'**JViV<%%% «^4W4N 

 
 THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES
 
 TARIFF AND TRADE.
 
 K.cJ^^ Ovc<2-<iVv^A 
 
 TAR I FF 
 
 AND 
 
 TRADE- 
 
 - ■-^;,OALU^^'-^" 
 
 J. W. ROOT 
 
 Subscribers' lEMtion 
 
 HALF A GUINEA NETT 
 
 LIVERPOOL 
 ALLOTT, JONES & CO., Bixtkth Street 
 
 1897
 
 PRINTED BY 
 
 MORRISON AND GIBB LIMITED 
 
 EDINBURGH 
 
 [A// rights reser'-iiedP[
 
 PREFACE. 
 
 <U> 
 
 ^ Trade economics are constantly assuming greater 
 
 I— . . . . 
 
 ^ importance in commercial countries and among 
 
 ^ industrial communities. Never, perhaps, have 
 
 EE theories been so utterly at variance as at present, 
 
 and never have the respective sides been so 
 
 determinedly and so fiercely championed. The 
 
 outcome is very often more dust than anything 
 
 else, and issues are obscured instead of being 
 
 made plain. The practical business man abjures 
 
 economics because they are apparently so contra- 
 
 2 dictory to realised facts, and the economist 
 
 immediately proceeds to construct new theories 
 
 u to account for the facts. 
 
 Though I have been a close student of political 
 economy, I make no claim to be regarded as an 
 expert in the science. Rather do I ask the atten- 
 tion of my readers on the ground that what I have 
 written is based largely on observation during an 
 active business career, and I have endeavoured 
 g throughout the following pages to make my 
 S meaning plain to those engaged in similnr occu])a- 
 ^ tions, and not to evolve new and abstruse problems.
 
 iv PREFACE 
 
 There are plenty of these as it is, and in pursuing 
 my work they have crossed my path at every turn. 
 I have never burked them, but sought always to 
 provide some sort of solution, though I must expect 
 that a few of them at anyrate will be challenged. 
 One consequence has been that this volume has 
 assumed larger dimensions than I originally intended, 
 and I can only trust that what it has gained in size, 
 will not be lost in any interest it may evoke. 
 
 An author dealing with such a subject is beset 
 by innumerable difficulties. The free use of statistics 
 is absolutely necessary, and there are few w^eapons 
 more dangerous, or more likely to be turned against 
 those who handle them. Reference to page 364, or 
 to the second footnote on page 283, will show how 
 utterly unreliable they may be. Anyone who has 
 to analyse large masses of figures emanating from 
 different sources, is liable to be completely be- 
 wildered, and so frequently are they contradictory, 
 that they may be made to prove almost anything. 
 I wish it to be distinctly understood therefore, that 
 in no single instance have I used statistics favourable 
 to my case, well knowing them to have been pro- 
 duced by exceptional circumstances. I have always 
 availed myself of the latest obtainable, provided 
 they came from reliable sources, and whenever I 
 have departed from this, I have given definite
 
 PREFACE V 
 
 reasons for so doing. Moreover, I have rarely 
 based my arguments on statistics, rather have I 
 used the statistics to illustrate the arguments. 
 Differences of ten or twenty per cent, in the former, 
 will merely intensify or diminish the force of the 
 latter, but will not destroy them. In more than 
 one instance where a leo^itimate choice has been 
 presented to me, and where my contentions have 
 been overwhelmingly borne out, I have deliberately 
 selected the least favourable. So far therefore from 
 dreading criticism of the figures I have given, I 
 confidently invite my readers to compare them with 
 those of succeeding or preceding years, provided 
 always the conditions of such comparison are fair. 
 
 I have not troubled readers with footnotes 
 giving the authorities for statistical and other 
 information. I will simply say here that my 
 sources have been principally official, and, in 
 addition to the various abstracts published by the 
 English Board of Trade, I have had frequent re- 
 course to the official publications of other countries, 
 while occasionally I have been favoured with the 
 inspection of private documents. Now and again I 
 have availed myself of unofficial material, but never 
 when its })ublication has been for purely contro- 
 versial purposes. 
 
