V. 
 
 LIBRARY 
 
 UNIVERSITY OF 
 CALIFORNIA 
 
 SAN DIEGO 
 
 HENRY 
 DEVENISH 
 
 HARBEN
 
 
 J ~b
 
 FACT «~ FICTION 
 
 The Cobden Club's Reply 
 to Mr. Chamberlain. 
 
 CASSELL & COMPANY, Limited 
 
 LONDON, PARIS, NEW YORK &> MELBOURNE. 
 
 1904. 
 
 [all rights reserved.]
 
 PREFACE. 
 
 In his recent campaign against the fiscal and commercial 
 policy which has guided British statesmen for the past 
 sixty years, Mr. Chamberlain has seldom spoken with- 
 out references to the Cobden Club, and he has frequently 
 attacked the principles and misquoted the opinions of 
 Mr. Cobden. 
 
 Mr. Chamberlain was for fourteen years, until 1892, an 
 eminent member of the Cobden Club, the chief speaker 
 on two occasions at its annual gatherings, and the proposer 
 at one of them of a toast to its foreign members, all of 
 them honorary members, including many of the most 
 distinguished economists in Europe. He has lately asserted 
 that the Club is supported by the money of these foreign 
 members in the interest of their own countries, and against 
 that of Great Britain. He has been informed that foreign 
 members are only honorary members, that they do not 
 pay subscriptions, or contribute to the funds of the Club, 
 and that they have no voice in its councils. He has, how- 
 ever, declined to withdraw or substantiate his untruthful 
 statement. 
 
 In one respect we ought to be grateful for his 
 action. It justifies us in replying to him with a frankness
 
 iv PREFACE. 
 
 and fulness we might otherwise have been unwilling to 
 adopt to a former colleague. 
 
 Under these circumstances, and in view of the moment- 
 ous issues raised in the fiscal campaign, the Cobden Club 
 have thought it incumbent on them to reply, in their cor- 
 porate capacity and not in the name of any single member, 
 to statements and arguments which have been so recklessly 
 piled up in the many speeches in which Mr. Chamberlain 
 has presented his policy to the country. 
 
 The reply has been prepared by a Committee consisting 
 of Mr. Shaw-Lefevre, as Chairman, the only survivor of 
 the original Committee of the Club when founded in 1866, 
 of Lord Welby, the Chairman of the General Committee 
 of the Club, Sir Spencer Walpole, K.C.B., Mr. Fletcher 
 Moulton, K.C., M.P., Mr. F. W. Hirst, Mr. J. Murray 
 Macdonald, and Mr. H. M. Williams. The work has 
 been approved by a full Committee of the Club, and 
 represents their views. 3 j 
 
 Apology may seem to be due for the length of the reply. 
 It should be observed that the case against Mr. Chamber- 
 lain is a cumulative one. If the reply had dealt with 
 five or six, or even ten or twelve, only of the principal mis- 
 statements in Mr. Chamberlain's speeches, it might have 
 been thought by the public that the rest of his statements 
 were unimpeachable. But a careful consideration of 
 the speeches by the Committee has proved that they are 
 open to objection in every part and almost in every para- 
 graph ; that the frequent historical references are wholly 
 unreliable ; that when authorities, such as Adam Smith, 
 J. S. Mill, Cobden, Bright, and Gladstone,?are quoted or
 
 PREFACE. v 
 
 referred to, opinions the very opposite of what they held 
 are attributed to them ; that the statistics are grouped 
 together in an unfair and unscientific manner ; and that 
 illustrations drawn from particular trades are ill-founded 
 or exaggerated. It has been thought worth while to 
 prove this by following out many of the principal mis- 
 statements both of fact and theory without, however, at all 
 exhausting all the sources of error.
 
 CONTENTS. 
 
 CHAPTER PAGE 
 
 Preface iii 
 
 I.— Cobden Club's Reply to Mr. Chamberlain i 
 
 II.— Mr. Chamberlain's New Readings of History in Days 
 
 of Protection before 1846 5 
 
 III. — Charges against Leaders of Free Trade 10 
 
 IV.— Cobden's Alleged Promises and Prophecies 14 
 
 V.— Mr. Chamberlain and Adam Smith 24 
 
 VI.— Mr. Chamberlain and Mr. Gladstone 28 
 
 VII.— The Causes of Prosperity after the Adoption of 
 
 Free Trade 31 
 
 VIII. — Alleged Stagnation of Trade during the last Thirty 
 
 Vears 37 
 
 IX.— Mr. Chamberlain's Theories on the Incidence of 
 
 Import Duties 4S 
 
 X.— Alleged Greater Progress in other Countries 51 
 
 XI. -Ruined and Threatened Trades 58 
 
 XII.— Minor Ruined Industries 66 
 
 XIII.— Mr. Chamberlain's Scheme 75 
 
 XIV.— Retaliation 85 
 
 XV. — "Dumping" 91 
 
 XVI.— Colonial Preferences 96 
 
 XVII. — Protection or Free Trade in India 104 
 
 XVIII. — Conclusion 106 
 
 Appendix 113
 
 THE COBDEN CLUB'S REPLY 
 
 TO 
 
 MR. CHAMBERLAIN. 
 
 CHAPTER I. 
 
 " In this controversy, which I am commencing here, I use 
 figures as illustrations. I do not pretend that they are proofs. 
 The proof will be found in the argument, and not in the figures. 
 But I use figures as illustrations to show what the argument 
 is." — Mr. Chamberlain at Greenock (October 4th, 1903). 
 
 Mr. Chamberlain having completed the programme he 
 sketched for himself some months ago of addressing a 
 series of great meetings on the fiscal question at various 
 centres of industry, it may be assumed that the whole of 
 his case is now before the country. We have heard, 
 therefore, all that can be urged in favour of the reversal 
 of the policy of the past sixty years, and of a return to 
 Protection, the taxation of food, and Colonial preferences. 
 We know also from his own mouth, in the above quotation, 
 the value which must be attached to any statistical argu- 
 ment of which he has made use. 
 
 It was to be expected that as the speaker, in the course 
 of his campaign, discovered what were the subjects which 
 most told with his audiences, he would amplify and magnify 
 these at the expense of others which created less interest. 
 It is doubtless for this reason that, while there has been 
 much repetition in the many speeches which Mr. Cham- 
 berlain has made, there has also been an important change
 
 2 COD DEN CLUB'S REPLY 
 
 in the relative importance attached to the various topics 
 with which he has dealt. 
 
 In the early stages of the scheme, in the past year, 
 it was represented that the destruction of the Empire 
 was at hand, and could only be averted by a preferential 
 tariff. This, it was hoped, apparently, would be a first 
 step towards an Imperial Zollverein. But the only definite 
 proposal then made was a small duty en food imported 
 into this country, with an exemption in favour of our 
 Colonies. The scheme was also baited with " Old Age 
 Pensions," for which funds were to be provided by the 
 taxes on food. It was stated by Mr. Chamberlain that 
 he could not himself look at the matter unless he was 
 able to promise that a large scheme for the provision of 
 such pensions could be assured by a revision of our fiscal 
 duties. 
 
 At the next stage, in a speech at Glasgow, October 
 6th, a new departure was taken. It was proposed that a 
 duty averaging 10 per cent, should be imposed on manu- 
 factured goods imported into this country. This, it was 
 said, would afford the means of obtaining funds to reduce 
 the burthen which might fall on the working classes from 
 the increase in the cost of food caused by the scheme 
 of Colonial preference. It would also give opportunities 
 for negotiating with other Powers for a reduction of their 
 import duties on our manufactures. Old Age Pensions 
 disappeared from the programme, and were no more 
 heard of. 
 
 This, however, was only ancillary to Mr. Chamberlain's 
 original object — namely, the taxation of food for the pur- 
 pose of conceding Colonial preferences. We know from the 
 statements of Lord Balfour of Burleigh that in the scheme 
 laid before the Cabinet for effecting Colonial preference 
 no mention was made of an intention to propose a duty 
 of 10 per cent, on manufactured goods. This latter pro- 
 posal, therefore, was an afterthought.
 
 TO MR. CHAMBERLAIN. 3 
 
 With the instinct of an accomplished and experienced 
 platform speaker, Mr. Chamberlain no doubt perceived, 
 as he gradually felt the pulse of his audiences, that the 
 scheme of Colonial preference awoke little interest ; that 
 the proposed taxation of food with the consequent increase 
 of price, in spite of his protestation to the contrary, alarmed 
 the working classes ; and that what really interested his 
 audiences was the promise of Protection to all home in- 
 dustries against foreign competition. 
 
 His later speeches, therefore, were mainly directed to 
 this more popular and specious topic. The Empire was 
 no longer in immediate danger, and Colonial preferences 
 were relegated to the background. With the object of 
 commending the wider scheme of Protective duties, it 
 was expedient to devise a new version of the condition 
 of the country before 1846, to attribute new motives to 
 the statesmen who carried Free Trade, to ascribe their 
 action to class interests, and to argue that the working 
 classes of those days were not consulted, or did not give 
 support to the movement. For the same reasons he now 
 began to urge that the prosperity which followed on the 
 adoption of Free Trade was not due to this, and to contend 
 that during the last thirty years the conditions of trade 
 have completely altered, and that a return to Protection 
 is expedient and desirable. To these topics, therefore, 
 the greater part of the later speeches has been devoted. 
 
 Apparently, also, in the later speeches, in consequence 
 of this modified programme, it was necessary for the orator 
 to adduce facts and arguments, for which he had not 
 been prepared at the outset. He appears to have taken 
 at second hand from his coadjutors and clerks many 
 facts or arguments which he did not verify himself. This, 
 at least, will explain why his illustrations of the evils 
 resulting from free imports, with rare exceptions, are 
 not founded on facts, or are misleading as to the real 
 position of things. The " facts " and figures in these
 
 4 COB DEN CLUB'S REPLY. 
 
 speeches have been followed by a chorus of denials in 
 the columns of the Times and other papers from persons 
 conversant with the trades concerned. But in spite of this 
 they have been repeated in the published speeches as 
 though the speaker were infallible. 
 
 In view of this altered strain of Mr. Chamberlain's 
 utterances it will be well to analyse his statements and 
 arguments as concisely as possible, and to invert their 
 order. In lieu of beginning with Colonial preferences 
 and then gradually approaching his full-blown scheme 
 of Protection all round, we propose to commence with 
 his new version of the effect of Protection before Free 
 Trade, and of the objects and aims of the statesmen who 
 overthrew Protection ; and then to trace his historical 
 resume' downwards to the present time, and to conclude 
 by an exposition and criticism of his specific scheme. 
 
 It will be seen how unreliable are Mr. Chamberlain's 
 historical references, how delusive and unscientific his 
 statistics, how misleading his quotations from Cobden, 
 Mill, and others, and how unsound his conclusions. 
 
 It will be seen also that the three objects of his scheme 
 — the first of Colonial preferences founded on the taxation 
 of food, the second of Retaliation against excessive tariffs, 
 and the third of Protection all round for home industries — 
 are entirely distinct from one another, and, subject to the 
 conditions laid down, incompatible, and that, if effect 
 is to be given to his policy, further taxation of food 
 and raw material will be inevitable. 
 
 When the speeches arc carefully analysed and reduced 
 
 to their elements, the actual propositions on which they 
 
 are founded may be grouped under the following heads : — 
 
 i. Those relating to the condition of England under the 
 
 system of Protection, with the object of proving 
 
 that the commonly received conclusion that there 
 
 was a great evil to be remedied is a delusion. 
 
 2. Those dealing with the economists and statesmen who
 
 MR. CHAMBERLAIN'S HISTORY. 5 
 
 proposed and carried Free Trade, with the double 
 but hardly consistent object (a) of injuring their 
 credit, (b) of suggesting that they were not really 
 Free Traders, and would, if now alive, support 
 Mr. Chamberlain. 
 
 Those affirming that the prosperity of the country 
 for twenty-five years after the adoption of Free 
 Trade was not due to that policy ; that conditions 
 have wholly changed during the last thirty years, 
 that stagnation has overtaken our foreign export 
 trade, and that other foreign countries have pros- 
 pered far more under a system cf Protection. 
 
 The economic fallacy that Import Duties fall in great 
 part en the foreign producer, and to a small extent, 
 if at all, on the home consumer. 
 
 Arguments in favour of the three-fold scheme of 
 Colonial Preference, Retaliation, and Protection all 
 round. 
 
 CHAPTER II. 
 
 MR. CHAMBERLAIN'S NEW READINGS OF HISTORY IN DAYS 
 OF PROTECTION BEFORE 1846. 
 
 " It is a popular delusion that during the time of Protec- 
 tion England was declining, until it had reached a state of 
 unexampled misery and destitution." — Birmingham, May l$th, 
 1903. 
 
 " It has been falsely represented that the people in those 
 days were not only on the verge of hunger, but were actually 
 being starved." — Ibid. 
 
 " Is it true that at the time when Free Trade was intro- 
 duced, and the Corn Laws were repealed, we were in a state of 
 destitution and misery and starvation ? Is it true that under 
 the Protection which prevailed before that this country was 
 going down in the scale of nations or losing its prosperity and
 
 6 COBDEN CLUB'S REPLY. 
 
 losing its trade ? No, absolutely no. The exact reverse was 
 the case." — Ibid. 
 
 These statements are a travesty of history. They are 
 opposed to the facts recorded of the times preceding the 
 adoption of Free Trade by almost every historian or econ- 
 omist who has addressed himself to the subject. Volumes 
 might be written in disproof of them. 
 
 Mr. Chamberlain must be quite cognisant of the conditions 
 of England under Protection, for no one has ever more 
 emphatically summed them up in a few pregnant sentences 
 than he did, when speaking at a great meeting at Birmingham 
 in 1885, on November 7th. The country at that time 
 was passing through a period of depression and stagnation of 
 trade — fortunately, as it proved, of a temporary character 
 — and there was a very decided movement in certain 
 quarters in favour of a return to Protection under the 
 guise of what was then called " Fair Trade " and " Reci- 
 procity." 
 
 " I think it is necessary," he said, " that we should once 
 more rub up our history of these bad times before Mr. Bright 
 ami Mr. Cobden succeeded in persuading Parliament that the 
 Corn Laws were an iniquitous tax. 
 
 " I wonder whether in this vast audience there are any 
 people who have any conception of the state of things which 
 existed forty or fifty years ago— i.e. between 1835 and 1845. 
 At that time the whole of the labourers in the agricultural 
 districts were on the verge of starvation. The Poor Rates were 
 in some districts 20s. in the pound. At the time of which I 
 am speaking the large towns were described by eyewitnesses 
 as bearing the appearance of beleaguered cities, so dreadful 
 was the destitution and the misery which prevailed in them. 
 People walked the streets like gaunt shadows, and not like 
 human beings. There were bread riots in every town. There 
 were rick burnings on all the country sides. We were on the 
 verge of a revolution when the Corn Laws were abolished." 
 
 In the same year at the Eighty Club, on April 28th, 
 he said : —
 
 MR. CHAMBERLAIN'S HISTORY. 7 
 
 " I think it is inconceivable that the working classes of 
 this country will ever again submit to the sufferings and to 
 the miseries which were inflicted upon them by the Corn Laws 
 in order to keep up the rents of landlords. If that is the pro- 
 gramme of the Tory party we have only in answer to it to 
 recall the history of those times when Protection starved the poor, 
 and when the country was brought by it to the brink of revolu- 
 tion. Remember the description which was given in the verses 
 of the Corn Law rhymer of the sufferings endured by the people 
 and of the burning indignation the sufferings called forth : — 
 
 They taxed your corn, they fettered trade, 
 And every good that God hath made 
 They turned to bane and mockery. 
 They knew no interest but their own, 
 They shook the state, they shook the throne, 
 Oh, years of crime ! . . . . 
 
 That is not a retrospect which I think would be favourable to 
 any party or any statesman who should have the audacity to 
 propose that we should go back to those times." 
 
 It may be well to refer to a few authorities in con- 
 firmation of these statements. Sir Spencer Walpole, in 
 his History of England (Vol. VI., p. 386), expresses his 
 " deliberate opinion that the wretchedness of the lower 
 orders had been constantly increasing from 1815 to 1842, 
 and that the wave of misery in Britain reached its sum- 
 mit in the course of that year." 
 
 Mr. Cobden, in the first speech he delivered in the 
 House of Commons on August 25th, 1841, referring to 
 the previous ten years, said : — 
 
 " I have seen at Manchester a body of ministers of all religious 
 persuasions, 650 in number, . . . gathered, not from York- 
 shire or Lancashire only, not from Derby or Cheshire only, 
 but from every county of Great Britain — from Caithness to 
 Cornwall, at an expense of £3,000 to £4000, which was borne 
 by their respective congregations. . . I will state generally 
 that both from the manufacturing and agricultural districts 
 there_was the most unimpeachable testimony that the con-
 
 8 COBDEN CLUB'S REPLY. 
 
 dition of the great body of her Majesty's labouring subjects 
 had deteriorated wofully within the last ten years, and more 
 especially so within the three years last past ; and, furthermore, 
 that in proportion as the price of the food of the people had 
 increased, just so had their comforts been diminished. I have 
 seen statements derived from the reports of infirmaries and 
 workhouses, from saving-banks and prisons ; and all alike 
 bore testimony, clear and indubitable, that the condition of 
 the great mass of her Majesty's subjects in the lower ranks 
 of life is rapidly deteriorating ; that they are now in a wor^s 
 condition and receiving less wages ; and that their distress and 
 misery result in a greater amount of disease, destitution, and 
 crime than has ever been witnessed at any former period of 
 the history of this country."* 
 
 Speaking at Edinburgh on December 2nd, 1845, Lord 
 Macaulay, referring to the condition of the country in 
 1841, said : — 
 
 " Will anybody tell me that the capitalist was the only 
 sufferer, or the chief sufferer ? Have we forgotten what was 
 the condition of the working people in that unhappy year ? 
 So visible was the misery of the manufacturing towns that a 
 man of sensibility could hardly bear to pass through them. 
 Everywhere he found filth and nakedness, and plaintive voicer., 
 and wasted forms and haggard faces. Politicians, who had 
 never been thought alarmists, began to tremble for the very 
 foundations of Society. First the mills were put on short time. 
 Then they ceased to work at all. Then went to pledge the scanty 
 property of the artisan ; first his little luxuries, then his com- 
 forts, then his necessaries. The hovels were stripped till they 
 were as bare as the wigwam of a Dogribbed Indian. Alone 
 amidst the general misery, the shop with the three golden balls 
 prospered, and was crammed from cellar to garret with the 
 clocks and the kettles, and the blankets, and the bibles of the 
 poor. I remember well the effect which was produced in 
 London by the unwonted sight of the. huge pieces of cannon 
 which were going northward to overawe the starving popula- 
 tion of Lancashire."! 
 
 * Cobden's Speeches, Vol. I., p. 8. 
 
 t " Macaulay's Miscellaneous Writings," Vol. Ill,, p. 361.
 
 MR. CHAMBERLAIN'S HISTORY. 9 
 
 And the speaker subsequently added a few admirable 
 words on prices and wages, which we subjoin : — 
 
 " If these things do not te'ach us wisdom we are past all 
 teaching. Twice in ten years we have seen the price of corn 
 go up, and as it went up the wages of the labouring classes 
 went down. Twice in the same period we have seen the price 
 of corn go down, and as it went down the wages of the labouring 
 classes went up. Surely such experiments as these would in 
 any science be considered as decisive." 
 
 At the commencement of 1842 — the year when Sir 
 Robert Peel made his first great advance in the direction 
 of Free Trade — the Queen's Speech at the opening of 
 Parliament contained these words : " I have observed 
 with deep regret the continued distress in the manufac- 
 turing districts of the country. The sufferings and priva- 
 tions which have resulted from it have been borne with 
 exemplary patience and fortitude." 
 
 The following extract from a petition presented to 
 Parliament by the Chamber of Commerce of Manchester 
 in 1838 is proof of the depressed state of trade in the country, 
 and is also disproof of the statement of Mr. Chamberlain 
 that before the adoption of Free Trade this country had 
 attained a virtual supremacy of the world's markets : — 
 
 " Your petitioners view, with great alarm, the rapid ex- 
 tension of foreign manufactures, and they have, in particular, 
 to deplore the consequent diminution of a profitable trade 
 v/ith the Continent of Europe. . . . Whilst the demand for 
 all those articles, in which the greatest amount of the labour of our 
 artisans is comprised, has been constantly diminishing, the 
 exportation of the raw material has been as rapidly increasing. 
 
 " Several nations of the Continent not only produce sufficient 
 manufactures for their own consumption, but they successfully 
 compete with us in neutral foreign markets. Amongst other 
 instances that might be given to show the formidable growth 
 of the cotton manufacture abroad, is that of the cotton hosiery 
 of Saxony, of which, owing to its superior cheapness, nearly 
 four times as much is exported, as from this country ; the Saxons
 
 io COBDEN CLUB'S REPLY. 
 
 exporting annually to the United States of America alone, a 
 quantity equal to the exports from England to all parts of the 
 world ; whilst the still more important fact remains to be 
 adduced, that Saxon hose, manufactured from English yarn, 
 after paying a duty of 20 per cmt., are beginning to be intro- 
 duced into this country and sold for home consumption, at 
 lower prices than they can be produced for by our manufacturers. 
 " Further proof of the rapid progress in manufacturing 
 industry going on upon the Continent is afforded in the fact that 
 establishments for the making of all kinds of machinery for 
 spinning and weaving cotton, flax, and wool have lately been 
 formed in nearly all the large towns of Europe, in which English 
 skilled artisans are at the present moment diligently employed 
 in teaching the native mechanics to make machines, copied 
 from models of the newest invention of this country, and not 
 a week passes in which individuals of the same valuable class do 
 not quit the workshops of Manchester, Leeds, and Birmingham 
 to enter upon similar engagements abroad."* 
 
 Attention is drawn to the change in Mr. Chamberlain's 
 version of historical facts, not merely for the purpose of 
 showing that it is absolutely unsupported by any authority, 
 but also because such a change has a totally different 
 moral quality from a simple change of opinion about 
 the merits of Free Trade. The change of opinion may 
 be morally justified. But what are we to say of the moral 
 sense of the man who changes his version of historical 
 facts in order to support his change of opinion ? 
 
 CHAPTER III. 
 
 CHARGES AGAINST LEADERS OF FREE TRADE. 
 
 One of the charges brought by Mr. Chamberlain against 
 the leaders of the Free Trade movement is, that they 
 were actuated by their own interests as manufacturers, 
 
 * See for this petition "Free Trade and the Manchester School" 
 (Harpers, 1903).
 
 CHARGES AGAINST FREE TRADERS. n 
 
 and that they believed wages would be lowered, and that 
 they would consequently be better able to compete with 
 foreign manufacturers. 
 
 " It is a fact," he said at Liverpool, October 27th, 1903, 
 " that the movement was a manufacturers' and a middle-class 
 movement. The leaders of the movement, or some of the 
 leaders of the movement, admitted that they thought it would 
 enable wages to be kept at what they called a reasonable level. 
 Ihey thought that it would give cheap food, or that if the 
 labourer had cheap food he could afford to work for lower wages, 
 and that they therefore could afford to carry on a competition 
 with which they were threatened in the goods they manu- 
 factured. . . Rightly or wrongly, the leaders of the Free Trade 
 movement believed that the big loaf meant lower wages." 
 
 The statement that the leaders of the movement ex- 
 pected that it would result in lower wages to their work- 
 men is a curious instance of the disinterment of a 
 scandalous charge frequently made at the time by 
 opponents of Free Trade. Mr. Cobden's speeches contain 
 many references to it. On February 24th, 1842, he 
 said : — 
 
 " We are told that the object of the Repeal of the Corn Laws 
 is to lower wages here to the level of Continental wages. Have 
 low wages ever proved the prosperity of our manufactures ? 
 In every period when wages have dropped it has been found 
 that the manufacturing interest dropped also ; and I hope 
 that the manufacturers will have credit for taking a rather 
 more enlightened view of their own interests than to conclude 
 that the impoverishment of the multitude, who are the greatest 
 consumers of all that they produce, could ever tend to pro- 
 mote the prosperity of our manufactures." 
 
 On February 23rd, 1844, he reverted to the subject :— 
 
 " With respect to farm labourers, our opponents tell us that 
 our object in bringing about the Repeal of the Corn Laws is, 
 by reducing the price of corn, to lower the rate of their wages. 
 I can only answer upon this point for the manufacturing districts ; 
 but as far as they are concerned, I state it most emphatically 
 B
 
 12 COBDEN CLUB'S REPLY. 
 
 as a truth, that for the last twenty years, whenever corn has 
 been cheap, wages have been high in Lancashire ; and on the 
 other hand, when bread has been dear, wages have been greatly 
 reduced. Now I distinctly put this statement on record, and 
 challenge anyone to controvert it." 
 
 In many other speeches Mr. Cobden nailed this lie 
 to the counter. It is strange indeed that Mr. Chamber- 
 lain should try to make it pass current again. 
 
 The more general charge that the leaders of the move- 
 ment were thinking only of their own class interests is 
 equally unfounded. It gives us the excuse for quoting the 
 touching passage in Mr. Morley's " Life of Cobden," in which 
 Mr. Bright described the incident that caused his entrance 
 into the Anti-Corn Law conflict at the instance of Cobden. 
 
 " It was, said Mr. Bright, in September in the year 1841. 
 The sufferings throughout the country were fearful ; and you 
 who live now, but were not of age to observe what was passing 
 in the country then, can have no idea of the state of your 
 country in that year. ... At that time I was at Leamington, 
 and I was, on the day when Mr. Cobden called upon me, in the 
 depths of grief — I might almost say of despair ; for the light 
 and sunshine of my house had been extinguished. All that 
 was left on earth of my young wife, except the memory of a 
 sainted life and of a too brief happiness, was lying still and 
 cold in the chamber above us. Mr. Cobden called upon me 
 as a friend, and addressed me, as you might suppose, with 
 words of condolence. After a time he looked up and said, 
 ' There are thousands of houses in England at this moment 
 where wives, mothers, and children are dying of hunger. Now,' 
 he said, ' when the first paroxysm of your grief is past, I would 
 advise you to come with me, and we will never rest till the Corn 
 Law is repealed.' I accepted his invitation. I knew that the 
 description he had given of the homes of thousands was not 
 an exaggerated description. I felt in my conscience that there 
 was a work which somebody must do, and therefore I accepted 
 his invitation, and from that time we never ceased to labour 
 hard on behalf of the resolution which we had made." 1 ! t $ 
 
 * Morle>'s "Life of Cobden," Chap. IX.
 
