us to the conclusion that, 
 if present conditions continue, the great areas in
 
 198 State Aid and State Interference. 
 
 the Western States will in, say ten years' time, 
 be no longer able to export wheat and meat at 
 prices below those which yield profit to the English 
 farmer. In ten years' time ' American competition ' 
 in the English market will be in rapid natural 
 decline. Thus the future of agriculture in the 
 United States need not clash with the future of 
 agriculture in the United Kingdom. And, after 
 all, the prospects of English farming are in the 
 future and not in the past, or even the present. 
 
 5. In dealing with the competition in English 
 markets of the United States, it is essential to a 
 right judgment of this question to remember that 
 Canada, in opening up her North-Western territories, 
 has without doubt brought before the world a wheat- 
 producing area of enormous extent. The soil and 
 climate of that portion of this area already opened 
 up produce crops double as heavy as those of the 
 prairie lands in the States ; and there are districts 
 where continuous cropping for fifteen or even twenty 
 years docs not appear to exhaust the rich soil. 
 Moreover the coming Canadian Pacific Railway is 
 penetrating this area. It is not surprising, then, 
 that with all these inspiriting prospects the sanguine 
 pioneer farmers of the North- West should declare 
 and, in a measure, prove their ability to produce
 
 Foreign Competition in Agriculture. 199 
 
 and place wheat in the English market at an average 
 little over 38s. a quarter. 
 
 But these sanguine anticipations must be taken 
 cum grano. They are the first reports from a raw 
 and untried district. And, indeed, the more we 
 inquire into detail the more we find cause largely to 
 discount these alleged anticipations. In the very 
 first place we find the area has been gravely ex- 
 aggerated, so far as wheat-production is concerned. 
 Geographically, it may be true there are some 150 
 million acres awaiting the plough and the seed of 
 the farmer, but practically it seems certain that a 
 vast proportion of these acres will continue to wait 
 till the end of time. Large curtailments of this 
 area must be made owing to physical causes. And 
 even where the climate is favourable, large tracts 
 are found on inspection to be too sandy or too 
 swampy for wheat, while in others there is dearth 
 of water for the cattle that are indispensable in the 
 carrying out of such extensive farming operations 
 as are the main element in the cheap production 
 of prairie wheat. Sinking wells, damming, draining, 
 or irrigation like manuring are not adjuncts of 
 prairie-farming, pure and simple. They add largely 
 to the cost of production. 
 
 Again, although the crops are heavier than those
 
 200 State Aid and State Interference. 
 
 farther south, they are, nevertheless, found to be 
 even more liable to tlie various scourges I have 
 detailed. Fire has already eaten up valuable crops, 
 and fire comes when all things are dry, in the 
 autumn, when the crop is just ripe ; grasshoppers and 
 caterpillars have devastated large areas ; the sun has 
 been too favourable and ripened the ears too quickly 
 for weight ; and already the proof of these things 
 is seen in that farmers, even in this much 
 vaunted North-West, have been forced to sell out 
 or to carry on at a loss through had seasons and 
 low prices. 
 
 A great point is the enormous interest (15 or 20 
 per cent.) now actually paid for money advanced for 
 agricultural purposes on the security of these new 
 lands. This is sure evidence of the existence of a 
 deep-seated conviction that land will rise in value, 
 and that such a rise will take place is of course a 
 mere truism in the face of the advent of population. 
 There is ample precedent in the eastern provinces of 
 the Dominion. There agricultural land, manifestly 
 and avowedly inferior to that of the North-West, is 
 now worth 8/. and 10/. an acre. Such a price, when 
 it comes to prevail in the North-West, will at once 
 raise the price on the spot of wheat from 3s. 6(7. to os. 
 the bushel. Such a rise will not, however, take
 
 Foreign Competition in Agriculture. 201 
 
 place unless and until the North-West proves its 
 claim to be the wheat ground of America. But rise 
 in the price of soil must accompany any and every 
 step in the successful realization of these vast wheat- 
 growing anticipations. 
 
 In this great North- West, if you can get your land 
 at first prices, if you have good years, and if freights 
 remain low, then you can export at a low price. But 
 already these conditions are changing ; already there 
 is a steady enduring flow of population to the North- 
 West. The farmers in the older provinces are either, 
 taking to stock-raising and dairy and fruit farming 
 or selling out and going west to grow wheat. Im- 
 migrants from all parts of Europe are seeking this 
 great wheat area ; it is the paradise of that large 
 class of farmers who start without any great extent of 
 capital. The great evidence of the fact of this vast 
 migration is that the men who are already there 
 farming on the borders of this area and getting their 
 twenty and even thirty bushels to the acre, sell all 
 they grow as seed and as food for these immigrants. 
 Human beings are coming down on the land like a 
 swarm of locusts ; they and their beasts devouring 
 what is reaped ; and big cities springing up rapidly 
 in their track. Not till this area is peopled will 
 it export to any great extent. But by that time
 
 202 State, Aid and State Interference. 
 
 land will be far dearer it has already doubled in 
 value and cost of production on the spot will rise 
 pro raid. 
 
 And yet, in spite of all this, for long years to 
 come wheat grown in the North-West must be 
 grown there cheaper than it can be in England. The 
 English farmer will find comfort in this, for he 
 must also acknowledge that this fact makes the 
 Canadian North-West the natural granary not of 
 Europe but of America. Prairie-farming in the 
 United States, obtaining ten to fourteen bushels per 
 acre, at once substituted itself for the wheat-growing 
 of the old Eastern States as the principal source of 
 supply to the American market. The new method 
 was prosecuted with such impetus and success that 
 it also maintained and, in a small measure, increased 
 the ratio that the export of wheat bore to other ex- 
 ports. The bright prospects of this Western farming 
 were, however, destined to be ruthlessly disturbed by 
 the discovery that the prairies north of the Canadian 
 boundary line not only produced wheat but produced 
 double the quantity, acre for acre, with no additional 
 expenses. The inevitable and natural consequence is 
 now following. The North-West is succeeding to 
 the West as the West succeeded to the East. 
 
 We see, (hen, that there will be hut little export from
 
 Foreign Competition in Agriculture. 203 
 
 the Canadian North-West till that North- West is 
 peopled. In the next place, when so peopled, the cost of 
 production on the spot will have risen considerably ; 
 and, lastly, the wheat so groionfor export will find its 
 chief market in America and not in Europe. 
 
 It is thus evident, if we give proper prominence to 
 the immediate past and duly weigh the probabilities 
 of the near future, that ' American ' and other com- 
 petition in agricultural matters is a fluctuating 
 factor; and that it will wax and wane in accord 
 with the growths and developments of other 
 communities. 
 
 6. There remains the task of facing the present, 
 which we thus clearly understand, and seeing what 
 good and true use may be made of it. 
 
 The farmer in these islands will remember that 
 his dread of American competition was chiefly bred 
 of an untoward and rare succession of bad harvests. 
 But he will find on his own farm many substantial 
 crumbs of comfort. In this matter of wheat, for 
 instance, the farmer does not live by the ears alone ; 
 for even in the very production of these ears he gains 
 2s. a bushel on the American in the value of straw. 
 This is an important item in wheat-growing ; and on 
 the prairie the straw is not only of no use but wastes 
 the certain amount of labour necessary to burn
 
 201 State Aid and State Interference. 
 
 it as rubbish. The getting rid of manure on 
 the richer prairies is likewise an actual additional 
 expense to the farmer. Again, the fertility of some 
 English districts, when properly farmed, is so great 
 that it outbids all possible prairie competition. The 
 yield per acre is above competition. Again, in most 
 good districts English wheat is of higher intrinsic 
 value (often 3s. and 4s. the quarter) than any that 
 can be grown on the prairie system. Again, we 
 have Mr. Prout's records of his experiment of ' con- 
 tinuous wheat-growing ' to show that even in the 
 exceptionally bad years through which we have 
 recently passed such "scientific agriculture" con- 
 tinues to yield profits. 
 
 Free Trade and density of population also range 
 themselves on the side of the British farmer. Forty 
 years of English progress have made fewer more 
 important marks on the state of affairs than in 
 regard to agricultural labour. This commodity has 
 now become certain in its supply and, as times go, 
 cheap. It is 15 per cent, cheaper than labour of 
 similar type in America. The fact is that both the 
 farmer and the labourers he employs are in capital 
 position as consumers. When our short wheat crop 
 last year forced us to import half as much again of 
 wheat as usual, there was a fall rather than a rise in
 
 Foreign Competition in Agriculture. 205 
 
 price of this first necessary of life. The commercial 
 policy England has adopted has enlarged greatly the 
 general wealth chiefly by the channel of easier con- 
 sumption. Our farmers, deprived of profits, by the 
 cruelty of the season, as producers, nevertheless 
 found compensation and relief as consumers in the 
 accommodation afforded by the wisdom of the 
 national policy. 
 
 7. But though the weight of this American 
 competition is temporary, and aggravated by reason 
 of bad seasons in England, it will nevertheless have 
 an abiding effect which is altogether salutary. Agri- 
 culture is an industry which has a proverbial 
 tendency to extreme conservatism. Its very success 
 seems to engender a condition of bucolic content- 
 ment which is little in keeping with these times of 
 ' Progress.' The British landowner no less than the 
 British farmer in the future will have cause for deep 
 gratitude to his Transatlantic rival for rousing him 
 to a sense of the needs of the day. It is one of the 
 great benefits conferred by Free Trade, that where it 
 prevails no industry can fall behind the best know- 
 ledge of the day. The United States have taught 
 Europe the great fact that even in the most trivial 
 tasks, the brain can be made the most profitable ally 
 of the hand. English agriculturists have never been
 
 206 State Aid and State Interference. 
 
 wanting in shrewdness or in energy ; they have 
 occasionally lagged in knowledge ; and even this 
 recent short scare has set them thoroughly to work 
 on the science of agriculture. But this science must 
 not be confined to the chemical cultivation of the 
 soil or to the mere physiological processes of organic 
 growth wisely and well it will be extended to 
 embrace the economic and political as well as the 
 natural factors of agricultural success. Commercial 
 geography and statistical information will prove as 
 precious to the English farmer as local lore of hus- 
 bandry. It will henceforth be recognised as more 
 useful to know that in a particular series of years 
 pasture or roots will pay better than cereals because 
 of the state of distant competing markets, than to 
 abide by some chemically perfect rotation of crops. 
 It may be that for the immediate present, wheat- 
 cultivation that is not of the highest order will be in 
 abeyance in England. A true science of agriculture 
 shows the political reasons for this temporary sub- 
 version of natural courses. But this same knowledge 
 will again forewarn farmers of the time when the 
 fuller growth of America will enable the revival of 
 wheat-growing even on the poorer soils where for the 
 time it had been given up. 
 
 We may trust this American competition scare
 
 Foreign Competition in Agriculture. 207 
 
 especially to influence landowners. The report of 
 the tenant farmers' delegates to the Canadian North- 
 West are full of allusions to the highly profitable 
 absence in Canada of the interference of " lawyer 
 factors." The facts of this competition may awaken 
 us to the removal of what is antiquated in our 
 present system of land tenure. Adam Smith's 
 vigorous, nay, pathetic, denunciation of entails and 
 other ' remnants of feudal anarchy ' have hitherto 
 made little impression ; but now, coupled with these 
 lessons from America, such reasonings are likely to 
 generate a new zest in the minds and work both of 
 owners and tenants, and thus considerably to 
 enhance the profits that have for years been 
 carelessly deemed sufficient for landed property. 
 
 8. Profits also will come from the transference 
 of agricultural activity. The general tendency of 
 this transference may be described as towards meat- 
 growing, dairy-farming, poultry-breeding, and 
 market gardening in the words of Professor Aldis 
 towards " the growth of such products as, from 
 their nature, must be consumed comparatively near 
 to their point of origin." No doubt the British 
 farmer will seek for crops and produce that are not 
 readily transported, by reason of their perishable, 
 bulky, or fragile nature. He will come to regard
 
 208 State Aid and State Interference. 
 
 the risks and costs of carriage as his natural ' pro- 
 tection.' And he will come to learn that in other 
 ways, in the superior productive power of the 
 English soil and climate, and of the English system 
 or skill in farming, he yet retains, if we judge by 
 results, a sure pre-eminence. And he, of all men, 
 will acknowledge that, after all, whatever the theory, 
 the cause or the reason the proof of the pudding is 
 in the eating. 
 
 As an instance, the English agriculturist will ask 
 himself, " How is it I do not grow beet for sugar- 
 making ? I know there is just twice the amount of 
 beetroot grown in Europe for this purpose that there 
 was only ten years ago ; I knoAv that England uses 
 just twice as much beet-sugar as she used even ten 
 \-ears ago ; I know our English refiners buy abroad 
 every year nearly 200,000 tons of raw beet-sugar ; I 
 know root-crops in England produce more, acre for 
 acre, than they do abroad. And yet I don't grow 
 beet ; I grumble that no crops pay nowadays ; I 
 don't suppose more than that can be said of beet. 
 Caird and Duncan and such other authorities tell me 
 I have a capital climate for the purpose. Am I in 
 the position of the Irish before they grew the 
 national potato ? Am I still under the Napoleonic 
 spell? I know Bonaparte started beet-growing on
 
 Foreign Competition in Agriculture. 209 
 
 the Continent as one of his many devices for destroy- 
 ing England's commercial greatness, by the ruin of 
 her sugar colonies. Can't I have my revenge by 
 taking this leaf out of his book ? " And he will find 
 his consoling answer in a matter-of-fact conclusion 
 that he cannot tell till he tries. 
 