 I take this opportunity of expressing my in-
 
 vi PREFACE 
 
 debtediiess and heartfelt thanks to all who have in 
 any way rendered me assistance, by placing docu- 
 mentary and other matter so freely and unreservedly 
 at my disposal, without which it would have been 
 impossible to produce this work. In one or two 
 instances, probably the worst return I could make 
 for their kindness, would be to refer to them by 
 name, and I abstain therefore from mentioning any 
 individually. I shall take care however that this 
 public acknowledgment is brought to their notice. 
 
 J. W. K 
 
 \si Septemler 1897.
 
 CONTENTS. 
 
 CHAPTER I. 
 
 The Purposes of Tariff. page 
 
 Beginnings of English Tariff : — Insidious Operation — Indifference of 
 Taxpayers. Revenue : — Influence on Value — Indirect Taxation 
 a Necessity — Principles which should regulate it — Temptations 
 to depart from them — Stimulus to Home Production — The 
 Taxation of Great Communities. Morality : — Checks on Over- 
 indulgence — Limits to which they can be imposed — Public 
 Opinion — Duties and Licences. Protection : — Primary Basis — 
 Uncertainty of Revenue Returns — Conflict between National and 
 Private Interests — Demands for Frequent Revision — Resulting 
 Disturbance to Trade — Restriction of Benefits— Logical Issues — 
 Revenue and Protection an Impossible Combination, . . . 1-25 
 
 CHAPTER II. 
 
 Infant Industriks. 
 
 The Growth of Primitive Manufactures— The Conditions Necessary — 
 Coal and Iron — Textiles — Impatience of Settlers — Natural 
 Advantages of the United States — Wages — Their Gradual Equalisa- 
 tion on the Two Continents — Rapidity of American Expansion — 
 Europe unable to cope with it — Industrial Development in 
 Germany — Former Conditions in Great Britain — Protection 
 really confined to Agriculture — Expansion following Repeal 
 of the Corn Laws — Natural and Artificial Stimulus, . . . 26-42 
 
 CHAPTER III. 
 Taxing the Foreigner. 
 
 Antipathy to Taxation — Value of Natural Monopolies for Revenue 
 Purposes. Export Dutikh : — Nitrate of Soda — Sugar — Mint 
 Seigniorage on Mexican Dollars — United States Wheat— Cotton —
 
 CONTENTS 
 
 PAGE 
 
 British Salt and Coal— Textile Machincrj'. Import Duties : — 
 French Wheat — Analogy to United Kingdom — The Steel Rail 
 Pool in America — Trusts — Antagonism of Free Trade to Trusts — 
 Influence of Protection on Price — Incidence of Revenue Duties — 
 Price versus Market Value, 43-64 
 
 CHAPTER IV. 
 
 The British Tariff. 
 
 Customs and Excise Revenue — Antiquated Nature of Existing Tariff 
 — Spirit Duties — The Beer Duty — Wine — Tobacco — Cigars — A 
 Neglected British Industry — The Breakfast-Table Duties — Non- 
 Dutiable Imports — Breadstuffs and Food — Raw Materials — - 
 Labour — Sugar — Effect of Foreign Bounties — How to meet 
 them — Sources of Tea and Sugar Supplies — Manufactured 
 Articles — Cotton and Woollen Textiles — -Leather — Glass — Iron 
 and Steel — Paper — Watches and Clocks — Gloves — Silks and 
 Ribbons — Linen Fabrics — Sundries — Summary of Suggested 
 Reforms, 65-99 
 
 CHAPTER V. 
 
 The United States Tariff. 
 