 CHARGES AGAINST FREE TRADERS. 13 
 
 These pathetic words have become classical in the 
 English language. Mr. Chamberlain, who professes to 
 have lately 1 read the " Life of Cobden," can hardly have 
 failed to notice them. Yet these are the men of whom 
 he ventures to suggest that as leaders of the movement 
 they entered upon it from interested motives, in the belief 
 that wages would fall with a lower price of corn, and that 
 they as manufacturers would be better able to meet 
 competition. 
 
 Indeed, the only scintilla of justification which 
 Mr. Chamberlain gives for stating that the leaders of the 
 Free Trade movement looked for lower wages is a letter 
 from Mr. Bright, written in 1888, to a friend in America, 
 suggesting to him that if his countrymen made Protection 
 their policy they would have to give higher wages to 
 their working classes — higher wages and shorter hours. 
 No reference is given, and we have failed to trace the letter. 
 As it happens, however, we know exactly what Mr. Bright 
 thought about the effect of Free Trade upon wages in 
 England from two published letters of 1884. From the 
 first (written to a member of the Hackney Liberal Asso- 
 ciation on the death of Professor Fawcett) we take the 
 following passage ; — 
 
 " Let your workmen reflect on the change in their condition 
 which Free Trade has wrought within the last forty years since 
 the reform of our tariff. The Corn Law was intended to keep 
 wheat at the price of 80s. the quarter ; it is now under 40s. 
 the quarter. The price of tea is now less than the duty which 
 was paid upon it in former days. Sugar is not more than 
 one-third of its cost when a monopoly of East and West India 
 sugar existed. As to wages in Lancashire and Yorkshire, the 
 weekly income of thousands of workers in factories is nearly 
 if not quite double that paid before the time when Frae Trade 
 was established. The wages of domestic servants in the county 
 from which I come are, in most cases, doubled since that time. 
 A working brick-setter told me lately that his wages are now 
 7s. 6d. per day; formerly he worked at the rate of 45. per
 
 14 COBDEN CLUB'S REPLY. 
 
 day. Some weeks ago I asked an eminent upholsterer in a 
 great town in Scotland what had been the change in wages 
 in his trade. He said that thirty or forty years ago he paid 
 a cabinet-maker 12s. per week ; he now pays him 28s. per 
 week. If you inquire as to the wages of farm labourers, you 
 will find them doubled, or nearly doubled, in some counties, 
 and generally over the whole country advanced more than 
 50 per cent., or one-half, whilst the price of food and the hours 
 of labour have diminished." * 
 
 In face of this it is difficult to accept as authoritative 
 an unknown and unverified letter, alleged to have been 
 written within four years of the date of this letter, and 
 to contain views of an exactly opposite character. 
 
 CHAPTER IV. 
 
 cobden's alleged promises and prophecies. 
 
 Here are a few of Mr. Chamberlain's utterances on this 
 point : — 
 
 " Mr. Cobden based the whole of his argument upon the 
 assumption, made in good faith, that if we adopted Free Trade 
 it would mean free exchange between the nations of the world, 
 that if we adopted Free Trade five or ten years would not pass 
 without all other nations adopting a similar system. That was 
 his belief, and upon the promise — the prediction which he 
 offered — the country adopted Free Trade. Unfortunately, he 
 was mistaken." — Birmingham, November gth, 1903. 
 
 " Mr. Cobden said that if Free Trade were adopted the 
 United States would abandon their premature manufactures, 
 and that the workmen in their factories would go back to the 
 land and — now I am quoting his exact words — that they would 
 ' dig, delve, and plough for us.' " — Ibid. 
 
 * StY "Free Trade and the Manchester School" (1903), p. 505.
 
 COBDEN'S PREDICTIONS. 15 
 
 " The policy of Free Trade was adopted at the time on the 
 faith of promises, predictions, and expectations which experi- 
 ence shows have not been fulfilled. . . . Nothing is more certain, 
 nobody denies, that Mr. Cobden believed — honestly believed — 
 that if once we set the example every other nation on the face 
 of the earth would follow our example, or if they did not follow 
 it they would be ruined. Mr. Cobden believed and told the 
 world that all the rest of the world would dig and delve and 
 plough for us, and that we in return would take our raw material 
 from them, and that they in return would exchange with our 
 manufactures." — Leeds, December, 1903. 
 
 Never, we believe, in the history of political controversy 
 has a statesman of repute made statements so untrue and 
 so reckless ! In spite of numerous previous contradic- 
 tions in the Press, Mr. Chamberlain, in his speech at 
 Leeds, repeated them, with further gross exaggerations. 
 The Life of Cobden and his speeches and writings are 
 accessible to all, and no one can have excuse for mis- 
 quoting and misrepresenting Cobden's opinions. 
 
 Nothing can be more certain than the fact that Cobden 
 made no such promises. Free Trade was adopted solely 
 because it was believed to be in the interest of Great 
 Britain, and not because any promises, predictions, or 
 expectations were held out by Peel or Cobden or by any 
 other of the statesmen who aided in carrying it. 
 
 We have gone very carefully through all the collected 
 and many uncollected speeches and writings of Cobden. 
 We cannot find any passage in them during the long years 
 of agitation for the Repeal of the Corn Laws, and before 
 the victory was achieved, in which Cobden made any 
 prediction as to what other countries would do, still less 
 any promise that they would follow our example. It is 
 true that, at the beginning of 1846, when Sir Robert Peel 
 had already announced his conversion and the intention 
 of his Government to repeal the Corn Laws, Cobden, in 
 the hour of triumph, in a speech at Manchester, in a few
 
 16 COBDEN CLUB'S REPLY. 
 
 words expressed his belief that other European Powers 
 would very soon follow our example. But to affirm on 
 the strength of this passage, as Mr. Chamberlain has done, 
 that Cobden based the whole of his argument in favour 
 of Free Trade on this belief, and to assume that he only 
 achieved success for his policy by holding out promises 
 which have not been fulfilled, is a complete and most 
 unjustifiable perversion of his views. 
 
 In the speeches made by Cobden on behalf of Free 
 Trade there are many passages dealing with the plea of 
 reciprocity, and urging that we should not wait till other 
 Powers were willing to meet us by lowering their tariffs. 
 
 In a speech delivered at Dundee on January 16th, 
 1844, he dealt at length with this question :— 
 
 " I pray you," he said, " to mark this plea of reciprocity, 
 for you will hear more of it next Parliament. It means that 
 you must not buy cheap until others are disposed to buy from 
 us. Sir Robert Peel and his Government have acted on oppo- 
 site principles in fiscal legislation. In all his 700 alterations 
 (in 1842) he never waited until he saw what other countries 
 were to give us in exchange for the articles we admitted. He 
 has legislated irrespective of foreign countries, and said that we 
 were not to wait for them. We have not a single duty on 
 this principle (of reciprocity). Mark the hypocrisy of this. 
 It is only when you come to the article of food that he finds 
 that he cannot apply the same principles of common-sense to 
 corn as to other articles. I say further that it is our policy 
 to receive from every country, and if foreign countries exclude 
 us it is only a stronger reason why we should throw open our 
 ports more widely to them." * 
 
 Again, in 1849, after the victory had been achieved, 
 Cobden, on January 10th, referred to this same principle 
 in unmistakable language : — 
 
 " I remember at the last stage of the Corn Law agitation 
 our opponents were driven to this position. ' Free Trade is 
 
 * See Dundee Advertiser, January 19th, 1844.
 
 COBDEISTS PREDICTIONS. 17 
 
 a very good thing for us, but you cannot have it until other 
 countries adopt it too ' ; and I used to say, ' If Free Trade be a 
 good thing for us, we will have it. Let others take it if it be 
 a good thing for them ; if not, let them do without it. ' 
 
 This principle of throwing open our ports and abolishing 
 all duties on exports, except for revenue purposes on a 
 few articles we did not produce, without waiting for other 
 countries to adopt the same course, and without promise 
 or expectation that they would do so, was, in fact, the main 
 question on which the battle of Free Trade was fought. 
 For many years previously most of the leading statesmen and 
 all sensible men in this country had been convinced of the 
 soundness of the principle of Free Trade as between nations, 
 but many of them still doubted whether it was sound policy 
 for this country to reduce or remove its duties on imports, 
 unless other countries were willing to make corresponding 
 reductions on their part. 
 
 Great efforts were made by the Government of Sir 
 Robert Peel between 184 1 and 1844 to induce the Govern- 
 ments of other countries to enter into commercial treaties 
 for reciprocal reductions of tariffs. When in 1841 Mr. 
 Gladstone was Vice-President of the Board of Trade, and 
 later when he was President of that department, he was 
 actively engaged in negotiations with this object. 
 
 Mr. Morley quotes him as saying : 
 
 " Between 1841 and 1844 we were anxiously and eagerly 
 endeavouring to make tariff treaties with many foreign count 
 tries. Austria, I think, may have been included ; but I recollec- 
 especially France, Prussia. Portugal, and I believe Spain. And 
 the state of our tariff, even after the law of 1842, was then such 
 as to supply us with plenty of material for liberal offers. Not- 
 withstanding this, we failed in every case. I doubt whether 
 we advanced the cause of Free Trade by a single inch." * 
 
 The complete failure of these negotiations convinced 
 Sir Robert Peel that it was no longer desirable to wait 
 
 * Mr. Morley's " Life of Gladstone," Vol. I., p. 267.
 
 i8 COB DEN CLUB'S REPLY. 
 
 till other Powers would follow our example. Between 1842 
 and 1845 he made large reductions of duties, abolishing 
 them in respect of 750 out of the 1,200 articles previously 
 taxed. In 1846 he abolished or reduced most of the 
 remaining Protective duties, including corn and other 
 articles of food. Nothing can be clearer than that he 
 effected this without giving any promise or exciting any 
 expectation that other countries would follow our example. 
 
 " I frankly avow," he said on introducing his great measure 
 of 1846, " that in making these great reductions on the produce 
 of other countries I have no guarantee that other countries 
 will follow our example. Wearied by our long and unavailing 
 efforts to enter into satisfactory commercial relations with other 
 countries, we have resolved to consult our own immediate 
 interests, and not to punish other countries for the wrong they 
 do us by continuing high duties upon these importations of 
 our products and manufactures, by continuing high duties our- 
 selves. It is a fact that other countries have not followed 
 our example. Nay, they have in some cases raised the duties 
 upon the admission of our goods. Hostile tariffs so far from 
 being an argument against the removal of restrictive duties, 
 furnish a strong argument in its favour." — House of Commons, 
 January 2jth, 1846. 
 
 In his powerful defence of Free Trade, in answer to 
 a motion of Mr. Disraeli in 1849, challenging the principle 
 of free imports on the ground that other countries were 
 still taxing our products, Peel returned to the same topic. 
 
 " In bringing forward," he said, " the present motion, Mr. 
 Disraeli observed, speaking of our recent legislation, ' that we 
 have created a new commercial system which mistakes the 
 principle upon which a profitable exchange can take place 
 between nations, that we can only encounter the hostile tariffs 
 of foreign countries by countervailing duties.' Now in opposi- 
 tion to this doctrine I boldly maintain that the principle of 
 Protection to native industry is a vicious principle. I 
 contest the principle that you cannot fight hostile tariffs by 
 free imports. I so totally dissent from that assumption that
 
 COBDEN'S PREDICTIONS. 19 
 
 I maintain that the best way to compete with hostile tariffs is 
 to encourage free imports. So far from thinking the principle 
 of Protection a salutary principle, I maintain that the more 
 widely you extend it the greater the injury you inflict on the 
 national wealth and the more you cripple the national 
 industry." 
 
 The whole of Sir Robert Peel's arguments were based 
 on the principle that it was the interest of this country 
 to get rid of its Protective import duties, regardless alto- 
 gether of what other countries might do. 
 
 The statement, therefore, of Mr. Chamberlain that Free 
 Trade was only carried in consequence of predictions 
 and promises that other countries would follow our ex- 
 ample is absolutely without foundation. 
 
 Equally unfortunate is Mr. Chamberlain's quotation 
 from Cobden that " if Free Trade were adopted the United 
 States of America would abandon their premature manu- 
 factures, and that their workmen would go back to the 
 land and would dig, delve, and plough for us," which 
 he alleged he had come across when reading Mr. Morley's 
 Life of Cobden. 
 
 Mr. Morley pointed out in the columns of the Times 
 that the passage referred to was not contained in the Life, 
 but was to be found in a speech of Cobden delivered on 
 June 18th, 1845, when Cobden was arguing in favour of 
 an immediate repeal of the Corn Laws, and pointed out 
 incidentally that American competition with us in manu- 
 factures was being stimulated and encouraged by our 
 delay in opening British ports as a market for their corn. 
 Cobden was very far from predicting a merely agricultural 
 future for the United States, and the very foundation of 
 his whole case from its beginning was that the United 
 States were bound to become our most formidable economic 
 and manufacturing competitors. 
 
 Mr. Morley quoted in reply a passage from Cobden 
 which is to be found in his Life of Cobden : —
 
 20 COB DEN CLUB'S REPLY. 
 
 " Looking to the natural endowments of the North American 
 continent as superior to Europe as the latter is to Africa — with 
 an almost immeasurable extent of river navigation, its boundless 
 expanse of the most fertile soil in the world, and its inexhaust- 
 ible mines of coal, iron, lead, etc. — looking at these and remember- 
 ing the quality and position of a people universally instructed 
 and perfectly free ; and possessing as a consequence of these a 
 new-born energy and vitality very far surpassing the character 
 of any nation of the Old World, the writer reiterates the moral 
 of his former work, by declaring his conviction that . . . 
 ' it is from the silent and peaceful rivalry of American com- 
 merce, the growth of its manufactures, its rapid progress in in- 
 ternal improvements, the superior education of its people, 
 and their economical and pacific government — that it is from 
 these and not from the barbarous policy or the impoverish- 
 ing armaments of Russia that the grandeur of our commercial 
 and national prosperity is endangered.' " * 
 
 Mr. Chamberlain, in the authorised edition of his 
 speeches, repeats his allegations as to the promises and 
 prophecies of Cobden without alteration, omitting only the 
 statement that the passage he quotes is to be found in 
 Morley's Life of Cobden, and substituting another to the 
 effect that he came upon the passage in a speech. 
 
 A more garbled and unfair representation of the views 
 of Cobden it would be difficult to imagine. As Cobden 
 anticipated, there has been a prodigious extension of manu- 
 factures in the United States, which must be and is wholly 
 independent of any artificial support by Protective duties. 
 On the other hand, as Cobden also expected, there has been 
 an immense increase of agriculture there, and we in this 
 country receive a large proportion of our food supplies 
 from that country. 
 
 Even more extraordinary and unfounded is Mr. Cham- 
 berlain's statement that Cobden believed that if other 
 nations did not follow our example in adopting Free Trade 
 
 * " Cobden's Tolitical Writings," Vol. I. (first edition), pp. 196-7. A 
 note to the pamphlet on Russia.
 
 COBDEN'S PREDICTIONS. 21 
 
 " they would be ruined." In Cobden's writings and 
 speeches we cannot find a single sentence to justify this 
 assertion. It was repeated with emphasis in Mr. Cham- 
 berlain's last speech at Leeds. 
 
 It will be observed also that in spite of Mr. Morley's 
 reply with regard to the passage in the Birmingham speech 
 that " the United States would dig, delve, and plough for 
 us," this passage was virtually repeated in the Leeds speech, 
 with the added absurdity and exaggeration that Cobden had 
 said " all the world would dig, delve, and plough for us." 
 
 Having endeavoured to throw as much discredit as 
 possible on Cobden, the new prophet of Protection, with 
 a strange inconsistency, calls Cobden as well as Adam 
 Smith in support of the policy of Colonial preferences. 
 
 Speaking of the tariff question which has recently 
 arisen between Germany and Canada, Mr. Chamberlain 
 said at Birmingham, May 15th, 1903 : — 
 
 " It is absolutely a new situation ; there has been nothing 
 like it in our history. It is a situation that was never contem- 
 plated by any of those whom we regard as the authors of Free 
 Trade. What would Mr. Bright, what would Mr. Cobden, have 
 said to this state of things ? I do not know, and it would be 
 presumptuous to imagine ; but this I can say, that Mr. Cobden 
 did not hesitate to make a treaty of reciprocity with France, 
 and Mr. Bright did not hesitate to approve of his action, and I 
 cannot believe if they had been present among us now, and had 
 known what this new situation was, that they would have 
 hesitated to make a treaty of preference and reciprocity with 
 our own children." 
 
 Reciprocity and retaliation, which Mr. Chamberlain 
 tells us over and over again are the watchwords of fiscal 
 reform, were the main principles of the fiscal system which 
 Mr. Cobden set himself to destroy. He never ceased to 
 denounce the Colonial preferences which then existed. 
 With reference, however, to Mr. Chamberlain's remarks on 
 Cobden's commercial treaty with France, it is to be 
 noticed that he speaks of it as a treaty of reciprocity,
 
 22 COBDEN CLUB'S REPLY. 
 
 and insinuates in the revised edition of his speech (what 
 he had originally boldly asserted) that it was a treaty 
 of mutual preference — the same kind of arrangement as 
 that which he wishes us to negotiate with the Colonies. 
 
 Now Mr. Gladstone, Mr. Cobden, and Mr. Bright 
 always repudiated the idea that the treaty with France 
 was in any way one based on the principle of reciprocity. 
 It was not, in fact, a bargain in the sense that each 
 Power gave a remission of duties in return for an equivalent 
 remission on the part of the other. It did not raise or 
 involve the imposition of a single duty, and did not create 
 a single differential duty in favour of France or of any 
 other country. Cobden himself spoke of it at Rochdale 
 (June 26th, 1861) as " the great final coping stone upon 
 the edifice of Free Trade so far as the abolition of all 
 protective duties goes," and he described the benefits of 
 the treaty as follows : — 
 
 " What, I confess, as an Englishman, I have had in this 
 important duty most to consider, is how this matter has bene- 
 fited you, not by what it will allow you to export, but by what 
 it will allow you to import. This is the way by which I seek to 
 benefit a population, by allowing more of the good things to 
 come in from abroad." 
 
 And again : — 
 
 " By removing every duty upon all articles of foreign manu- 
 facture we have made England a free port for manufactured 
 goods, just as we had made it a free port for corn and for raw 
 materials. The consequence is that all articles of foreign manu- 
 facture may be brought to England without let or hindrance. 
 We find a large consumption for them here ; and foreigners and 
 Colonists coming from Australia, Canada, and America, may 
 find in our warehouses not merely all our produce which they 
 want, but Swiss and German and French produce which they 
 may buy here without visiting the Continent to purchase them. 
 This, I consider, is to us, as a mercantile people, an immense 
 advantage which will be, by-and-by, fully appreciated."
 
 COBDEN'S PREDICTIONS. 23 
 
 It may be well to quote also on this point a letter of 
 Mr. Cobden, which appears in Mr. Morley's Life of Glad- 
 stone : — 
 
 " I will undertake that there is not a syllable on our side of 
 the treaty that is inconsistent with the soundest principles of 
 Free Trade. We do not propose to reduce a duty which, on 
 its merits, ought not to have been dealt with long ago. We 
 give no concessions to France which do not apply to all other 
 nations. We leave ourselves free to lay on any amount of 
 internal duties and to put an equal tax on foreign articles 
 of the same kind at the Custom house. It is true we bind 
 ourselves, for ten years, not otherwise to raise such of our Customs 
 as affect the French trade, or put on fresh ones ; and this, I 
 think, no Free Trader will regret." — Cobden to Bright (" Life of 
 Gladstone?' Vol. II., p. 21). 
 
 In the same strain, Mr. Gladstone always defended 
 the treaty, not as a bargain between the two countries, 
 balancing one concession against another, but as a simul- 
 taneous movement towards Free Trade. 
 
 " We have been told," said Mr. Gladstone, " that the treaty 
 with France is a bargain ; that we have asked for equivalents, 
 and that we have not got them. I deny that this treaty has 
 ever been a bargain, for it is the essence of a bargain that you 
 give away something which is of value to you to retain, and 
 that you receive something which it is important to you to keep. 
 It is a reciprocal instrument, if you like ; but a bargain it is not, 
 for you are giving nothing to France that is not a gift to your- 
 selves, and you are receiving nothing from France except that 
 by which France confers a benefit upon herself. We have never 
 attempted the impossible task of constructing a system of 
 equivalents. We know quite well, if there were any means of 
 obstructing the progress of Free Trade it was by relying upon 
 negotiations in the spirit of a bargain." * 
 
 It only remains to be said that when, in 1882, the French 
 Republic, mainly in consequence of financial difficulties 
 
 * 3 Hansard, 157, par. 314.
 
 24 COB DEN CLUB'S REPLY. 
 
 arising out of the war with Germany, put an end to the 
 treaty of i860 with this country, and when after long nego- 
 tiations it was found impossible to come to agreement for 
 a substitute, the question arose with the British Government 
 whether it would be well to re-impose the duties in this 
 country which had been abolished by that treaty. After 
 careful consideration, it was decided that it was not in 
 the interest of England to shackle its trade by reimposing 
 these duties, even for the purpose' of attempting at some 
 future time to negotiate for a reduction of the French 
 tariff. 
 
 How, in view of all these facts, Mr. Chamberlain 
 has come to the conclusion that the treaty with France 
 of i860 can be quoted in aid of his new-found policy of 
 preferential arrangements with our Colonies, or treaties 
 with other Powers, or of retaliatory duties, passes all 
 comprehension. 
 
 CHAPTER V. 
 
 MR. CHAMBERLAIN AND ADAM SMITH. 
 
 Mr. Chamberlain has also given an entirely false idea 
 of Adam Smith. There is nothing original in this per- 
 formance. Cobden himself, in a speech of July 3rd, 1844, 
 describes how certain Protectionist pamphleteers " took 
 a passage and with the scissors snipped and cut away 
 at it until, by paring off the ends of sentences and leaving 
 out all the rest of the passage, they managed to make 
 Adam Smith appear in some sense as a monopolist. When 
 we referred to the volume itself we found out their tricks, 
 and exposed them." 
 
 Let us now do for Mr. Chamberlain what Cobden did for
 
 ADAM SMITH. 25 
 
 Mr. Chamberlain's predecessors. Speaking at Glasgow in 
 October 6th, 1903, Mr. Chamberlain said : — 
 
 "I am in that city in which Free Trade took its birth, in 
 that city in which Adam Smith taught so long, and where he 
 was one of my most distinguished predecessors in the great 
 office of Lord Rector of your University, which it will always be 
 to me a great honour to have filled. Adam Smith was a great 
 man. It was not given to him, it never has been given to mortals, 
 to foresee all the changes that may occur in something like a 
 century and a half ; but, with a broad and far-seeing intelligence 
 which is not common among men, Adam Smith did at any 
 rate anticipate many of our modern conditions, and when I read 
 his Looks I see how even then he was aware of the importance 
 of home markets as compared with foreign ; how he advocated 
 Retaliation under certain conditions ; how he supported the 
 Navigation Laws ; how he was the author of a sentence which 
 we ought never to forget, that ' Defence is greater than 
 opulence.' When I remember, also, how he, entirely before 
 his time, pressed for reciprocal trade between our Colonies 
 and the Mother Country, I say he had a broader mind, a more 
 Imperial conception of the duties of the citizens of a great 
 Empire, than some of those who have taught also as professors, 
 and who claim to be his successors. Ladies and gentlemen, I 
 am not afraid to come here, to the home of Adam Smith, and 
 to combat free imports, and still less am I afraid to preach to 
 you preference with our Colonies.* " 
 
 There is only one other reference to Adam Smith in 
 the volume : " I have persevered for a considerable series 
 of years in endeavouring to remove the disabilities upon 
 your trade without ceasing to consider myself a Free 
 Trader — at all events, in the sense in which Adam Smith 
 understood the word." f 
 
 * Apart from his precise allegations, the impression Mr. 
 Chamberlain seeks to produce is that Adam Smith would 
 have been in sympathy with his programme, that his 
 
 * See Chamberlain's speeches on "Imperial Union and Tariff Reform," 
 pp. 19-21. 
 
 t Id., p. 68,
 
 26 COBDEN CLUB'S REPLY. 
 
 conception of Free Trade was perfectly compatible with 
 the proposal of the Tariff Reformers, that he was not only 
 an advocate of Retaliation under certain conditions, but 
 actually " pressed for " preferential trading with the 
 Colonies. 
 
 Let us try to take Mr. Chamberlain's points very briefly 
 in order : — 
 
 (i.) It is quite true that Smith valued a near market 
 more than a distant one, but the result of this theory of 
 his is precisely the opposite of what Mr. Chamberlain insinu- 
 ates. Instead of preference with the Colonies, Adam 
 Smith pleaded for an open and free commerce with France 
 on the ground that France would " afford a market at 
 least eight times more extensive, and, on account of the 
 superior frequency of the returns, four and twenty times 
 more advantageous than that which our North American 
 Colonies ever afforded " (see Book IV., Chapter III., of 
 " Wealth of Nations "). Pitt adopted Smith's policy in 
 his famous treaty with France. It is quite astounding to 
 find Mr. Chamberlain suggesting that Adam Smith is an 
 authority for Colonial preference. The system of prefer- 
 ential or discriminating duties and prohibitions by which 
 the trade of the Mother Country was supposed to be regu- 
 lated for the benefit of the Colonies, and that of the Colonies 
 for the Mother Country, was of course one of the principal 
 objects of Smith's dislike. The Colonial monopoly, as he 
 calls it, was thoroughly odious to him. It was bad economy, 
 and could only be maintained by war. After describing 
 the evils of Protection, Adam Smith continues (Book IV., 
 Chapter VIII.) :— 
 
 " But in the system of laws which has been established for 
 the management of our American and West Indian colonies, the 
 interest of the home consumer has been sacrificed to that of 
 the producer with a more extravagant profusion than in all our 
 other commercial regulations. A great empire has been estab- 
 lished for the sole purpose of raising up a nation of customers
 
 ADAM SMITH. 27 
 
 who should be obliged to buy from the shops of our different 
 producers all the goods with which these could supply them. 
 For the sake of that little enhancement of price which this 
 monopoly might afford our producers, the home consumers have 
 been burdened with the whole expense of maintaining and 
 defending that empire." 
 