 It has been my object to focus the attention of 
 agriculturists on a wider appreciation of the facts 
 of the past as well as of the present, in order that 
 we may judge aright of the future. The question 
 of its food-supply is to any nation its primary 
 concern, and the utilisation of the soil is a main 
 element in this question. It is often mistaken for 
 the whole of the question. It is well to bear in 
 mind that since the inauguration of free trade we 
 have added eight millions to our population, and 
 we have increased our imports of food (of kinds 
 usually grown in England) by something like 
 80,000,000/. value in the year. It may be said, 
 then, that these new eight millions of people spend 
 10/. each per annum to pay for foreign supplies 
 which they fail to obtain from English sources. 
 Thus, seeing that our system of agriculture is more 
 productive than that of other countries, we are 
 driven to acknowledge that at least a partial cause 
 of this purchasing abroad of these foods is that 
 
 p
 
 210 State Aid and State Interference. 
 
 we do not farm sufficient soil to feed our own 
 population. 
 
 Two questions remain : Is this owing to actual 
 lack of land ? do we practically make the best of 
 all the soil we possess that is fit for the purpose ? 
 Or, on the other hand, assuming that soil exists 
 sufficient for the purpose, is not mUch of this now 
 utilised for industries or purposes that pay better 
 than the direct production of food ? This latter 
 explanation is, at all events, supported by the fact 
 that annually we increase our consumption of foods 
 that cannot be grown in England. In 1840 we 
 spent 9s. per head per annum on these foreign foods. 
 In 1878 we spent 30s. per head. As compared 
 with pre-free-tKide days, we now buy three times 
 the amount of currants, ten times the amount of 
 oranges and lemons, four times the amount of tea, 
 and so in all other details. Manufactures, mining, 
 and carrying have progressed in proportion ; but 
 population has only increased by one-fifth. We are 
 driven, then, to the conclusion that capital, labour, 
 and probably large areas of actual soil, have been 
 turned to other and more profitable uses than the 
 direct production of food. The Census records are 
 significant. In 1S41 the rural population of England 
 and Wales (the portion, that is, connected with
 
 Foreign Competition in Agriculture. 211 
 
 the direct production of food) numbered 8,200,000 ; 
 the town population (that portion not connected 
 with the direct production of food) numbered 
 7,700,000. The country folk outnumbered the 
 townsfolk ; those who produced food outnumbered 
 those who only consumed. But in 1871, while the 
 rural population only increased its numbers by some 
 2,000,000, the town populations had increased by 
 no less than 5,000,000. In 1871 the tables were 
 reversed; the townsfolk largely outnumbered the 
 country folk those who produced food were largely 
 outnumbered by those who only consumed it. The 
 Census of 1881 proved that the urban population 
 continues to increase nearly twice as fast as 
 the rural. We have more people, we have more 
 money, and we have found for certain areas of soil 
 more profitable use than the manufacture of food. 
 What wonder, then, that the national food market 
 is supplied in some measure by foreigners ? 
 
 We have thus, in brief, the whole case of this 
 foreign competition. British agriculture will derive 
 invaluable benefit from these alleged inroads on its 
 prosperity if, as seems probable, this competition 
 of virgin soils directly or indirectly rouse English 
 agriculture to a survey of the needs of the day . 
 By the close of this century, twenty years hence, 
 
 p 2
 
 212 State Aid and State Interference. 
 
 prairie. produce will be more and more absorbed in 
 its own home market ; and even wheat-growing 
 in England may again have reverted to its old 
 courses. English agriculture will then be found, 
 without doubt, to have passed through the fire 
 of competition improved vastly in quality, purged 
 and hardened for a long future of prosperous 
 activity.
 
 Foreign Competition in Manufactures. 213 
 
 CHAPTER IX. 
 
 FOREIGN COMPETITION IN MANUFACTURES. 
 
 1. "What Foreigners are doing and what they are asserted to 
 be doing. 2. The modem tendencies of Foreign Tariffs. 
 3. Of Colonial Tariffs. 4. Pauperising effects of High 
 Tariffs. 5. Foreign Exporters of Manufactures. 
 
 1. There is no field of human industry for 
 which the aid of the State is more often invoked 
 than for that of manufactures. To start non-existent 
 manufactures; to foster and cherish manufactures 
 that are hard pressed ; to protect all classes of 
 manufactures against foreign oppression or aggres- 
 sion ; are held by many to be among the , first 
 duties of a national government. Such is the end 
 put forward. And to attain this end means are 
 suggested in which assumption and assertion entirely 
 swamp experience. Government are told to start 
 and cherish and protect manufactures by the means 
 and instrumentality of customs duties. What I 
 wish in this chapter to suggest is that these means
 
 214 State Aid and State Interference. 
 
 have proved by no means infallible. Indeed, if we 
 look to recorded results, we find that the lower the 
 customs tariff the more do manufactures originate, 
 progress, and prosper in a country. Experience tells 
 us that if you would start and encourage and main- 
 tain manufactures that shall be profitable to the 
 community, you must jealously watch that your 
 tariff of customs duties be low enough not to 
 interfere practically with the free course of industry. 
 There is no more self-evident proof of this to be 
 found anywhere than in the records of what manu- 
 facturers are actually doing in England and in 
 foreign countries. And these records belie in a 
 most astounding manner the assertions on the 
 subject that are, strange to say, commonplaces in 
 books and newspapers, no less than on the platform 
 and in the public utterances of those who aspire 
 to be leaders and advisers of the community at 
 large. 
 
 2. One of the commonest of these assertions is 
 to the effect that "Foreigners are by their tariffs 
 shutting us out of their markets," and that "hostile 
 tariffs abroad are closing to our manufactures the 
 markets of the world." In the first place, this type 
 of assertion is absolutely and, in the second place, 
 it is relatively contradicted by the facts of the case.
 
 Foreign Competition in Manufactures. 215 
 
 It is absolutely untrue because, as a matter of 
 fact, the various foreign countries have, for instance, 
 during the last twenty years, in the aggregate 
 taken great strides towards Free Trade principles 
 in regulating their tariffs. 
 
 Lord Sandon did his party a sterling benefit by 
 calling for a parliamentary return recording the 
 rates of duty in English money levied on articles 
 of British produce or manufacture imported into 
 the various foreign countries and chief English 
 Colonies in each of the years 1860, 1870, 1875, and 
 1880. These returns are now before the public, 
 and to ignore them is to ignore recorded facts of 
 the highest value at the present moment. 
 
 On the continent of Europe we find, from these 
 returns, that during the last twenty years tariffs 
 have been generally and considerably lowered ; the 
 numbers of articles taxed has been considerably 
 reduced; and all the states of the Continent have 
 either granted or expressed their willingness to 
 grant most favoured nation treatment to English 
 goods. 
 
 It may be well to place on record here a few of 
 the details of this notable European movement. 
 
 In the first place, in regard to the tendency 
 towards reduction of tariffs. Comparing the tariffs
 
 216 State Aid and State Interference. 
 
 of 1880 with those of 1860, we find that in only 
 two out of the sixteen European states is there 
 any increase. These two exceptions are Italy and 
 Greece. And even in these two cases there are 
 explanations that are most satisfactory. In Italy 
 the change is due to the fact that in 1880, by the 
 lapse of special treaties between Italy and third 
 countries, English imports fell under a 'general 
 tariff" higher than that they had enjoyed under most 
 favoured nation treatment. In Greece the change was 
 due to the fact that all duties were raised 10 per cent. 
 ad valorem by the promulgation of a financial law 
 requiring all duties to be paid in new instead of old 
 drachmas. Of the other states of Europe in France 
 and in Turkey the tariffs remained the same ; in 
 Denmark, Portugal, and Switzerland there has been 
 reduction when there has been change ; in Spain, 
 Germany, Russia, Sweden, Norway, and Austria 
 there has been general and, very often, great 
 reduction. 
 
 A point of great additional importance is the 
 number and kind of items in which alteration has 
 been made. If we omit Italy and Greece on account 
 of their present anomalous position, we find that of 
 the 2,140 'items' existing in 1860, 136 only have 
 been raised, while 000 have remained the same and
 
 Foreign Competition in Manufactures. 217 
 
 no less than 1,104 have either been lowered or 
 removed from the list altogether. 
 
 Or the 136 that have been raised, 30 are in 
 Denmark, 53 in Germany and Russia, and the 
 remaining 53 scattered over all other countries. It 
 is desirable also to remember the kind of items so 
 altered. In Denmark the increase has taken place 
 in the duties on spirits, raw sugar, butter, and 
 fire-arms. In Russia the increase has been in wool, 
 engines, and machinery. In Germany the chief 
 rise has been in yarns of various kinds. In Holland 
 there has been increase on raw sugar. In Sweden 
 and in Norway on spirits and raw sugar. In Austria 
 on railway carriages. Generally speaking we find 
 that the duties have been raised in 61 cases on yarns, 
 raw materials, and food ; in 20 on spirits ; in 19 on 
 tissues ; and in 37 on sundry manufactured articles. 
 Thus the English manufacturer has been directly 
 favoured in many more instances than he has been 
 directly hampered in the comparatively few instances 
 in which duties have been raised on the Continent. 
 
 Incidentally it may be mentioned that in Russia 
 alone a very great advance in favour of the English 
 manufacturer has been made in the abolishing the 
 distinction which was drawn in 1860 between goods 
 arriving by sea and by land. Tissues, hosiery,
 
 218 State Aid and State Interference. 
 
 carpets, earthenware, refined sugar, iron-castings, 
 paper, and other items of English export, were all 
 saddled with these extra duties in 1860 from which 
 they were relieved in 1880. 
 
 As to the 1,104 items that have been lowered, 
 the English exporter has even more definite cause to 
 congratulate himself. In 200 cases there is a 
 decrease in the duties levied on raw materials and 
 food. In 400 cases there is a decrease in the duties 
 on yarns and tissues, and the remaining 504 cases 
 are in sundry items of manufactured articles. 
 
 Perhaps the most conclusive testimony is that 
 which deals with the comparative height of the pre- 
 sent tariff's. It may be held that a tariff not exceed- 
 ing 10 per cent, ad valorem will not greatly interfere 
 with trade. A tariff that is, in the aggregate 
 average, above 20 per cent ad valore?)i may be set 
 down as decidedly high and ' hostile.' An inter- 
 mediate tariff may be described as medium. If, 
 then, we classify continental countries under the 
 three categories low, medium, and high, accord- 
 ing as their tariffs are under 10 per cent., between 
 10 per cent, and 20 per cent., and above 20 per 
 cent., we shall find that Switzerland, Turkey, Hol- 
 land, Norway, Sweden, Belgium, and France, range 
 themselves under the first category. Italy, Denmark,
 
 Foreign Competition in Manufactures. 219 
 
 and Germany may be described as medium. Spain, 
 Greece, Portugal, Austria, and Russia still remain 
 under the category of high tariff countries. It is 
 not our province to deal with prospects, but it may 
 be mentioned that Italy, Portugal, and especially 
 Spain, are determined to advance themselves out of 
 this backward class so soon as they can. It will 
 thus be seen that during the last twenty years 
 tariffs have been generally and considerably lowered 
 on the continent of Europe. 
 
 We must also recognise the fact that the number 
 of articles appearing in the tariffs has been very 
 considerably reduced. In only three States in 
 Germany, Italy, and Denmark has there been 
 any increase in the number of items on the list. 
 In the other States the average number of articles 
 scheduled has fallen from 134 in 1860 to 118 in 
 1880. And there are now only three States that 
 have more than 200 articles on their schedule. This 
 tendency is of course a tendency invaluable to 
 freedom of commerce, for it clears the channel of 
 numerous obstructions that otherwise impede and 
 hamper that free current of commercial intercourse 
 which is so absolutely essential to a healthy state 
 of trade. 
 
 Perhaps the most definite advance is, however,
 
 220 State Aid and State Interference. 
 
 the general adoption of the most favoured nation 
 principle. This is a great step out of the com- 
 plications and impediments to trade inevitable 
 to the system of many and separate commercial 
 treaties. It seems that in 1860 we enjoyed this 
 favour by express treaty with eight only of the 
 sixteen European states. In 1880 we had actually 
 secured the privilege with no less than fourteen, 
 and the remaining two had expressed their definite 
 determination to adopt the arrangement so soon 
 as treaties could be arranged. The high importance 
 of this increasing inclination of foreign nations to 
 give us most favoured nation treatment is seen in 
 the fact that it is one half the battle at the least in 
 our competition to supply a foreign market. We 
 have ' opposed ' to us the native and the foreign 
 competitor ; and this ' most favoured nation ' treat- 
 ment at once puts us on an equal footing with our 
 foreign competitor. As for the native competitor, 
 he, so far as he can compete at all, can only hope 
 to compete with success provided he enjoy the same 
 facilities as a consumer that we enjoy in conse- 
 quence of low tariffs. We have thus advanced the 
 great step since 18G0 which places us in nearly all 
 European markets on an equality with all foreign 
 competitors in those markets. This is a distinct
 
 Foreign Competition in Manufactures. 221 
 
 and general advance along the whole line in the 
 direction of greater freedom of commercial inter- 
 course. And on the whole we see that on the 
 continent of Europe the tariffs are becoming less and 
 less hostile to English goods. 
 