 Frequency of Changes — Avowed and Real Purposes — Extent and 
 Detail of the Tariff — Summary of Schedules — Principles of their 
 Construction. Chemicals : — Drugs — Chemical Manufactures — 
 Vegetable Products — Exemptions. Earthexwaee : — Building 
 Materials — Domestic Utensils— Glass and Glassware. Met.\ls : 
 — Tin — Iron and Steel — Cotton Ties — Tinplates — Cutlery and 
 Tools — Copper and Lead. Timber : — Conflicts between Succeed- 
 ing Administrations. SuG.\R : — The Domination of the Sugar 
 Trust — Resulting Scandals. Tobacco and Cigars. Wi^tes axd 
 Spirits. Agricultural Products : — Breadstufifs — Dairy Pro- 
 ducts — Fruit and Vegetables — Meat and Provisions — General 
 Result of Protection on the Industry. Textiles : — Raw Materials. 
 Cotton: — Yarns — Tissues — Complicated nature of Duties — 
 Extent of Import Trade. Wool : — Yarns — Fabrics — Severity of 
 M'Kinley Tariff — Illustrations — Effect of Duty on Raw Wool — 
 Extent of Trade. Silk. Fl.4.x, Hemp, and Jute : — Linen 
 Tissues and Embroideries. Paper and Books. Miscellaneous : 
 — Coal — Leather and Gloves. The Free List : — Agricultural 
 Implements — Tourists' Wearing Apparel — What Protection has 
 done and is doing for the United States, .... 100-152
 
 CONTENTS xiii 
 
 PAGE 
 
 CHAPTER VI. 
 
 The Tariffs of France and Germany. 
 
 France : — Prevailing Economic Conditions of the Country — Tariff as 
 a Source of Revenue — The Nature of French Protection — Analysis 
 of Foreign Trade — Export Statistics — Absence of Competition in 
 French Products — National Character and Economic Policy — 
 Tariff Rates — Textiles — Iron and Steel — Chemicals — Exemption 
 of Raw Materials — Agricultural Products — Surtax on Indirect 
 Imports — Colonial Tariff Policy — Reciprocity. 
 
 Germany : — Moderation of Tariff — Simplicity of Arrangement — 
 Revenue Duties — Protective Duties — Chemicals — Iron and 
 Steel — Textiles — Leather — Earthenware — -Agricultural Products 
 — Advantages enjoyed by Home Manufacturers — Retaliation and 
 Reciprocity — Tariff Wars with Russia and Spain — Strained 
 Commercial Relations with United States — The Denunciation 
 of the British Treatj' — Causes of Industrial Expansion in 
 Germany, 153-192 
 
 CHAPTER VII. 
 
 Bounties. 
 
 Sugar : — Nature of Drawbacks — Tendency to Develop into Bounties 
 — Efforts to Stimulate the Beet Industry — Continental Bounty 
 Wars — Germany Antagonistic to the System — Cost to Consumers 
 — Hidden Bounties — Surtax on Foreign Sugar in France — 
 Futility of the System — Possibilities of Increased Consump- 
 tion — Decline of the British and Colonial Industry — Fairplay 
 but no Protection. 
 
 Shipping : — British Subsidies — Carriage of Mails — German Subsidies 
 — French Construction Bounties — Navigation and Mail Subsidies 
 — Other European Bounties — United States Shipbuilding — 
 American Coasting Service — Mail Payments — The Canadian 
 Subsidy. 
 
 Railways : — The German System — Cost compared with Great 
 Britain — Watered Stock — Results of German State Control — 
 French Subventions — Division and Remuneration of Capital — 
 Total Cost to the Treasury — American Railroads. 
 
 Miscellaneous: — France — Canada — Australia — Sale of Surplus 
 
 Products — General Influence on Trade, .... 193-236
 
 xiv CONTENTS 
 
 PAGE 
 
 CHAPTER VIII. 
 
 Tariff and Taxation. 
 
 Sources of Indirect Taxation — Proportion to Direct — Distribution of 
 Taxation in Great Britain — Taxation in United States — Revenue 
 Derived compared with Actual Burdens — Cost of Collection — 
 Effect of Protection on National Finances— Taxation in France — 
 Sources of Revenue compared vsrith United Kingdom — National 
 Expenditure — Cost of Debt — Why France is able to prosper 
 under it — Taxation in Germany — Imperial and State Systems 
 — Moderation of Debt and Taxes — State Contributions — Prussian 
 Budget — Immense Advantages enjoyed by Germany over her 
 Industrial Competitors, ....... 237-279 
 
 CHAPTER IX. 
 
 Imperial Customs Union. 
 