 (ii.) With regard to Retaliation, Adam Smith says it is 
 naturally dictated by revenge, but is, generally speaking, 
 unwise. There is only one case in which Retaliation may 
 be good policy, and that is when there is a probability 
 that the imposition of retaliatory duties may procure the 
 recovery of a great foreign market, but he leans strongly 
 against the policy because such a weapon cannot be en- 
 trusted to statesmen, and because Retaliation rarely 
 benefits the sufferers and always injures other classes of 
 citizens. 
 
 (iii.) The Navigation Act. Adam Smith says, " The Act 
 of Navigation is not favourable to foreign commerce or to 
 the growth of that opulence which can arise from it. The 
 interest of a nation in its commercial relations to foreign 
 nations is like that of a merchant with regard to the different 
 people with whom he deals — to buy as cheap and to sell 
 as dear as possible " (Book IV., Chapter II.). After ex- 
 plaining the economic evils caused by the Act of Navigation, 
 Adam Smith, who condemns all commercial restrictions 
 which interfere with the natural flow of trade, comes 
 to the conclusion that there is more to be said for this 
 Act than for any other of the English regulations. " As 
 defence, however, is of much more importance than opulence, 
 the Act of Navigation is perhaps the wisest of all the com- 
 mercial regulations of England." It will be noticed that 
 Mr. Chamberlain's sole quotation from Adam Smith is 
 verbally inaccurate, as well as misleading. 
 
 To Reciprocal and Preferential Trade with our Colonies, 
 Adam Smith, as we have seen, was utterly and even 
 bitterly opposed. 

 
 £8 COB DEN CLUB'S REPLY i 
 
 (iv.) Lastly, Mr. Chamberlain says he is not afraid to 
 combat free imports in the home of Adam Smith, and is 
 a Free Trader in the sense in which Smith understood 
 that word. We will not multiply quotations in order to 
 expose this misstatement. In the very lectures at Glasgow 
 to which Mr. Chamberlain referred, Adam Smith put his 
 own economic creed in a nutshell : — 
 
 " From the above considerations it appears that Britain 
 should by all means be made a free port, that there should be no 
 interruptions of any kind made to foreign trade ; that if it 
 were possible to defray the expenses of government by any 
 other method, all duties, customs and excise, should be abol- 
 ished, and that free commerce and liberty of exchange should 
 be allowed with all nations, and for all things." * 
 
 It is perfectly clear, then, that Adam Smith was not 
 a Free Trader, either in Mr. Chamberlain's sense, or in 
 Mr. Balfour's sense, but in that of Cobden, and that he 
 was in favour of abolishing duties on imports, regardless 
 of what other nations might do. 
 
 CHAPTER VI. 
 
 MR. CHAMBERLAIN AND MR. GLADSTONE. 
 
 Not the least extraordinary of the performances of Mr. 
 Chamberlain in his recent campaign was his effort at Liver- 
 pool to bring the high authority of Mr. Gladstone in aid, 
 not of his actual proposal, but, as he said, of the principle 
 of finance underlying it. | For this purpose he made a long 
 quotation from the great speech in which Mr. Gladstone, 
 on introducing his famous budget of i860, was defending 
 
 * See "Adam Smith's Lectures," edited by Edwin Carman. Oxford, 
 Clarendon Press, p. 209. 
 
 t Ste Mr. Chamberlain's speeches, pp. 170-71.
 
 GLADSTONE. 29 
 
 his proposals against a counter scheme for reducing the 
 tea and sugar duties. The sentence quoted began : — 
 
 " I do not hes'tate to say that it is a mistake to suppose 
 that the best mode of giving relief to the labouring classes is 
 simply to operate upon the articles consumed by them. If you 
 want to do them the maximum of good you should rather oper- 
 ate upon the articles which give them the maximum of employ- 
 ment." 
 
 After giving a further long passage, Mr. Chamberlain 
 paraphrased it in these words : — 
 
 " No, I shall not benefit the working classes merely by 
 taking off the tea and sugar duties. You must use the money 
 you have to dispose of, in order to increase employment, in 
 order to give them by their production the means of purchasing 
 commodities they require." 
 
 Now Mr. Chamberlain's quotation begins in the very 
 middle of a paragraph of Mr. Gladstone's speech. The 
 passage immediately preceding, which was omitted, throws 
 a clear light upon Mr. Gladstone's underlying principle of 
 finance, and is absolutely contradictory to Mr. Chamber- 
 lain's principles and scheme. It should be recollected that 
 Mr. Gladstone, in this budget, was proposing to reduce the 
 number of articles still subject to duty in the existing British 
 tariff from 419 to 48. Among them was the preferential 
 duty on timber, from which Colonial produce was exempt. 
 The proposal, therefore, was to abolish the last Colonial 
 preference. He also proposed to repeal the excise duty 
 en paper. It was to secure these remissions that Mr. Glad- 
 stone argued against the alternative of reducing the tea 
 and sugar duties. The omitted passage explained why 
 Mr. Gladstone preferred duties on tea and sugar to those 
 which he was proposing to abolish. 
 
 " If," he said, " we are to have a very large scale of ex- 
 penditure, and a very high income tax, I cannot think that, 
 while the bulk of the burden should unquestionably fall on
 
 30 COBDEN CLUB'S REPLY. 
 
 the shoulders of those possessed of property, it is otherwise 
 than desirable that the labouring classes should also bear their 
 share of the burden in a form in which it will be palpable and 
 intelligible to them, rather than in forms in which it will be 
 veiled from their eyes. But I take my stand more especially 
 on this consideration ; the duties on tea and sugar, whatever 
 else they may be, are simply revenue duties. They entail no 
 complexity in the system of Customs law ; above all, they 
 entail none of the evils that belong to differential duties." 
 
 One can readily understand why Mr. Chamberlain 
 thought it prudent to omit this passage from his quotation, 
 and why also he failed to quote from the same speech 
 a later passage in which Mr. Gladstone explained what 
 England was proposing to do under the recent commercial 
 treaty with France, which his budget was to sanction 
 and carry out. 
 
 " England," he said, " engages, with a limited power of 
 exception, which we propose to exercise with respect only to 
 two or three articles, to abolish immediately and totally all 
 duties upon all manufactured goods. There will be a sweep, 
 summary, entire, and absolute, of what are known as manu- 
 factured goods from the face of the British tariff." * 
 
 It would be difficult to imagine a greater contrast 
 between the underlying principles of the two schemes. 
 By the one it was proposed to abolish altogether 
 every remaining duty on manufactured goods, the last 
 remnant of a Colonial preference, and the excise duty on 
 paper, one of the most mischievous taxes in restraint of 
 knowledge ever invented. For this purpose it was 
 proposed to retain the tea and sugar duties, which 
 were not open to the objection that they were pro- 
 tective or differential, and which entailed no complexity 
 in the system of Customs law. ] 
 
 * The three minor articles excepted until the following year were cork, 
 gloves, and straw-plaiting. — See Gladstone's Financial Statements, pp. 
 128-139.
 
 LOW PRICES. 31 
 
 By the other, it is proposed to impose duties on all 
 imported manufactured goods, to restore the system 
 of Colonial preferences, to tax food, and to reintro- 
 duce endless complexities of Customs law. By way of 
 sweetening the dose, it is proposed to reduce the tea and 
 sugar duties. It would be impossible to discover two 
 policies more distinctly opposed. It follows that the 
 underlying principles of finance of the two schemes must 
 be equally distinct and opposite. 
 
 CHAPTER VII. 
 
 THE CAUSES OF PROSPERITY AFTER THE ADOPTION 
 OF FREE TRADE. 
 
 The next links in the chain of errors and misrepresentations 
 are the statements that the repeal of the Corn Laws had no 
 effect on the price of corn, and that the prosperity which 
 followed upon the adoption of Free Trade was not due 
 to it. The passage in Mr. Chamberlain's speech at Bir- 
 mingham, on November 4th, 1903, with respect to prices 
 of corn is as follows : — 
 
 " In 1846, when things were at their worst, when the Irish 
 famine had put the whole people of Ireland into a condition which 
 was almost one of despair, what do you think happened with 
 regard to the price of bread ? The price of wheat for the whole 
 year of 1846 was 54s. 8d. per quarter, and after the repeal of 
 the Corn Laws, which took place in that year, taking an 
 average of ten years, the price of wheat was 55s. 40!. per 
 quarter, or 8d. higher than it was during the year of 1846, 
 when the repeal took place. Now from all this I ask you to 
 accept the statement, which I make without fear of refutation, 
 that it is a mistake to say either that dear bread was the cause 
 of the repeal of the Corn Laws, or secondly that the repeal 
 of the Corn Laws produced immediately any reduction in the 
 price of bread,"
 
 32 COBDEN CLUB'S REPLY. 
 
 It would be difficult to crowd more errors into fewer 
 words, or to produce a better illustration of the abuse of 
 statistics by the unfair grouping of years and figures. 
 
 It is true that the Act repealing the Corn Laws was 
 passed by Parliament in 1846, but it did not abolish the 
 duties till 1849. ^ r - Chamberlain includes in his ten years' 
 average the years 1847 and 1848, when corn was still 
 subject to great enhancement by the Corn Law, and the 
 years 1854 t° 1856, when, owing to the war with Russia and 
 the consequent stoppage of supplies from Russian ports, 
 wheat rose to the famine price of 72s. and 73s. per quarter. 
 
 The following table, showing the prices of wheat during 
 the five years preceding 1849 and the five years com- 
 mencing with that year, proves conclusively the great fall 
 in price which took place in consequence of the abolition 
 of the dut}' on corn — a fall of no less than 12s. a quarter. 
 
 
 Prices of 
 
 W 
 
 HEAT 
 
 PER 
 
 Quarter 
 
 
 
 
 s. d. 
 
 
 
 
 
 s. 
 
 d. 
 
 1844 
 
 5i 3 
 
 
 
 
 1849 
 
 44 
 
 3 
 
 1845 
 
 50 10 
 
 
 
 
 1850 
 
 40 
 
 3 
 
 1846 
 
 54 8 
 
 
 
 
 1851 
 
 ■ • 38 
 
 6 
 
 1847 .. 
 
 69 9 
 
 
 
 
 1852 
 
 40 
 
 9 
 
 1848 
 
 50 6 
 
 
 
 
 1853 
 
 53 
 
 3 
 
 Average 
 
 55 5 
 
 
 
 
 Averag 
 
 e 43 
 
 5 
 
 It needed a great effort of statistical jugglery to con- 
 ceal this fall of prices by adding three years of war prices 
 and two years of Protective prices, and then arriving at 
 the astounding conclusion that the repeal of the duties 
 was followed by an increase in the price of wheat. 
 
 Astounding also are his statements that dear bread 
 was not the cause of repeal, and that the Corn Laws 
 were abolished in opposition to the wishes of the labouring 
 classes. The universal testimony of history is against him 
 on the first point. With regard to the second, the great 
 popular meetings held in every part of the country in favour 
 of repeal of the Corn Laws, and the fact that petitions in
 
 LOW PRICES. 33 
 
 favour of it were signed by upwards of a million and a 
 half of people, while those against it had only 60,000 
 signatures, are sufficient proofs of the hopes and wishes 
 of the working classes. 
 
 Having proved to his satisfaction that the price of 
 wheat did not fall after the repeal of the duties on corn, 
 Mr. Chamberlain naturally goes on to assert that the 
 period of prosperity which he admits followed on the 
 repeal of the Corn Laws had nothing to do with Free 
 Trade. 
 
 "It is true," he says, " you have been told that after the 
 repeal of the Corn Laws this country entered on a period — 
 which lasted for five-and-twenty years — of what I may call un- 
 paralleled prosperity. I do not deny it, but I say that it had 
 nothing to do with the repeal of the Corn Laws and very little 
 to do with the introduction of Free Trade. The cause of the 
 prosperity was the discovery of gold in California and Australia, 
 the development of inventions, the enormous increase of rail- 
 way and steamship communication, the general impetus and 
 stimulus which was given to the trade of the world. Every- 
 body prospered and we prospered more than all. Why ? 
 Because under a system of Protection in the years of which I 
 have spoken, before the repeal of the Corn Laws, we had secured 
 a supremacy in the world's markets. Other countries of the 
 world were backward owing to various circumstances, and we 
 alone were in a position to take advantage of this great boom, 
 as we should call it now, of this great advance in the general 
 dealings, the commercial dealings, of the world." 
 
 The passage is another illustration of the inaccurate 
 historical references which abound in these speeches. The 
 allegations of great prosperity in our foreign trade before 
 the repeal of the Corn Laws, under a system of Protection 
 when, it is alleged, we had secured a supremacy of the 
 world's markets, cannot be sustained. They are not borne 
 out by the figures of our export trade, which made little 
 progress between 1815, the year when the great war with 
 France was concluded, and 1842, when Sir Robert Peel
 
 34 COBDEN CLUB'S REPLY. 
 
 made his first great effort towards Free Trade by repealing 
 and reducing a large number of import duties. The follow- 
 ing figures for periods of years will bear this out. 
 
 Average Value of Exports of British Produce and 
 Manufactures. 
 
 £ £ 
 
 1816 — 20 ... 40,315,000 1843— 48 ... 56,742,000 
 
 1821—24 ... 37,250,000 1849—53 ... 75,245,000 
 
 1825—30 ... 35,930,000 1857—59 ... 98,900,000 
 
 1831 — 35 ... 40,500,000 1860—64 ... 132,400,000 
 
 1836 — 42 ... 50,011,000 
 
 The figures show conclusively what a powerful effect 
 the measures of 1842 and 1846, and the cessation of the 
 corn duties in 1849, had in freeing the shackles of trade 
 and increasing our exports. 
 
 We have already quoted the petition of the Manchester 
 Chamber of Commerce in 1838, showing that this country 
 under Protection had not secured that absolute supremacy 
 in the markets of the world, which Mr. Chamberlain in 
 the above passage maintains.* 
 
 Mr. Chamberlain, however, admits the great prosperity 
 of the twenty-five years which followed the adoption of 
 Free Trade ; but he draws a distinction in this respect 
 between these twenty-five years and the thirty years that 
 followed 187 1. 
 
 Free Traders have never denied that other causes than 
 the repeal of the Corn Laws and the abolition of Custom 
 duties, except for purely revenue purposes, contributed to 
 the prosperity which ensued. It is, of course, impossible 
 to distribute between the several causes their fair share 
 in the increasing wealth of the country and the improved 
 condition of its population. But the verdict of economists 
 and historians, almost without exception, has been that the 
 measures taken by Sir Robert Peel in 1842 and 1846 to 
 
 * Supra, p. 9.
 
 LOW PRICES. 35 
 
 free our import trade from the shackles of Protection, were a 
 main cause, though not the only cause of these improve- 
 ments. The figures, already quoted, of the exports from the 
 country show how immediate was the bound upwards in 
 trade on the adoption of these measures. It is impossible 
 to avoid the conclusion that they were connected as cause 
 and effect. 
 
 Mr. Chamberlain himself has spoken with a double 
 voice on this point, for while at Birmingham he said that the 
 repeal of the Corn Laws in 1846 had nothing to do with 
 the prosperity which followed and the freedom of trade 
 had very little to do with it, at Greenock, October 7th, 
 1903, he said : — 
 
 " For something like twenty or thirty years after Free Trade 
 was preached and adopted there was no doubt in my mind that 
 it was good policy for this country, that our country prospered 
 under it more than it would have done under any other system. 
 That was for twenty-five years." 
 
 Before, however, leaving the first twenty-five years 
 after Free Trade, it should be pointed out that the period 
 was not one of uniform prosperity. There were ups and 
 downs in it. There were periods of prosperity followed 
 by others of depression. One of the principal periods cf 
 trade depression occurred towards the close of the period. 
 In 1869 and 1870 there were many complaints of bad trade, 
 and of want of employment in the manufacturing dis- 
 tricts. For the first time since 1846 the advocates 
 of what was called " Reciprocity " and " Fair Trade " 
 came to the front. A certain number of Chambers 
 of Commerce, misled by the symptoms of the moment, 
 began to doubt about the efficacy of Free Trade, and de- 
 manded a return to Protection in some form or other. 
 The movement made itself felt in Parliament. 
 
 A motion was made by a Lancashire member, Mr. 
 Birley, to inquire into the operation of the Commercial
 
 36 COB DEN CLUB'S REPLY. 
 
 Treaty with France, alleging its unfairness and the want of 
 reciprocity, and practically challenging the whole policy 
 of Free Trade. It was supported by Mr. Newdegate, 
 Mr. Fielden, and Mr. Staveley Hill. It will be noticed on 
 reference to the debate that almost every argument which 
 has been used by Mr. Chamberlain in the present fiscal 
 controversy was then anticipated. There were the same 
 sad forebodings as to the future of British trade — the 
 same complaints of the intolerable effect of hostile tariffs 
 in other countries — the same suspicion as to the imports 
 of foreign manufactures — the same desire for means of 
 negotiation with foreign Powers for a reduction of their 
 hostile tariffs. Mr. Shaw-Lefevre, who then represented 
 the Board of Trade, in the absence of Mr. Bright through 
 illness, replied on behalf of the Government, and contended 
 that the bad symptoms were merely temporary, and 
 were already passing away, and that there was no 
 reason to be alarmed about the future of British Trade. 
 He deprecated a war of tariffs, and contended that the 
 suggested remedies would do more harm than good. 
 
 In 1 87 1 there was a revival of trade. In 1872 there 
 ensued an extraordinary boom of trade. It was largely 
 due to the great demand for British manufactures on 
 the Continent to make good the deficiency caused by the 
 Franco-German war. Prices rose enormously.* There was 
 a serious coal famine due to the enormously increased 
 demand. Coal rose in price 300 per cent. Iron, cotton, 
 and wool, and 'goods manufactured from them advanced 
 greatly in price, with the result that the values of exports 
 and imports were immensely enhanced. The years 1872 
 
 * In a Memorandum of the Board of Trade laid before Parliament in 1897, 
 it is stated by Sir Alfred Bateman that " in the period 1870-4 the figures 
 of the exports of the United Kingdom were largely swollen by such excep- 
 tional circumstances as the war between France and Germany, the payment 
 of the French indemnity to Germany, and the boom in our own iron and 
 coal trade, at a time when railway construction abroad was brisk. These 
 and other causes contributed to unusually high prices."
 
 STAGNATION OF TRADE 37 
 
 and 1873 were the culminating points of this boom. It 
 will be seen how important it is to bear in mind this boom 
 when estimating the progress of British exports of late 
 years. 
 
 CHAPTER VIII. 
 
 ALLEGED STAGNATION OF TRADE DURING THE LAST THIRTY 
 
 YEARS. 
 
 " I have pointed out that specially during the last thirty years," 
 Mr. Chamberlain said at Newcastle (October 20th, 1903), " there 
 has been a great change in regard to our trade and industry, 
 and that this change may, if it be not stopped, lead to great 
 disaster. I have stated that during this period our general 
 export trade has remained practically stagnant. There has 
 been a great increase in the population, but the amount of our 
 exports has, with certain fluctuations, remained about the 
 same as it was thirty years ago. . . . Whereas in the 
 five-and-twenty years after Mr. Cobden's great reform was 
 carried this country was an industrial centre, exchanging 
 its manufactures with other countries for their food and 
 raw materials, now we have ceased to hold any such 
 position of industrial supremacy, and every day we are 
 sending out more and more of raw materials and of coal, 
 and we are importing more and more of foreign manu- 
 factures. . . . Putting aside our Colonial trade, our trade 
 with foreign protected countries, countries which have not 
 Free Trade, has decreased in amount and deteriorated in 
 character. 
 
 " Well, my case is that the trade of this country, as measured 
 — and I think it ought to be mainly measured — by the exports 
 of this country to foreign countries and British possessions, 
 has during the last twenty or thirty years been practically 
 stationary ; that our export trade to all those foreign countries 
 which have arranged tariffs against us has greatly diminished, 
 and at the same time their exports to us have great increased." 
 — Liverpool, October 2jth, 1903.
 
 38 COB DEN CLUB'S REPLY. 
 
 As these statements constitute the main gravamen on 
 which the whole of Mr. Chamberlain's revived policy of 
 Protection is based, it is necessary to treat them at some 
 length. It has already been shown that the years 1872 
 and 1873 were conspicuous beyond all preceding and many 
 following years for an abnormal but temporary demand 
 for British manufactures on the Continent, owing to the 
 Franco-German War, and for a great rise of prices of all 
 commodities, which swelled the values on our trade 
 returns. This boom was followed by a reaction, when, 
 for a time, the volume of export trade was much reduced, 
 and prices, in 1875, fell again to their former level. Later 
 again, prices fell continuously, year by year, till 1896, 
 when they reached a point 30 per cent, below their 
 average for the years 1865 to 1871. 
 
 The statements of Mr. Chamberlain as to the stagnation 
 of trade in the last thirty years turn entirely upon com- 
 parisons drawn between the trade returns for 1872-3 and 
 those of recent years. He dealt with the figures in the 
 following passage. 
 
 " What are the facts ? The year 1900 was the record year 
 of British Trade. The exports were the largest we had ever 
 known. The year 1902 — last year — was nearly as good, and 
 yet if you will compare your trade in 1872, thirty years ago, 
 with the trade of 1902 — the export trade — you will find that 
 there has been a moderate increase of twenty-two millions. That, 
 I think, is something like y\ per cent. Meanwhile, the population 
 has increased 30 per cent. Can you go on supporting your 
 population at that rate of increase, when even in the best of 
 years you can only show so much smaller an increase in your 
 foreign trade ? " — Glasgow, October 6th, 1903. 
 
 When challenged as to this on the ground that it was 
 unfair and unscientific to compare a year of boom like 
 that of 1872 with recent years, Mr. Chamberlain denied 
 that he had selected the year 1872 " for any sinister pur- 
 pose." He added the words quoted at the head of our
 
 STAGNATION OF TRADE. 39 
 
 first chapter, saying that he did not pretend the figures 
 he quoted were proofs ; for the proof would be found in 
 the argument, not in the figures — an almost comical 
 defence for a comparison so misleading ! Later, at New- 
 castle, he proposed another method of comparison equally 
 fallacious. 
 
 " I will," he said, " compare five years with five years. If, 
 instead of taking single years you take a quinquennial period, 
 then it appears rather better for me than my argument at 
 Glasgow shows. According to a statement prepared by Mr. 
 Benjamin Kidd, one of the greatest authorities on this and 
 similar subjects, the total average exports for the five years 
 ending 1900 was seven millions less than the five years ending 
 I875-" 
 
 " Better for me." What a characteristic phrase ! 
 
 But the two quinquennial periods were again carefully 
 selected with a view to his argument. The earlier period 
 included the three years of booming trade and inflated prices i 
 From the later period he excluded 1901 and 1902, which 
 would have materially altered the result. He took no 
 account also of the great reduction of prices which had 
 occurred in the thirty years, irrespective of the inflated 
 prices of 1872-74.* 
 
 It so happens, however, that Mr. Chamberlain has him- 
 self supplied a conclusive argument against the comparisons 
 of the quinquennial period of 1871-75 with a subsequent 
 period. In 1881, when he held the post of President of the 
 Board of Trade, an important debate was raised in the House 
 of Commons on the subject of our export trade. It was 
 contended that British trade was falling off. Comparison 
 was made between the average exports of the five years 
 1871-75 and the average of the next five years, showing 
 a falling off of 7 per cent. Mr. Chamberlain, in a very 
 conclusive speech, objected strongly to this method of 
 
 * This subject was most admirably treated by Mr. Asquith in his 
 speeches at Cinderford and Newcastle, October 8 and 24, 1903.
 
 40 COBDEN CLUB'S REPLY. 
 
 comparison, and pointed out that no account had been 
 taken of the great fall of prices between the two periods. 
 
 " The reduction quoted," he said, " was in value only, and 
 as during the same period there was a fall of prices averaging 
 not less than 20 per cent., the real value of our trade had in- 
 creased in the interval by about 14 per cent." 
 
 If the comparison made in 188 1 was fallacious and 
 unfair, on account of a fall of 20 per cent, in prices, how 
 far more unfair and fallacious a comparison of the same 
 quinquennial period with the years ending 1900, when 
 there had been a further fall of prices of 30 per cent., 
 making a total difference of 50 per cent ! Is it possible 
 that Mr. Chamberlain can have forgotten his argument 
 of 1881 ? What are we to think of a statesman who makes 
 the very same delusive comparison which a few years ago 
 he had exposed with so much effect ? His attention must 
 have been called to the subject quite recently, for his col- 
 league in the Cabinet, the President of the Board of Trade, 
 Mr. Gerald Balfour, in answer to a question put to him 
 in the House of Commons, in the session of 1903, gave 
 figures showing what the values of imports and exports 
 would be for the years 1883, 1893, and 1902 based on the 
 prices of the year 1873, from which the following table 
 has been drawn up : — 
 
 Exports 
 
 OF 
 
 1] 
 
 ritish Produce 
 
 AND ; 
 
 Manufactures. 
 
 
 
 
 [Value given in Trade 
 
 Value based on Prices 
 
 
 
 
 Returns. 
 
 
 
 of 1873. 
 
 
 
 
 \£ Millions. 
 
 
 £ 
 
 Millions. 
 
 1873 .- 
 
 ... 
 
 
 255 
 
 
 
 255 
 
 1883 ... 
 
 
 
 240 
 
 
 
 295 
 
 1893 ... 
 
 
 
 2l8 
 
 
 
 329 
 
 1902 
 
 ... 
 