 3. A subsidiary but none the less common and 
 important complaint is put forward that our Colonies 
 shut us out by hostile and Protective tariffs. Indeed 
 Protectionists, not only in England but in other 
 countries, have twitted us with the assertion that 
 however ' Freetrade ' we may be ourselves, never- 
 theless our colonial offspring, so soon as they acquire 
 fiscal liberty, immediately raise up hostile tariffs 
 against us, and adopt the policy of Protection for 
 themselves. This strange and utter misrepresenta- 
 tion of what is actually occurring holds sway over a 
 strangely wide domain. It is reflected in leading 
 articles in leading newspapers ; it is even a common- 
 place on the platform, in Parliament, and even 
 within the precincts of the Cobden Club itself. 
 Professor Bonamy Price is indeed one of the few 
 public authorities who has. put the matter in its 
 true light. In an address in 1878 he well put 
 the matter in the sentence : " Victoria, at the 
 instigation of an ignorant democracy, breaks the 
 financial uniformity of a mighty empire, and loads
 
 222 State Aid and State Interference. 
 
 the merchandise of the central State with har- 
 rassing duties." As a matter of fact we have nine 
 Colonies that arrange their own fiscal affairs in 
 independence of the Colonial Office. Of these, 
 only two, Canada and Victoria, have ' hostile ' 
 tariffs. The Cape of Good Hope, New South 
 Wales, Queensland, Tasmania, South Australia, 
 New Zealand, and Newfoundland, all have tariffs 
 that would fall under the ' low ' category as being 
 under 10 per cent. They are all tariffs imposed 
 solely for the purposes of revenue. And of our 
 remaining Crown and other Colonies all have low 
 tariffs excepting, indeed, those which have no 
 tariffs at all. 
 
 Canada and Victoria have both of them set up 
 high tariffs within recent years for the special and 
 avowed purpose of Protection. But Victoria, as we 
 have seen in detail in a previous chapter, has 
 grievous cause to repent this fiscal backsliding. In 
 Canada the main reason for the adoption of a 
 Protective policy is political and not economical. It 
 is a measure of self-defence against the supposed 
 overshadowing of its great neighbour. The Canadian 
 Government determined to protect itself by a high 
 tariff against the United States. And, yielding only 
 to the definite law of the British Empire, that within
 
 Foreign Competition in Manufactures. 223 
 
 its boundaries there should be no differential duties, 
 the high tariff had to include British as well as 
 American goods though the Canadians themselves 
 pointed out it was distinctly not hostile in intention 
 to British goods. 
 
 Our Colonies and India are, as is very well known, 
 taking from us vastly increasing quantities of manu- 
 factured commodities. As we see, they most of them 
 have low tariffs ; but it is a notable comment on the 
 policy of high tariffs that the two Colonies that im- 
 pose them still, continue to do their share in the con- 
 sumption of manufactures from the mother country. 
 The squatters and miners of Victoria no less than 
 the farmers and lumberers of Canada are not to be 
 turned aside from their most lucrative enterprises by 
 any blandishments of Protection. The great bulk of 
 population in each of these two Colonies sturdily 
 refuses to reverse the natural and most profitable 
 order of opening up a new country. All that the 
 high tariff can do is to make these natural pioneers 
 of their country's growth and greatness pay more 
 for what they use. The high tariff is merely a 
 tax on growth which is paid without difficulty 
 out of the great profit that accrues from the rapid 
 development of virgin resources. The amount of 
 this tax may be fairly gauged in the comparison
 
 224 State Aid and State Interference. 
 
 of Victoria and New South Wales we have made 
 in a previous chapter. 
 
 4. Recorded results tell us that the assertion 
 that most other countries are exhibiting in their 
 tariff arrangement increased hostility to British 
 manufactures, is absolutely contrary to truth. The 
 assertion is also relatively untrue. If we for one 
 moment ask ourselves the question who pays import 
 duties we shall at once see that a high tariff only 
 excludes foreign goods in the sense of rendering the 
 population of the protected country less able to buy 
 these goods, whether of foreign or of home make. 
 If it so happens that the country is rich in other 
 wealth-yielding forces the general effect of the tariff 
 will be, not to curtail the importation of foreign 
 goods but, simply to force the population to pay 
 more than other nations pay for these same goods. 
 We still find that, in the strictly protected com- 
 munities of the United States, Canada, and Victoria, 
 the consumption of English manufactured articles, 
 of the very kind the tariff seeks to exclude, 
 nevertheless continues to increase year by year. 
 
 Supposing that a ton of linen piece-goods can be 
 manufactured in England for 100/. Add to this 10/. 
 profit and 1/. carriage to market. The English 
 dealer can sell at a nrofit for 112/. The Germans
 
 Foreign Competition in Manufactures. 225 
 
 place on this a duty of 51. in order to protect their 
 own linen industries. This difference is either pure 
 profit to the German manufacturer or it represents 
 extra cost of production. And so long as the higher 
 price is paid by the German purchaser English 
 goods may be able to compete, provided the added 
 duty only brings up the total cost of the English 
 goods to the level of the cost of production in 
 Germany. In this sense the Import duty is merely 
 the entrance-fee charged by the State for entry into 
 the German market, which fee is recouped out of 
 the higher prices obtaining in the market. And if 
 these prices are not higher the protective tariff is of 
 no effect. 
 
 The point of the question is, whether this 
 entrance-fee can be recouped out of the differences 
 of price. If it cannot, English goods will not pene- 
 trate ; but in that case the German State fails to 
 obtain an equivalent amount for its Revenue ; and 
 the German consumer has to contribute in some 
 other way. But it all comes in the end to the issue 
 that the amount of the Import duty that is paid is 
 ultimately paid by the German consumer. 
 
 This tells terribly on production in Germany. 
 The value of wages or of profits depends intimately 
 on their purchasing power. If a Protective duty 
 
 Q
 
 226 State Aid and State Interference. 
 
 raises local prices 20 per cent, it makes labour 20 per 
 cent, dearer, and it makes profits 20 per cent, less 
 profitable. It is paid by the producers of the nation 
 qud consumers. In the enhanced prices of his 
 clothing and his food the labourer will contribute 
 out of his wages. In the enhanced prices not only 
 of his clothing and food, but also of his machinery 
 and his raw materials, the capitalist will contribute 
 out of his profits. 
 
 If the duty succeeds in fostering, that is inter- 
 fering with, industry, it can only do so by succeeding 
 in making the price of the commodity higher to the 
 consumer than it otherwise would be. And pro tanto 
 it reduces the earnings of labour and the profits of 
 capital. Pro tanto it is a dead loss to the producers ; 
 a dead handicap on the nation as a whole. 
 
 And there is further loss to the nation that 
 imposes import duties that are so high as to inter- 
 fere with the free course of industry. We are 
 all struck by the fact that any nation famed for 
 wealth is a nation of great commercial dealings. 
 There is most capital made by those nations that 
 trade most. Exchange is the one great fountain 
 head of capital, whether it be local or cosmopolitan. 
 The reason is not commonly understood. The 
 popular mind with strange perversity vainly desires
 
 Foreign Competition in Manufactures. 227 
 
 that the nominal value of exports should balance 
 or exceed that of imports. The very reverse is, of 
 course, the more profitable account. It is out of 
 the profits made by importing that commerce en- 
 riches a nation. The exports are merely one of 
 many methods of paying for the imports. But 
 after they are paid for, imports bring with them 
 profit. We may put a hypothetical case. Very good 
 pine-apples can be grown in England at a cost of 
 2s. Qd. each : equally good pine-apples can be sent 
 from Jamaica at a cost of 6d. each, including 2d. 
 profit to the grower. Consequently we import 
 great quantities of pine-apples from Jamaica. Porter 
 cannot be made in Jamaica, so warm is the climate, 
 at less cost than 2s. 6d. a bottle. It can be made 
 in England at 6V/. a bottle, including 2d. profit to 
 the brewer. The cost of carriage to and fro is 
 equal for a bottle or a pine-apple. We send to 
 Jamaica as exports 1,000 bottles of porter costing 
 25/. We receive from Jamaica 1,000 pine-apples 
 costing 25/. The brewer in England, by having a 
 market in Jamaica, has made 8/. profit ; and so 
 too the pine-apple grower in Jamaica, by having a 
 market in England, has made 8/. profit. So far 
 each nation has been enriched. But there is a 
 far greater source of profit to each community in 
 
 Q 2
 
 228 State Aid and State Interference. 
 
 the enormous saving of expense secured by the 
 exchange. Supposing there to exist prohibitive 
 tariffs in England against pine-apples and in Jamaica 
 against porter. Then in one country, if they drank 
 porter, consumers would have to pay 125/. instead 
 of 25/. for the 1,000 bottles ; and in the other 
 country they would have to pay 125/. instead of 
 25/. for their 1,000 pine-apples. In other words, by 
 the means of the protective tariff, Jamaica would 
 have been impoverished 100/. and England 100/. in 
 every such transaction. 
 
 It is in this respect that high and protective tariffs 
 most injure English exporters. It is an indirect and 
 not a direct effect. But it is none the less powerful 
 and telling. A high tariff prevents a nation reaping 
 all the profits which accrue from exchange ; and 
 the nation has so much the less to spend on the 
 necessities, the conveniences, or the luxuries of life. 
 In England, by our commerce, we can cat pine- 
 apples for Gd. that would otherwise cost us 2s. Gd. 
 And so, in proportion, with all other commodities, 
 there is profit in whatever we consume or use by 
 reason of our free imports. We leave trade unre- 
 stricted, and we know that then it will run in 
 those channels and in those directions which are 
 most favourable to the genesis of profits.
 
 Foreign Competition in Manufactures. 229 
 
 We regret to see other nations cutting them- 
 selves off from such sources of profit, and we are 
 fain to console ourselves with the tendency there 
 arises for us, profiting so as consumers, to cheapen 
 so greatly our Costs of production as to undermine 
 altogether these walls that other natioDS build up 
 in order to keep out the fertilising and enriching 
 current of free commerce. 
 
 It is as though villages in the rainless Delta of 
 the Nile were to fence themselves and their lands 
 round with walls impermeable to the annual flooding 
 of the Nile, and set to work to manufacture manures 
 and distil water. Each year that river brings down, 
 it is calculated, so many millions of tons of fertilising 
 deposit and so many billions of gallons of water to 
 a rainless land. Supposing that one of those vil- 
 lages adopts the opposite policy, and by clearing 
 away all obstructions, invites and receives the full 
 flood of the fertilising and enriching Nile ; and 
 supposing the remaining villages continue stoutly 
 to keep out all such external aid not only will 
 this one village flourish, but its crops will become 
 so perennially abundant that it will shortly find 
 itself able to purchase with its surplus all that it 
 desires of the property of its desolated neighbours.
 
 230 State Aid and State Interference. 
 
 And in the end, when, for lack of recuperative 
 force ; when, through despising the outside aid of 
 more favoured regions of the earth ; when, by reason 
 of refusing to admit the waters of rainy and snowy 
 Abyssinia, these villages of the rainless Delta dwindle 
 and fall into ruin, then the wise village, which has 
 made the most of the bounty of nature in other 
 lands, will be flourishing as ever, and only regretting 
 that the other villages should, by foolish exclusive- 
 ness, have so entirely pauperised themselves as to 
 be no longer capable of purchasing its own surplus 
 products. 
 
 So do nations, which open their doors to supplies 
 from all the world, profit not only by the large and 
 steady supply of all they need as consumers and as 
 producers, but above all by the fact that wheresoever 
 they can obtain a commodity abroad cheaper than 
 it can be made at home in every case there is 
 enormous profit to the nation, simply out of the fact 
 that it is not made at home at so much extra cost 
 of national labour. 
 
 5. It might be supposed, not altogether without 
 reason, that, if our manufactures were in actual 
 process of extinction by this asserted irruption of 
 foreign competition, these various countries, and
 
 Foreign Competition in Manufactures. 231 
 
 more especially those which foster their manufactures, 
 would be all of them increasing the percentage of 
 manufactures exported. 
 
 In his most admirable book Freetrade v. Fairtrade, 
 Mr. T. H. Farrer gives the following tables, which 
 tell no uncertain tale. 
 
 United Kingdom. 
 
 Articles of Food, Drink, and Tobacco 
 
 1870. 
 
 1880. 
 
 Per 
 
 Amount. \ c ^ B . t - 
 
 i Total. 
 
 1 
 
 Amount. 
 
 Per 
 cent. 
 
 of 
 Total. 
 
 
 
 7,607 4 
 
 13,744 ! 7 
 
 178,236 i 89 
 
 1 
 
 
 
 S,825 
 
 23,272 
 
 190,963 
 
 4 
 
 10 
 
 86 
 
 
 Total Exports of British and \ 
 
 199,587 
 
 100 
 
 223,060 
 
 100 
 
 ! 
 
 United States. 
 
 Pood 
 
 Amount. 
 
 Percentage. 
 
 1S70. j 1880. 1870. 1880. 
 
 1870. 
 
 1880. 
 
 Dollars. 
 129,960 
 273,597 
 
 51,651 
 
 Dollars. 
 464,130 
 274,554 
 
 S5,262 
 
 
 
 21,660 
 45,600 
 
 8,609 
 
 
 
 96,694 
 57,199 
 
 17,763 
 
 28-6 
 60-1 
 
 11-3 
 
 56-3 
 33-3 
 
 10-4 
 
 Raw Materials . 
 
 Manufactured \ 
 
 Articles ... J 
 
 Total 
 
 I 
 455,208 1 823,946 
 
 75,869 
 
 171,656 
 
 100 
 
 100
 
 232 State Aid and State Interference. 
 
 FlLANCE. 
 
 Food 
 
 Amount. 
 
 Percejjtaoe. 1 
 
 1869. 
 
 1S79. 
 
 1869. 
 
 1 
 
 1S79. : 
 
 
 
 34,017 
 21.4S2 
 
 70.504 
 
 
 33.159 
 25,210 
 
 t>J .510 
 
 27 
 17-0 
 
 50 -o 
 
 26-0 
 
 
 lit -8 
 
 Total 
 
 54-2 
 
 126,003 127, S-5 
 
 100 
 
 100 
 
 Germany. 
 
 Food 
 
 
 Amount. 
 
 
 Percentage. 
 
 1S69. 
 
 1S79. 
 
 1S09. 
 
 1 79. 
 
 1S69. 
 
 1879. 
 