 Discovery of America — Spanish Colonies — Portugal and her 
 Possessions — Germany in Africa and Oceana — French Colonies — 
 Extent of Trade — Algeria and Tunis — Madagascar — The 
 Egyptian Question — Relationship betv^een France and her 
 Colonies. Great Britain : — Crown Colonies — Colonial Tariffs 
 — Colonial Trade — The Basis of Union — Schemes Propounded — 
 Proportion of Colonial to Foreign Food Supplies — The Canadian 
 Preferential Tariff — Distribution of Canadian Trade — Origin of 
 Dutiable Imports — Analysis of Canadian Exports — Possibilities 
 of Canadian Expansion — The Belgian and German Treaties — ■ 
 What their Denunciation may mean — Constitutional Aspect of 
 the Question — Australasian Trade — Australian Federation — Free 
 Trade in Agricultural Products — Australasian Loans and the 
 British Trustee Act — The True Basis of Imperial Federation — 
 Phcenicia and Greece, 280-335 
 
 CHAPTER X. 
 
 The Balance of Trade. 
 
 Mistaken Notions concerning it — The United Kingdom Balance of 
 Trade — How it is made up — Influences affecting it — Its Fluctua- 
 tions — The Meaning of them — Remedies when unfavourable— 
 The United States Balance of Trade — Wild Fluctuations — Their 
 Principal Cause — The French Balance of Trade — Its Dependence 
 on the Wheat Crop — The German Balance of Trade — Influences
 
 CONTENTS XV 
 
 PAGE 
 
 affecting it same as in United Kingdom — Trade Fluctuations in 
 the Argentine Republic — Trade Movements in Japan — Unrelia- 
 bility of some Trade Statistics — How Balances are settled — Gold 
 Movements — The Balance of Trade in South Africa — Why Great 
 Britain imports so largely from France — The Importance of the 
 Question, 336-375 
 
 CHAPTER XL 
 
 Home and Foreign Trade. 
 
 Relative Importance — Effects of Protection — Arbitrary Divisions of 
 Territory — Wasteful Labour — Incidence of Taxation on different 
 Industries — The Agricultural Rating Act — Light Dues — Railway 
 Preferential Rates — Reckless Foreign Trading — Education— In- 
 ternal Competition — Independent Traders — Capitalist Influences 
 — The Directions in which they are exerted — The True Aims of 
 Home Traders— The West African Trade — General Possibilities 
 of Foreign Development, ....... 376-407 
 
 CHAPTER XII. 
 Free Trade or Protection % 
 
 Slow Growth of Free Trade Principles — National and Individual 
 Interests — General Growth of National Indebtedness — Decrease 
 of the British Debt — Military and Naval Expenditure — The 
 Commercial and Industrial Classes — Re-export Trade — Pro- 
 tection in its Relationship to Commercial Morality — The 
 Causes of Over-production — The Working Classes — Spread of 
 Protectionist Sentiment in Great Britain — Increasing Competi- 
 tion in Wholesale Trade — Great Prosperity of Retail Trade — 
 Bullion Movements — What Free Trade and Protection do for 
 the various Classes of the Community, .... 408-432 
 
 APPENDIX. 
 
 The New Ameiucan Tariff, 433-448 
 
 Index, 449
 
 TARIFF AND TEADE. 
 
 CHAPTER I. 
 The Purposes of Tariff. 
 
 Beginnings of English Tariff: — Insidious Operation — Indifference of 
 Taxpayers. Revenue :— Influence on Value — Indirect Taxation 
 a Necessity — Principles which should regulate it — Temptations 
 to depart from them — Stimulus to Home Production — The 
 Taxation of Great Communities. Morality : — Checks on Over- 
 indulgence — Limits to which they can be imposed — Public 
 Opinion — Duties and Licences. Protection : — Primary Basis — 
 Uncertainty of Revenue Returns — Conflict between National and 
 Private Interests — Demands for Frequent Revision — Resulting 
 Disturbance to Trade — Restriction of Benefits — Logical Issues — 
 Revenue and Protection an Impossible Combination. 
 