 
 278 
 
 
 
 416 
 
 Increase of 1902 over 1S73 23 153 
 
 The table shows at a glance how completely the great 
 fall of prices, since 1873, concealed the real progress of trade. 
 Estimated in the prices of the several years of exports in
 
 STAGNATION OF TRADE, 4* 
 
 which the trade returns are made up, the increase on 
 the thirty years was only twenty-three millions, or SI- per 
 cent. When, however, the exports of 1902 are valued in 
 the prices of 1873, the increase is shown to be 153 millions, 
 or 55 per cent., as compared with a growth of population 
 of only 30 per cent. It is clear, then, that unless account 
 be taken of the course of prices of articles included in the 
 trade returns, a very wrong impression will be derived 
 from them. What chiefly concerns the country is the 
 volume of trade in affording employment for labour, not 
 the varying prices of the articles exported. 
 
 The point is well brought out by the figures showing 
 the export of cotton goods. The quantity of these goods 
 exported in 1872 was 3,547,000,000 yards, and their value 
 was £63,466,000, while in 1902 the quantity was 
 5,331,000,000 yards and the value £65,059,000. The quan- 
 tity, therefore, increased by no less than 50 per cent, and 
 the value by only 2\ per cent. If Mr. Chamberlain's 
 method of comparison be adopted the cotton trade would 
 appear to be in a most stagnant condition. 
 
 The same vicious method of comparison was applied 
 by Mr. Chamberlain to the exports of manufactured or 
 half-manufactured articles to countries in Europe and to 
 the United States, which have adopted highly protective 
 systems. By comparing 1872 with 1902 he arrived at the 
 most alarming conclusion that " we are sending £42^ millions 
 of manufactures less to these countries than we did thirty 
 years ago," an announcement which, we are told, was 
 received by his audience with cheers ! 
 
 But if his figures are corrected by taking into account 
 the fall of prices, they would come out very differently, 
 and the exports to those countries would show a sub- 
 stantial increase instead of the great decrease brought out 
 by Mr. Chamberlain in his delusive statement. 
 
 But further, if instead of the year 1872, either the year 
 1871 or 1875, or the quinquennial period 1867-71 or 1875-79,
 
 42 COBDEN CLUB'S REPLY. 
 
 excluding the three years of boom, be taken for comparison 
 with 1902, or the last five years, and if allowance be made 
 for the great fall of prices, it is certain that the figures 
 would show an increase, in the interval, of manufactured 
 goods to protected countries of not less than 40 per cent. 
 The official tables, however, do not enable us to give the 
 exact figures. 
 
 It cannot be doubted then that, consciously or un- 
 consciously, years and figures have been grouped together 
 by Mr. Chamberlain to support his preconceived con- 
 clusions. The allegation of stagnation of the general trade 
 of the country in the last thirty years and the alarming 
 statements of the falling off of exports of manufactured 
 goods to protected countries are founded on the neglect 
 to take into account the very great reduction of prices 
 n the interval, and on the selection of a year of 
 boom for comparison. If due allowance be made for this, 
 and if years or groups of years are fairly selected for pur- 
 pose of comparison, there can be no doubt whatever that 
 progress has been made in the export trade of the country 
 far in excess of the growth of its population. 
 
 It is submitted, however, that the values of goods 
 exported from this country, whether fully and partly 
 manufactured, or raw material, are not the sole measure of 
 the progress and prosperity of the country. 
 
 The best test is to be found by taking into account 
 the general condition of the population, and especially 
 of the labouring people, the import and consumption of 
 food and raw material, the increase of British shipping, and 
 of railways, and other evidences of the growth of wealth- 
 Have wages increased ? Are labourers and their families 
 better fed and clothed than they were ? Is employment 
 more regular ? Are fewer persons out of employment ? 
 Have the savings of the people increased ? Have pauper- 
 ism and crime decreased ? And with reference to other 
 classes, has the accumulation of wealth been greater of
 
 STAGNATION OF TRADE. 43 
 
 late years, and do the income tax returns and the death 
 duties show greater incomes and greater realised wealth ? 
 
 It may be confidently stated that in all these respects 
 there has been as great a relative advance and improve- 
 ment in the last thirty years (even including the two years 
 of war in South Africa) than in the previous twenty-five 
 years after the adoption of Free Trade in 1846. Especially 
 has this been the case in respect of the condition of the 
 labouring classes, for the great fall of prices has taken 
 place during the last twenty-three years since 1880, and 
 as money wages have also increased in the interval, the 
 condition of the average labourer has been very greatly 
 improved.* 
 
 During the last thirty years also the population has 
 increased by nearly 12 millions, which means an increase 
 of the number of workers of at least 4 millions. In spite of 
 this great increase there has been better employment. 
 
 All this great extension and improvement may not be 
 due to Free Trade. Other causes have doubtless contri- 
 buted to it. But it cannot be doubted that the free import 
 of food has been a main element in the improved condition 
 of labourers. It has enabled them to take full advantage 
 of the great fall of prices. The free import of raw material 
 and of half manufactured goods has also been a main 
 cause of the continuous growth of our manufactures and 
 of our shipping. 
 
 If the general results of the thirty years ending with 
 1900 have been satisfactory, and will bear comparison with 
 those obtained in the first twenty-five years after the 
 adoption of Free Trade, it must be admitted that progress 
 has not been uniform, and that there have been within the 
 period alternations of depression and inflation. One such 
 period of depression occurred about the year 1881. There 
 was much distress in some of the industrial centres in the 
 
 * See Appendix for the details of co-nparison in the above respects between 
 1846-1871 and 1901. 
 
 D
 
 44 COBDEN CLUB'S REPLY. 
 
 north of England. Many men were out of work. Profits 
 were low, and there were complaints of bad trade. Just as 
 rank weeds grow apace in rainy seasons, so economic 
 heresies, long discredited, spring up again in the stress of 
 bad times. Men who claimed to be Free Traders com- 
 plained of the absence of fair trade on the part of other 
 countries, and advocated Reciprocity and Retaliation. At 
 a bye-election for the town of Preston, Mr. Ecroyd was 
 elected on a programme of this kind ; and finding some 
 kindred spirits in the House of Commons, such as Mr. 
 James Lowther, Mr. Newdegate, and Mr. Chaplin, raised 
 a debate on our export trade. Mr. Chamberlain was 
 the President of the Board of Trade, and replied to these 
 neo-Protectionists on the part of the Government in a 
 speech vindicating the whole policy of Free Trade, and 
 showing, when our trade was looked at broadly, how 
 little ground there was for the complaints, and how futile 
 and absurd were their proposals. The Cobden Club 
 published and circulated the speech. The country had 
 then experienced ten of the thirty years which Mr. 
 Chamberlain now calls a period of stagnation of export 
 trade. He showed, as we have already pointed out, 
 that if the volume of trade was taken into account, 
 and if allowance was made for the fall of prices, 
 the export trade, instead of falling off 7 per cent., had 
 increased 14 per cent., as compared with the previous 
 ten years. He admitted that some special trades had 
 suffered ; that others were in a state of depression. He 
 attributed this in part to rash speculation, and in part to 
 a change of fashion, which had particularly affected such 
 towns as Bradford. The irresistible logic of facts, he said, 
 was opposed to the pessimist views of Mr. Ecroyd. Grumb- 
 ling was the secret of English success. He pointed out that 
 during the twenty years from 1831 to 1850 the consumption 
 of wheat per inhabitant in Great Britain had been 
 270 lb. per annum, while in 1871 to 1879 it Jiad ^increased
 
 STAGNATION OF TRADE. 45 
 
 to 341 lb., and that the price had fallen from 55s. per 
 quarter to 48s. He quoted Dr. Farr to the effect that 
 the death-rate of the population falls, as a rule, 3 per cent, 
 for each fall of 2s. per bushel in the price of wheat. He 
 showed the great reduction of pauperism. He scornfully 
 exposed and trampled on the proposals for Retaliation and 
 Reciprocity in terms which we will refer to later on, when 
 we deal with Mr. Chamberlain's present proposals in these 
 directions. He concluded by quoting with approval, in 
 reference to the effect of Free Trade on the prosperity of the 
 country, a passage from Sir Stafford Northcote's " Twenty 
 Years of Financial Policy" (p. 361), published in 1862 : — 
 
 " The great fiscal and commercial measures of the last 
 twenty years — i.e., 1842 to 1862 — have wrought a wonderful 
 change in the circumstances of the country. A complete 
 revolution has taken place in many parts of our moral, social, 
 an d political system, which may be directly traced, either 
 wholly or in great part, to the effects of those measures. . . . 
 There have been seasons of temporary local and partial suffer- 
 ing ; and the changes, which have proved beneficial to the 
 public, have sometimes pressed hardly on particular interests ; 
 but upon the whole it can hardly be questioned that the condi- 
 tion of every portion of the community has been greatly improved 
 by the new policy." 
 
 Mr. Chamberlain, who quoted this with such emphasis 
 and approval, and in the presence of a party then led by 
 Sir Stafford Northcote, would now have us believe that this 
 was a totally wrong version of events, and that the pros- 
 perity of the country cannot properly be attributed to 
 these causes. What credence can be given to a statesman 
 who gives such opposite interpretations of recent events 
 within so short a time ? 
 
 After 1881 there were two or three years of very good 
 trade, when both exports and imports largely increased ; but 
 in 1885 there was again a reaction and great reductions 
 occurred in our expert trade. In the General Election
 
 46 COBDEN CLUB'S REPLY. 
 
 which took place in that year much was said on the subject 
 of " Fair Trade." The neo-Protectionists made great 
 play with the policy of Retaliation and Reciprocity. Mr. 
 Chamberlain made many most admirable speeches at 
 Birmingham and elsewhere on the subject, and uniformly 
 accentuated the Free Trade opinions, which, as President 
 of the Board of Trade, he had so ably vindicated in 1881. 
 It is not to be supposed that he had merely taken these 
 views from the permanent officials of the Board of Trade, 
 or that he relied upon the facts and arguments of Lord 
 Farrer, then the chief officer of that Department, though 
 there is much reason now for thinking that this master 
 of fiscal and commercial policy must have impressed his views 
 on the elastic opinions of his political chief. Fifteen years 
 had then expired of the thirty so often referred to as a 
 period of stagnation ; but Mr. Chamberlain uniformly 
 spoke in the most confident terms of the conditions of trade. 
 His optimist views were confirmed by an access of prosperity 
 in 1888 to 1891. Yet we are now asked to believe that 
 all which he said in 1885 was wrong, and that he himself 
 had completely mistaken the signs of the times. We 
 prefer to take the opinions of Philip sober, of Mr. Cham- 
 berlain speaking with recent official experience at the 
 Board of Trade, to those of Mr. Chamberlain intoxicated 
 with the imperial ideas of fiscal confederation, which, 
 forsooth, can only be attained by the taxation of food 
 and the reversal of the principles of Free Trade. 
 
 We have made the above comparisons with the year 
 ending 1900. In the years ending 1901 and 1902 our import 
 and export trade made no progress. But they were 
 years of war in South Africa, when the great demands 
 for war material, and for our troops in the field — paid 
 for largely out of borrowed money — gave full employ- 
 ment to all our manufacturing classes, to the exclusion of 
 much work for export. There was no want of employment ; 
 complaints were general of the want of effective labour.
 
 STAGNATION OF TRADE. 47 
 
 Wages in the agricultural districts rose. Prices of food 
 rose as they usually do in time or war, and many people 
 suffered in consequence What, however, was more serious 
 was the increase of crime against property, of pauperism 
 and vagrancy, and the decrease in the annual increments of 
 deposits in the Savings Banks. These were symptoms 
 which till then had not been observed at any time since 
 1846. They must be attributed to the increased pressure 
 of taxation upon the very lowest class of the population. 
 The war taxes falling on the wage-earning classes amounted 
 to £15,000,000 a year, and were levied on corn, tea, sugar, 
 beer, spirits, and tobacco. This large increase of taxa- 
 tion could not be imposed without making itself felt, and 
 though the artisan earning 20s. to 30s. a week may not 
 have been seriously affected, yet to the large class of per- 
 sons earning small and precarious wages an increased 
 charge for the necessaries of life means a pressure which 
 may easily drive them over the border line into pauperism, 
 vagrancy, and crime. 
 
 It is only in this way we can account for the grave 
 symptoms we have referred to. They seem to us to make 
 it urgently necessary that the war taxes falling on labour 
 should be removed as early as possible, rather than they 
 should be exchanged for taxes falling more directly on 
 food, and intended to be a permanent part of our fiscal 
 system. 
 
 The year 1903 has been one of considerable expansion 
 in our export trade, owing, no doubt, to the conclusion 
 of the war, and to the fact that our manufacturers have 
 no longer been employed so largely on material for the 
 army in South Africa. The home trade has, however, 
 not been so satisfactory. The expenditure out of borrowed 
 money on war material has ceased. Large numbers of 
 men employed in South Africa have gone back into civil 
 employment. The numbers of unemployed have increased. 
 Most of the war taxes still remain.
 
 48 COBDEN CLUB'S REPLY, 
 
 CHAPTER IX. 
 
 MR. CHAMBERLAIN'S THEORIES ON THE INCIDENCE OF 
 ; IMPORT DUTIES. 
 
 It appears to be an essential article of the new creed 
 of Protection, as proclaimed by Mr. Chamberlain, that 
 when a duty is imposed on an imported article which 
 is also produced in this country, a large part of it will be 
 paid, not by the consumer, but by the hated foreign pro- 
 ducer. 
 
 The question thus raised has been discussed mainly 
 with reference to the taxation of food. No fewer than 
 fourteen of the ablest Professors of Political Economy in 
 this country wrote a joint letter to the papers denying 
 this proposition, and asserting that in their opinion a tax 
 on the import of wheat would, as a general rule, raise the 
 price of wheat by the same amount, and would fall on the 
 consumers. 
 
 Undeterred by this weight of authority, Mr. Chamber- 
 lain, at Glasgow (October 6th, 1903), in propounding his 
 scheme for the taxation of food, said : — 
 
 "I do not believe that these small taxes on food would 
 be paid to any large extent by the consumers in this country. 
 I believe, on the contrary, they would be paid by the foreigner. 
 Now that doctrine can be supported by authoritative evidence. 
 In the first place, look at the economists — I am not speaking of 
 the fourteen professors (laughter) — but take John Stuart Mill, 
 take the late Professor Sidgwick, and I could quote others now 
 living.* They all agree that of any tax upon imports, especi- 
 ally if the tax be moderate, a portion, at any rate, is paid by 
 the foreigner, and that is confirmed by experience." He added 
 " I have gone carefully during the last few weeks through the 
 statistical tables not only of the United Kingdom, but of other 
 countries, and I find that neither in Germany, nor in France.- 
 
 • In a later speech he mentioned the names of Professors Ashley and 
 Hewins as the living authorities.
 
 INCIDENCE OF IMPORT DUTIES. 49 
 
 nor in Italy, nor in Sweden, nor in the United Kingdom when 
 there has been the imposition of a new duty or an increase 
 of an old duty, has the whole cost over a fair average of years 
 ever fallen on the consumer. It has always been partly paid 
 by the foreigner." 
 
 He also quoted from an official expert employed by the 
 Government, whose name he did not mention, to the 
 effect that the incidence of a tax depends upon the pro- 
 portion between the free production and the taxed produc- 
 tion of the article subject to it. 
 
 Of the authorities named by Mr. Chamberlain, by far 
 the most important, the only one carrying great weight, 
 is John Stuart Mill. But the chapter which that eminent 
 man wrote on the Taxes of Commodities in no way sup- 
 ports Mr. Chamberlain. Mill lays down in the clearest 
 and most emphatic language that * 
 
 " A tax on any commodity, whether laid on its production, 
 its importation, its carriage from place to place, or its sale, 
 and whether the tax be a fixed sum of money for a given quan- 
 tity of the commodity or an ad valorem duty, will as a general 
 rule raise the value and price of the commodity by at least 
 the amount of the tax. There are few cases in which it does 
 not raise them by more than that amount." 
 
 Dealing with protective duties, Mill added that all 
 Customs duties which operate as an encouragement to 
 the home production of the taxed article are an eminently 
 wasteful mode of raising a revenue. 
 
 No one also has ever more clearly laid down that the 
 consumers pay not only the tax on the article imported, 
 but also the enhanced price of the home production. 
 
 Later on he introduced various subordinate consider- 
 ations which in no way qualify or invalidate his general 
 principle. There is nothing in Mill to weaken the rule 
 that especially in the case of necessaries, such as food, for 
 which the demand is not elastic, import duties tend to raise 
 
 * Mill's " Principles of Political Economy," Vol. II., Book V., Chap. IV.
 
 50 COB DEN CLUB'S REPLY. 
 
 prices at least by the amount of the tax, and fall upon the 
 consumers ; and that the home production generally is raised 
 in price by the same amount. Mr. Chamberlain, in quot- 
 ing Mill as an authority in his favour, cannot have read 
 his well-known work on political economy with any greater 
 care than he read Mr. Morley's " Life of Cobden." 
 
 All the experience we have confirms the views of Mill 
 and the fourteen professors, and is opposed to the doctrine 
 preached by Mr. Chamberlain. It may be that when the 
 import duty imposed is very small, the fluctuations which 
 occur in the price of the article taxed will prevent the 
 effect of the duty being perceived at once. But in the 
 long run it is certain that in the case of an article of prime 
 necessity an import duty will raise the price in proportion 
 to the duty, and as a rule by something more, and will 
 fall on the consumer. 
 
 The prices of wheat in countries such as Ger- 
 many, France, and Italy, where high duties are levied 
 on imported corn, are higher than the prices in this 
 country, in years when such countries are importers, 
 by slightly more than the amount of the duties. Mr. 
 Chamberlain, indeed, with the strange infelicity which he 
 shows in dealing with statistics, has quoted the case of 
 France in proof of his contention. In his speech at Liver- 
 pool he compared the price of wheat in France with that 
 in England for the five years 1878 to 1882, when the 
 duty in France was only is. oM. per quarter, and stated 
 that the excess was 4s. iod. ; and in the next five years, 
 when the duty in France was raised to 12s. 2|d., he said 
 the excess was 9s. " In other words," he said, " an in- 
 crease of us. 2d. in the duty only increased the compara- 
 tive price in this country by 4s. 2d., and 7s. of the differ- 
 ence, therefore, or 60 per cent., must have been paid 
 by the foreigner." 
 
 There was, of course, a great fallacy underlying his use 
 of these statistics. France is only occasionally an im-
 
 INCIDENCE OF IMPORT DUTIES. 51 
 
 porter of wheat. In many of the years included in the 
 ten referred to by Mr. Chamberlain, France did not import 
 any wheat, and the price therefore was regulated by its 
 own supply. If such years be excluded, it will be found 
 that on the average of years when France has been an 
 importer of wheat, the price there has exceeded that in 
 England by slightly more than the amount of 12s. 2-|d., 
 the duty levied in France. 
 
 Lord Goschen has recently shown that the price of an 
 article of prime necessity, such as wheat, is invariably 
 raised by the amount of the duty levied on it when imported. 
 Mr. Chamberlain's efforts to prove the contrary are strangely 
 inconsistent with his whole scheme, which is based on 
 the theory that import duties will raise prices and give 
 great advantage to the home producer. He proposes, for 
 instance, to make an exception in favour of Colonial pro- 
 duce. This presupposes that the price in the British 
 market will be increased by the duty, so as to give to the 
 Colonial producer a considerable advantage as compared 
 with the foreign producer who is to be taxed. He proposes 
 to exempt maize and bacon from duties on the ground 
 that they are the food of the poorest classes. Why should 
 he do so unless a duty levied on those articles would pro- 
 portionately raise their price ? He proposes to put a 
 somewhat higher duty on flour than on wheat, in order, 
 as he says, to encourage the revival in this country of 
 the important industry of milling. This can only mean 
 that even a small duty will raise the price and induce 
 capitalists in this country to erect mills on the strength 
 of it. 
 
 Nothing, again, can more conclusively show the weight 
 of opinion against Mr. Chamberlain's view than the system 
 of drawbacks. It has been usual when a duty is levied on 
 an article, imported as raw material, to allow a draw- 
 back, equal to the duty, to be paid on the export of the 
 manufactured article. Thus, two years ago, when the
 
 52 COBDEN CLUB'S REPLY. 
 
 small duty of is. per quarter was imposed on imported 
 corn, an equivalent drawback was allowed on the export 
 of forty different articles, such as biscuits, confectionery, 
 starch, etc., of which corn is a principal part. The draw- 
 back was calculated at the same rate as the duty. Mr. 
 Chamberlain himself has admitted that if raw materials 
 are to be taxed it will be necessary to give drawbacks on 
 the manufactured articles when exported. It is not to be 
 expected that the drawbacks will be calculated on the 
 raw material used in the manufactured article at any 
 less rate than on the raw material. If it were true that 
 half the duty on imports, or a large part of it, is paid by the 
 producer in the country from which it comes, the conces- 
 sion of a drawback equal to the whole duty would mean 
 that a premium to the amount of one-half the duty would 
 be given to the exporter of the finished article, and the 
 foreign consumer would then gain at the cost of the home 
 taxpayer. 
 
 Mr. Chamberlain, in his speeches on this point, seems to 
 be anxious to ride two horses at the same time. He evi- 
 dently wishes to hold out expectations to producers and 
 manufacturers in this country that they will be protected 
 against foreign competition by import duties, which will 
 raise the prices of their products ; and he hopes also to dis- 
 arm the opposition of consumers by persuading them that 
 they will not feel the burthen of the tax. In his effort to 
 attain both these objects, he has split the difference between 
 them. It is, however, essential to the discussion of his scheme 
 that we should come to a conclusion on the subject of the 
 incidence of import duties. We have no hesitation, then, in 
 affirming that, as a general rule, an import duty raises the 
 price of the article in respect of which it is imposed, whether 
 imported or produced in the country, by the amount of the 
 tax, or somewhat more ; that the tax is paid by the con- 
 sumer ; and that no part of it falls on the foreign producer. 
 Where, however, the article taxed is not one of neces-
 
 INCIDENCE OF IMPORT DUTIES. 53 
 
 sity, it may well be that the higher price caused by the 
 duty will reduce the demand for it, and that the rise of 
 price will not, in such case, be to the full amount of the 
 duty. If it were not so, the foreign exporter would con- 
 tinue to send his goods as before ; but in so far as the 
 reduced demand is followed by a fall in price, the pro- 
 ducer as well as the consumer must suffer. 
 
 Let us illustrate the case by that of woollen goods, of 
 which we both export and import large quantities, and 
 manufacture still more for home consumption. The imme- 
 diate effect of a duty of 20 per cent, on imported woollen 
 goods would be to increase the price of all such goods, 
 whether imported or exported, by the same amount ; but 
 it would be found within a short time that the increased 
 price would check the demand. Prices would then fall, and 
 though they would not fall to their old level, they would 
 be something below the old price plus the import duty. 
 Importations would be checked, and only the highest class 
 of goods, for which customers would pay the old price 
 plus the duty, would come in. This is what has actually 
 happened in the United States. Very high duties have 
 been imposed there on woollen goods, with the result 
 that the demand for them has been greatly reduced. 
 Prices have fallen in consequence, but not to the old level. 
 The consumption of wool has been much diminished. The 
 people of the United States suffer from the enhanced 
 price of such clothing, and many are consequently unable 
 to supply themselves with what they want. This reduced 
 demand is mainly on the part of the lowest class of people. 
 It is they who cannot afford to buy at the enhanced price. 
 The wealthier classes continue to buy the best kinds of 
 woollen clothes, and pay the old prices plus the duty 
 for them. Hence it is that those of the Yorkshire manu- 
 facturers who produce the best classes of goods are still 
 able to export them to the United States in spite of the 
 higher duties. The manufacturers of the commoner kinds
 
 54 COB DEN CLUB'S REPLY. 
 
 of goods in this country are shut out altogether. But it is 
 ridiculous to suppose that the Yorkshire manufacturers 
 pay any part of the duties levied in American ports. They 
 only export their goods there when they can make a profit. 
 If they cannot make a profit they do not send their goods. 
 The duties have diminished a profitable trade ; but no 
 part of the loss finds its way into the revenues of the 
 United States. 
 
 It will be seen, then, that there may be differences in 
 the effect of import duties between the case of articles 
 of prime necessity and those which can be dispensed with, 
 or for which substitutes can be found ; but in neither case 
 can it be contended with any truth that the foreign pro- 
 ducer pays any part of the duty levied on his goods. 
 
 CHAPTER X. 
 
 ALLEGED GREATER PROGRESS IN OTHER COUNTRIES. 
 
 " I advise them [the Cobden Club] to write to their foreign 
 members and see whether they can tell them why Germany and 
 France and the United States of America — and if you will 
 remove all these from the calculation, then I take small coun- 
 tries, such a country as Sweden, for instance — why have all 
 these countries prospered under a system which they declare 
 would be ruinous to us ? When that question is answered, I 
 think my occupation will be gone." — Greenock, October Jth, 
 1903. 
 
 Just as we have said that the prosperity of England, 
 since Free Trade was adopted, whether in the first twenty- 
 five years or in the later thirty years, was not due wholly 
 to that great measure, but that many other causes have 
 co-operated, so it may be admitted that other nations,
 
 PROGRESS IN OTHER COUNTRIES. 55 
 
 which have not adopted the policy of Free Trade, have 
 also prospered in consequence of these other causes. 
 We believe, however, that their progress would have been 
 greater, and the condition of their people would have 
 improved still more, if they had not adopted the system 
 of Protection. 
 
 The country with which we can best compare our own 
 is Germany. Like England, it does not produce enough 
 corn for its own consumption. Like England, it has 
 great resources of coal and iron. Its population is 50 
 per cent, greater. Its progress has been very great during 
 the last thirty years, during which the Empire has been 
 consolidated, and all the many fiscal barriers which existed 
 in the numerous petty states then federated together have 
 been swept away. Its foreign trade has greatly developed 
 of late years, though still far behind that of this country. 
 Higher import duties of late years have been imposed from 
 time to time on corn and food in the interest of home pro- 
 ducers to meet the falling prices, and at the same time 
 duties on some manufactured articles have also been in- 
 creased. These food duties may have checked the re- 
 duction in the number of persons engaged in agriculture, 
 but the whole increase of population has been in the towns 
 and in those employed in trade and manufactures. As 
 we have already said, the progress of a country cannot 
 be measured only by the ratio of increase of its foreign 
 trade. The test must include the condition of its popu- 
 lation, and mainly of its labouring people. 
 