 Marks. 
 567,126 
 
 767,060 
 
 677,277 
 
 Marks. 
 758.970 
 
 945,660 
 
 1,071,020 
 
 
 28, 350 
 38,383 
 
 43,864 
 
 
 37,948 
 
 47. 2-3 
 
 53,551 
 
 25 -6 
 34 7 
 
 39-7 
 
 27-3 
 34-0 
 
 38-7 
 
 Raw Materials. 
 
 Manufactured 
 
 Articles ... 
 
 Total 
 
 2,212,003' 
 
 2,775.050 
 
 110.603* 
 
 138,782 
 
 100 100 
 
 The values tor 1S0O are estimated onlv. 
 
 It will be observed that the percentage of manu- 
 factures to total exports decreases in proportion as 
 the tariff is higher and more avowedly protective. 
 
 It is well to compare particular points. 
 
 We are frequently warned that in textile manu- 
 factures our day of supremacy is past and gone. 
 And we are told France is wise in her generation
 
 Foreign Competition in Manufactures. 233 
 
 in keeping to an elaborate scale of duties. If we 
 look to results we find that in supplying the markets 
 of the world, we are not only at the present doing 
 nearly five times the foreign business that France 
 is doing, but within the last 20 years , while our 
 export of textiles has increased 50 per cent, that of 
 France has decreased 10 per cent. The figures are 
 worthy of record : 
 
 Export3 of Textile Manufactures. 
 (Cotton, linen, silk, and woollen.) 
 1S59. 1869. 1S79. 1880. 
 
 France 32,000,000 ... 35,000,000 ... 28,000,000 ... 29,000,000 
 
 England 73,000,000 ... 107,000,000 ... 94,000,000 ... 109,000,000 
 
 Perhaps there is no State in the world that has 
 set to work so determinedly to foster manufactures 
 by the means of a high customs tariff as the United 
 States. Mr. Mulhall in his valuable work The 
 Balance Sheet of Nations gives some very remark- 
 able figures. He tells us that in 1870 the inha- 
 bitants of these islands manufactured 408 shillings 
 per head, but that in 1880 the value of the manu- 
 factures was 440 shillings per head an increase of 
 8 per cent. In the same two years the value of 
 manufactures per head of population in the United 
 States was 354 and 355 shillings respectively. In 
 other words, the population of the United Kingdom 
 was becoming' more and more a manufacturing
 
 234 State Aid and State Interference. 
 
 people, while the population of the United States 
 was remaining stationary in that very respect. 
 
 And it is not only with us that all this is so. 
 The Swiss exports to the United States tell the 
 same tale. There is increase in the watches 
 exported, a very significant item. 
 
 Again If we ask for the export of a manufactured 
 commodity for which any country is famous, and if 
 we also look to its tariff, we shall notice some curious 
 facts. On the continent of Europe France is the 
 great silk manufacturing country, Switzerland fol- 
 lowing next. In all European countries there are 
 heavy import duties on silk, excepting only Switzer- 
 land, where there is a light duty, and France, where 
 there is no duty at all. 
 
 Again fire-arms enter Belgium and Norway free, 
 and all other continental States place import duties 
 on them. Belgium, at all events, is the great 
 continental manufactory of fire-arms, and the only 
 one whose competition is actually felt by England. 
 
 Again it will be held that Switzerland is the 
 head-quarters of European watch and clock making. 
 And yet Switzerland of all continental countries 
 alone refrains from taxing the imported watches 
 and clocks, and is content with a merely nominal 
 duty.
 
 Foreign Competition in Manufactures. 235 
 
 It may be that a country does not import in any 
 quantity those commodities it chiefly manufactures ; 
 and that therefore the duty is useless ; but the fact 
 none the less remains that in each instance these 
 manufactures flourish most when ' unprotected.' 
 
 On the whole, then, so far as Foreign competition 
 is actually affecting British manufactures, we find 
 that gradually the latter are obtaining easier access 
 to the chief foreign markets. Any nation that still 
 clings to the idea of a high tariff clings to an idea 
 that has a pauperising effect : and in so far its powers 
 are curtailed for purchasing English manufactures ; 
 in so far, its powers are curtailed of successfully 
 competing in manufacture with those nations that 
 enjoy all the industrial advantages of free intercourse 
 with the rest of the world.
 
 236 State Aid and State Interference. 
 
 CHAPTER X. 
 
 FOREIGN COMPETITION IN MANUFACTURES. 
 
 1. What we are doing in England Our Home Market and 
 Foreign Purveyors. 2. Percentage of Manufactures to other 
 Imports. 3. Particular examples Hardware Silk Wool- 
 lens. 4. English Labour cheaper and better. 5. Failure of 
 Foreign Competition. 
 
 1. One of the commonest assertions on which is 
 founded an appeal to the State to do something for 
 English manufactures is that the English home 
 marJcct is heing flooded by foreign manufactures. We 
 must therefore form some idea of what this home 
 market really is, and of the place taken in it by 
 imported manufactures. 
 
 The British Association for the Advancement of 
 Science recently appointed a Committee to inquire 
 into the manner in which incomes were spent in 
 England. Abundant statistics of all kinds were 
 collected and collated. From the elaborate calcula- 
 tions of the Report of this Committee, it appears that
 
 Foreign Competition in Manufactures. 237 
 
 we probably spend each year in England on various 
 manufactured commodities a sum approaching to 
 500,000,000/. Of these commodities we obtain only 
 one seventeenth, or 30,000,000/. worth, from abroad. 
 This amount of foreign goods is roughly distributed 
 as follows, and I add for comparison the values of 
 our export of similar articles : 
 
 Imports. Exports. 
 
 Silks and Gloves 15,000,000 
 
 Cottons and Woollens 10,000,000 
 
 Iron, Steel, and Glass 4,000,000 
 
 Miscellaneous 1,000,000 
 
 Total of these Manufactures 30,000,000 
 
 3,000,000 
 
 80,000,000 
 
 34,000,000 
 
 100,000,000 
 
 217,000,000 
 
 The silks and gloves are distinctly luxuries, and 
 could only be purchased by well-to-do people. A. 
 large portion of the ' woollens ' is to be credited 
 to the influence of fashion. The chief feature, 
 however, is the utter insignificance of the total 
 sums as compared with the values of what we 
 export. We probably send abroad ten times the 
 value of the manufactured commodities we import. 
 
 There is, however, a fact of much importance in 
 connection with this home market which largely 
 regulates our dealings with foreigners. And this 
 fact is the curious effect of fashion in the matter 
 of clothing. Things have altogether changed in
 
 238 State Aid and State Interference. 
 
 this respect within the last fifty years Wear was 
 then the great attribute of good clothing ; but now it 
 is so no longer. There may be compensation in all 
 this. It may be that a working man spends no 
 more on dress in buying a 11. suit each year than 
 in paying 101. for a suit that lasted him ten years ; 
 or that his wife should buy a new 11. costume each 
 year instead of a new 10/. gown every ten years. 
 But all this has a great effect on manufacture. 
 Districts and classes were formerly most conserva- 
 tive in the matter of dress, but now fashions 
 penetrate all over the country and through all 
 classes. There is much more frequent change. 
 And where in old days this change of fashion 
 affected 1,000 people it now affects 100,000. 
 
 The sewing-machine ' the printing-press ' of 
 fashion in dress has been the great and indis- 
 pensable ally of this revolution. 
 
 A notable example of this effect of fashion has 
 been felt in the woollen trade. The English woollen 
 manufacturers were slow to recognise this new 
 invasion of fashion. The point was well if familiarly 
 put in the remark that women at one time made 
 balloons of themselves, and at another time mops. 
 At one time they were all for stiff, spreading, stand- 
 ing-out skirts, and at another all for limp, clinging,
 
 Foreign Competition in Manufactures. 239 
 
 close-fitting skirts. And as fashion had come to 
 rule, not only in Hyde Park, but in every country 
 town and village, this change in the material used 
 for dresses had a most powerful effect on the trade. 
 In this case in particular English manufacturers 
 were slow to believe that fashion had so great an 
 influence on the trade. But now that the lesson 
 has been learnt, a more watchful eye will follow or 
 anticipate the vagaries of fashion. 
 
 A change of fashion has. all this widespread 
 effect; but it must be mistaken neither for our 
 industries being defeated in competition with those 
 of foreign nations, nor for effects of depression 
 among consumers. Fashion is a factor in our in- 
 dustrial and commercial life that has put on a new 
 power lately, and one we must seek to understand 
 and to acknowledge. And it has nowhere so great 
 an effect as in the English home market. What 
 with lowering of /prices and raising of wages the 
 great bulk of the people in England have now more 
 to spend on dress and the accessories of life than 
 any people have ever had elsewhere or in any other 
 age. This fact not only widens the domain .of 
 fashion, but also gives to the English home market 
 an importance in the national economy that makes 
 it paramount to all other elements.
 
 240 State Aid and State Interference. 
 
 2. If it be true that the English home market 
 is now being flooded with foreign manufactures to 
 the detriment of home manufactures, we shall find 
 necessarily that the percentage of manufactured 
 articles to the rest of our imports is increasing. It is 
 thus well worth tabulating the actual facts of the case. 
 
 TABLE. 
 Percentage of Manufactured Articles to the Total op 
 Imports and Exports of the United Kingdom for the 
 Last Fifteen Years. 
 
 
 Imports. 
 
 
 Exports. 
 
 
 
 
 Percent- 
 
 
 
 Percent- 
 
 
 
 
 age of 
 
 
 
 age of 
 
 Year 
 
 Manufac- 
 
 
 Manu- 
 
 Manufac- 
 
 
 Manu- 
 
 
 tures. 
 
 Total. 
 
 factures 
 
 to 
 
 Total. 
 
 tures. 
 
 Total. 
 
 factures 
 
 to 
 Total. 
 
 
 
 
 
 
 
 
 
 
 1^7 
 
 17,600,000 
 
 27.200,000 
 
 7 
 
 175,700,1 00 
 
 181.000,000 
 
 07 
 
 lscis 
 
 19.900,000 
 
 204,700,000 
 
 7 
 
 174,300,000 
 
 180,000,000 
 
 
 1S60 
 
 20,700.000 
 
 295,500.000 
 
 7 
 
 ls.VOO,000 
 
 190,000,1 I 
 
 
 IsTO 
 
 27,200,000 
 
 30.'!. 300,000 
 
 
 
 104.100,000 
 
 200,000,000 
 
 07-'. 
 
 1.-71 
 
 20,. r >00,( 
 
 331,000,000 
 
 6 
 
 217,403,000 
 
 223,000,000 
 
 97* 
 
 1n7l> 
 
 22.200,000 
 
 354,700.000 
 
 6 
 
 240,300,000 
 
 256.000,000 
 
 07 j 
 
 1673 
 
 23,500,000 
 
 371.300,1 00 
 
 6 
 
 247,800.000 
 
 255, 
 
 "i 
 
 1-74 
 
 2.5,600,000 
 
 370,100,000 
 
 7 
 
 233,000,000 
 
 240,0* 
 
 07 
 
 1-75 
 
 27,100.1100 
 
 373,000.000 
 
 7 
 
 - 15.3i 
 
 223,000,000 
 
 96J 
 
 W, 
 
 27,700,000 
 
 375.200.1 
 
 7 
 
 104, 700,000 
 
 201,000.000 
 
 <" 
 
 1-77 
 
 28,M>0, I 
 
 304.400.0 <> 
 
 s 
 
 102.71 
 
 109,000,000 
 
 965 
 
 l-7s 
 
 20.600,000 
 
 30S.I-U0.00J 
 
 S 
 
 IsH. 900,000 
 
 193.00 1 
 
 90S 
 
 1.-70 
 
 110,000 
 
 363.0(1 
 
 s 
 
 !-<;.i 
 
 122J ' 
 
 ", - 
 
 ls-o 
 
 33,200,000 
 
 411,201 
 
 - 
 
 J15,U00, 
 
 . Uu.UOO 
 
 06|? 
 
 From this table it is situ, once and for all, that 
 tor the past fifteen years our foreign trade in 
 manufactured commodities lias maintained a steady
 
 Foreign Competition in Manufactures. 241 
 
 relative level ; and that there has been no appreci- 
 able decrease in our relative exports nor increase 
 in our relative imports of manufactured to other 
 commodities. As our population increases in num- 
 bers and in wealth, it would be a very suspicious 
 sign indeed if we did not spend some of our increased 
 gains in the purchase of greater values of foreign 
 manufactured commodities. But that at the same 
 time we increase in equal ratio our purchases of raw 
 material and of food is clear irrefragable evidence 
 that our manufacturing ability is not in the least 
 impaired. In short, these records distinctly show 
 that to say that our home market is being flooded 
 by foreign manufactures is to reverse the truth. As 
 a matter of fact we continue to flood foreign markets, 
 and we continue to spend more and more in our 
 home market, but the proportion of foreign manu- 
 factures to native purchased in that home market 
 does not increase in like ratio. 
 
 3. It will not be altogether unprofitable to in- 
 vestigate one or two particular instances as to our 
 foreign trade in certain specific manufactures. The 
 most frequent public complaints have been in regard 
 to hardware, silk, and woollens. 
 
 We are frequently informed that American cutlery 
 and tools are driving those of English manufacture 
 
 R
 
 242 State Aid and State Interference. 
 
 out of the shop windows. We are frequently in- 
 formed that continental, and especially American, 
 competition is altogether upsetting our hardware 
 trade. The following tabulated record of what is 
 actually happening will assist us to a correct 
 
 judgment : 
 
 TABLE. 
 Imports and Exports of Hardware and Manufactured 
 
 Metals betwekn the United Kingdom and the Four 
 
 Countries we principally deal with. 
 
 
 1S80. 
 