 Tariff is inextricably bound up with the still 
 larger question of taxation. For whatever ultimate 
 object it is levied, the first result is always to affect 
 the national revenue, and either to intensify or 
 diminish the strain upon the more direct or internal 
 taxes. From its earliest inception this method oi" 
 raising money has lent itself peculiarly to abuse, 
 inasmuch as, though its incidence in tlie long run, if 
 not actually universal, falls u]X)n the great majority 
 of any community subjected to it, direct interference
 
 2 THE PURPOSES OF TARIFF 
 
 ^vith the liberty of the individual is confined 
 within narrow compass. From the days of King 
 Edward I.— who svstematised and leofalised the 
 exactions of his father Henry HI. upon the wool- 
 fells ex})orted from the kingdom, ^^■hich, owing to 
 the absence of any native weaving industry, 
 practically included all that was grown — down to 
 the present day of taxation on imjDorts of the 
 same commodity wherever it may be in vogue, the 
 amount of the levy has been nominally paid by a 
 very small number of merchants or factors engaged 
 in the foreign commerce of the country, but has 
 actually come out of the pocket of the humble 
 peasant who reared a few sheep, or the industrious 
 and often poorly paid artisan whom the laws of 
 decency, to say nothing of health or the desire 
 of comfort, compel to be clad. But it would rarely 
 occur to either the peasant or the artisan that in 
 the very pursuit of his ordinary avocation, or in 
 compliance with the most elementary of demands, 
 he was casting his mite into the national treasury, 
 while, assuming the form of a poll tax, it might 
 have dawned on him that it was altogfether out 
 of proportion to his means, and led him to protest, 
 if not actually to rebel against it. However 
 legitimate a tariff may otherwise be, it is always 
 possible for it to fall with crushing weight on 
 those least able to stand it, without them beingf 
 aware of the fact, Avhile those who should bear the 
 burden escape almost scot-free.
 
 INDIFFERENCE OF TAXPAYERS 3 
 
 Yet it rarely happens that ultimate incidence 
 is taken into account in the imposition or rearrange- 
 ment of tariff. The unfortunate consumer is 
 about the last person to be considered in the 
 negotiation of a commercial treaty ; he is quite 
 as likely as not to be sacrificed to the interests 
 of some specially favoured class in the foreign 
 country which the Government of his own seeks to 
 conciliate, and if he venture to complain, an attempt 
 is made to silence him by appealing to his loyalty 
 and to the general welfare, represented, it may be, 
 by some branch of trade with which he is not 
 in the remotest degree concerned. A prominent 
 English statesman complained not very long ago 
 that his country had thrown away the keys which 
 might unlock the door of foreign markets to English 
 manufacturers ; in other words he regarded it as a 
 misfortune that the general consumer was not 
 called upon to pay an annual premium to insure 
 markets at some indefinitely future period to a 
 limited number of producers. So far from this 
 opinion being isolated, it represents a very important 
 basis, on which many tariffs are constructed. 
 
 To the student of Innnan nature it must be a 
 ma.tter of surprise that under these circumstances 
 the consumer remains so docile, and only on very 
 rare occasions seeks to throw off the yoke. It m;iy 
 be well padded to make it sit easy, Init it galls all 
 the same after l)eing worn long in one |)()sition, and 
 thoutrh we do see constant si^nis of discontent it
 
 4 THE PURPOSES OF TARIFF 
 
 has nowhere yet broken hito o^^w rebelKon. The 
 reason of this is not far to seek. National ex- 
 penditure everywhere is increasing by leaps and 
 bounds, and funds must be provided to meet it. 
 Nothing is so annoying to the individual taxpayer 
 as personal application. He will resist to the 
 uttermost the payment of half a crown w^hile he is 
 awake, but if someone puts a hand in his pocket 
 and extracts five shillings when he is asleep, he 
 feels that it cannot be helped and is not worth 
 worrying about. By this apparent indifference he 
 becomes the object of attention from three distinct 
 quarters, and eventually succumbs to the attack of 
 their combined forces. The Government desires ta 
 replenish its exchequer, the social reformer aims at 
 diminishing the temptations to vice by enhancing 
 their cost, and the wily producer avails himself of 
 the opportunity of adding to his profits by shutting 
 out foreign competition. Thus tariff is made to 
 answer the purposes of revenue, of morality, and of 
 protection. 
 
 I.— REVENUE. 
 