 Tested in this way, Germany is far behind our own 
 country. Its labourers, as a rule, are worse paid, worse 
 fed, and work for longer hours. The very great advance 
 of Socialism shows how widespread is the discontent 
 throughout the country. One of the chief demands of 
 the Socialists is for the removal of the taxes on food. 
 
 Another bad symptom, in our view, is the increase in 
 the number of trusts or cartels. These trade combinations
 
 56 COBDEN CLUB'S REPLY. 
 
 owe their existence mainly to the fact that monopoly is 
 favoured and promoted by Protection, and by high duties, 
 which prevent full and free competition. They thrive 
 and fatten on the public by raising prices all round upon 
 their home customers, and often for a time they sell their 
 surplus stocks abroad at a lower price than they allow 
 to the home consumer. 
 
 It must be admitted that in one respect Germany 
 compares favourably with this country — in the far higher 
 standard of education which it insists upon, and the 
 immense strides it has made in the application of 
 science to manufacture. Here Germany has achieved a 
 real superiority over us. But the question of scientific 
 training is altogether independent of the issue between 
 Protection and Free Trade. All agree that more should 
 be done here for technical education. 
 
 German progress is far less satisfactory than our 
 own. Labourers and artisans lead very hard lives. Their 
 food and clothing are bad and scanty. Under the pressure 
 of agrarian agitation, Germany has been compelled to 
 adopt a system of high tariffs on corn, meat, and all agricul- 
 tural produce. Its statesmen have been influenced by the 
 same ideas that have occurred to many people in this 
 country — namely, that under a system of import duties they 
 would be able to negotiate with advantage with other 
 Powers for mutual reductions. This, however, has not 
 proved to be the case. As between Germany and Russia, 
 or Germany and the United States, or Germany and 
 France, no practical progress has been made towards 
 reciprocity, to say nothing of Free Trade. 
 
 Of this we may be certain, that if Germany were to 
 adopt the policy of Free Trade — that is to say, free imports 
 — it would speedily become a far more successful rival 
 to us, not only in neutral markets but in our own, than 
 it now is. The only advantage we now have as compared 
 with Germany is the low rate at which we import all the
 
 PROGRESS IN OTHER COUNTRIES. 57 
 
 raw materials for our manufactures and the food for 
 our people ; and by raw materials we do not mean only 
 the products of the earth in their first stage, but those 
 worked up by labour into higher stages, when they are 
 still raw materials in a sense for the finishing processes 
 of manufacture. 
 
 Many of the above remarks apply equally to the 
 United States, which command a much larger and 
 more prosperous Free Trade area than even Germany. 
 Who can wonder at the increase of their trade, when 
 we regard their vast agricultural and mineral resources, 
 the enormous growth of their population, the devotion of 
 their people to trade and commerce, and a long freedom 
 from militarism and feudal tradition ? As they pro- 
 duce more foods of all kinds than suffice for the wants of 
 their people, the system of Protection has not raised the 
 price of food to the workers. They pay, however, much 
 more for every other requirement, including their houses, 
 than would be the case under a system of Free Trade. High 
 Protective duties there, as in Germany, favour the aggre- 
 gation of trusts and monopolies ; they lead to fluctuations 
 in trade, to inflation and depression, and they are intimately 
 connected with political corruption in the federal and 
 State legislatures. 
 
 Under a system of Free Trade the United States, like 
 Germany, would compete with us to far greater advan- 
 tage. They would certainly recover within a short time 
 that share in merchant shipping, the loss of which was 
 largely due to Protection. They would become the great- 
 est rivals to us in all neutral markets. Our supremacy 
 in mercantile marine, and our marked advantage in markets 
 such as India, open to all the world, are due in the main 
 to our freedom of trade. 
 
 As regards Sweden, the reports of our Consuls, the 
 statistics of the Board of Trade, and the letters of skilled 
 Swedes, who can hardly believe that intelligent Englishmen
 
 58 COB DEN CLUB'S REPLY. 
 
 have begun to envy them, afford ample evidence that 
 Sweden, far from being on a par with Great Britain, has 
 in fact prospered less under a Protective system than 
 Denmark under her more rational tariff. 
 
 CHAPTER XI. 
 
 RUINED AND THREATENED TRADES. 
 
 " Agriculture, as the greatest of all trades and industries 
 of this country, has been practically destroyed. Sugar has gone ; 
 silk has gone ; iron is threatened ; wool is threatened ; cotton 
 will go ! How long are you going to stand it ? At the present 
 moment these industries and the working men who depend upon 
 them are like sheep in a field. One by one they allow themselves 
 to be led out to slaughter and there is no combination, no 
 apparent prevision of what is in store for the rest of them." — 
 Greenock, October yth, 1903. 
 
 A more ludicrous exaggeration never was uttered 
 from a platform. Let us take the industries in turn. 
 
 Agriculture. 
 
 It is absurd in the highest degree to speak of agriculture 
 as being destroyed. Two of the three interests concerned 
 in it — the one the sleeping partner, the landowner, the 
 other the working partner, the farmer — have indeed 
 suffered severely the last twenty-five years by the great 
 fall of prices of farm produce. Rents have been largely 
 reduced, more of course in the arable parts of England 
 than in the pastoral districts. It should be recollected, 
 however, that agricultural rents were largely raised be- 
 tween the years 1855 and 1875. It may be doubted 
 whether in most parts of Great Britain rents have 
 been reduced of late years to a lower point than they were 
 at fifty years ago.
 
 RUINED AND THREATENED TRADES. 59 
 
 Profits of farmers were also for many years greatly 
 reduced. A large extent of land under the plough has been 
 laid down in grass. But, on the other hand, the remaining 
 class of persons employed in agriculture, the labourers, have 
 gained immensely under Free Trade. Not only have their 
 money wages been increased, but a steady fall in the prices 
 of food and clothing has enormously benefited them by 
 making their wages go further. It is certain that the 
 labourers are at least 50 per cent, better off than they 
 were twenty-five years ago, and 100 per cent, better than 
 before 1846. 
 
 True, the number of farm labourers has diminished. 
 It is often said that they were driven away from the land 
 by the failure of employment and by the difficulties of 
 farmers. But the very reverse was the case. Labourers 
 were induced to leave the rural districts by the certainty 
 that they could get far higher wages in the towns, on 
 the railways, in the police, and in many other employ- 
 ments. This voluntary exodus of labourers, which com- 
 menced and assumed great dimensions between 1870 and 
 1880, before the fall of prices began, caused a rise of money 
 wages on the farms, and added to the farmers' difficulties. 
 The labour bill rose. As a result farmers were compelled 
 to economise labour in every possible way by the use 
 of machinery and otherwise. The laying down of arable 
 land as pasture has been largely due to the increased 
 cost of labour relatively to the produce of the land. But 
 the reduction in the number of agricultural labourers 
 has been very far greater than that due to the conversion 
 of arable land into pasture. A great economy of labour 
 has been effected both on arable farms and on pasture 
 farms by the use of machinery and otherwise. It has 
 been hastened by the rise of wages and the exodus to the 
 towns of rural labourers. 
 
 This conversion of arable land into pasture has 
 reduced the gross produce. But it is easy to exaggerate 
 E
 
 60 COB DEN CLUB'S REPLY. 
 
 the effect of it. The measure of the reduction is the differ- 
 ence between the product of the land under the plough 
 and its product when in grass. It should be recollected 
 that about three-sevenths of the land of England was 
 always in grass. In 1871-5 there were 10,200,000 acres 
 of pasture land compared with 13,460,000 of arable land. 
 Since then 2,500,000 acres have been withdrawn from the 
 arable area and added to the area of pasture.* 
 
 One-fifth of the arable land has been laid down in grass, 
 and an addition has been made of one-fourth to the area 
 of pasture. The loss to the country as a whole from this 
 conversion is the difference between the value of the pro- 
 duct of this extent of land when under the plough, and 
 of its product when in grass. It may be doubted whether 
 at present prices the difference can be reckoned at more 
 than £3 to £4 per acre. Serious as this may seem, the 
 aggregate loss is small indeed compared to the enormous 
 gain to the whole country from the great fall in price of 
 food of all kinds, and also of raw material for our manufac- 
 tures. In the national balance sheet the gain to the 
 country is to be measured by scores of millions — 
 exceeding many times over the amount by which the 
 produce of the land has been reduced. At the present 
 time it may be confidently stated of the country as a 
 whole that adjustments of rents and of labour have been 
 effected to such an extent that there is no longer any difficulty 
 in letting farms. There is, in fact, everywhere a fair 
 demand for them, and in many parts of the country a 
 strong competition — showing that there are large numbers 
 of people able and willing to undertake farms who believe 
 that a fair return can be made on their capital and labour. 
 The land of England, whether in arable or grass cultivation, 
 is cultivated much as it has always been. The numbers 
 of horses, cows, and cattle have largely increased. 
 
 * An addition should be made to these figures for the remainder of the 
 United Kingdom,
 
 RUINED AND THREATENED TRADES. 61 
 
 There has also been a great extension of fruit cultivation 
 and of market gardening. 
 
 Under these circumstances, though we may regret that 
 so many interested in land should have suffered losses, 
 yet we must rejoice in the wonderfully improved conditions 
 of agricultural labourers, and we find it difficult to under- 
 stand how anyone in his senses can speak of agriculture 
 as having been destroyed. 
 
 It is true that Cobden did not believe that under Free 
 Trade the agricultural interest would suffer any serious 
 loss. He was more than justified in this for thirty years 
 — a long period for any economic prediction. Within a 
 few years after the Repeal of the Corn Laws the value 
 of land rose steadily with the increasing prosperity of the 
 country. This lasted till about 1878, when prices began to 
 fall, and fell continuously for nearly twenty years. The 
 agricultural depression has not been confined to England. 
 It has been sharply felt in Germany and France, and 
 especially in the Eastern States of America. 
 
 We may be very confident that Cobden's views on 
 the expediency of Free Trade would not have been affected 
 by the prospect of a fall in corn prices and rents. He 
 frequently maintained that landowners had no vested 
 interest in high rents. He regarded high rents as a main 
 cause of agricultural depression, and not as an index of 
 prosperity. In an interesting speech he explained that 
 as a Sussex landowner he had lowered his rents, and he 
 urged other landlords to follow his example. Had he 
 foreseen what was to occur thirty years after the repeal 
 of the Corn Laws, he would have urged, with even greater 
 force than he did, the carrying, during the thirty years of 
 grace, of those measures of land reform which he con- 
 sidered only second in importance to Free Trade, which 
 would have multiplied the number of small owners of 
 land, and have attached the labouring people to the rural 
 districts.
 
 62 COBDEN CLUB'S REPLY. 
 
 However that may be, Free Trade having been carried, 
 and the country as a whole having had experience not 
 only of the general prosperity which has prevailed for 
 fifty-eight years, but also of the immense advantage of low 
 prices of food and clothing and every other requirement 
 for the last twenty-five years, it would be madness indeed 
 to attempt to retrace our steps and go back to the con- 
 ditions before 1846. By artificially raising prices again, 
 we should certainly lower wages and reduce the standard 
 of living for the whole of the labouring class. We will 
 revert to this when considering the specific scheme of Mr. 
 Chamberlain. 
 
 The Iron Industry. 
 
 " You stand aside and allow the iron industry to be ruined, 
 and there will not be any iron industry to support you when, 
 in turn, you are the object of attack." — Greenock, October jth, 
 1903. 
 
 The best answer to this jeremiad is the report at the 
 end of 1903 of the Iron and Coal Trades Review — the leading 
 organ of the trade, one not unfriendly to Mr. Chamber- 
 lain's schemes — and also the Board of Trade returns for 
 that year. The Review said : — 
 
 " The first six months of the past year were quite satis- 
 factory for both the coal and iron trades of Great Britain. In 
 both cases we had a considerable increase of volume over the 
 output of the corresponding period of 1902. . . . We may, 
 on the whole, welcome 1904 with grateful and hopeful hearts 
 because the past has done so well for us, and hopeful because 
 we have emerged without serious disaster from a much more 
 forbidding environment than that which now surrounds us." 
 
 It is true that exceptionally heavy shipments of iron 
 were made from Germany during the past year, due to 
 the efforts of cartels or trusts to relieve their home market 
 of accumulated stocks during a period of depression. But 
 although the heavy imports had the effect of temporarily
 
 RUINED AND THREATENED TRADES. 63 
 
 depressing prices of iron bars, there was nothing which 
 could fairly be called a disturbance of industry. Although 
 the imports of German iron reached a very high figure, this 
 did not prevent a very large export trade from England, 
 and the special imports of a low class of iron were of enor- 
 mous advantage to many branches of our manufactures, 
 for which they are raw material. 
 
 The trade returns for the past year show most satis- 
 factory increases of exports of articles manufactured 
 from iron and steel in all directions. Within a compara- 
 tively brief period our exports of machinery have nearly 
 doubled, and last year they reached the record level of 
 £18,000,000. 
 
 Hardware and cutlery are steadily expanding, and 
 implements and tools record satisfactory progress. To 
 these trades, employing increasing numbers of highly paid 
 workmen, the question of the restriction of steel imports, 
 and the consequent enhancement of the price of their 
 raw material, is a matter of vital importance. 
 
 The reproaches which were legitimately levelled against 
 British ironmasters, that their plant was inferior to that 
 of their foreign competitors, no longer applies. Vast sums 
 have been laid out in bringing their works up to date. Many 
 concerns have been transferred to the coast in order to 
 economise railway carriage, and the conditions of pro- 
 duction generally have been so completely changed that 
 the British ironmaster is able to hold his own in any market. 
 To speak of the industry as a threatened one is simply 
 ludicrous. 
 
 The Silk Industry. 
 
 The same observations apply to the woollen and the 
 cotton industries. The silk trade, Mr. Chamberlain ex- 
 plained in 1881, was in a very unsatisfactory condition 
 before the removal of the Protective duties by which it 
 was long attempted to bolster it up. This was and still
 
 64 COB DEN CLUB'S REPLY. 
 
 is quite true of one branch of the industry — that of thrown 
 silk. It has never been able to stand competition with 
 the French manufacturer. But another branch, almost 
 equally important — that of spun silk — has shown of late 
 years great expansion and vitality, and is a striking proof 
 of what British energy and skill can effect. 
 
 The Shipping Industry. 
 
 We should have thought it difficult to make a case for 
 alarm about British shipping. But Mr. Chamberlain 
 attempted the task, and at Liverpool, October 27th, 
 1903, endeavoured to effect it by producing figures to 
 show that the increase of foreign shipping during the last 
 ten years had been at a much greater rate than that of 
 British shipping. 
 
 " From 1890 to 1901 we are told that the total increase in 
 the tonnage of the whole British Empire," he said, " was 
 1,400,000 tons,- and meanwhile the total increase in foreign 
 tonnage was 2,000,000 tons, or 800,000 tons more than the 
 British tonnage." 
 
 It appears, however, that he made the serious error 
 of including in his figures of foreign tonnage the increase 
 of American shipping for the lake, river, coasting, and 
 fishing trades, amounting to 1,100,000 tons within the 
 ten years. These vessels do not compete with over-sea 
 tonnage, of which the British built tonnage is mainly 
 composed and ought, therefore, to be excluded from any com- 
 parison. He has also made the comparison with the ships of 
 the British Empire. The tonnage belonging to Canada shows 
 a reduction in the ten years of 300,000 tons, owing to falling 
 off of demand for wooden sailing vessels. If we allow 
 for these two errors so characteristic of the speaker, the in- 
 crease of vessels belonging to the United Kingdom in the ten 
 years was 1,630,000 tons, and of those belonging to all 
 foreign Powers was 1,062,000 tons — figures which show that
 
 RUINED AND THREATENED TRADES. 65 
 
 our proportion to the tonnage of the rest of the world 
 has been much more than sustained during the last ten 
 years. 
 
 Mr. Chamberlain is probably not aware also that the 
 standard of measuring ships in Great Britain is the net 
 tonnage, after deducting the engine-room space, which 
 is less than the gross tonnage by one-third in ordinary 
 cargo vessels, and one half in the case of passenger vessels- 
 The United States and many other countries measure 
 by the gross tonnage and in so doing swell the aggre- 
 gate of their shipping tonnage as compared with ours. 
 Of the foreign tonnage also, a far larger proportion than 
 with us consists of sailing vessels. Making allowance 
 for these differences, the actual carrying power of British 
 vessels is considerably more than that of all other countries 
 added together. We owe this proud position unquestion- 
 ably to the freedom of our ports, and to the fact that our 
 shipbuilders, owing to the free import of all material, can 
 build iron vessels at a far lower rate than their rivals 
 in other countries. 
 
 In view of these facts we do not think it necessary 
 to argue the question of shipping at any length. But 
 to complete the case for Free Trade in ships we will add 
 the comparative figures of British and American tonnage 
 employed in the direct trade between Great Britain and 
 
 the United States. 
 
 i860, 1880. 1900. 
 
 Great Britain 940,000 6,939,000 10,162,000 
 
 United States 2,245,000 1,442,000 1,035,000 
 
 In face of these figures it is hard to imagine how any 
 sane man, who feels pride in the strength and growth of 
 our mercantile marine, can support a proposal for American- 
 ising our commercial and shipping policy.
 
 66 COB DEN CLUB'S REPLY. 
 
 CHAPTER XII. 
 
 MINOR RUINED INDUSTRIES. 
 
 Let us now deal with some of the minor industries 
 to which Mr. Chamberlain has directed attention — namely, 
 alkali, cycles, wire, glass, watches, jewellery, and pearl 
 buttons. His method, when intending to speak at some 
 great industrial centre, has been to get up a case 
 in respect of some of its trades with which to alarm the 
 working classes as to their future employment, and to fill 
 them with envy of the foreign importer. He has done this 
 in the most slipshod fashion. He evidently accepted 
 the facts supplied him without testing them. As a result, 
 his statements were most misleading. It would require 
 many pages in each instance fully to expose the hollowness 
 of his methods, and to set the true facts before the public. 
 But we will endeavour as shortly as possible to deal with 
 some of them, beginning with the alkali industry, in which 
 the people on Tyneside are deeply interested. Speaking 
 at Newcastle ne said : — 
 
 f Alkali. 
 
 " In one process for making alkali there are two products 
 —caustic alkali and bleaching powder. People who want 
 to export alkali must make the bleaching powder and get rid 
 of it in order to make it pay. The Germans have this advan- 
 tage. They make as much alkali as they want, and all the 
 bleach that comes in the process they dump here in England. 
 We can only make a limited amount of the alkali because we 
 cannot sell our bleach, and if this goes on we shall sell no alkali 
 at all in that process which requires that both alkali and bleach- 
 ing should be produced." — Newcastle, October 20th. 
 
 The statement is a tissue of errors. It is not true 
 that we cannot sell^ our own bleach. The exports of 
 bleach from this country have increased of late years
 
 MINOR RUINED INDUSTRIES. 67 
 
 from 1,031,000 tons in 1901 to 1,102,000 tons in 
 1903. The imports bear but a small proportion to our 
 exports, and have declined from 257,000 tons in 1901 
 to 241,000 tons in 1903. The total German exports 
 amounted in 1902 to 29,000 tons, of which 8,300 only came 
 to England, while 10,200 tons were sent to the United 
 States. If there is any dumping it must be to the latter 
 country. There is no ground whatever for alarm in respect 
 of this industry. 
 
 Wire. 
 
 This industry is one of the many branches of the metal 
 trades which flourish by the low price of raw material. 
 Mr. Chamberlain at Liverpool represented the trade in 
 this country as practically extinguished by German com- 
 petition. There is no doubt that for some years the Ger- 
 man manufacturers, by reason of the low price of German 
 iron of poor quality, obtained a great advantage ; but of 
 late our manufacturers have benefited by the " dumping " 
 of this low class of iron in this country. This has enabled 
 them to compete successfully with the German makers. 
 The exports of British wire have consequently increased 
 from 45,000 tons (valued at £967,000) in 1901 to 60,000 
 tons (valued at £1,171,000) in 1903 — an increase of 33 
 per cent. 
 
 Of the total export of German wire of 29,600 tons for 
 the year 1902, only 8,300 tons were sent to this country, 
 while the exports to the United States increased from 
 4,600 tons in 1897 to 10,000 tons in 1902. 
 
 Glass. 
 " Now, what about glass ? I am told that at the present 
 time 240 millions of bottles are imported into this country. I 
 think these come from Germany. Have Germans any special 
 faculty for making bottles ? . . . I believe that all the 
 plate-glass works, at all events all but one, have been closed. 
 I have been told by a manufacturer in the trade that at one 
 time the plate-glass industry employed 20,000 English work-
 
 68 COBDEN CLUB'S REPLY. 
 
 men. Now that is all gone. (' Shame.') " — Liverpool, October 
 28th, 1903. 
 
 The German and Belgian manufacturers, it is well 
 recognised, have a special advantage in the making of 
 glass in the abundant supply of silica, or white sand, in 
 close proximity to their works. So substantial are the 
 advantages of our foreign competitors that, according 
 to an expert writer on the subject,* "even if 60 per cent, 
 duty were put on importations, as in America, the foreigners 
 would still dump their glass into Great Britain." But 
 despite these serious disadvantages, the home glass trade 
 is very far indeed from being in the moribund condition 
 described by Mr. Chamberlain. In many branches we 
 control the home market, and our foreign trade is a large 
 and to some extent an increasing one, as the following 
 figures show : — 
 
 British Exports of Glass. 
 
 Plate, rough or silvered 
 
 Flint and manufactures thereof ... 
 Bottles and manufactures of com- 
 mon glass 
 
 Other manufactures enumerated... 
 
 1901. 
 
 £"5.3i7 
 
 250,575 
 
 438,817 
 252,446 
 
 1902. 
 £108,112 
 248,454 
 
 471,162 
 270,202 
 
 1903. 
 £"4.9i8 
 259.74 1 
 
 443.782 
 284,206 
 
 £i,Q57. I 55 £i,097.930 £1,102,647 
 
 Mr. Chamberlain's assertion that the plate-glass works 
 once employed 20,000 workmen is quite inaccurate — 
 indeed, it is estimated that even if the whole of the plate 
 glass at present imported were made in the country it 
 would only give employment to some 3,000 men. One 
 would suppose from Mr. Chamberlain's statement that St. 
 Helens, the town where plate glass is chiefly made, must 
 be in a decadent condition. On the contrary, it is a most 
 flourishing community, the population of which has greatly 
 increased of late years. Many other trades have given full 
 employment to its population. 
 
 * Annual Trade Review, Glasgow Herald, December 31st, 1903.
 
 MINOR RUINED INDUSTRIES. 69 
 
 Cycles. 
 
 The cycle trade is another case in which Mr. Chamberlain 
 raised a cry of alarm. " When the foreigners," he said, 
 " found that the manufacture of cycles was rather a good 
 thing they put tariffs on cycles ranging up to 45 per cent., 
 and, not content with that, when the time of depression 
 was strongest in America the Americans dumped their 
 cycles down here at prices with which the English manu- 
 facturers could not compete." By a strange coincidence) 
 a few days before Mr. Chamberlain found it advisable to 
 dangle before the Coventry cycle manufacturers the pros- 
 pect of a tariff on imported cycles, the Statist congratulated 
 this industry upon the steady growth in its foreign trade, 
 together with the decline in foreign importations. The 
 figures may be left to speak for themselves : — 
 
 Year. 
 
 1900. 
 1901 
 1902 , 
 1903 
 
 " The great watch manufacturers in America have agreed 
 together that they will not reduce their production, but 
 that they will agree upon a home price that will satisfy 
 the market there, and, having done that, they will go on 
 making — keeping all their workmen at work, and if there is 
 any surplus they will dump it — (cheers) — in the only country 
 which is magnanimous enough, generous enough, foolish enough 
 to allow it. . . . If it goes on long enough, the Prescot 
 works will close, the whole of their trade will be gone." — Liver- 
 fool, October 28th. 
 
 The truth is that a more unfortunate example of " dump- 
 ing" could hardly have been selected, since, as a matter 
 of fact, the import of watches has fallen off enormously 
 
 Exports 
 
 Imports 
 
 of Cycles. 
 
 of Cycles. 
 
 £ 
 
 £ 
 
 530,950 
 
 194,848 
 
 577,412 
 
 176,355 
 
 718,037 
 
 144.535 
 
 847,839 
 
 99,042 
 
 Watches. 

 
 ?o COBDEN CLUB'S REPLY. 
 
 of late years. Here are the figures as given by the Board 
 of Trade : — 
 
 1901. 1902. 1 9°3- 
 
 No. 2,481,329 2,103,115 1,620,619 
 
 That Mr. Chamberlain, moreover, should have gone 
 out of his way to refer to the United States in this con- 
 nection is still more remarkable when it is remembered 
 that our American export trade in watches and parts 
 thereof is steadily growing. 
 
 Jewellery. 
 
 The most absurd of all the instances given by Mr. 
 Chamberlain of ruined trades was that of jewellery. He 
 told his audience at Birmingham that " in 1900 we sold 
 to foreigners £50,000 worth. We imported from the same 
 foreigners £137,000 worth — (shame) — and we were £87,000 
 to the bad. (Shame.) That was 1900, but in 1902 we 
 were £170,000 to the bad. (Shame.) " 
 
 It was shown in the Press a few days later that this 
 great increase of imports in 1902 was due to the fact that 
 the Sultan of Morocco had pawned his family jewels to a 
 British commercial traveller for a large sum, and that 
 the jewels had been sent to England for security. So 
 Gilbertian a touch lends to the Chamberlain fiction the 
 requisite element of humour ; but in spite of this the 
 statement appears unaltered in the published report. The 
 speech does not add, what the Trade returns show, that 
 the last three years have shown a large increase of exports 
 and a decrease of imports. 
 
 Pearl Buttons. 
 
 Though the trade in jam giving employment to 40,000 
 persons was subjected to ridicule by Mr. Chamberlain, pearl 
 buttons employing a small number were treated by him 
 as a most important industry. He said at Birmingham
 
 MINOR RUINED INDUSTRIES. 71 
 
 (November 4th) that 6,000 persons used to be employed in 
 the industry, and that these are now reduced to about 1,000, 
 of whom very few are in full employment. From careful 
 inquiry made a few years ago, when the trade was at 
 its best, it appeared that no more than 2,000 persons were 
 employed in it. A reduction has taken place, but this 
 is not due to American or other competition, but to a 
 change of fashion induced largely by the great extension 
 of steam laundries, which, as any housewife knows, crush 
 the pearl buttons when left on shirts and other garments. 
 