 Exports to Imports from 
 
 1,240,000 
 
 06i",000 
 
 1,667,000 
 
 5.075,000 
 
 228,000 
 860,000 
 190,000 
 
 2S1.000 
 
 
 
 
 Total 
 
 8,551,000 
 
 16.597,ii00 
 
 1,559,000 
 1,745,000 
 
 Total to all 
 
 25,148.000 
 
 3,304,000 
 
 
 If French and German and American cutlery and 
 tools and machines are flooding the English market, 
 what shall be said of English goods of the same 
 kind in those markets ? at all events we are 
 returning the compliment fiftyfold. 
 
 And if we look into the silk trade we find similar 
 evidence ; and yet we not unfrequently hear that 
 the silk trade at all events has been ruined. Even 
 Free Trade orators have comforted the Coventry
 
 Foreign Competition in Manufactures. 243 
 
 mill-hands by pointing out that though the one 
 industry of silk manufacture has slipped from their 
 grasp, its place has been occupied by the manu- 
 facture of bicycles. The following details as to our 
 annual exports of ' silk manufactures ' may be 
 interesting : 
 
 France ... . . . 
 Germany 
 
 United States . 
 Belgium . . . . 
 Canada . . . . 
 
 India 
 
 Australia . . . 
 Other Countries 
 
 Exports of Silk 
 Manufactures 
 
 Imports of Silk ) 
 Manufactures ) 
 
 1869. 
 
 
 1880. 
 
 114,000 
 
 steady rise to 577,000 
 
 77,000 
 
 >> > > 
 
 , 110,000 
 
 279,000 
 
 uneven fall , 
 
 , 218,000 
 
 Nil. 
 
 steady rise , 
 
 56,000 
 
 22,000 
 
 > j > ? 
 
 84,000 
 
 10,000 
 
 >> >> > 
 
 355,000 
 
 66,000 
 
 S ?) J 
 
 205,000 
 
 542,000 
 
 uneven fall , 
 
 425,000 
 
 ^1,110,000 steady rise to 2,030,000 
 1869. 1880. 
 
 1,110,000 rise to 2,030,000 increase 90 per cent. 
 
 11,800,000 
 
 13,100,000 
 
 11 
 
 The tendency here again is to turn the tables on 
 foreigners so far as flooding markets is concerned. 
 
 Another instance is that of the woollen trade. 
 The facts of the case I condensed in a letter to the 
 Times, which I will here reprint, as it contains 
 evidence very much to the point : 
 
 " At this meeting at the Mansion-house it was 
 explicitly stated by the speakers, with the tacit
 
 244 State Aid ami State Interference. 
 
 acquiescence of the audience, that the English 
 woollen trade was being overwhelmed by foreign 
 competition, and that that mysterious despot Fashion 
 marshalled and directed this new invasion. The 
 leaders of the movement that is to oppose this con- 
 jectural invasion seem content to depend on mere 
 allegations, and to be presumably not aware of the 
 figures of their own trade. They may, therefore, be 
 interested to know that transactions were as follows 
 in the year 1880 : Of woollen manufactures, in 
 round numbers of value, we made and consumed 
 in England 63,000,000/. ; we made and exported 
 from England 17,000,000/. ; and we imported and 
 consumed from abroad 7,000,000/ 
 
 In other words, Fashion, marshalling to her sup- 
 port all the varieties and excellencies of foreign 
 endeavour and skill, manages to supply us with 
 one-tenth only of what we annually consume in 
 woollen manufactures ; and, on the other hand, we 
 supply foreigners with nearly three times the value 
 of woollen manufactures that we obtain from them. 
 The foreigner must be mightily unfashionable ; and 
 it seems that his eagerness to possess himself of 
 goods that are pronounced at the Mansion-house 
 to be unfashionable enables the ladies of England, 
 out of the profits of the trade, to wear whatever
 
 Foreign Competition in Manufactures. 245 
 
 they may consider most suitable to their position, 
 their person, or their purse. 
 
 It may also be interesting to the leaders of this 
 new movement to know that we are year by year 
 using more and more ' raw ' wool in England. The 
 following figures testify to this : 
 
 1870. 1S75. 18S0. 
 
 Lb. Lb Lb. 
 
 1. Of Foreign Wools we Imported.. 263,300,000 ... 365,100,000 ... 463,500,000 
 
 2. Of Foreign Wools we Exported.. 92,500,000 ... 171,100.000 ... 237,400,000 
 
 "' f fo/use" T? 1S .. W ?.. re !! ill ?. d } 1"0,SOO,000 ... 193,000,000 ... 226,100,000 
 
 It is also to be remembered that as a nation 
 we are taking from foreigners more and more yarn 
 for weaving and other manufacturing purposes. 
 The figures are : 
 
 
 1870. 
 
 1S75. 
 
 1S80. 
 
 
 Lb. 
 
 Lb. 
 
 Lb. 
 
 Yarns Exported 
 
 ... 35,500,000 .. 
 
 . 31,700,000 .. 
 
 . 26,500,000 
 
 Yarns Imported 
 
 ... 10,300,000 . 
 
 .. 12.400,000 . 
 
 .. 14.900,000 
 
 Excess of Exports ... 
 
 ... 25,200,000 . 
 
 .. 19,300,000 ., 
 
 ,. 11,600,000 
 
 In other words, so far as the foreign trade in 
 yarns is concerned, we are supplying less and less 
 to foreigners, and taking more anil more from them ; 
 and, as yarns are only used for manufacture, these 
 facts do not exactly prove that foreigners are manu- 
 facturing more and we manufacturing less. 
 
 I would allude briefly to the other point the 
 alleged effects on British agriculture. Here, again,
 
 246 State Aid and State Interference. 
 
 it is often better to know what is actually proceeding 
 than to ignore such knowledge, and allow the kindly 
 impulses of generosity to be led astray by the imagi- 
 nation. It seems to have been tacitly assumed that 
 both prices and quantity of English-grown wool have 
 fallen solely because fashion has for the time being 
 deserted lustre and long wool for dulness and short 
 wool. But the magnitude of this asserted influence 
 is limited by the fact that of the 150 million lbs. 
 of wool annually grown in these islands, 55 millions 
 at the least are short wool. A.nd, again, those 
 familiar with agriculture know very well that for 
 years past farmers have bred for the carcase and not 
 for the fleece; they have found it more profitable 
 over since the beginning of the century to supply 
 the butcher rather than the manufacturer; and the 
 consequent fall in the value of the fleece has been 
 more than compensated by the increased bulk and 
 general character of the carcase ; and meat is one of 
 the few commodities that seem always to remain 
 high in price. The number of sheep in England 
 varies but little taking one year with another. The 
 averages for the last four triennial periods have 
 been 32.}, 33, 32}, and 31} millions. The figures 
 always fall off in wet years. Fluke and other diseases 
 incidental to excessive moisture are known to have
 
 Foreign Competition in Manufactures. 247 
 
 almost decimated flocks in certain districts of late. 
 The fashion for these dull wools, on the showing of 
 the authors of this new movement, did not enter 
 upon the scene till 1874. But in 1868 there were 
 35 millions of sheep in these islands, and in 1871 
 only 31 millions, in spite of the absence of all 
 interference on the part of fashion. It is also worth 
 while noting that the increase has been continuous in 
 the export of English-grown wool, from 9,000,000 lbs. 
 in 1870 to 11,000,000 lbs. in 1875 and 17,000,000 lbs. 
 in 1880. Foreigners are taking more and more of 
 our home-grown wool. The results on fashion may 
 be disastrous, but we have no cause to complain. 
 
 When we meet with an appeal to English ladies 
 to employ English labour in preference to foreign, 
 we find ourselves face to face with an appeal 
 altogether out of tune with the intelligence and 
 tendency of the times. If education has achieved 
 anything, English women will know they cannot 
 spend a penny on French or any other fashions 
 unless the penny has been earned first ; English 
 labour provides the English nation with the where- 
 withal for these foreign purchases. 
 
 On this question of fashion the ladies of England 
 will do well to follow the ' statesmanlike ' lead of her 
 Royal Highness the Princess of Wales, and not be 
 led astray to imagine that by purchasing what they
 
 248 State Aid ami State Interference. 
 
 do not want they can in any way assist those whose 
 economic function it is to supply what is wanted. 
 British industries, as a rule, are quite capable of 
 taking care of themselves ; they require no patron- 
 ising, and least of all would they brook any 
 grandmotherly protection from foreign competition. 
 England manufactures nearly one-third of the wool 
 that is manufactured in all Europe. The English 
 system is doubtless capable of improvement, but it 
 is not trembling in its shoes because the general 
 prosperity enables the nation to make a few pur- 
 chases abroad. As long as we in England wisely 
 and determinedly allow as little as possible to inter- 
 fere with the free course of industrial transactions, 
 fashion can but assist in giving spice and stimulus 
 to industrial exertions. 
 
 To attempt to fight natural tendencies is a 
 beating of the air that is vain, if it be nut indeed 
 actively injurious to the interests involved. And it 
 is a fight which the wise will wage only when they 
 are ignorant. A generous but purblind imagination 
 has before now led good people to lay the lance in 
 rest, even against innocent windmills." 
 
 By thus gathering together facts we see that even 
 these three classes of manufacture, classes to which 
 popular rumour has specially credited most ruinous
 
 Foreign Competition in Manufactures. 249 
 
 effect from foreign competition, retains nevertheless 
 all the outward signs of vitality, and of most success- 
 ful competition against the dreaded foreigner. In 
 short, there is not apparently any single instance of 
 manufacture in England that is not doing at the 
 least as well as those in foreign lands. And it is 
 probable that the majority of these are prospering 
 better, especially in regard to the export trade they 
 can and do command. 
 
 It may be well to append to these particular in- 
 stances an analysis of our exports to France during 
 the last few years : 
 
 Table of Exports to France from the United Kingdom. 
 
 Apparel and Hosiery.... ... 
 
 Cotton Textiles 
 
 Silk 
 
 Woollen 
 
 1869. 
 
 1874. 
 
 1880. 
 
 
 
 99,000 
 
 987,000 
 
 114,000 
 
 551,000 
 
 1,337,000 
 
 28,000 
 
 3,277,000 
 
 
 
 116,000 
 
 1,040,000 
 
 290,000 
 
 1,128,000 
 
 1,860,000 
 
 45,000 
 
 2,765,000 
 
 
 
 162,000 
 
 1,070,000 
 
 577,000 
 
 1,441,000 
 
 1,377,000 
 
 92,000 
 
 2,927,000 
 
 Worsted 
 
 Earthenware 
 
 Other Manufactures 
 
 Total Manufactures ... 
 
 Coal 
 
 Alkali 
 
 Metals Un wrought 
 
 Wool 
 
 5,793,000 
 
 7,264,000 
 
 7,546,000 
 
 879.000 
 
 63,000 
 
 941,000 
 
 380,000 
 
 1,876,000 
 
 75,000 
 
 857,000 
 
 242,000 
 
 1,552,000 
 
 89,000 
 
 905,000 
 
 63,000 
 
 Total Raw Materials ... 
 
 2,663,000 
 
 3,050,000 
 
 2,609,000
 
 250 State Aid and State Interference. 
 
 From these records it will be seen at once that so 
 far as the French market is concerned we are in- 
 creasing our hold upon it in regard to manufactures, 
 but that we find the French require of us less and less 
 of the raw materials which manufacturers make use of. 
 
 4. If we look to England itself we shall learn 
 much. The prosperity of the people, and more 
 especially of those whose incomes are small, depends 
 intimately on the purchasing power of money. A 
 high tariff' is always opposed to increasing this 
 power. Its effect, if it has any, must be to raise local 
 prices. Indeed a high tariff has no influence of a 
 protective kind unless it raises prices above what 
 they are in other countries. Even American au- 
 thorities have to allow that the labourer in America, 
 if this purchasing power of money be taken into con- 
 sideration, is not so well off as tHe labourer in Eng- 
 land. And the United States is only to a moderate 
 degree affected by its high tariff, because all over its 
 vast interior it upholds Free Trade. In the United 
 States, for instance, the growth of corn and wheat 
 and meat is practically unlimited ; in England we 
 can only grow half uf that we consume, and yet in 
 England the prices of food are not higher than the 
 ] trices of the same in the United States. This is all 
 proof of the maxim "If cheap food is not brought
 
 Foreign Competition in Manufactures. 251 
 
 to the people the people will go to cheap food." 
 We have had in England a series of seven very lean 
 years, and yet prices of wheat and agricultural pro- 
 duce have not risen. The farmer as a producer has 
 consequently suffered : there has been no compensa- 
 ting rise in price for shortness in quantity of wheat 
 he produces. But as consumer, not only of food, 
 but of manures, implements, clothing, labour, and 
 all else, he feels the benefit of no rise in prices. And 
 above all, he has enjoyed the reflex action of living 
 on in a community where dearth of harvests has not 
 ruined the general prosperity. There have been no 
 famine prices to check industrial prosperity. 
 
 And another remarkable feature is the great 
 advance in steadiness of prices : not only has wheat 
 not risen but meat has not fallen. We open our 
 markets to all the world, and we are rapidly discover- 
 ing a steady uniform price for our own chief com- 
 modities. This is of special value to the farmer, 
 because he can tell surely what he is working for. 
 When he knows that prices will not alter very greatly 
 he can tell beforehand what it will pay him to pro- 
 duce ; and he will not devote a year's energies and 
 a year of his farm and all its belongings to the pro- 
 duction of something which in the outside vagaries 
 of market prices he may find valueless when he has
 
 252 State Aid and State Interference. 
 
 produced it. This steadiness of price, consequent on 
 worldwide supply, is a main element in the steady 
 prosperity of agriculture. 
 