 A commercial ao-e like the one in which we 
 live, lends itself eminently to the easy raising of 
 revenue by indirect means. The enormous burden 
 of taxation now resting on the shoulders of every 
 civilised as well as most semi-civilised peoples, 
 would often be well nio-h intolerable were it realised. 
 Were it possible for instance, to make every
 
 INDIRECT TAXATION NECESSARY 5 
 
 Englishman who drank a glass of spirits or smoked 
 an ounce of tobacco, every German or Frenchman 
 who used a pound of sugar, and every American 
 who purchased a suit made from imported cloth, pay 
 for them in two separate amounts, the one the 
 actual cost of the article, the other the sum reserved 
 for the Government, he would be amazed at the 
 disproportion between them, and the extent to 
 which he was contributing to the support of the 
 national exchequer. To ignorance in this respect 
 is largely owing the ability to raise and maintain 
 those bloated armaments which are a constant 
 menace to the peace of the world, though declared 
 so often to be necessary for the protection of 
 commerce, which would however be still more 
 flourishing without them, if for no other reason than 
 that the vast sums expended would be diverted to 
 industrial channels, where they would be likely to 
 yield a more or less profitable return. 
 
 The dependence of Government on this source 
 of revenue naturally varies in accordance with its 
 situation. In a country sparsely inhabited over 
 a widely scattered area, the collection of direct 
 taxation is a practical impossibility, and it becomes 
 a necessity to levy it upon some particular and 
 generally used fixture— such as land, or u})on 
 commodities which have to pass through a limited 
 number of defined places for distribution, whetlier 
 as imports or exports. No community in these 
 days is so self-contained as to be inde})endent of its
 
 6 THE PURPOSES OF TARIFF 
 
 neio'hbours, both near and distant, and even if it 
 strive to supply most of its own wants, it is at least 
 anxious to raise and dispose of surplus products in 
 order to exchange them for luxuries, or some tangible 
 and permanent form of wealth which it ma}' hoard. 
 So far then from the Government of a newly 
 settled territory ever being likely to experience 
 difficulty in procuring funds for its due maintenance^ 
 it has invariably a wide choice for operation, 
 increased rather than diminished in proportion as 
 the territory over which it exercises sway is unde- 
 veloped, because in a primitive state the demand 
 for foreign material of all sorts must be considerable. 
 It is just here however that a wise discretion is 
 absolutely necessary if success is to reward the 
 eiforts to attain prosperity. There will always be 
 a strong inclination to tax such articles as are 
 imported in the greatest abundance, or are declared 
 of the highest value, because by limiting the scope 
 of the impost, trouble and expense may be saved. 
 It may nevertheless be unsound policy, because 
 uj)on the cheapness at Avhich these articles can be 
 obtained may depend the rapidity of the progress 
 made. Take for instance a country opened out to 
 agricultural settlers. Among their earliest require- 
 ments will be implements for preparing the land for 
 cultivation, to be followed quickly by machinery 
 for the economic inofatherino- of the fruits of the 
 earth, and possibly subsequent treatment to render 
 them marketable. Or suppose again a rush to a
 
 PRINCIPLES OF TAXATION 7 
 
 minincr district where there has been a discovery of 
 the precious metals, or the more sober appropriation 
 of territory where the baser ones are known to exist 
 in rich abundance. Mining machinery of compU- 
 cated and costly character will be required before 
 a large, or even a payable yield can be obtained. 
 In any of these cases therefore, implements and 
 machinery are likely to figure as an important item 
 in trade returns, a tariff on which would produce 
 a substantial income towards the expenditure on 
 administration, and that protection of life and 
 property which is one of the first essentials in 
 every newly constituted community. 
 
 Such material, however conveniently it may 
 offer, should be kept oft' the tarift" list until 
 every other source of revenue has been exhausted. 
 Following in the same line, we shall arrive at the 
 princijole on which a tai'iff ought to be constructed. 
 Implements and machinery are not the only 
 materials requisite for agricultural and mining 
 development, and whether it be in this direction or 
 in some other, everything required for production 
 should be rendered as cliea]) as ])ossible. There is 
 no form of production into whicli the simplest 
 articles of food and clothing do ]iot enter, 
 and they likewise demand immunity from every 
 charge which is not imperati\ c. In fact, exclusion 
 from taxation of every article and commodity I'l-i'St^ly 
 entering into the production of another, is tlic oidy 
 sound basis of economic })rogress and piosperity.
 