 We have completed this catalogue of ruined industries. 
 We hardly know whether more to wonder at the triviality 
 of many of the instances, or at the grave inaccuracy of 
 the speaker in all of them. 
 
 It must not be inferred from what we have said that 
 we are not fully conscious of the injury often inflicted 
 upon special industries in the country by the increase of 
 tariffs in foreign countries. In no case has this been more 
 serious than in the action of the United States in their 
 successive McKinley and Dingley tariffs. Undoubtedly 
 they hit certain branches of our trade most seriously, and 
 for a time these industries suffered greatly. But healthy 
 trades under free competition find escape from such diffi- 
 culties. The offending country by imposing heavy duties in 
 favour of particular trades often injures others, and affords 
 opportunities to its rivals of finding new openings. This was 
 conspicuous in the case of the tin plate industry, which was 
 greatly disorganised by the Dingley tariff. The enormous 
 export trade from South Wales to the United States was 
 almost annihilated. Ruin stared the manufacturers in the 
 face. They met the emergency with courage ; they discov- 
 ered new markets ; they developed the home market which 
 they had previously neglected. They modernised their 
 machinery. As a result, they overcame their difficulties. 
 The industry is now on a sounder basis than ever, with a 
 rapidly expanding foreign trade to all parts of the world.
 
 72 COB DEN CLUB'S REPLY. 
 
 But the home trade has been vastly increased, stimulated 
 by the action of the American tariff, which has given many 
 openings for exports to neutral markets, in which these 
 goods are required. There could not be a better illustra- 
 tion of the soundness of Free Trade. 
 
 In other cases the general cost of production has been 
 raised in the country which has raised its tariff, and it 
 has been found possible for our manufacturers, in spite 
 of the high duties, to continue an export of the best articles. 
 
 British manufacturers have been spurred on to in- 
 creased ..efforts. They provided themselves with better 
 machinery, often from the United States. They have suc- 
 ceeded to a great extent in breaking down the barrier 
 of tariffs and in recovering a great part of the trade. In 
 this way only can we account for the fact that in spite 
 of the very high duties imposed by such countries as 
 Russia, Germany, and Italy, our export trade to them 
 is a rapidly increasing one. 
 
 The following figures, showing the increase of exports 
 of manufactured and partly manufactured goods to these 
 countries during the last ten years, are of interest :— 
 
 1891-4- 1899- 1902. Increase. Percentage 
 
 R„ccia £ £ increase. 
 
 * UsSia 4.900,000 7,200,000 2,000,000 + 47 
 
 Germany ... 14,800,000 18,400,000 3,600,000 + 24-9 
 ltaly 3.400,000 3,800,000 400,000 + 12 
 
 The exports to all countries and colonies of manufac- 
 tured and half-manufactured goods in the same period 
 increased by £26,500,000, or 13.5. The United States 
 showed a decrease in the same period of £5,000,000, or 
 23 per cent. ; but the year 1903 has resulted again in a 
 very large increase. 
 
 Screws. 
 
 It may be well at this stage to recall Mr. Chamberlain's 
 own experience as a manufacturer of screws in Birming-
 
 MINOR RUINED INDUSTRIES. 73 
 
 ham, of which he gave a most interesting account in a 
 speech delivered at Bordesley on November 12th, 1885 : — * 
 
 " Well, I have been out of the screw trade now for ten years 
 or more, and I do not know anything about it in its present 
 condition ; but I do know what happened while I was a member 
 of the screw firm, and really my experience has a rather 
 important bearing upon this question. We made screws by 1 
 the aid of an American invention, a most beautiful machine 
 which was imported from America." 
 
 Rival manufacturers in France, German}', Russia, 
 Austria, and Italy also imported this American machine 
 and were protected against Mr. Chamberlain's firm by a 
 duty on screws. What happened ? 
 
 " Every one of these countries puts a duty upon screws 
 from abroad. We, as you know, were perfectly open. Any- 
 one could send screws without paying any duty at all. Now, 
 then, what was the result ? This was a case of hardship 1 
 According to the Fair Traders, we ought to have gone whining 
 about the country asking for Protection for this wretched 
 manufacture of ours, which was threatened by foreign competi- 
 tion. Now what was the fact ? The fact was this : that at 
 the time of which I am speaking we sent screws into every 
 country in the world, and no country in the world was able 
 to send screws here. Who benefited by it ? Well, we did." 
 
 The United States increased their tariff to 100 per 
 cent., but Nettlefolds continued to expert, and at last 
 the American manufacturers offered them a large annual 
 sum if they would refrain from competing in America. 
 And so, Mr. Chamberlain added : — 
 
 " My firm received a handsome income for years from the 
 American manufacturers, protected as they were by the folly 
 and stupidity of this Protectionist legislation." 
 
 " The only people," he said, who suffered were " the 
 working classes of the United States, who had to pay 
 
 * We are indebted for this trouvaille in Mr. Chamberlain's past records to 
 recent articles in the Speaker and Morning Leader.
 
 74 COBDEN CLUB'S REPLY. 
 
 more for every screw they used," and manufacturers of 
 other commodities, who found their businesses " hampered 
 and trammelled by the additional cost that was put upon 
 their materials." It was, Mr. Chamberlain declared, the 
 American users of screws, " they and they alone, who 
 bore the burden of the tax upon their industry." 
 
 Mr. Chamberlain was careful to explain that, in spite 
 of his compact with the Americans, which to some people 
 might seem to be wanting in patriotism as tending to limit 
 employment in this country, his own workmen shared in 
 the benefit. 
 
 " There were more of them employed than had ever been 
 employed before, and they were employed at better wages. 
 Their condition, too, compared very favourably with the con- 
 dition of similar workmen in foreign countries." 
 
 " I travelled abroad at that time, and I went to the French 
 and German and other factories, and I knew all that was going 
 on, and in every case the wages of the working people making 
 the same article were lower — much lower — in some cases half 
 of what we were paying ; and the time they worked was, in 
 every case, longer. In France, for instance, they worked twelve 
 hours a day when we were working nine hours. I say in every 
 case. I should say in every case but one. In America the 
 workpeople got higher wages than they did in England ; but 
 the cost of living was very much greater, and their position 
 was really not so good as that of our workmen. Clearly, the 
 working classes in England benefited by our Free Trade 
 system." 
 
 " Well," said Mr. Chamberlain to an enthusiastic 
 audience, " if other people choose to cut off their tails, 
 are you going to be so foolish ? " " I tell you," he con- 
 cluded, " that any proposal to tax corn is a proposal to 
 put rent into the pockets of landlords, and any proposal 
 to tax manufactures is a proposal to put profits into the 
 pockets of particular favoured manufacturers," a most 
 concise and true description of his present proposals. 
 
 The above quotations are taken from the verbatim
 
 MR. CHAMBERLAIN'S SCHEME. 75 
 
 report of the Times of November 13th, 1885, and no one 
 who reads them can avoid the conclusion that Mr. Cham- 
 berlain's experience as a business man is entirely on the 
 side of Free Trade. 
 
 CHAPTER XIII. 
 
 MR. CHAMBERLAIN'S SCHEME. 
 
 We are now in a position to examine the scheme by which 
 Mr. Chamberlain proposes to reverse the fiscal and com- 
 mercial policy of the past sixty years and to embark on a 
 return voyage to the benighted land of Protection. 
 
 The scheme proposes a duty of 2s. per quarter on corn, 
 exclusive of maize ; a duty of 5 per cent, on meat (with 
 the exception of bacon), on dairy produce (such as butter, 
 cheese, etc.) and fruit ; and duties averaging 10 per cent. 
 on manufactured and half-manufactured goods. A rather 
 higher duty is to be levied on flour, with the object of 
 promoting the milling industry in this country. Raw 
 materials are to be exempt from duty. Colonial produce 
 is to be exempt from the duty on corn, meat, etc., and 
 probably from the duties on manufactured goods, though 
 this is not quite certain. The produce of these taxes, so 
 far as the duties on corn and other food are concerned, is 
 to be used for a reduction of the tea duties by three- 
 fourths and the sugar duties by one-half ; and the duties 
 on manufactured goods are to make up for any deficiency 
 so caused, and still further to reduce the tea and sugar 
 duties and other taxes — presumably the income tax. 
 
 The scheme thus stated as a whole is, in fact, com- 
 pounded of three distinct parts with different objects, 
 and devised at different times, apparently, by different 
 hands. 
 V
 
 76 COB DEN CLUB'S REPLY. 
 
 The first to be proposed was that of " Colonial prefer- 
 ences." This had its origin at the Colonial Conference in 
 1898, but culminated in consequence of the Imperialist 
 mirage which dazzled the eyes of the Colonial Minister 
 on the illimitable veldt of South Africa. The second- 
 that of " Retaliation "—against those nations which treat 
 exports from this country with " outrageous unfairness," 
 was due to the inspiration of Mr. Balfour, who devised 
 it as a via media to keep his party together. The 
 third is a scheme of Protection all round to home indus- 
 tries by a tax on foreign manufactures averaging 10 per 
 cent. This apparently was suggested to Mr. Chamberlain at 
 a later stage by party organisers as a more popular measure 
 than the other two. It was the more acceptable to him, 
 as it afforded a plausible means of redressing the burthen 
 imposed on consumers by the taxes on food. It is the only 
 part which has " caught on " in the sense that it has re- 
 ceived any large measure of popular support. It will be 
 seen that these three parts have been hastily and clumsily 
 joined together in a single scheme, without due considera- 
 tion of their effect as a whole, and that they are to a large 
 extent inconsistent with or antagonistic to one another. 
 
 It is obvious that if the scheme of Colonial preferences 
 be adopted, and if for this purpose a duty of 2s. per quarter 
 on corn and 5 per cent, on meat and dairy produce be 
 imposed, the scheme will go as far in the direction of taxing 
 food as is thought at present to be expedient. The speeches 
 of Mr. Chamberlain, taken as a whole, amount to an under- 
 taking, as far as he is concerned, that no higher duties 
 will be laid on food than those which he now proposes. 
 
 As regards retaliation, although it has never been ex- 
 plained by the author of the proposal in what manner it 
 is to be carried into effect, yet it is very certain that unless 
 we are willing to tax food for the purpose it will be impossible 
 to effect anything in this direction against such countries as 
 the United States and Russia, winch are the worst offenders
 
 MR. CHAMBERLAIN'S SCHEME. yy 
 
 in imposing high tariffs on foreign trade. But when a tax 
 on food has been imposed for the purpose of Colonial 
 preferences, that engine will not be available for retaliation, 
 because our tariff would then be fixed by definite arrange- 
 ments with our Colonies. 
 
 Conversely, if a tax on food be imposed for the 
 purpose of retaliation and negotiation, and at the same 
 time a preference to the Colonies be conceded, the pre- 
 ference will cease to have any practical value to the Colonies 
 in the event of agreement with a country like the United 
 States for a remission of the food tax in return for tariff 
 concession on their part. The food supplies of the United 
 States are so enormous that prices would fall to nearly 
 their old level. In practice, then, it will be found that these 
 two parts of the scheme are inconsistent with one another, 
 unless we are willing largely to increase the food taxes, and 
 to refuse preference to the Colonies in respect of part of 
 them. 
 
 The same considerations apply to the wider scheme 
 of a general scale of import duties on manufactured goods 
 averaging 10 per cent. The object of such duties is to 
 secure the home market to home manufacturers to a 
 moderate extent against foreign competition. It must be 
 obvious that such a policy cannot be confined to manu- 
 factures ; it must be extended at least to agricultural 
 produce. It is quite clear from demonstrations of 
 opinion among agriculturists that they will never support 
 a scheme of Protective duties on manufactured articles 
 unless an equivalent Protection be conceded to their own 
 products. If duties are imposed on all imports of manu- 
 factured goods averaging 10 per cent., it is clear that 
 landowners and farmers will insist with very plausible 
 arguments on duties at least as high on their own products. 
 How, then, can this be combined with a scheme of Colonial 
 preferences or with retaliatory duties on food which are 
 to be reduced or remitted when agreement is arrived at
 
 78 COB DEN CLUB'S REPLY. 
 
 with foreign countries for a reduction of their tariffs ? 
 If the time ever comes for the practical application of 
 Protection, it seems to be all but certain that Colonial pre- 
 ferences will be left in the lurch, or indefinitely postponed, 
 and a scheme for Protection all round upon manufactured 
 goods and food products will alone be proposed. Like 
 Aaron's rod, this scheme has swallowed up the others, 
 and practically alone holds the field ; though Mr. Cham- 
 berlain still proclaims his Colonial aspirations. 
 
 It is equally certain that if such a plan were adopted, 
 the duties then imposed could never in the future be the 
 subject of negotiation for the reduction of the tariffs of 
 other countries. If it is thought expedient to retaliate 
 as against other Powers, it will be found necessary to 
 impose temporarily still further duties on food for the 
 purpose. The temporary duties will then, in their turn, 
 become permanent, and we shall be drawn on step by step 
 to high Protective duties all round. 
 
 Let us now consider the financial bearing of the 
 scheme on the assumption that it can be brought into 
 operation as it stands, taking the duties on food as proposed 
 — namely, 2s. per quarter on corn and 5 per cent, on 
 meat and other products of the land, and duties on manu- 
 factured goods averaging 10 per cent. We must assume 
 also that prices of all kinds of food will be increased in 
 exact proportion to the duties on imports. 
 
 On this assumption the national exchequer will receive, 
 on the basis of the present supplies, about £6,000,000 in 
 the first year — namely, £3,300,000 on corn, £1,350,000 on 
 meat, £1,350,000 on dairy produce. The consumers in 
 this country, however, will have to face an increased price 
 of £8,171,000 on corn, whether imported or produced in 
 this country, of £3,975,000 on meat, and of £4,130,000 on 
 dairy produce — a total of £16,300,000, of which £5,950,000 
 will be paid into the Exchequer, £8,175,000 will go into 
 the pockets of farmers or landowners in this country,
 
 MR. CHAMBERLAIN'S SCHEME. 79 
 
 and £1,300,000 into the pockets of Colonial producers. 
 The six millions paid into the Exchequer will, it is said, 
 be used, as far as they go, in reducing the sugar duties 
 by one-half and the tea duties by three-fourths. On this 
 arrangement there will be a deficit of £2,800,000. 
 
 The import duties of 10 per cent, on manufactured 
 goods are calculated by Mr. Chamberlain to produce 
 fifteen millions a year, if the Board of Trade estimate of 
 the import of manufactured goods at 149 millions be 
 accurate. It is proposed to use this income in making 
 good the above deficit, and still further reducing the tea 
 and sugar duties and other taxes — presumably the in- 
 come tax. The 10 per cent, on manufactured goods will 
 increase the price of all home manufactured goods, not 
 possibly in all cases by the same proportion, because, 
 as already explained, the demand will be reduced ; but 
 still the increase of price all round will be considerable 
 - — not less than 5 to 8 per cent. — and as the home con- 
 sumption of manufactures is enormously greater than 
 the imported or exported manufactures, it follows that 
 the increased price paid by consumers in this country of 
 manufactured articles, whether imported or produced at 
 home, will assume immense proportions. It has been 
 estimated at from thirty to sixty millions. This will be 
 equivalent to a new tax on consumers. 
 
 What the effect of all this will be on the different 
 classes of the community it is not difficult to predict. Let 
 us consider first its consequences to those engaged 
 in agriculture. At first sight it might seem that a great 
 boon will be conferred on them. Eight millions a year of 
 increased price will be paid to them for their main products. 
 There is, however, much to be considered on the other 
 side of the account. Prices all round will be enhanced. 
 Everything that farmers require will be dearer by 10 per 
 cent, at least. Farm implements, machinery, clothing 
 for themselves and their families, will be dearer by
 
 8o COBDEN CLUB'S REPLY. 
 
 more than 10 per cent. The food of farmers, who do not 
 consume their own wheat or meat, will be increased in cost. 
 Feeding stuffs other than maize will be increased in cost. 
 Those who do not grow oats will have to pay more for 
 the keep of their horses. What the balance remaining over 
 will be after taking into account these higher charges 
 it is impossible to estimate. It is admitted, however, 
 that the duty of 2s. per quarter on corn will not be 
 sufficient to stimulate in any sensible degree the cultiva- 
 tion of corn and to cause the restoration of land laid down 
 in grass of late years to arable culture. Above all, the 
 agricultural labourers stand to lose all round. To them 
 Free Trade has been an unrestricted blessing. 
 
 It is generally stated by those conversant with the 
 subject that nothing less than a duty of ios. per 
 quarter on imported corn will have the effect of stimulating 
 its production to any considerable extent in this country. 
 In this view, therefore, there will be no increased demand 
 for labour in agricultural districts. It is not pretended 
 that the duty on meat and dairy produce will stimulate 
 their production in this country. There is already every 
 possible inducement. It may be doubted whether the 
 pasture lands of this country will carry a much larger 
 stock of cattle. One great and growing branch of agri- 
 cultural industry, that of milk production, which prac- 
 tically has no competition from abroad, will certainly 
 suffer from the proposed duties. Its expenses all round 
 will be increased without any prospect of higher prices 
 for milk. Market gardeners will also surfer in the same 
 way. It seems, therefore, to be improbable that the 
 proposed duties will effect any sensible change in the 
 position of agriculture. If any balance remains over in 
 the farmer's accounts after paying the increased price of 
 all his requirements, it will certainly find its way into 
 the landowner's pockets in the shape of rent. 
 
 What, above all, will be the effect of the scheme on the
 
 MR. CHAMBERLAIN'S SCHEME. 81 
 
 labouring people, especially in the agricultural districts ? 
 The hope and expectation of the framers of the scheme — 
 their pretence, we might rather say — is that it will pro- 
 mote manufactures by freeing them from competition and 
 by substituting home products for foreign products ; and 
 that in so doing it will give greater employment for labour. 
 But, on the assumption of the scheme, there will be greater 
 demand for labour in the towns, and as the agricultural 
 labourers will have to pay more for their food, clothing, 
 and other requirements, their money wages must be 
 increased at the expense of farmers' profits, or, if their 
 wages are not increased, the labourers will be worse off, 
 with the result that there will be still greater induce- 
 ment to them to leave the rural districts and to find work 
 in the towns. Farmers, therefore, will find it even more 
 difficult than now to keep their labourers. 
 
 It is contended, however, that the labourers, so far as 
 food is concerned, will be no worse off than at present, 
 inasmuch as Mr. Chamberlain has been pleased to promise 
 them relief from the sugar duties and tea duties in propor- 
 tion to the increased cost of bread, meat, and dairy pro- 
 ducts. 
 
 It should, however, be recollected that the sugar duties, 
 and also a part of tea, beer, spirit, and tobacco duties, 
 were imposed for the purpose of the late war in South 
 Africa. They are war taxes. The working classes have 
 a right to the remission of these taxes now that the war 
 is at an end. In our view, it is urgently necessary that there 
 should be speedy relief from these war imposts of indirect 
 taxation. We decline altogether to discuss the scheme on 
 the supposition that these taxes are to be considered as 
 a permanent addition to the burthens of the country. 
 We are asked, in effect, to treat the proceeds of them 
 as part of the permanent taxation, and to substitute for 
 them other taxes on food, on bread, meat, and dairy pro- 
 ducts, far more objectionable in their incidence and result.
 
 82 COBDEN CLUB'S REPLY. 
 
 These duties are to be so imposed under arrangement 
 with the Colonies as to be incapable of reduction or re- 
 mission. There can be no doubt that the duties on bread 
 and meat will have a far more deleterious effect on labour- 
 ing men and their families than those on tea and sugar. 
 
 In any case, clothing, boots, and shoes, and all the 
 other requirements of labouring men and their families, 
 will be increased in cost by the scheme. The advocates 
 of this measure must make up their minds whether it will 
 be followed by an increase of wages or not. If it means 
 an increase of wages, the agricultural interest, equally with 
 all other industries in the country, will find the cost of 
 production increased, and all prospect of increased profit 
 to farmer and of increased rent to landowners will dis- 
 appear. If, on the other hand, it means no increase of wages, 
 but, as we firmly believe, a decrease, it will follow that the 
 average condition of the labouring people, especially in 
 agricultural districts, will be deteriorated. If the rent 
 of land is increased, it will be at the cost of the labouring 
 people. 
 
 What, again, will be the effect of the scheme upon 
 our manufacturing industries ? Each trade, taken singly, 
 may hope and believe it will find advantage in Protection, 
 if confined to its own products, especially if the imports of 
 such goods bear a large proportion to the exports, and if 
 there is also a large demand for home consumption. It 
 might be that in such a case the gain from reduced imports 
 and from larger home sales would make up for any loss 
 arising from a reduction of exports due to higher prices. 
 It may be conceded, for instance, that farmers and land- 
 owners might gain by protective duties on corn and meat 
 if feeding stuffs were exempted, and if no other trade was 
 similarly treated. Profits and rents would rise at the 
 expense of the rest of the community, including the agri- 
 cultural labourers. In the same way a vast number of 
 other trades might welcome Protection if made peculiar
 
 MR. CHAMBERLAIN'S SCHEME. 83 
 
 to themselves. But it will be a totally different question 
 if there is to be Protection all round, Protection to food 
 of all kinds, Protection to the hundreds and thousands 
 of articles manufactured and imported. 
 
 Let us take the great cotton industry, one of the greatest 
 of our staple manufactures, importing cotton to the value 
 of forty millions, making it up into cotton goods valued at 
 100 millions, of which thirty millions are for home consump- 
 tion and seventy millions for export. As we import cotton 
 goods to the value of five millions only, mostly of special 
 kinds which we do not manufacture, the duty on such 
 imports will affect the cost of all manufactured cotton 
 goods very slightly, if at all. But a general scheme of 
 Protection all round will tell against this great industry 
 in a hundred ways, and will hamper it at every turn. 
 Flour, for instance, is a very important item in the manu- 
 facture. Dyeing and bleaching requisites, leather, iron 
 and steel, oil, tallow, and a hundred minor accessories 
 will all be raised in price. The aggregate will be 
 serious, will raise the cost of manufacture, will reduce 
 the very narrow margin of profit at which we can export 
 yarns and cotton cloth, and endanger our whole export 
 trade. It will be little short of madness to risk a vast 
 trade like cotton — one so highly exotic in the sense 
 that it depends for the whole of its raw material on foreign 
 countries — by increasing the cost of manufacture under 
 a general scheme of Protection. Above all, the rise in 
 price of food — the raw material of labour — will lower the 
 efficiency of the workmen. 
 
 There is, again, the case of the great iron and steel 
 industries, which, including all their branches, from the 
 raw mineral to such highly finished manufactures as 
 machinery and ships, has a turnover of 150 millions a 
 year. A number of separate but allied industries 
 are combined in this total. It is possible that each 
 one of these might desire Protection for its separate
 
 84 COB DEN CLUB'S REPLY. 
 
 speciality. The owner of iron ore might gladly see a 
 duty levied on Spanish or Swedish ore. The manu- 
 facturer of pig-iron might equally favour duties on German 
 imports. The makers of steel rails might desire duties 
 on imported rails. And manufacturers of machinery 
 might be pleased to see foreign-made machinery subject 
 to duties. But if one of these industries is to be protected 
 in this way, all must receive equal treatment, and the 
 general result will be an increased cost of production 
 all round and at each stage. This will tell with accumu- 
 lating force against the most highly finished articles, and 
 will most seriously reduce our export trade. 
 
 Our vast industry of the construction of ships and their 
 engines may be considered the culminating point of the 
 iron and steel industry. There cannot be a doubt that we 
 owe this and our great supremacy in numbers and tonnage 
 of steamships afloat to the low rate at which we can build 
 them and to the low price of every component part of 
 them. But the scheme of Protection all round, averaging 
 10 per cent., however the duties may be adjusted, will 
 raise prices at every point, and will enhance enormously 
 the price of the completed ship, and thus deprive us of 
 our great advantage over competing shipbuilders and 
 shipowners. It is an idle dream and a cruel delusion 
 that our great industries can gain and thrive under 
 such a system, and that employment for labour will be 
 increased. The very reverse will undoubtedly be the 
 result. We might go through all the other trades of the 
 country and draw the same conclusions. 
 
 Besides the increased cost of manufacture in particular 
 industries, there will be greatly increased taxation, due 
 to the enhanced charges on Government departments and 
 on local governing bodies. There must be a great addition 
 to the cost of the Army and Navy for food and clothing 
 of soldiers and sailors, and for war material of all kinds, 
 from cartridges to ironclads. The poor in the work-
 
 MR. CHAMBERLAIN'S SCHEME. 85 
 
 houses, the prisoners in jail, the lunatics in asylums, will 
 cost more for food and clothing. Taxes and rates will 
 consequently be greatly raised. 
 
 What, again, must be the effect of higher prices all 
 round on the vast body of persons living wholly or in part 
 on private means, the result of past savings, and on the 
 innumerable people with small fixed salaries, employing 
 perhaps one or two women servants ? Their expenses ol 
 living will increase at every point. Many may be com- 
 pelled to adopt a lower standard of living, and as a result 
 there may be less employment in domestic service. 
 
 With many of our industries and trades there- is 
 no foreign competition — the great coal industry, for 
 instance, giving employment to over 650,000 persons ; 
 the building trade with nearly 1,000,000 working men ; 
 the fishing industry with over 100,000 men. What will be 
 the effect on all these, and upon hundreds of other trades, 
 of permanent taxes on food, clothing, and all other 
 requirements of labour, and of increased prices for 
 machinery, house frames for builders, steam trawlers, 
 and all other requirements ? 
 
 When we think over the outcome of all this it is impos- 
 sible to believe that the labouring classes will obtain 
 greater employment. The reverse will undoubtedly be 
 the result. Our exports will be seriously handicapped by 
 the increased cost of all the items of manufacture. Vast 
 numbers of people will be compelled to curtail their ex- 
 penditure. Employment must inevitably be less. Wages, 
 instead of rising, will fall. 
 