 It has been calculated that the wage-earning 
 classes of England win a quarter of wheat now at an 
 expenditure of exactly half the amount of labour they 
 had to give for the same quantity thirty years ago. 
 This represents a very great advance. It accounts 
 for the fact of the shortened hours of labour we in 
 England can institute and yet compete with all other 
 nations successfully. Our labour is more profitable, 
 and one chief reason of this is that we have no 
 high tariff taxing the ordinary commodities of life 
 and transferring money from the pockets of the 
 labouring classes to the pockets of the capitalists. 
 It is not remembered so often as it should be that a 
 protective tariff raises a revenue over and above that 
 which finds its way into the coffers of the State. The 
 tariff raises prices. In many protective States every 
 hardware article, every yard of cloth, or piece of 
 clothing or furniture, costs more because of the tariff. 
 Every labouring man has to pay this increase of 
 price and a great part of this increase rinds its way 
 into the pockets of the manufacturer and distributor. 
 This does nut occur in England, and as a consequence 
 the wase-earner is better off.
 
 Foreign Competition in Manufactures. 253 
 
 But there is another point we have to see to. If 
 labour is nominally cheaper in England than in other 
 countries, is it really as good ? We may answer de- 
 cidedly in the affirmative. We shall do so if we go 
 into details ; we shall do so if we only look to the 
 fact that competition is free not only to goods but to 
 men ; and the English artisans and mechanics not 
 only completely hold their own against all foreign 
 invasion in England, but are to be found in almost 
 every manufacturing centre in the whole world. And 
 in each of these they are found holding prominent 
 positions. We are told on the one hand that we 
 cannot compete with France, for instance, because 
 our Factory Acts limit us to fifty-six hours, while 
 manufacturers in France obtain seventy hours work 
 a week from their ' hands.' The answer to this is 
 that we do compete. And if we do compete at so 
 much less expenditure of time, we find at once we 
 must be doing our work far more economically. This 
 must not blind us, however, to the danger that 
 State Interference, as embodied in the Factory Act, 
 might at any moment cause serious injury to English 
 industry if it prevented a natural change in the 
 hours of labour due to any new change in the 
 comparative efficiency of our labour and of foreign 
 labour that was working under freer conditions.
 
 254 State Aid and State Interference. 
 
 A great deal has been said of our sad lack of tech- 
 nical education. "We are in a transitional state. We 
 abolished that State Interference which was em- 
 bodied in all the old apprenticeship and other close 
 trade regulations and traditions, but we put forward 
 no substitute. Indeed, the State forced on the nation 
 an altogether different commodity on the plea that 
 it was a fair substitute. Reading, writing, and 
 arithmetic were made the substitutes for technical 
 education. We do not yet understand the full effect 
 of the great error that was made when the nation, in 
 its proper determined enthusiasm to educate itself, 
 was altogether led astray by rashly assuming that 
 the three R's represented education. The farmer 
 has all along protested ; and now, at last, the manu- 
 facturer is protesting likewise. And we must hope 
 shortly to see a reform in our education policy, which 
 will, at last, begin with some adequate definition 
 of the term education. 
 
 Farmers have long pointed out that children who 
 are probably destined to become agricultural la- 
 bourers are practically better educated by being 
 taught the technicalities and practical operations of 
 agriculture than by being hurried through courses 
 of reading, writing, and arithmetic. Both branches 
 of education are good, but if you substitute the one
 
 Foreign Competition in Manufactures. 255 
 
 for the other you will oftentimes obtain an adult 
 'educated,' but ignorant of all knowledge that can 
 serve him honestly for his life's work. 
 
 And so it is with manufacture. The dead level of 
 the three It's is to be imposed on all children alike 
 at the sacrifice of all other training. This unforeseen 
 tendency of the nation's first grasp on the great idea 
 of a thoroughly national education policy will soon 
 be checked, and we shall have some real and efficient 
 substitute for those means of technical education of 
 acquiring training and knowledge in their real work 
 of life which close guilds and apprenticeship 
 systems sought, however badly, to provide. 
 
 It is well for English labour that it can still com- 
 pete with the world, even though it has been so 
 hampered by a partial attempt at national education. 
 It is one sure hope of the future that in this direc- 
 tion at all events, in the direction of technical 
 education, considerable improvement is yet possible 
 and probable. 
 
 5. On the whole we see that foreign competition 
 in manufactures is at the present a non-existent 
 element in our position. We open our doors to the 
 foreign competitor in every sense of the term ; and 
 by our national prosperity, we, so to speak, invite 
 him to do his w T orst. In spite of all this, the amount
 
 256 State Aid and State Interference. 
 
 of manufactures he supplies to us is altogether in- 
 significant if compared either with the amount of 
 manufactures we supply to him or with the amount 
 we supply to ourselves. 
 
 We remain, after what has been called ' forty 
 years of disastrous one-sided Free Trade,' the one 
 great exporting country of manufactures. We also 
 note, that of the other countries, those export the 
 greatest percentage of manufactures that have the 
 lowest tariffs ; and we are driven, if we look to ex- 
 perience, to adopt the maxim that " the export of 
 manufactures proceeds in inverse ratio to the height 
 of the customs tariff." This is not a theoretic idea, 
 but merely a plain matter-of-fact account of what 
 has actually occurred among nations. One-sided 
 Free Trade has, at all events, enabled us as a 
 nation to pay the lowest prices for everything we use 
 or consume. The consequence is that, flourishing 
 thus as consumers, we can, as producers, in the long 
 run undersell all foreigners who attempt to compete 
 with us, and who do not enj<>y similar advantages. 
 It is for this reason we have been able to make so 
 much of our coal and our iron and our climate. 
 
 What a country ran best produce is not confined 
 to what its soil or its climate yield, but to what 
 the whole of the conditions of its existence yield.
 
 Foreign Competition in Manufactures. 257 
 
 Character, skill, perseverance, and even traditions in 
 the people are often quite as important as latitude, 
 or mineral resources, or rainfall. Forty years of free 
 traffic with all the world, so far as we could make it 
 free, have enabled us to develop many invaluable 
 national qualities and attributes. In addition to 
 this, on the one hand we have been checked from 
 wasting our energies on the production of com- 
 modities more cheaply produced elsewhere ; and, on 
 the other, we have been enabled to establish and 
 to obtain a good start in various other industries for 
 which we have equal, but not superior, natural 
 facilities to other nations, but of which other nations 
 have deprived themselves by a variety of artificial 
 restrictions. 
 
 As a matter of fact, nature is more bountiful in 
 regard to particular products in some districts of the 
 earth's surface than in others. A high tariff prevents, 
 and a low tariff allows, a nation to profit by this fact. 
 And a government which would aid its citizens in 
 industry or commerce by interfering with their 
 natural advantages, and obstructing free intercourse, 
 must, in the long run, injure and impede, not only 
 the commercial, but the manufacturing prosperity 
 and advance of the people.
 
 2")8 State Aid and State Interference. 
 
 CHAPTER XI. 
 
 INTERFERENCE WITH OTHER NATIONS. 
 
 1. Four General Principles. 2. Lowering Tariffs. 3. Fighting 
 Bounties. 4. Commercial Treaties. 
 
 1. The Government of any one country is not 
 infrequently urged, proprio motu or from without, 
 to extend the active influence of its own commercial 
 policy so far as to interfere with the private and 
 public policies of other nations. I wish in this 
 chapter first of all to summarise the principles that 
 should lie at the base of all international commercial 
 policy ; and then to apply these general principles 
 to the particular modes in which such interference 
 may be embodied. 
 
 I will formulate four general principles, and then 
 pass on to apply those general principles to these 
 modes: to tariffs, bounties, and treaties. I ven- 
 ture to think it is no exaggeration to say that the 
 problem we here deal with is one of the most vital
 
 Interference with other Nations. 259 
 
 importance to our national future. We in England 
 have again arrived, as it were, at cross roads in our. 
 commercial progress. We had done so before when 
 we took the right road in 1846, and again when 
 we took a wrong turning in 1860. 
 
 If we review generally the principles that ought 
 to regulate our dealings with other nations in re- 
 gard to commercial policy, we see at once that we 
 have two concurrent duties to perform. There is 
 our duty to ourselves, and there is our duty to 
 foreign nations. It is not only just as wrong, but 
 it is just as foolish, to forego the one duty as to 
 forego the other. In regard to our duty to our- 
 selves we light upon a first principle which I need 
 not dilate upon It is a principle more generally 
 accepted than any other. It is the promotion of 
 our own prosperity. In regard tp our duty to other 
 nations, ideas are more mixed. In the first place, 
 there must be international as well as national 
 freedom. In short, the liberty of each nation is 
 only confined within the limits of like liberties 
 in other nations. Our liberty does not authorise us 
 to do anything that robs other nations of a similar 
 liberty, and we must resent any such attempt on 
 the part of a foreign nation. We must neither 
 interfere nor suffer interference with this liberty. 
 
 S 2
 
 2G0 State Aid and State Interference. 
 
 With this proviso in mind we come upon a second 
 general principle the promotion of the prosperity 
 of other nations. It is often forgotten of what very 
 great importance to our individual prosperity is the 
 prosperity of other nations. Many of us know the 
 bad effect of a famine in India or China on English 
 trade. But there is more than this. In the late 
 heated discussion in newspapers and elsewhere on 
 the free trade question one point seems to me to 
 have been altogether overlooked. Stated broadly, 
 this point is that much of the falling off in particu- 
 lar cases in our export of manufactures, and certainly 
 a most serious drag on any increased consumption 
 of our manufactures in certain countries, is, not that 
 they are supplying themselves ; not that protection 
 has fostered and developed in their midst rival 
 manufactories to ours but that they heavily tax 
 each native in his capacity as consumer, and so 
 discourage and weigh down his efforts as a pro- 
 ducer; they pauperise the nation, and render it less 
 able to buy from other nations. This is a fact 
 strangely overlooked. I do not, of course, say that 
 it is the case everywhere, but it is the case in 
 certain countries whose natural and virgin resources 
 do not assist the population to rcsisl ami overcome 
 the pauperising effects of commercial restrictions.
 
 Interference with other Nations. 261 
 
 A third general principle that should regulate 
 international commercial policy is the removal of all 
 restrictions or obstacles to the free current of com- 
 mercial and industrial life. Freedom to industries is 
 the mainspring of industrial prosperity. Of course 
 this freedom is like international freedom, a mere 
 relation. It means freedom to do all that does not 
 interfere with the same freedom in others. The 
 chief function of Government is to watch over this 
 essential condition to the existence of freedom. 
 That is the final cause of the State's existence. 
 The State which busies itself with other matters is 
 likely to busy itself to the detriment of its subjects. 
 The main condition of commercial success also is 
 that the will, whether of the individuals or of the 
 State, be left as free and as untrammelled as possible. 
 The contravention of this principle leads to endless 
 conflicts of interests and to strange breaches of 
 justice. To say that commmercial intercourse must 
 be as unrestricted by State interference as possible 
 ought to appear to many to be a needless truism, 
 and yet it is a principle more commonly violated 
 than any other. Indeed, the true value of com- 
 mercial intercourse is not commonly appreciated. 
 Many have forgotten how Mill proved commerce to 
 be ' a mode of cheapening production.' Commerce
 
 262 State Aid and State Interference. 
 
 is certainly a means to that end. The more we 
 import and export the cheaper we can produce. 
 Interchange of commodities implies saving in the 
 cost of production. It is this saving of price in all 
 the nation consumes that makes commerce a source 
 of national wealth. Each commodity imported re- 
 presents normally so much labour saved in its 
 production. The more the nation imports the more 
 it saves in the cost of production. Unrestricted 
 commerce will regulate itself according to the actual 
 profits accruing to the community. Anything that 
 interferes with commerce is simply a curtailment of 
 these profits. There is an important corollary to 
 this principle which most people overlook. It is true 
 we must never seek to compete against greater 
 natural superiorities in other nations. But, at the 
 same time, we must never forget to compete against 
 equal or lesser natural superiorities. It is by not 
 attending to this latter wholesome rule that we have 
 allowed the silk industries of France to steal a march 
 upon us in the matter of better technical education 
 and a higher standard of taste. This rule specially 
 affects Ireland. There are many industries in which 
 other countries have no natural superiority to Ire- 
 land; and some industries in which Ireland and Irish 
 people have actual natural superiority. Yet these
 
 Interference with other Nations. 263 
 
 industries do not now flourish in Ireland. Lately, 
 however, an altogether wholesome private movement 
 is on foot which will, we all hope, be pre-eminently 
 successful in reviving in Ireland those industries for 
 which Ireland and the Irish have natural facilities 
 greater than, or at all events equal to, those possessed 
 by other nations. 
 
 These three foregoing principles apply to our 
 commercial policy in so far as it affects our industrial 
 and national prosperity. But our commercial policy 
 is also largely controlled by the need of enabling 
 the State to perform its duties. In most civilized 
 countries the commercial policy adopted has close 
 connection with the question of raising State 
 Revenue. This we are compelled to recognise in 
 regulating our commercial policy. And the best 
 general principle to act upon is to see that the 
 collection of Revenue does not hamper commercial 
 and industrial life. 
 