 8 THE PURPOSES OF TARIFF 
 
 We are at once shut olF from a very wide field 
 
 ill wliich tlie tax-cjatherer has lono^ revelled, but it 
 
 leaves a still wider one untouched. The days are 
 
 long past since any considerable aggregate of 
 
 individuals confined expenditure to bare necessaries, 
 
 and we are now in an era when in most countries a 
 
 verv large part is for the provision, first of comforts 
 
 and then of absolute luxuries. The strict line 
 
 between these is difiicult to draw, and no despotic 
 
 distinction is possible, but there is in the mind of 
 
 every thinking person some sort of classification 
 
 which grades the one into the other. The justice 
 
 of taxing pure luxuries is rarely denied, even by 
 
 those who most largely indulge in them, and who 
 
 ofier a stout resistance whenever an effort is made 
 
 to put theory into practice. The advisability of 
 
 including everything which legitimately falls under 
 
 this desiofnation is, however, another matter. They 
 
 are sometimes capable of being confined in so small 
 
 a space, that detection is difficult, and contraband 
 
 trading rendered so easy as to place the honest 
 
 and legitimate dealer at a serious disadvantage, 
 
 and the gain to national revenue is more than 
 
 offset by injury to national morals. Moreover, 
 
 luxuries in their narrower and more exclusive 
 
 sense are nowhere sufiiciently distributed to make 
 
 them an important source of revenue ; how 
 
 much less then in a new country, whose 
 
 inhabitants have still to win their way to 
 
 wealth.
 
 DANGERS TO BE AVOIDED 9 
 
 Yet in all climes and under most conditions, 
 there is a considerable, often a wide margin for 
 personal expenditure, which is not strictly applic- 
 able either to production or the maintenance of 
 life and health, and it is here that the legitimate 
 imposition of indirect taxation becomes alike 
 possible and profitable. The individual is then 
 called upon to contribute out of his abundance, and 
 is neither penalised for his poverty nor handicapped 
 in his industry. Articles of ornament and of 
 general but not necessary utility, the higher and 
 better grades of food and clothing, are sure to 
 be wanted in sufficient quantities to provide a 
 moderate revenue on a reasonable tariff, without 
 seriously inconveniencing those who pay, and after- 
 wards profit by the security they enjoy as well as 
 by the public works which tend to enhance the 
 value of their labour by reducing cost of transport, 
 or in a hundred other ways. Only when a Govern- 
 ment has failed to meet its expenditure or finds it 
 impossible to economise, is it justified in extending 
 its system of indirect taxation beyond these limits. 
 
 At the same time care must be taken in imi)OS- 
 inir a revenue tariff that it does not defeat its own 
 object. By framing it on too high a scale, an 
 unhealthy impetus may be afforded to the 
 manufacture or preparation of commodities for which 
 the country is in no way suited, and tariff, instead 
 of being a necessary adjunct to Goverinueiit, will 
 become the Ijattlefield of conteiidinir fictions.
 
 lo THE PURPOSES OF TARIFF 
 
 There remains of course the safeo-uard of an excise 
 duty, but that would mean the creation of another 
 department with its staff" of officials, whose salaries 
 and expenses might not be defrayed by the revenue 
 they collected, especially if the manufacturing 
 industry were spread over a wide area, and not con- 
 centrated in a few settled districts. On the other 
 hand, it would be absurd to exclude an article from 
 a tariff list, merely on the ground that its inclusion 
 might encourage native production. Provided the 
 tax is in everv wav leofitimate, it is a matter of 
 indifference to the consumer whether the product 
 he purchases is of foreign or home manufacture. 
 Perhaps patriotism may lead him to prefer the latter 
 if he has not to pay more for it. When the duty 
 becomes prohibitive, or so materially reduces the 
 import as adversely to affect the revenue, it will be 
 time enough either to lower it to an attractive basis, 
 or to see that those who are profiting by the 
 exclusion make good the deficiency. It is quite 
 possible for a revenue tariff to encourage and assist 
 local industry without becoming extravagantly or un- 
 wisely protective ; but it must not be overlooked that 
 the moment indirect taxation threatens to grow 
 oppressive, or a direct impost becomes more lucrative 
 and economical, as well as fairer in its incidence, that 
 moment does the protected industry become a drag 
 on the progress of the country. That it would be 
 unfair to leave it suddenlvin the lurch is the strono-est 
 reason for the exercise of caution in stimulating it.
 