 It is possible that by reducing the money wages of 
 labour to the German level, and by lengthening the hours 
 of work to the German standard, our manufacturers may 
 make up the difference caused by the rise in prices of their 
 materials. They may then compete again on equal terms 
 with their rivals on the Continent. But who can con- 
 template such possibilities ? What will the labourers say
 
 86 COB DEN CLUB'S REPLY. 
 
 to it ? How can the country as a whole gain ? We have 
 already called attention to the fact that in the last three 
 years there has been a serious increase of crimes against 
 property, of pauperism and vagrancy, and that other 
 grave symptoms have made their appearance, showing 
 increased pressure upon the lowest classes of the com- 
 munity. We believe this to be attributable to the greater 
 taxation of articles of consumption. These evils will be 
 intensified by the general rise of prices, which must in- 
 evitably result in a reduced standard of living and greater 
 pressure on these classes, and consequently a further 
 increase in the ratio of poverty and crime. 
 
 CHAPTER XIV. 
 
 RETALIATION. 
 
 Here are two of the many passages in which Mr. 
 Chamberlain expounds the policy of Retaliation : 
 
 " We will recover our freedom, resume the power of negotia- 
 tion, and, if necessary, retaliation (loud cheers), whenever our 
 own interests and our relation between our Colonies and our- 
 selves are threatened by other people." — Birmingham, May 15/A, 
 1903. 
 
 " There may be something wrong in my constitution, but 
 I never like being hit without striking back again. But there 
 are some people who like to be trampled on. . . I am not in 
 favour of peace at any price. . . I am not a Free Trader at 
 any price." — Greenock, October yth, 1903. 
 
 The above are good illustrations of the tone and temper 
 in which Mr Chamberlain proposes to approach other 
 1 owers, and commence negotiations on the delicate ques- 
 tions which must arise. They remind one of his many 
 unfortunate utterances on public platforms when dealing 
 with foreign questions. A rasping tongue is very effective
 
 RETALIATION. S 7 
 
 at a great popular meeting, but is a grave disqualification 
 in negotiations with other Powers. He has not told us 
 in what manner these threats are to be enforced. We 
 have been informed by Mr. Ritchie that no definite scheme 
 was suggested to the Cabinet, when the policy of retalia- 
 tion was discussed and decided on, and when four of its 
 members resigned. Then, as now, retaliation was vague 
 and indefinite. It would be difficult to state the objec- 
 tions to a policy of this kind more conclusively than in the 
 language used by Mr. Chamberlain himself on August 12, 
 1 88 1, when it was pressed upon the House of Commons 
 by the band of " Fair Traders." 
 
 " We are," he said, " to adopt a policy of Reciprocity and 
 Retaliation. But I want to know what are the precise steps 
 by which this policy is to be carried into effect. Hon. gentle- 
 men opposite do not agree among themselves. The hon. member 
 for Preston (Mr. Ecroyd) is the only speaker who has gone into 
 some, details. He said that it is the 1 duty of our working men 
 to make some sacrifice? in order to reconqueT the free and fair 
 trade which we have lost. There is no doubt about the sacrifice 
 which the working men would have to make 1 in order to adopt 
 the policy of the hon. gentleman. His view appears to be this — 
 and I do not say that there is not an appearance of justification 
 for it — we are' to retaliate on foreign countries by putting on 
 protective duties in order to induce them to take off the duties 
 which they new levy on our goods. The hon. gentleman appeared 
 to consider that his proposal was a temporary expedient to be 
 adopted with reluctance and regret, and to be abandoned as 
 soon as possible. But suppose foreign countries are not per- 
 suaded by the hon. gentleman or by his retaliatory policy to 
 take off their duties. How long is the experiment to last ? Is 
 it to be for five years or for 10 years or for 20 years, or for ever, 
 that the working classes are to be called upon to make the sacri- 
 fices which it is admitted will be entailed upon them ? Then, 
 again, on what goods are we to retaliate ? On which of our 
 imports are we to put duties ? That is a question of cardinal 
 importance, on which the advocates of Reciprocity ought to, 
 but do not, agree. . . I understand that if the foreigner charges
 
 88 COBDEN CLUB'S REPLY. ' 
 
 40 or 50 per cent, duty on English manufactures, the hon. 
 Member would retaliate by putting 10 per cent, on the manu- 
 factures of the foreigner. But the 1 hon. Member is altogether 
 inconsistent in such a proposal. He stands up as the advocate 
 of ' Fair Trade,' but does he not see that it is just as unfair 
 that there should be duties, say of 40 per cent, on one side 
 and 10 per cent, on the other, as if there were 30 per cent, on the 
 one side and none on the other ? Unless the duties imposed by 
 us are the same as those imposed against us, it is clear that 
 trade will not be fair, although it will no longer be free. But 
 there is another point. England is of all countries the most 
 vulnerable in this matter — that is to say that, in spite of, or 
 rather I am inclined to say in consequence of, the Protectionist 
 policy of foreign countries, we export a great deal more than we 
 import in the way of manufactures. . . . Commercial war 
 such as he (the hon. Member) proposes would do us more harm 
 than the foreigner, who might retaliate on our retaliation by 
 prohibiting or still further increasing his duties on our goods, 
 or even by putting a duty on the export of articles which we 
 do not produce for ourselves. I have already asked how long 
 the'se sacrifices are to be imposed on the working men — for 10, 
 for 20, or for 30 years ? [Mr. Ecroyd, No, no.] The hon. 
 Member only intends it as a temporary expedient, but the effect 
 of such a policy will be to foster weak industries unsuited to the 
 country, such, for instance, as those which existed in Coventry, 
 or at Bethnal Green, which even in the times of Protection 
 had only an unhealthy life, and which, when the time* of ex- 
 periment ceased, would be immediately destroyed, carrying 
 with them in their ruin the fortunes of all who had been tempted 
 by this mistaken policy to engage in them." * 
 
 Four years later, in 1885, at a great meeting in the 
 Birmingham Town Hall, Mr. Chamberlain put the case 
 still more forcibly against retaliation, and even suggested, 
 if we rightly understand him, that we ought to be grateful 
 to our competitors for their Protectionist policy instead 
 of threatening to retaliate against them. 
 
 " The doctrine of retaliation is put before) you by people 
 who are altogether ignorant of the character of your trade. 
 * See Hansard, 3rd Series, Vol. 264, p. 1800,
 
 RETALIATION. 89 
 
 They say to you, ' Foreign countries put a duty upon your 
 manufactures. What can be juster than that you should put 
 a duty upon theirs ? ' Well, if that were all, I should agree 
 with them that there is no injustice in it. We owe nothing 
 to these foreign countries, and if we could injure them without 
 injuring ourselves, and wanted to do so, the proposal would 
 be reasonable enough. But we cannot retaliate upon them 
 without running the risk of retaliation upon ourselves, which 
 would be very much worse for us than anything we could do 
 for them. It so happens that in spite of Protection — I am 
 inclined to say in consequence of Protection — we send more 
 manufactures to those Protectionist countries than they send 
 to us. Believe me, if their hands were free, if they were wisea 
 if they released trade altogether, they would be much more 
 serious competitors than they are now." 
 
 We have quoted these effective passages not for the 
 purpose of convicting Mr. Chamberlain of inconsistency. 
 That, indeed, would be a task of supererogation. We 
 have mentioned them because they ably state the diffi- 
 culties raised by his present vague and minatory language. 
 There is much that is plausible, specious, and taking in a 
 policy thus loudly proclaimed. It appeals to the pugnacious 
 instincts of Englishmen. It raises cheers at a public 
 meeting. But it does not conduce to practical business. 
 The main objection to it is the eminently practical one that 
 all past experience shows that it does not succeed in 
 achieving its object. In all the many fiscal disputes be- 
 tween different nations, scarcely one can be adduced in 
 which such a policy has succeeded in effecting a substantial 
 advance towards Free Trade between them. Though 
 there have been many cases where retaliatory wars have 
 been embarked on, they have only resulted in great losses 
 on both sides. They have ended, as a rule, in drawn 
 battles, and in a return to the state of things which led 
 to the battle. 
 
 As between two countries, both of which already have 
 very high protective duties, a war of this kind, though
 
 go COB DEN CLUB'S REPLY. 
 
 productive of mischief, is only an enhancement of evils 
 already existing. But in our own case, where for sixty 
 years we have enjoyed absolute freedom of trade, so 
 far as imports are concerned, it would be a very different 
 thing to embark on a course of this kind with some other 
 country which has long imposed exceptionally high duties 
 on imported manufactures. There is nothing in what has 
 occurred between other countries to warrant the conclusion 
 that any country with a high protective system would be 
 in the least degree induced to modify its policy and reduce 
 its tariff in consequence of threats on our part to impose 
 moderate duties on its exports. It has already been shown 
 that against the worst offenders — Russia and the United 
 States — retaliation would be futile and absurd, unless we 
 are prepared to put high duties on food. But high duties 
 on food are not to be thought of. If Germany, with 
 its highly " scientific " tariff, has been unable to obtain 
 from the United States or Russia favourable terms for a 
 reduction of tariffs, is it in the least degree probable that 
 we shall be more successful ? On this point it may be 
 worth while to recall the fact that under the Act of Con- 
 gress, which gave effect to what is called the Dingley 
 Tariff, authority was given to the President of the United 
 States to negotiate treaties with other Powers for a re- 
 duction of tariffs. A dozen such treaties were entered 
 into by the President and were laid before Congress, 
 but in no single case has that body agreed to give 
 its sanction. It will be the same in this country. If Pro- 
 tection all round, averaging 10 per cent., be adopted, it 
 is very certain that a combination of the interests con- 
 cerned will vehemently oppose any agreements with other 
 Powers for the reduction or removal of the Protective duties. 
 Not the least serious part of this proposal is the effect 
 it would have on the position of this country in respect 
 of its treaties with other Powers conceding to it " most- 
 favoured-nation " treatment. It is clear that from the
 
 " DUMPING." 91 
 
 moment we began to deal exceptionally with any single 
 Power, whether by retaliation or otherwise, for reciprocal 
 tariff immunities, we should lose the advantage of most- 
 favoured-nation treatment with all other Powers, and 
 our export trade would come under their general tariffs, 
 and be subjected to far higher duties than at present. It 
 will be a case of going further and faring worse. 
 
 CHAPTER XV. 
 
 " DUMPING." 
 
 It will be well to give Mr. Chamberlain's definition in 
 his own words : — 
 
 " What is dumping ? Dumping is the placing of the sur- 
 plus of a home manufacture in a foreign country without re- 
 ference to its original and normal cost. Dumping takes place 
 when the country which adopts it has a production which is 
 larger than its own demand. Not being able to dispose of its 
 surplus at home, it dumps it somewhere else. (Laughter.) Now 
 the United Kingdom is the only country where this process 
 can be carried on successfully, because we are the only country 
 that keeps open ports. All the other great countries protect 
 themselves against dumping by immediately putting on a 
 tariff, large or small, to keep out these dumped articles. The 
 peculiarity of the situation is that they are not sent in under 
 conditions of fair competition. They are surplus stocks, which 
 are being got rid of below cost price ; and, just as you rind 
 a great surplus sale of some gigantic emporium may have the 
 effect of ruining all the small shops in the neighbourhood, so 
 the surplus of the products of all the producing countries in 
 the world may very well ruin the trade of this country."— 
 Liverpool, October 27//;, 1903. 
 
 We are not surprised, in view of this very loose state- 
 ment—it can hardly be called a definition— that the 
 term " dumping " is frequently used at public meetings 
 
 G
 
 92 COBDEN CLUB'S REPLY. 
 
 as a term of abuse or a protest against any large 
 importations of foreign produce, coming into com- 
 petition with home produce, and lowering prices. It has 
 recently become a common expression among agricul- 
 turists to speak of the dumping of American corn in 
 this country. It is, however, an essential part of Mr. 
 Chamberlain's definition that the article " dumped " 
 is sold below its cost price. This, Mr. Chamberlain 
 admits, is done by people at home as well as abroad. 
 Whenever there is a sale of bankrupt stock, or a clearance 
 sale of surplus stock at very low prices, the goods may 
 be said to be dumped on the district at prices which may 
 seem to be unfair to other vendors in the district. 
 
 Cases also have occurred, not infrequently, it is said, 
 where manufacturers, desirous of obtaining a monopoly in 
 their trade, have dumped their goods at very low prices 
 in the neighbourhood of competitors in order to compel 
 them either to come into the combination or to drive them 
 from the business. This may be unfair competition, but 
 it is, perhaps, in the way of business. No one has ever 
 suggested that measures should be adopted to prevent 
 clearance sales or sales of bankrupt stock, or such other 
 transactions as we have described. 
 
 The dumping of foreign goods is of an analogous 
 character. The chief complaints are against Germany. 
 The system of Protection in that country has given rise 
 to numerous trusts, or cartels, which have created mono- 
 polies in certain branches of trade, and have greatly 
 raised prices. It often occurs, when their production is 
 greater than the demand in their own country, that they 
 find it better to dispose of their surplus stock by exporting 
 it, and getting what they can for it, rather than to lower 
 their prices to their home customers. 
 
 Mr. Chamberlain has fallen into two capital errors in 
 his description of dumping. In the first place he says 
 that ours is the only country to which dumped goods
 
 "DUMPING." 93 
 
 are or can be sent. If Mr. Chamberlain had taken the 
 trouble to make the most simple inquiries he would have 
 found that German goods have been dumped not only in 
 Free Trade countries like England and Holland, or in 
 Belgium with its low tariff, but also in highly Protected 
 countries such as Austria, Switzerland, and the United 
 States itself. Secondly, Mr. Chamberlain states that 
 all other great countries, if dumping takes place, 
 immediately put on a tariff, large or small, to keep out 
 these dumped articles. They do nothing of the sort. In 
 1900 Germany, so far from dumping, was importing much 
 iron and steel herself. In 1901 her home demand fell, and 
 she began to dump. Mr. Chamberlain cannot name one 
 single country, large or small, which put on special 
 duties to meet the German dumping. All of them, like 
 ourselves, took it " lying down." The cheap German steel 
 found its way into Holland and Belgium and Switzer- 
 land and Austria alike. America has taken enormous 
 quantities of it since 1900. The statement that we alone 
 failed to shut out cheap German steel is simply untrue. 
 
 It is further to be observed that Mr. Chamberlain 
 failed to produce a single case in which any industry has 
 been ruined or seriously injured by dumping within his 
 description of the process. It has already been shown in 
 the chapter on alleged ruined industries that dumping 
 was occasionally complained of, but the cases when in- 
 vestigated come to nothing. 
 
 We need not be surprised at Mr. Chamberlain's utter 
 failure to support his wild generalisations by reference 
 to concrete cases, for it is, of course, impossible to ruin a 
 country by giving it the right to change the products of 
 its labour for the best value the world has to offer. Mr. 
 Chamberlain, it should be noticed, makes no complaint 
 as to dumpings of surplus raw material ; indeed, he appears 
 to welcome importations of wool and ore and hides, how- 
 ever low in price, although they compete just like other
 
 94 COB DEN CLUB'S REPLY i 
 
 kinds of dumping with home producers. The fact is 
 that Mr. Chamberlain, in common with the crude Pro- 
 tectionists whose opinions he has borrowed since last May, 
 forgets that a large part of the articles manufactured at 
 home, and the greater part of the manufactures which we 
 import, are not purchased ^directly by the consumer, 
 but are bought by manufacturers for use as materials, 
 appliances, machinery, or plant in British industry. Iron 
 and steel " dumpings " are not bought by housewives, but 
 by manufacturers. This consideration disposes of the plea 
 that supplies of cheap manufactured or partly manufactured 
 goods should be shut out by tariffs. Cheap pig-iron, 
 which is manufactured and yet a raw material, should 
 no more be burdened with an import duty than cheap 
 so-called " raw " cotton, which has been picked and has 
 undergone the manufacturing process of ginning. In every 
 dumping bargain there is a buyer and a seller, and if it 
 suits an unfortunate German to sell iron or steel — a most 
 useful material — at a price below cost, it also suits someone, 
 say in Belgium, to buy it. The essence of such a transaction 
 is that Germany has taken the trouble to mine coal and 
 o e and limestone, has smelted the ore and produced useful 
 metal, and then has sold it for less than it is worth to 
 Belgium. Belgium takes the iron, and uses it as a material. 
 Finally it is consumed, either in a building or ship or 
 engine or boiler in Belgium, or it is sold to some third 
 country, or perhaps even to Germany herself, at a profit. If 
 anyone has just cause for complaint in such a case it is 
 not the country which benefits by the supply of cheap 
 German iron, but the German builder, engineer, or boiler- 
 maker who, under a Protective tariff, is compelled to pay 
 for his materials prices higher than these at which they 
 are sold abroad. 
 
 ■ Here is the evidence of the American Consul at Frank- 
 fort, from a report dated June 20th, 1903 : — 
 
 " German papers report that an English firm has been
 
 "DUMPING." 95 
 
 awarded the contract for a large gasometer by the city of 
 Copenhagen, being the lowest bidder — 53,185 dollars ; the low- 
 est German bid was 54,742 dollars. The curious part is that 
 the English firm intends to use German material, finishing it 
 in England. It will be bought in Germany at export prices, 
 which are about cost, or even less. The papers state that the 
 German manufacturers of gas reservoirs cannot purchase 
 their raw material in Germany as cheaply as foreign firms can, 
 and therefore cannot compete with English manufacturers." 
 
 Such facts as these should reassure Mr. Chamber- 
 lain's dupes. Exportation below cost price is not com- 
 petition to be feared, for it can only be temporary. We 
 are aware that it has been alleged that a systematic 
 attempt to ruin British industry has been made by 
 foreign " dumpers," but the allegation is entirely 
 unsupported by evidence. The view that the German 
 " dumping " of the past few years has been simply a case 
 of exportation through sheer weakness and depression 
 of the home trade is fully supported by an impartial 
 authority — the Board of Trade — which says, in the fiscal 
 Blue-Book : — 
 
 " It is, of course, easy to suppose a state of things in which 
 a cartel, or a combination of cartels, might deliberately 
 export at a low price, with the principal or the exclusive aim 
 of injuring, and ultimately of entirely ruining and bringing 
 to a close, a particular industry in a foreign country. But it 
 cannot be said that there is any clear evidence of such action 
 on the part of the German combinations, whose export policy 
 up to the present time appears to be mainly the result of supply 
 exceeding demand in the German domestic markets." 
 
 The fact is, of course, that the manufacturers cf no 
 country in the world sell more cheaply than they must. 
 Such goods as have been " dumped " in this country, in 
 America, in Holland, in Belgium, and in Germany itself, 
 during the past few years, have been forced sales by the 
 unfortunate Germans during a commercial crisis cf a
 
 96 COBDEN CLUB'S REPLY. 
 
 character to which we, in Free Trade England, are happily 
 strangers. 
 
 Lastly, if dumping be an evil, no remedy has been 
 suggested for it. It is quite clear that a duty of 10 per cent, 
 will not exclude dumped goods. It is probable that nothing 
 short of prohibition will effect the purpose. But who 
 is to decide when a remedy is needed, and for how long 
 it is to be applied, or how to discriminate between the 
 dumped goods sold at an unfair price and the same kind 
 of goods sold at fair prices ? We believe these questions 
 are insoluble, and that the wiser course is to treat such 
 transactions in the foreign trade with the same indifference 
 that we treat them in our home trade. 
 
 CHAPTER XVI. 
 
 COLONIAL PREFERENCES. 
 
 We have expressed the view that the scheme of Colonial 
 Preference has practically been shelved by the more popular 
 demand for Protection all round for home industries, with 
 which it is inconsistent if not antagonistic. But as Mr. 
 Chamberlain continues to insist on his Colonial policy, and 
 to assert that an offer has been made to this country by 
 the Colonies, it is necessary to deal with the subject shortly, 
 and without entering into the past history of Colonial 
 Preference and the reasons for its abandonment, and with- 
 out attempting to deal with the financial complexities 
 which it would entail. 
 
 It was on May 15th, 1903, that Mr. Chamberlain first 
 attached to the policy of Preference the more popular cry 
 of Retaliation against the foreigner. Seven months 
 elapsed, and on January 15th, 1904, Mr. Chamberlain 
 opened his so-called " Commission " with a speech in
 
 COLONIAL PREFERENCES. 97 
 
 which the " Imperial " aspect of the proposals is mentioned 
 last of all, and bald Protection is put in the foreground 
 as a policy which will fill our pockets. The transition has 
 been so rapid that it is difficult to believe that seven months 
 ago Mr. Chamberlain was clearly of opinion that a pre- 
 ference for Colonial products would involve " sacrifice " 
 on the part of the British taxpayer. In the speech of 
 May 15th the phrases " even at some present sacrifice," 
 and " community of sacrifice," showed that Mr. Chamber- 
 lain had not then brought himself to believe that import 
 duties were not paid by the consumer. Now we hear 
 nothing of " sacrifice." A combined policy of Protection 
 and Preference is to increase our gains. The earlier and 
 loftier appeal has been lost sight of. We have now, naked 
 and unashamed, the Protectionist appeal to greed, and 
 the advocates of taxed imports are everywhere imitating 
 Mr. Chamberlain in relegating the Empire to their 
 perorations. 
 
 But the Rake's Progress through Preference to Pro- 
 tection does not absolve us from reviewing the follies of 
 the preferential trading proposals. So far as their statis- 
 tical aspect is concerned we need but summarise the facts- 
 The figures relating to our imports from foreign countries 
 and British possessions respectively show that : 
 
 (a) Four-fifths of our imported food and two-thiids 
 of our imported raw materials are drawn from foreign 
 countries. 
 
 (b) Eighty per cent, of our import trade and 60 per 
 cent, of our export trade is transacted with foreign 
 countries. 
 
 (c) With our self-governing Colonies, to which alone 
 Mr. Chamberlain's proposals apply, we transact but about 
 one-seventh of our total seaborne trade. 
 
 These simple facts, which were placed before the public 
 in 1902, when Mr. Chamberlain first made his preferential 
 proposals, made it clear that a Colonial Preference was
 
 98 COBDEN CLUB'S REPLY. 
 
 impossible unless we were prepared to sacrifice the welfare 
 of our industries and population, in return for the dubious 
 advantage of a small rebate in Colonial duties on our 
 manufactures. We could not represent the folly of such 
 a scheme more clearly than did Mr. Chamberlain himself 
 when he said : — 
 
 $ 'This proposal (for Imperial reciprocity) requires that we 
 should abandon our system in favour of theirs, and it is in 
 effect that while the Colonies should be left absolutely free 
 to impose what protective duties they please both on foreign 
 imports and upon British commerce they should be required 
 to make a small discrimination in favour of British trade, in 
 return for which we are expected to change our whole system, 
 and impose duties on food and raw material. Well, I express 
 again my own opinion when I say that there is not the slightest 
 chance that in any reasonable time this country, or the Parliament 
 of this country, would adopt so one-sided an agreement. The 
 foreign trade of this country is so large, and the foreign trade of 
 the Colonies is comparatively so small, that a small prefer- 
 ence given to us upon that foreign trade by the Colonies would 
 make so trifling a difference — would be so small a benefit to 
 the total volume of our trade — that I do not believe the work- 
 ing classes of this country would consent to make a revolu- 
 tionary change for what they would think to be an infinitesimal 
 gain." 
 
 This is no utterance of twenty years ago. Mr. Cham- 
 berlain thus condemned Preferential Trading when Colonial 
 Minister, in a Unionist Government, on June 9th, 1896, 
 and when speaking on so important an occasion as the 
 Congress of Chambers of Commerce of the Empire. The 
 facts have not altered since 1896. The foreign trade of 
 this country is still so large, and the foreign trade of the 
 Colonies is still so small, that a small preference given us 
 by our Colonies must still be a trifling matter in relation 
 to the volume of our trade. 
 
 Speaking at Leeds on December 17th, 1903, Mr. Cham- 
 berlain said : —
 
 COLONIAL PREFERENCES. 99 
 
 " The opportunity has arisen to place what you please — or.e 
 brick, one cornerstone, one arch of the great edifice we wish to 
 rear. The opportunity has come from our Colonies. Our 
 Colonies have shown a general desire for reciprocal preference ; 
 they have made the offer to us. It is not Free Trade. I wish 
 it were, but it is an approach to it, and that is something." 
 
 This utterance is very disingenuous. It is not the 
 case that the Colonial preferences for British goods have 
 been propounded as part of a reciprocal bargain. From 
 the very first the idea of reciprocity was excluded. Speaking 
 at the Colonial Conference of 1902 Mr. Chamberlain said : — 
 
 " In 1897 I would remind you that the Premiers then unani- 
 mously undertook to consult with their colleagues, and to 
 consider whether a preference might not be given on their 
 Customs tariff for goods imported from the United Kingdom- 
 This was a proposal without any reciprocal obligation. It 
 was regarded by the Premiers at the time as a proposal that 
 might be made in consideration of the fact that the United 
 Kingdom was the largest and best and the most open market 
 in the world for all the products of the Colonies. 
 
 So that at the very first there was no question of re- 
 ciprocal obligation on our part. The matter is made even 
 clearer by the following passage from the same speech, 
 in which Mr. Chamberlain dealt with the disappointing 
 results of the Canadian preference. 
 
 " While I cannot but gratefully acknowledge the intention 
 of this proposal, and its sentimental value as a proof of good- 
 will and affection, yet its substantial results have been alto- 
 gether disappointing to us, and I think they must have been 
 equally disappointing to its promoters .... the total in- 
 crease of the trade of Canada with foreigners during the period 
 named, this is including both the trade subject to the tariff 
 and also the free trade, was 69 per cent., while the total in- 
 crease of British trade was only 48 per cent and the 
 
 net result which I desire to impress upon you is that, in spite 
 of the preference which Canada has given us, their tariff has 
 pressed* with the greatest severity, upon its best customers,
 
 ioo COBDEN CLUB'S REPLY. 
 
 and has favoured the foreigner, who is constantly doing his 
 best to shut out her goods. . . . The very valuable experi- 
 ence which we have derived from the history of the Canadian 
 tariff shows that, while we may most readily and most grate- 
 fully accept from you any preference which you may be willing 
 voluntarily to accord to us, we cannot bargain with you for 
 it ; we cannot pay for it unless you go much further and 
 enable us to enter your home market on terms of greater 
 equality." 
 