 2. If we apply these four principles to tariffs, we 
 must come to these conclusions. We have our own 
 tariff and we have the tariffs of other nations. Low 
 tariffs are everywhere desirable if we would realize 
 our four principles of prosperity. A low tariff, by 
 interfering as little as possible with the ordinary free 
 current of commerce, does not in practice restrict
 
 264 State Aid and State Interference. 
 
 or direct production or exchange. There is con- 
 sequently no waste of labour or of capital on the 
 production of commodities that can be produced 
 cheaper elsewhere, or on the importation of commo- 
 dities that can be produced cheaper in the country 
 itself. A low tariff incidentally promotes commerce, 
 and so increases the profit or saving of labour 
 accruing from all exchange. It thus promotes the 
 prosperity of all nations. And besides this, so far 
 as the object of raising revenue is concerned, a 
 low tariff is right, a high tariff wrong that is, if 
 we judge by results. A low tariff may practically 
 not interfere with the free current of commercial life 
 if we see to it carefully that it neither oppresses 
 nor relieves of oppression home as compared with 
 foreign or foreign as compared with home products. 
 For instance, we not unfrequently meet with the 
 argument that some home industry should be 
 relieved of taxation. This contention has reason 
 in it only if a like industry in a country trading 
 with us in that particular commodity is free of 
 similar burdens. But we are apt to forget that 
 foreigners pay rates and taxes as well as ourselves. 
 It is not so generally acknowledged as it should be 
 that a low tariff in the course of years yields 
 more actual revenue than a high tariff. We have
 
 Interference with other Nations. 265 
 
 our two colonies in Australia Victoria and New 
 South Wales. They are very similarly circum- 
 stanced. Victoria for the past ten years has had 
 a high tariff, and New South Wales a low tariff. 
 In Victoria the income from customs duties during 
 these ten years has remained about the same per 
 annum : in New South Wales it has steadily 
 increased. Another example is that of the United 
 States as compared with the United Kingdom. 
 During the past twelve years the English customs 
 revenue has maintained a steady level of 20,000,000/. 
 per annum, though the tariff has been low, and 
 even reduced during the decade. During the past 
 ten years, with a high tariff, the United States 
 customs revenue has fallen from 37,000,000/. in 
 1869 to 27,000,000/. in 1880. And we must remem- 
 ber that during this decade the population of the 
 United States has increased by 10,000,000 while 
 our own has increased only by 4,000,000. If we 
 add this direct result to the indirect result of 
 largely increased imports, each item of which brings 
 profit to the nation, we shall see that a low tariff 
 brings a vast balance of material benefits which 
 would overwhelm even the most extravagant pre- 
 tensions in the way of industrial benefit set up 
 by the advocates of a protectionist tariff. If w r e only
 
 266 State Aid ami State Interference. 
 
 remember that we profit by imports even more 
 than we do by exports, we shall not go wrong. 
 We must keep our own tariff low ; that promotes 
 our own prosperity ; but is it also our desire to 
 promote the prosperity of other countries ? For 
 both reasons, then, we wish other nations to have 
 low tariffs. How are we to accomplish this ? 
 
 We are told to put on an equivalent tariff so long 
 as they maintain theirs. But such a retaliatory 
 tariff is an act of war. There must be economic 
 loss. Such a tariff can only be justified by success. 
 Where have we experience or reasons to prove that 
 such a tariff ever reduced any other tariff? The 
 cost of such an act of war would forestal much of 
 any ensuing profits. Such an act would breed many 
 evil indirect influences, which last for a long time 
 and which, in the everchanging arena of 'practical 
 politics,' may well outlast any succeeding period of 
 low tariffs, even assuming such a period ever came. 
 It is instructive also to regard the practical possibili- 
 ties of retaliatory duties in England to-day. In the 
 first place, were we to impose them, the opinion 
 must gain ground among other nations that we 
 have abandoned low tariffs. All might not think 
 so; but some would; and in so far the imposition 
 of retaliatory duties to force some nations to low
 
 Interference with other Nations. 267 
 
 tariffs would increase the tendency of other nations 
 to retain high tariffs. In the second place, we must 
 either impose them for a term of years or until their 
 object be accomplished. A term of years will be 
 taken, especially by the more obstinate opponents, 
 to be merely a term of waiting. No term of years 
 puts us to the risk of pursuing a hurtful policy for 
 ever, or, at all events, for long. We should bind 
 ourselves, in self-contradiction, to that very policy 
 which we were seeking to overthrow. In the third 
 place, more than 90 per cent, of what we import is 
 food and raw material, and to put duties on these is 
 simply to commit industrial suicide. In the present 
 political state of the world, the remedy for high 
 tariffs is to keep our own low and free from all 
 foreign interference. This is the surest means 
 eventually to outlive the action of high or hostile 
 tariffs. We must hold up to the world the example 
 of successful fact. This is a remedy which has not 
 yet been tried. In the case of England, we began 
 it in 1846 ; but we left off in 1860, when we made 
 the French Treaty. 
 
 3. In determining on the principles that should 
 regulate our conduct towards countries that give 
 Bounties, we must above all keep our attention fixed 
 on actual experience. Mr. Gladstone has said, in
 
 268 State Aid and State Interference. 
 
 regard to the notorious Sugar Bounties, " We do 
 not regard with any satisfaction the system under 
 which an artificial advantage is given in our 
 markets to the products of foreign labour." But 
 this idea is applicable only in the event of their 
 products being sold in our market at less than their 
 cost of production. This would deprive our own 
 industry of legitimate employment ; but only when 
 and if it takes place. The question remains, What 
 Bounties do actually give an artificial advantage 
 in our market to the products of foreign labour? 
 A great many people will name at once the Sugar 
 Bounties. Well, firstly, let us look to facts. In 
 regard to the countries that give these Bounties, it 
 is, of course, evident that the artificial advantage 
 comes from the pockets of the people at large. 
 Consequently all profits of this artificial advantage 
 is merely returning to a few of the people what all 
 the people have paid out. But there is the further 
 question, Are there any extra profits created by 
 these Sugar Bounties ? If we turn tu reasous we 
 shall light upon an explanation which no one seems 
 to notice. These bounties are drawbacks on export. 
 In other words, the ' bounty-fed produce ' is 
 produce which has escaped contributing to the 
 revenue, and which yields in addition certain
 
 Interference with other Nations. 269 
 
 surreptitious profits on the transaction. But to 
 accomplish all these ends there must be a duty 
 on sugar. The greater proportion, then, of all 
 this labour is simply to overcome an obstacle to 
 industry which we in England have most wisely 
 abolished when we abolished the sugar duties. 
 It is not known so generally as it should be that 
 no State on the Continent gives Sugar Bounties. 
 The bounty is obtained in spite of the Govern- 
 ment, and by reason of the difficulty of assessing 
 a duty and an equivalent drawback on raw and 
 refined sugar. Each Continental Government knows 
 this, and each wishes to abolish so faulty a system. 
 The only method that can really succeed is the 
 doing away with all duties on sugar; and seeing 
 that sugar is so necessary a food, this would appear 
 to be both wise and necessary, and English experience 
 proves the entire success of the method. 
 
 But, then, there are other bounties not founded on 
 drawbacks. The most recent instance is the insti- 
 tution of Shipping Bounties by France. Their 
 object is to promote a carrying trade and a ship- 
 building trade. And they are to accomplish this 
 by turning to these trades labour and capital from 
 other employments. Much must be lost to the 
 community by such forced interference with industry.
 
 270 State Aid and State Interference. 
 
 Had France population to spare to earn a livelihood 
 on the sea ; had France more coal and iron in close 
 proximity to harbours ; were France a mass of good 
 harbours standing midway between the Eastern 
 and Western civilizations ; had France committed 
 herself to a low tariff for purposes of Revenue only ; 
 had France 10 millions of Frenchmen and 200 
 millions of native races under her own rule domi- 
 ciled in all distant parts of the world ; France would 
 have been the natural rival of England in all ship- 
 ping affairs. But France has none of these things, 
 and it so happens that England has them all. It 
 is therefore not wise of France to endeavour to 
 rival England in a special industry due to special 
 environments which France does not enjoy. More- 
 over, we already see that Italy and Germany and 
 Spain are talking of Shipping Bounties. To put on 
 such a bounty is to invite nay, rather to incite 
 other nations to do likewise, and thus, even if 
 successful, it becomes more than ever a dead 
 economic loss to the country, and the instrument of 
 its own destruction. 
 
 It may be contended that while we in England 
 are waiting for other countries to experience by sad 
 disaster an; 1 loss the mistakes they have made, our 
 own particular industries may suffer from tern-
 
 Interference with other Nations. 271 
 
 porary depression, and that thus, in order to 
 promote our own prosperity and also that of the 
 other nations, we should endeavour to put an end 
 to all bounties. If we take the case of England 
 and France we shall see the difficulty in our way. 
 If we place countervailing bounties on our own 
 industries we at once bring the two cases more on 
 to an equality. But then that means that we reduce 
 the natural advantage we now possess a natural 
 advantage which is only made the greater by the 
 artificial arrangement adopted by France. Again, 
 it is equally impracticable to place a duty in 
 English ports on all shipping that receives bounties, 
 because by so doing we at once put a premium on 
 French ships visiting foreign and neutral ports. We 
 have become the great carriers and builders by our 
 natural opportunities, and in some measure by 
 our rather unique low tariff. Nothing can even- 
 tually deprive us of this but similar conditions 
 arising in some other nation. If France pre- 
 fers to take millions a year out of the pockets of 
 her people, to make what M. Tirard himself has 
 recently called 'great and heavy sacrifices/ in 
 order to turn labour and capital from more profit- 
 able to less profitable employment, and to waste 
 the margin of labour and capital expended in this
 
 272 State Aid and State Interference. 
 
 production over and above what would be expended 
 were things left free, we shall indeed note the ex- 
 pense all this is to the French people. We shall 
 also note the fact that in so far as these bounties 
 succeed in diverting capital and labour from 
 other industries, in so far do they open up a 
 new gap for English industries to fill. We shall 
 note, too, that whatever success may attend this 
 new policy will have its first effect on those ship- 
 building and carrying interests which exist by 
 sufferance under peculiar local conditions. The free 
 and healthy English industry will be the last to 
 feel their effects. We remember that the up-keep of 
 the ships of the French navy is nearly three times 
 as costly as that of English men-of-war. There 
 are not the same material facilities in France. All 
 this dead loss of a forced industry, coupled with the 
 direct burden of the bounty, renders it absolutely 
 certain that in the end England must win. And 
 this even without taking into account that for very 
 consistency's sake the logical French mind will yet 
 demand similar bounties for all other industries. 
 
 To destroy the Bounty System we must trust to 
 indirect influences. And among these the most 
 powerful is the care that the natural advantages 
 any particular industry threatened enjoys in Eng-
 
 Interference with other Nations. 273 
 
 land be not in any way hampered. As we have 
 successfully braved the Sugar Bounties by taking 
 away all duty on sugar, so we can successfully 
 brave the Shipping Bounties by removing all re- 
 strictions on the increase of our commerce, and 
 promoting the efficiency and speed and comfort of 
 our mercantile marine. The French bounties, in 
 so far as they are efficacious, will greatly stimulate 
 private skill and enterprise in England. England 
 has still the great sources of supply of coal and 
 iron, and she has that colder climate that is so 
 essential to metal working. England must look to 
 facts and let fancies alone ; put her trust in ex- 
 perience, and keep her tariff low. Then the force 
 of nature will overcome all those artificial restrictions 
 placed by other nations on their own industries. 
 
 4. There remains the last of our particular 
 inquiries What principles ought to regulate our 
 dealings with other nations in respect to commer- 
 cial treaties ? Commercial treaties are bargains or 
 contracts based on a state of warfare. To have 
 a treaty at all you must assume that the two 
 countries are in a condition of antagonism. In so 
 far, then, as commercial treaties are treaties of 
 amity, in so far are they good. But in so far as 
 they are treaties of commerce, in so far are they 
 
 T
 
 274 State Aid and State Interference. 
 
 restrictions on commerce. Now, they may be re~ 
 strictions on commerce itself being restricted, as 
 when Japan contracts not to levy more than three 
 per cent, on imported goods. We find that this is 
 the usual tendency of modern treaties; they are 
 bargains by which one nation contracts with an- 
 other for greater facilities of commerce. But by 
 their very nature they also bind a nation to con- 
 fine these facilities to some one or two other 
 nations. They only do away with restrictions on 
 one stream of commerce by placing restrictions on 
 other streams. They thus compel a nation to adopt 
 a more costly mode of obtaining certain commodi- 
 ties than it would adopt were its action free and 
 unfettered. It would thus appear that no commer- 
 cial treaty is correct which binds the contracting 
 parties to any differential duties or tariff. Commercial 
 treaties that open up trade with another country 
 without, at the same time, restricting trade with 
 other countries, may be beneficial. Such are the 
 treaties by which England secures commerce with 
 China and Japan. The French Treaty is not one of 
 these. The treaty of 18G0 was a decided departure 
 from Free Trade principles ; it restricted our free- 
 dom in commercial dealings with other nations. We 
 gained indeed by the low duties France placed on
 
 Interference with other Nations. 275 
 
 our goods ; we gained by the low duties we placed on 
 French goods ; but we lost in other respects. For 
 instance, other nations, Spain and Portugal, at once 
 raised their tariffs against us, and by this French 
 Treaty we lost our liberty of managing our own 
 financial and commercial affairs as we might deem 
 best. Mr. Chamberlain has told us " If the treaty 
 negotiations with France break down, the English 
 Government would be perfectly justified in dealing 
 with the wine and spirit duties as they thought best 
 for the interests of the country." In other words 
 the treaty, if made, will deprive the English Govern- 
 ment of its liberty to deal with duties tending to the 
 best interests of this country. We obtain, indeed, 
 entry into the French market, but in so doing, if we 
 may judge by experience, we close other markets to 
 ourselves. That is sufficient of itself to condemn the 
 treaty. But the question remains Is this treaty the 
 only means of gaining entry into the French market ? 
 Now, if we declare to all the world we will make no 
 contracts that bind ourselves, but will, from time to 
 time, put on and take off duties as suits our own 
 financial policy, will not such a policy afford them 
 strong reason to open their ports to us in order to 
 maintain commercial intercourse ? We might well 
 tax some luxuries more than we do, and our wine
 
 276 State Aid and State Interference. 
 
 duties might well be readjusted. In these matters 
 our hands have been hitherto tied by treaties. In the 
 present condition of the world England would find 
 much saving of labour could her commercial treaties 
 be restricted to one clause that known as ' the most 
 favoured nation ' clause. Thus we should contract to 
 grant to all nations the fullest favours our domestic 
 policy will allow ; we should contract to receive 
 from these nations the fullest favours their domestic 
 policy will be able to grant. But we should leave it 
 to each nation to elaborate its own domestic policy. 
 If we abide by profitable principles of conduct we 
 shall not make commercial treaties that restrict our 
 financial policy, or that in any way, directly or 
 indirectly, restrict our trade with third countries. 
 It will be better for our prosperity to have no 
 treaties at all than treaties that in any way bind 
 us. We are more likely to lead other nations to 
 lower their tariffs by such action than by that 
 vain seeking after reciprocal concessions which has 
 been attempted now for more than sixty years, and 
 which, whenever it meets with success in one 
 country causes, ipso facto, an equivalent backsliding 
 in other countries. If we have a treaty at all it 
 would be well if it consisted of the one clause ' the 
 most favoured nation ' clause. Even this is merely
 
 Interference with other Nations. 277 
 
 a conditional arrangement conditioned by the 
 peculiar political relation of nations to one another 
 at the present day. A treaty is the only means 
 existing, with the exception of warfare, for pre- 
 venting one nation from pressing its own liberty 
 so far as to encroach upon a similar liberty in 
 other nations. 
 
 In thus considering what principles ought to 
 govern our dealings with other nations as respects 
 tariffs, bounties, and commercial treaties, I tabulate 
 four principles : 1, We must promote our own 
 prosperity ; 2, We must promote the prosperity 
 of other nations ; 3, We must free from all re- 
 straints and obstacles the courses of commerce and 
 industry; 4, We must not allow the collection of 
 revenue to hamper commercial or industrial require- 
 ments. 
 
 These principles are largely conditioned by the 
 political relations of nations, but in applying them to 
 the special objects under discussion we shall see that 
 they lead us in regard to tariffs simply to keep our 
 own as low as possible ; in regard to the bounties 
 avoid them altogether ; in regard to commercial 
 treaties, to make none that in any detailed way 
 hamper our own liberty of financial or commercial 
 action. These solutions proceed on the sound and
 
 278 State Aid and State Interference. 
 
 profitable principle of assuring, both to ourselves 
 and to others, the utmost individual freedom com- 
 patible with the like individual freedom of each 
 other. By such courses we shall, in doing our 
 duty to ourselves, also do our duty to other nations. 
 And if we win in the race it will be because 
 other nations handicap their own chances by un- 
 necessary and hurtful restrictions on the liberty of 
 the individual. 
 
 FINIS.
 
 INDEX.
 
 INDEX. 
 
 Abstract principles, 2 
 Abyssinia, 230 
 Access to soil, 19 
 Advertisement, 31, 44 
 Agriculture, 18, 177, 246 
 Agricultural competition, 177, 212 
 
 education, 206 
 
 Aldis, Professor, 207 
 American farming, 21, 188 
 
 Free-trade, 35 
 
 manufactures, 37, 242 
 
 railways, 193 
 
 _ tools, 42, 241 
 Apprenticeship, 254 
 Arts of civilization, 15, 143 
 Australia v. France, 150 
 Australia, 74, 165 
 Austrian bounties, 96 
 Authority, 2 
 
 Bad times, 39 
 Barbados, 85 
 Barley prices, 20 
 Beet sugar, 82 
 Belgian refiners, 97 
 Berry, Mr. Graham, 13 
 Bismarck, 112 
 Boot-makers, 123 
 Bounties, 11, 64, 271 
 Bounties and prices, 90 
 Brassey, Sir T., 184 
 Breeding, 246 
 Bright, Mr. J., 31 
 British agriculture, 31, 246 
 
 British Association, 14 
 constitution, 168 
 empire, 15, 148, 152 
 
 Burdens on farmers, 33, 184 
 
 Caret, Mr., 187 
 Canada, 163, 222 
 
 North-west, 19S 
 Canadian tariff, 22, 136, 160 
 Cane and beet sugar, 93 
 Civilization, 1, 15, 143 
 Chamberlain, Mr., 275 
 China market, 45 
 China trade, 141 
 Coal, 118 
 Cobden, 36 
 Colonial growth, 120, 127 
 
 and foreign trade, 143 
 
 manufactures, 21 
 
 policy, 159 
 trade, 16, 127 
 
 revenues, 126, 145 
 Commercial policy, 25S 
 
 treaties, 273 
 
 Competition, use of, 212, 257 
 Consumers, 38, 251, 262 
 Continental dislike of bounties, 
 
 102, 269 
 Continental tariffs, 35, 215 
 Corners, 194 
 Cost of bounties, 70 
 
 production, 82, 191 
 Countervailing duties, 13, 93 
 Coventry, 242
 
 282 
 
 Index. 
 
 Customs duties, 34, 144. 
 revenue, 125 
 
 Delta of the Nile, 229 
 
 Differential duties, 223 
 
 Distress in United States, 39 
 
 Duff, Mr. Grant, 135 
 
 Dulness, 246 
 
 Duties, 21 
 
 Duty of the State, 6, 261 
 
 Education, 253 
 
 in agriculture, 206, 252 
 Educated ignorance, 3 
 Effect defined, 4 
 Efficiency of labour, 253 
 Employment of population, 142 
 Endymion, 154 
 English cutlery, 41, 242 
 
 estate, the, 154 
 
 exports, 240, 256 
 
 future, 155 
 
 home market, 236 
 
 grown wool, 247 
 
 manufactures, 35, 240 
 
 retaliation, 267 
 
 shipping, 58 
 
 sugar-beet, 208 
 
 superiority, 203, 253 
 European tariffs, 35, 215 
 Exchange, 226 
 Experience invaluable, 8 
 Exporting soil, 187 
 Exports and imports, 45, 129 
 Exports of manufactures, 241 
 Extravagance, 40 
 
 Factory Acts, 253 
 
 Facts, 12 
 
 Fairness. 56 
 
 Fair-trade empire, 16 
 
 Farmers' prices, 33, 251 
 
 Fashion, 237 
 
 Financial independence, 157 
 
 Floods of manufactures, 24, 231, 
 
 236 
 Food supply, 33, 250 
 Fouquet, M., 97, 104 
 Forcing foreigners, 25 
 Foreign competition, 64, 230 
 
 food supplies, 180, 209 
 
 ., tariffs. 22, 215 
 
 Formulated ignorance, 4 
 Free exchange, 36 
 land, 19 
 ports, 14 
 Freedom, 9 
 Free trade for British empire, 15, 
 
 136, 170 
 Free-traders and Free-traders, 30 
 Free trade and Protection, 113 
 French complaints, 94 
 
 manufactures, 232 
 
 shipping bounties, 69, 1 29 
 
 taxation, 70, 145 
 
 trade, 249 
 Future of American Protection, 62 
 
 Geoeges, M., 95, 103 
 German Government, 128 
 
 sugar, 98 
 Germany, 157, 232 
 Gladstone, Mr., 268 
 Gloves, 236 
 Gold, 118, 238 
 Gold diggings, 119 
 Government, 6 
 
 popularity, 64 
 
 Grain crops, 33, 198 
 Granary of America, 202 
 Greece, duties, 216 
 Grey, Lord, 169 
 Groans of the planters, 77 
 Growth of England, 179, 210 
 Grumbling, 78 
 
 Half-knowledge, 3 
 
 Hayter, Mr., 135 
 
 Hardware, 241 
 
 Hennessy, Sir J. P., 140 
 
 Hero-worship, 2 
 
 High tariffs pauperise. 228. 260 
 
 Hogg, Mr. Q., 83 
 
 Holland, 108 
 
 Home markets, 35, 190, 236 
 
 Hongs. 141 
 
 Hong Kong, 15, 139 
 
 Hostile tariffs, 22, 214 
 
 Ignorance, 10 
 Immigrants, 38 
 Imperial Union, 169 
 Import duties, 224 
 
 Imported food, 182
 
 Index. 
 
 283 
 
 Imports, 10, 116, 262 
 Improvements in farming, 205 
 Increase of English nation, 148 
 India, 223 
 
 International contracts, 27 
 freedom, 258 
 
 Italy, 85, 217 
 Irish manufactures, 262 
 Items in tariffs, 217 
 
 Jacqtjemont, M., 100 
 Jamaica, 75, 227 
 Japan, 274 
 Jerningham, Mr., 99 
 
 Laboub, 43, 119, 185 
 
 in England, 252 
 in United States, 250 
 Land prices, 180 
 
 question, 19, 209 
 Less hostile tariffs, 220 
 Liberty, 2, 158 
 Loss by waiting, 271 
 Low, medium, and high tariffs, 218 
 Low tariffs, 39, 133, 234, 257 
 
 for Colonies, 173, 223 
 
 Lubbock, Mr. N., 91 
 Lustre, 246 
 
 MacCulloch, Sir J., 113 
 Mallet, Sir L., 94 
 Manufactures, 11 
 Manufactures from abroad, 213, 
 
 240 
 Manufacturing nations, 233 
 
 supremacy, 25, 41 
 
 Markets abroad, 215 
 Marriages, 133 
 Mercantile marine, 72 
 Misapplication of energy, 25, 38 
 Monopoly, 197 
 Mot, M. de la, 97 
 Most favoured nations, 220, 276 
 Mulhall, Mr., 233 
 
 Napoleon-, 208 
 National feeling, 168 
 Natural advantages, 273 
 Nature's bounty, 257 
 New lands, 200 
 New South Wales, 14, 212 
 North-west, 201 
 
 Oats, prices, 20 
 
 O'Loghlan, Sir B., 136 
 
 One-sided free-trade, 15, 137, 256 
 
 Opium revenue, 145 
 
 Other nations' prosperity, 260 
 
 Pacific railway, 198 
 Parliament, 161 
 Penal clauses, 105 
 Percentage of manufactures, 24, 
 
 240 
 Pine-apples, 227 
 Planters, 74 
 Political economy, 4 
 Popery in politics, 2 
 Population, 42, 117, 187, 201 
 Population and wheat, 189 
 Prairie cropping, 33, 1 84 
 Price, Professor Bonamy, 221 
 Prices of sugar, 81 
 
 of wheat, 18, 186, 196 
 
 steady, 251 
 Printing-press, 29 
 Principles, 2 
 Produce of the soil, 178 
 Production and use, 67 
 Profits on imports, 226 
 Profitable manufactures, 213 
 Protection, 9, 32, 214 
 
 for young countries, 
 
 16, 112, 212 
 Protective prices, 34 
 Prosperity of United States, 32, 
 
 45, 214 
 Prout, Mr., 204 
 Purchasing powers, 133, 225, 250 
 
 Bails, 42 
 
 Bailways, 18, 191 
 
 Bainfall, 185 
 
 Baw materials, 34 
 
 Baw wool, 245 
 
 Beciprocity, 26 
 
 Befined sugar, 110 
 
 Befining in bond, 103 
 
 Beforms in farming, 207 
 
 Betaliation, 266 
 
 Bevenue, 126, 144, 263 
 
 Bitchie's, Mr., Committee, 74 
 
 Boyal Agricultural Commission. 
 
 178 
 Bussell, Earl, 159
 
 284 
 
 Index. 
 
 Saccharimetry, 108 
 
 Sandon, Lord, 215 
 
 Savings' banks, 131 
 
 Say, M. Leon, 82 
 
 Self-government, 161 
 
 Sewing-machines, 218 
 
 Sheffield ware, 42 
 
 Sheep, 246 
 
 Ship-building, 67, 123 
 
 Shipping, 68, 129 
 
 Shipping bounties, 12, 66, 271 
 
 Silk trade, 242 
 
 Slave v. free-grown, 78 
 
 Smith, Adam, 37, 187, 207 
 
 South Africa, 166 
 
 States in error, 7 
 
 Steadiness in prices, 251 
 
 Steel, 42 
 
 Successful example, 28, 105, 110, 
 
 253 
 Sugar bounties, 12, 73 
 
 conference, 105 
 
 consumed, 79 
 
 growing, 80 
 
 refining, 94 
 Sumner, Professor, 112 
 Supreme Will, 160 
 Surplus products, 44 
 
 Tariffs, 22, 35, 234 
 
 and prices, 224, 250 
 and revenue, 48, 145 
 
 Taste, 262 
 
 Taxing industries, 264 
 
 Technical education, 206, 254 
 
 Tendency to low tariffs, 216 
 toward union, 157 
 
 Textile manufactures, 232 
 
 Theorists, 144 
 
 The three It's, 254 
 
 Tirard, M., 271 
 
 Tobacco revenue, 145 
 
 Tools, 42. 241 
 
 Town and country, 21 1 
 
 Trade channels, 174 
 
 depression, 152 
 Treaty of 1860, 274 
 Tropical farms, 77 
 
 Under-peopled countries, 33, 
 
 116, 173, 183 
 United States, 9, 31, 36, 231 
 Unity of empire, 170 
 Unkindly seasons, 178 
 Unprofitable manufactures, U.S., 
 
 11,37,43 
 Use and production, 67 
 Use of soil, 180, 209 
 Use of treaties, 275 
 Usine, 75 
 
 Value of commerce, 261 
 Victoria, 14, 222 
 
 Victoria and New South Wales, 
 113 
 
 Wages, 132, 224, 250 
 Wakefield, Gibbon, 184 
 Wales, Frincess of, 247 
 War of tariffs, 26, 266 
 Wear, 238 
 Weeds, 184 
 
 Welfare of wage-earners, 252 
 Western States, 198 
 West Indian sugar, 75 
 Wheat farmers, 18, 182, 246 
 
 in England, 181 
 
 surplus, 195 
 Who pays bounties, 79, 99, 
 
 271 
 Who pays import duties, 224, 
 
 252 
 Women, English, 247 
 Woollen trade, 238 
 
 Yarns, 245 
 
 ZOLLVEItElN, 15, 171 
 
 LONDON : R. CLAY, SONS, AND TAYLOR, PRINTERS.