 Nor is it the case that anything has occurred since 
 1902 to justify Mr. Chamberlain's reference at Leeds to 
 a Colonial " offer." Canadian manufacturers are deter- 
 mined not to increase the Preference for British goods. 
 An official memorandum of the Canadian Government 
 of last year stated ; — 
 
 " The Canadian Government has been attacked by Cana- 
 dian manufacturers on the ground that the Preference is seri- 
 ously interfering with their trade. The woollen manufacturers 
 have been foremost in the attack, and they have made very 
 bitter complaints to the effect that the industry is threatened 
 with ruin through the severe competition from Britain brought 
 about by the operation of the Preference." 
 
 It then proceeded to disclaim any such intention on 
 the part of the Canadian Government. 
 
 Moreover, it is on record that the Canadian Finance 
 Minister, in a statement made to the Dominion Parliament 
 in April, 1903, remarked that at the time of the 1902 
 Conference, in London, Mr. Fielding frankly told the Colonial 
 Secretary that while his colleagues were prepared to 
 rearrange their tariff to give Great Britain a preference 
 over the foreign competitor, they were not prepared, as 
 between the British and the Canadian manufacturer, to 
 make any further reduction in their tariff which would 
 operate to the advantage of the former. 
 
 We have also before us the so-called New Zealand 
 preference scheme. We find it to be even less favourable
 
 COLONIAL PREFERENCES. 101 
 
 than that of Canada. The Canadian preference is at 
 least a reduction of duties in our favour. The New Zealand 
 scheme is that the old duties on British goods remain in 
 force, but that still higher duties are levied on foreign 
 imports. This, of course, is not a step towards Free Trade 
 within the Empire, but an increase in New Zealand Pro- 
 tection. The Protectionists of all the Colonies hold similar 
 views. The Canadian Manufacturers' Association aims at 
 increasing the tariff all round and then giving us a sham 
 preference by a larger fractional reduction of higher duties. 
 But, as Mr. Chamberlain so well said at the Colonial Con- 
 ference, " So long as a preferential tariff, and even a munifi- 
 cent preference, is sufficiently protective to exclude us 
 altogether from your markets, or nearly so, it is no satis- 
 faction to us that you have imposed even greater disabilities 
 en goods coming from foreign countries." 
 
 In Australia the Protectionist party holds views very 
 similar to those of Mr. Seddon in New Zealand. The 
 Victorian Protectionist Association affects to support Mr. 
 Chamberlain, but it recently resolved that : — 
 
 " Every tariff alteration made for this purpose (preference) 
 must be based on the principle that the Commonwealth pro- 
 tective duties continue to cover the difference between labour 
 cost of production in Australia and that in other parts of the 
 Empire, so that fiscal preference shall be by additional duties 
 upon imports from foreign countries." 
 
 Most significant of all, in the Commonwealth Parliament 
 Mr. Deakin, the Federal Premier, was asked, " Whether 
 Mr. Chamberlain is trying to deceive the British public, 
 and, if not, what ' offer ' has been made by the Australian 
 Government ? " 
 
 Mr. Deakin replied that he supposed Mr. Chamberlain 
 was probably thinking of the preferential trade resolutions 
 passed at the Colonial Conference. Mr. Reid then pointed 
 out that no offer was contained in those resolutions, where- 
 upon Mr. Deakin said : —
 
 102 COB DEN CLUB'S REPLY. 
 
 " The leader of the Opposition doubts the application of 
 the word ' offer ' to the resolution carried at the Colonial Confer- 
 ence, and therefore / tell the hon. member frankly that I know 
 of nothing that can be so construed." 
 
 If we have cause to be afraid of foreign competition, 
 if it is our duty to shut out imports, we cannot blame 
 British Colonial manufacturers because they decline to 
 be " open markets " or " dumping-grounds " for the British 
 manufacturer. If Protection is necessary to the welfare 
 of British industry, if we — old hands at manufacturing 
 as we are — need duties to save us from the foreigner, 
 our Colonies cannot be expected to ruin their adolescent 
 industries by neglecting to protect themselves from the 
 greatest exporting nation, the United Kingdom. As a 
 Free Trade country, thriving under a policy of free imports, 
 we can honestly and loyally advise our Colonies to lower 
 their tariff barriers, no less in their own interests than 
 in ours. As Protectionists, provided with an " average 
 10 per cent." tariff, expressly devised for the purpose of 
 securing the home market for British manufactures, and 
 of excluding foreign competition, we must admit that 
 our Colonies would do well to shut out British goods. 
 A return to Protection in the United Kingdom will mean, 
 therefore, a set-back to freedom of trade throughout the 
 Empire and throughout the world. 
 
 In conclusion, then, we have to point out the following 
 difficulties and objections to the scheme which seem to 
 us to be insuperable. 
 
 i. There is no offer of any kind from the Colonies. 
 2. There is no prospect whatever of the Colonies conceding 
 any substantial reductions of their existing Protective 
 duties, which are chiefly aimed against British manu- 
 factures. All we can expect of them is that they will 
 increase somewhat the duties on the manufactures 
 of other countries, leaving ours under the existing 
 high duties.
 
 COLONIAL PREFERENCES. 103 
 
 3. The Colonies will certainly not agree to any limitation 
 
 of their legislative independence in fiscal matters. 
 Any scheme, therefore, in the direction now proposed 
 will bind this country and not our Colonies. It will 
 prevent our repealing or reducing the taxes on food, 
 no matter how detrimental we may find them, unless 
 we are prepared for a quarrel with all our Colonies. 
 
 4. The scheme will be most unequal in its operation, con- 
 
 ceding enormous advantage to New Zealand, nothing 
 at all to South Africa, and little to Australia, unless 
 raw produce be taxed as well as food. 
 
 5. The Canadians evidently expect that preference will 
 
 be given not only to their food importations, but 
 
 to the manufactures imported to this country. We 
 
 may therefore expect that bounty-fed iron and steel 
 
 and other manufactures will be dumped upon us in 
 
 lieu of, or as well as, German products. 
 
 Under these conditions, it seems to us that the scheme 
 
 is attended by so many difficulties and dangers that so 
 
 far from tending to unite and consolidate the Empire it 
 
 will have the opposite effect. It will give rise to disputes 
 
 and jealousies and recriminations not unlike those which 
 
 caused the severance from England in the eighteenth 
 
 century of her North American Colonies. 
 
 It may be well here to quote from a speech of Sir Wilfrid 
 Laurier, the Canadian Premier, delivered on August 16th, 
 1897, in acknowledging the Cobden Club medal : — 
 
 " I was a Free Trader," he said, " before I came to England. 
 I am still more a Free Trader, having seen what Free Trade 
 has done in England. It is true the dream of Cobden has not 
 been realised. You have what is sometimes, I believe, in this 
 country termed one-sided Free Trade. It is true it is one-sided, 
 but the advantage is not for those nations who have not adopted 
 Free Trade. The impression which I have gathered from what 
 I have seen in Europe is that England has nothing to fear 
 for her commercial supremacy so long as she has ' one-sided
 
 104 COBDEN CLUB'S REPLY. 
 
 Free Trade.' In Canada we can do no better than follow the 
 example thus set us. There are parties who hope to maintain 
 the British Empire on lines of restricted trade. If the British 
 Empire is to be maintained, it can only be upon the most absolute 
 freedom, political and commercial. In building up this great 
 Empire, to deviate from the' principle of freedom will be to so 
 much weaken the ties and the bonds which now bind it to- 
 gether." 
 
 CHAPTER XVII. 
 
 PROTECTION OR FREE TRADE IN INDIA. 
 
 Mr. Chamberlain's speeches have been remarkable not 
 only for what he has said, but for what he has left unsaid 
 — for his silence on topics the elucidation of which is 
 most necessary before we adopt his policy and his scheme. 
 
 Chief among subjects omitted is India. What does 
 he propose as regards that great dependency of the 
 Crown ? The British Government has hitherto insisted 
 upon Free Trade between India and this country, and 
 between India and other countries. If duties have been 
 imposed by the Indian Government on imports of cotton 
 goods for revenue purposes, the British Government, at 
 the instance of the Lancashire cotton manufacturers, has 
 insisted upon a corresponding Excise duty on the manu- 
 facture of cotton goods. This has prevented the import 
 duties operating in the direction of Protection to native 
 industry, to the detriment of the cotton manufacturers of 
 Lancashire. 
 
 This Free Trade policy has been enforced in oppo- 
 sition to the wishes of the native races in India, who 
 are generally Protectionist in their views. It has been 
 strongly opposed by those interested in Indian cotton 
 mills, which already form a great industry, largely supported
 
 INDIA AND PROTECTION. 105 
 
 by British capital, and have monopolised certain branches 
 of the trade to the exclusion of British goods. 
 
 The difficulty as to India has been ably stated by Sir 
 John Gorst, whose experience at the India Office gives 
 weight to his opinion. 
 
 " In British India there were native manufacturers of cotton 
 goods, and if a general Protective system was established in 
 this country, how could we refuse to allow a similar system to 
 be established in India ? When he was Under-Secretary in 
 India, under Lord Cross, they were perpetually appealed to by 
 the Indian cotton manufacturers to give them Protection for 
 their budding industries ; but the answer they made was that 
 England was a Free Trade country, that we had satisfied our- 
 selves that Free Trade was the most advantageous system 
 for our own country, and that we were therefore giving to 
 India, in compelling her to be a Free Trade country, the very 
 benefits which we conferred on our own people." * 
 
 The same view has also been put forward by Mr. Lai 
 Mohun Ghose in his recent Presidential address to the 
 Indian National Congress : — 
 
 " I am myself," he said, " a staunch believer in the doctrine 
 of Free Trade. But whatever my individual opinion may be, 
 I am aware that a large body amongst my countrymen is in 
 favour of Protection as regards our own industries. And, having 
 regard to the fact that so many of our flourishing industries 
 were deliberately killed by murderous Excise duties, Free 
 Trader as I am by principle, I have scarcely the heart to oppose 
 my fellow-countrymen when they ask for Protection on behalf 
 of all native industries. I shall therefore ask one question of 
 Mr. Chamberlain and his followers. If you succeed in deluding 
 the people of England and inducing them to adopt a suicidal 
 policy, what answer will you return to our people when they 
 desire their industries to be protected against Lancashire ? " 
 
 What answer indeed can be given to this ? How can 
 we refuse the same measure to India which we think good 
 for ourselves ? Will it be possible to maintain the Excise 
 
 * Sir John Gorst at Preston, January 4th, 1904.
 
 106 COB DEN CLUB'S REPLY. 
 
 duties on cotton manufactures in India ? Duties on all 
 British manufactured goods will probably be raised, or 
 imposed for the first time, in order that the salt tax and 
 other burthens on the Indian people may be reduced. 
 What will then be the position of Lancashire ? Nearly 
 one-third of its total production of cotton goods is now 
 exported to India. This is equal to the whole of the 
 home consumption. There can be no doubt whatever 
 that the removal of the Excise duties on cotton manu- 
 factures in India, and the imposition of fresh import duties 
 there, will spell ruin to the cotton trade in this country. 
 Why, then, raise this most embarrassing and dangerous 
 question ? So long as we maintain the principle of Free 
 Imports to Great Britain we are justified in imposing it 
 throughout the Empire — that is, on those dependencies 
 which are under the control of the British Parliament. 
 But if we return to Protection it will be impossible to 
 force an opposite principle on unwilling dependencies. 
 
 CHAPTER XVIII. 
 
 CONCLUSION. 
 
 We have now completed our work of analysing and criti- 
 cising the main statements and arguments of the great 
 prophet of fiscal and commercial reaction. There is much 
 of a personal character in the speeches which we are tempted 
 to deal with — such as the egotism which everywhere 
 reveals itself in the speaker, his boastful reference to his 
 past efforts (for the most part futile) on behalf of the 
 labouring classes, his contemptuous language in referring 
 to many of his late colleagues, his refusal to withdraw 
 the charge against the Cobden Club that it is supported 
 by the money of its foreign members in the interest of
 
 CONCLUSION. 107 
 
 their own countries — though he has been officially in- 
 formed that it is not true. This charge comes with pecu- 
 liarly bad grace from the mouth of one who is supported 
 in his agitation by large funds from contributors who 
 dare not publish their names. These are materials which 
 invite comment and rejoinder. We have, however, thought 
 it best to confine our present criticism to his versions of 
 history and of recent facts bearing on his policy. 
 
 If we have omitted reference to many mis-statements 
 it is not because they differ in quality from those we have 
 dealt with, but because we have not thought it well to 
 fritter away the space at our disposal on minor points 
 when so many larger questions are in the field. We under- 
 take to say, however, as a summary of the speeches and 
 all their contents, that the historical references in them 
 are unfounded and untrue, and that, looked at as a whole, 
 they are a travesty of history ; that the quotations from 
 Adam Smith, Cobden, Mill, and Gladstone are unfair, in the 
 sense that they have been culled without regard to their 
 context, and convey meanings the opposite to those which 
 were intended ; that the figures and statistics given in 
 the "speeches are grouped together in so deceptive and 
 unscientific a manner as to be worthless supports for 
 any argument ; that his illustrations of ruined in- 
 dustries are with rare exceptions unfounded or grossly ex- 
 aggerated ; that his conclusions are unsound and untrust- 
 worthy ; and that his scheme — or, rather, bundle of schemes 
 — is unworkable as a whole, inconsistent, and antagonistic 
 one part with the other, and that it will necessarily de- 
 generate into one of pure Protection all round. 
 
 There can be little doubt, when the speeches are exam- 
 ined as a whole, that the original motive was the Imperialist 
 ids a of connecting the Colonies with the Mother Country 
 in some kind of fiscal union, but that, as time passed 
 and the tone and temper of the meetings developed, the 
 speaker was induced, by lack of popular enthusiasm for 
 H
 
 108 COBDEN CLUB'S REPLY. 
 
 this project, to embark on the wider and very different 
 policy of Protection to home industries. At first this 
 was proposed under the thin disguise of a policy of Re- 
 taliation and Reciprocity. But later this disguise was 
 thrown off, and Protection pure and simple was preached. 
 
 A comparison between the two speeches at Birming- 
 ham, the one on May 13th, the other on November 4th, 
 after little more than five months, will show how far Mr. 
 Chamberlain had travelled in the interval. At the former 
 he said, with reference to some topic he was urging : 
 "We are all Free Traders. (Cries of No, no, and laughter.) 
 Well, I am. ... I am perfectly certain I am not a 
 Protectionist." By the time he had reached Birmingham 
 again, no one who reads his speech can doubt that he 
 had become a full-fledged Protectionist. 
 
 For the purpose of this change of front, and on behalf 
 of his new policy, it was necessary to invent some plausible 
 justification. Hence his new version of history before 
 and after 1846 ; hence also his distortion of figures and 
 facts to fit in with his new theories and schemes. 
 
 We have been compelled then to devote a great part 
 of this reply to proving it to be untrue that England was 
 enjoying prosperity before 1846, or that the high price 
 of food had nothing to do with the adoption of Free Trade ; 
 untrue that Free Trade was only adopted in consequence 
 of the promises of Cobden and others that other nations 
 would follow our example within a few years, or, if they 
 did not, that they would be ruined ; untrue that the prices 
 of corn did not fall in consequence of the Repeal of the 
 Corn Laws ; untrue that the prosperity which followed 
 the adoption of Free Trade was not due in a large measure 
 to that cause ; untrue that a great distinction is to be 
 drawn between the condition of the country and its trade 
 in the last thirty years as compared with the first twenty- 
 five years after Free Trade ; untrue that the trade of the 
 country has been stagnant during the latter period.
 
 CONCLUSION. 
 
 109 
 
 We confidently maintain that, having regard to the 
 great fall in price of almost all commodities during the 
 last thirty years, and to all the indications of the course 
 of trade, the increasing wealth of all classes, the rise of 
 wages of labourers when estimated in money and what 
 can be obtained for the money, the reduction of pauperism 
 and crime, the progress of the country during the thirty 
 years which followed 1871 has been relatively as great as 
 in the first twenty-five years after Free Trade, and that 
 this has been very largely due to the adoption of that 
 principle. 
 
 We have admitted that other countries — and especially 
 the United States and Germany — have also made great 
 progress in the interval, in spite of the fact that they have 
 pursued an opposite fiscal policy — one of high tariffs and 
 Protection. As regards Germany, this course has been 
 attended by the very evils which the abolition of the Corn 
 Laws in this country was intended to cure and did cure — 
 namely, low rates of wages to labourers, coupled with 
 high prices of food. These conditions, together with long 
 hours of work, supported by immense efforts in the direction 
 of scientific industrial education, have enabled that country 
 greatly to increase its export trade, and in some few branches 
 to meet this country on favourable terms. As regards 
 the United States, which is the greatest of food producers, 
 the system of protection has not affected the price of food 
 for its labouring people, but it has been attended by other 
 evils, tariff-bred monopolies and trusts, and political cor- 
 ruption. 
 
 We believe, then, that the action taken by Peel, in 1842, 
 1844, and 1846, of removing protective and preferential 
 duties on imports, was wise and beneficent in the highest 
 degree. Experience had shown the absolute inutility of 
 negotiations based on retaliation and reciprocity. 
 
 Whatever arguments prevailed with these statesman 
 and with the country in the past are far stronger at the
 
 no COBDEN CLUB'S REPLY. 
 
 present time against reverting to the old system. It is 
 one thing to cast aside old garments to which use has 
 made us accustomed and to don new ones. It is quite 
 another thing to revert to the long disused rags of the 
 past. 
 
 Once embarked on a voyage to Protection under the 
 promise that the duties will be small, and will be little 
 felt, we shall soon find that the same winds will drive the 
 craft much farther. It will probably be found that the low 
 duties do not effect their purpose. Arguments now used 
 for a 2s. duty on corn will be urged for another rise, and 
 so on, and so on. The promises of Mr. Chamberlain on 
 this point will be worthless against the forces which 
 will urge the country backward, even if the past history 
 of his pledges were more encouraging. 
 
 But not the least serious part of the danger is the 
 political one. Hitherto the British Parliament has pre- 
 served a reputation for purity greater than that of any repre- 
 sentative assembly in countries under Protection. Under 
 the new system, pressure will be brought to bear upon 
 successive governments by powerful interests for adjust- 
 ments of the tariff. This will introduce a new and danger- 
 ous element into political life. Tariffs will be arranged 
 to meet the views of political friends, or to disarm opponents. 
 Already we see a commencement of the process. Duties 
 are not to be imposed on imported maize, though on every 
 other kind of inferior corn and feeding stuffs. Two powerful 
 interests are to be appeased by this — the Irish and the 
 farmers. Duties are to be heavier on flour in order to pro- 
 mote the trade of milling. The existing evil of special in- 
 terests, such as those represented by dockyard members, will 
 be multiplied, and Parliament will become as corrupt as 
 any representative assembly in Protective countries. 
 
 We hold, then, that the policy which is embodied in 
 Mr. Chamberlain's scheme will spell ruin to much of our 
 industry, and degradation to our political system.
 
 CONCLUSION. in 
 
 In saying this it must not be inferred that we are satis- 
 fied with the existing state of things and with the future 
 prospects of the country. There are existing conditions 
 which may well cause misgiving and alarm for the future. 
 The chief and most serious is the enormous growth in 
 the expenditure of the country during the last few years, 
 and especially that on the two great military departments. 
 This was pointed out two years ago by Lord Welby in 
 the House of Lords. Lord Salisbury, in reply, com- 
 mended Lord Welby's speech to the nation, but added, 
 " Who are we that we should attempt to stem the tide ? " 
 There has been an increase during recent years of 40 millions 
 on these services alone in the annual votes. In addition 
 to this, millions are being spent out of borrowed money in 
 every part of the world on permanent military and naval 
 works. We have also during the last three years added to 
 our public debt about 200 millions for the war in South 
 Africa. Consols have fallen from 114 to 87, and the 
 credit of the country is seriously impaired. The burthen, 
 however, resulting from the war, and the interest of the 
 debt raised for it, are nothing in comparison with the in- 
 crease of the annual expenditure, which has become greater 
 than that which any other country has to bear in propor- 
 tion to its population. Our commercial competition with 
 other countries is undoubtedly hampered by the taxation 
 necessary to meet this enormous expenditure. 
 
 It will be recollected that the sequence of policy in 
 1842 and succeeding years was, first, the adoption of Free 
 Trade ; secondly, the substitution of direct taxation for 
 indirect taxation in the shape of duties on food and every 
 other article of import ; and thirdly a considerable reduction 
 of military expenditure. We are now urged to reverse the 
 procedure. Military expenditure has already been enor- 
 mously increased. It is proposed to raise the necessary 
 funds by indirect taxes on food and manufactured articles, 
 and as a consequence to re-embrace Protection. We may
 
 H2 COBDEN CLUB'S REPLY. 
 
 be certain that the grave symptoms which existed before 
 1842 and 1846 will reappear. Trade and manufactures will 
 not increase, but will fall off. Money wages will not rise, 
 but will fall. Food being dearer and wages being less, the 
 average condition of the labouring classes will deteriorate. 
 Crime and pauperism will increase. 
 
 Instead of following the advice given by Mr. Cham- 
 berlain to reverse our fiscal policy and to provide funds for 
 maintaining our present expenditure, the far wiser course 
 will be to reduce greatly our expenditure, to remove the war 
 taxes which already weigh heavily on the labouring classes, 
 and to substitute for wasteful expenditure on armaments an 
 outlay to equip the country better for meeting the com- 
 mercial competition of the world. The danger of the 
 policy recommended to us and the better alternative 
 policy have never been better explained than by the Hon. 
 G. H. Reid, the leader of the Free Trade party in the 
 Australian Parliament : — 
 
 " When the day arrives," he said, " that England can only 
 maintain her trade by artificial preferential tariffs, on that 
 day England is doomed. A time may arrive when England 
 must place tariffs around herself, but they will be the very last 
 ditch on which a defeated nation attempts to defend herself 
 against conquering foes. England gained her supreme com- 
 mercial position, not by barricading her ports, but by proving 
 herself superior in technical skill, in manufacturing utility, in 
 knowledge,- in business habits. She must ultimately rely on 
 these weapons for her success if she is to retain her high com- 
 mercial position. Technical education, improved methods of 
 production, the study of foreign requirements, the adaptation 
 of goods, are the weapons with which England must fight if she 
 is to hold her own."
 
 APPENDIX. 
 
 To illustrate the comparative progress of the country in 
 the twenty-five years immediately succeeding 1846 and 
 the following thirty years (see Chapter VIII.). 
 
 The figures are taken from the Board of Trade Memo- 
 randum. Except in the case of the four first items the figures 
 do not go further back than the year 1854. 
 
 Average prices of principal 
 articles according to index 
 numbers of Sauerbeck and 
 Board of Trade, those of 
 1871 being taken at 100 ... 
 
 Price of wheat per quarter... 
 Pauperism : 
 
 No. of Paupers (England and 
 Wales) 
 
 Rated per 100 of Population 
 
 Average Wages of Agricul- 
 tural Labourers in England 
 and Wales ... 
 
 (From Board of Trade Memo- 
 randum, p. 269.) 
 
 Number of Emigrants from 
 United Kingdom 
 
 Rated to Population 
 
 Deposits in Trustees' Savings 
 Banks and Post Office ... 
 
 Railway Traffic : 
 No. of Passengers 
 
 1846. 1871. 1901. 
 
 95 
 
 100 
 
 So 
 
 55S. 
 
 55s. 
 
 27s. 
 
 1,330,000 . 
 
 .. 1,037,000 . 
 
 781,000 
 
 7 
 
 A'z 
 
 2"2 
 
 1854. 
 
 1871. 
 
 I90I. 
 
 9s. 4d. 
 
 12s. id. 
 
 . 14s. 7d. 
 
 267,000 
 
 192,000 
 
 .. 171,000 
 
 097 
 
 0-65 
 
 0*42 
 
 £ Mils. 
 
 £ Mils. 
 
 £ Mils. 
 
 33'7 
 
 • 55-8 
 
 l9-'4 
 
 Mils. 
 
 Mils. 
 
 Mi s. 
 
 Hi 
 
 375 
 
 1,172
 
 ii4 
 
 APPENDIX. 
 
 
 
 
 1854. 
 
 1 871. 
 
 1 901. 
 
 Railway Receipts : 
 
 £ Mils. 
 
 £ Mils. 
 
 £ Mils. 
 
 Passengers 
 
 I0'2 
 
 20'6 
 
 46-6 
 
 Goods 
 
 10* 
 
 26-5 
 
 53* 
 
 
 Mils. 
 
 Mils. 
 
 Mils. 
 
 Coal Production (tons) 
 
 65 
 
 117 
 
 . 219 
 
 Iron Production (tons) 
 
 3*1 
 
 5'6 
 
 .. 87 
 
 
 Mils. 
 
 Mils. 
 
 Mils. 
 
 Imports Cotton (cwts.) 
 
 6-8 
 
 127 
 
 • i6-3 
 
 Do. Wool (lbs.) ... 
 
 8o- 
 
 I84-5 
 
 393'9 
 
 Ships Built for British 
 
 
 
 
 Owners : 
 
 Tons. 
 
 Tons. 
 
 Tons. 
 
 Sailing Vessels 
 
 132,000 
 
 56,000 . 
 
 54,000 
 
 Steam do. 
 
 64,000 
 
 297,000 . 
 
 720,000 
 
 Total Tonnage ... 
 
 196,000 
 
 353»°oo 
 
 774,000 
 
 Ships Registered in United 
 Kingdom 
 
 Value of Net Imports (given 
 in Trade returns) 
 
 Value (corrected by Index 
 No. of Sauerbeck's Table) 
 
 Value of Exports of British 
 Produce (Values from 
 Board of Trade returns) ... 
 
 Value (corrected by Index 
 No. of Sauerbeck's Table) 
 
 Estimated Profits on Foreign 
 Investments 
 
 3,515,000 
 
 ... 5,690,000 
 
 ... 9,608,000 
 
 Mils. 
 
 Mils. 
 
 Mils. 
 
 152 
 
 W 
 
 523 
 
 190 
 
 33i 
 
 657 
 
 +97 
 
 223 
 
 271 
 
 t 116 
 
 223 
 
 339 
 
 
 £ 
 
 % 31,890,000 
 
 £ 
 ... 62,530,000 
 
 1850. 
 
 t 1856. 
 
 t 1682-3. 
 
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