 GREAT COMMUNITIES ii 
 
 The policy of raising revenue by indirect taxa- 
 tion is not however, by any means confined to new 
 and sparsely peopled, or even densely populated but 
 poverty-stricken countries, where the percentage of 
 the well-to-do and wealthy is infinitesimal, and the 
 scope for the tax collector correspondingly limited. 
 Great Bril^ain, which is pedantically Free Trade in 
 its economic creed, still imposes a large annual 
 contribution on various commodities entering its 
 ports, though in no instance could the most delicate 
 olfactory nerve detect the scent of protection. No 
 other great country is so scrupulously careful, 
 rather do they seek to combine national income 
 with what they are pleased to regard as national 
 prosperity, fostered by harassing foreign competi- 
 tion. But we have for the moment only to considei- 
 the principles \\hich ought to guide them from a 
 purely revenue standpoint. 
 
 These do not widely differ from what has l)een 
 already laid down. The same care is necessary to 
 avoid hampering production, or to increase its cost 
 by the taxation of the materials or labour that may 
 be required in any indigenous branches of industry. 
 
 A country whose import runs u]) to tens and 
 hundreds of milhons of pomids sterling, and whose 
 population can only ])e expressed in eiglit figures, 
 enjoys a very wide selection, becaus(^ in no such 
 instance are the climatic conditions within its 
 borders so diverse, that it is not compelled to draw 
 many of its recjuiremeiits from other sources. tli'»ngh,
 
 12 THE PURPOSES OF TARIFF 
 
 like the United States it may be caj)able of pro- 
 ducing every absolute necessary. There is conse- 
 quently less excuse for such a country imposing 
 burdens likely to prove grievous to any class of its 
 hybrid population, and still less to favour one at 
 the expense of another. In every case there will 
 be commodities of almost universal consumption 
 which readily lend themselves to taxation, and thus 
 extract a moderate contribution from the pockets 
 of those who are too poor to make a large or direct 
 one. For it must be remembered, that in every 
 well-ordered country the poor like the rich benefit 
 from at least some part of the national expenditure, 
 and while they may fairly look to Government to 
 place no impediment in the way to maintain exist- 
 ence, they are under obligations when that is pro- 
 vided for, to apportion some small amount of the 
 surplus towards the protection they are afforded in 
 the enjoyment of whatever civil rights they are 
 entitled to. 
 
 That indeed must always be a strong argument 
 against the entire abolition of indirect taxation. 
 Still, even when limited in extent, it is capable of 
 inflicting great injustice, which there is invariably 
 less disposition to redress than if the scope were 
 wider. Channels of trade as well as habits of life 
 are continually changing, and what may be wise 
 to-day may become oppressive ten years hence. 
 Not even a tariff" imposed purely for revenue should 
 become hidebound, but nnist be regarded as open
 
 CHECKS ON CONSUMPTION 13 
 
 to revision and transition whenever altered circum- 
 stances render such a course expedient. Too rigid 
 an adherence to what has become an antiquated 
 system, may bring contempt on the poKcy under- 
 lying it, which in itself may be as sound as on the 
 day it was adopted. 
 
 It is evident then that a tariff for revenue 
 requires more scientific construction than for any 
 other object. The number of commodities upon 
 which it may be economically imposed is limited, 
 because most of those which are tlieoretically best 
 fitted are likely to be of too trivial a character to 
 make them sufficiently productive to the exchequer 
 for the time and labour devoted to them. What- 
 ever is selected should not enter largely into the 
 fabric of native industry, while it should be distri- 
 buted among as many of the well-to-do sections of 
 the community as possible. Absolute equality of 
 incidence in this or any other form of taxation is 
 impossible, but in most, if not all the trading 
 countries of the present day, it is quite practicable 
 to impose the burden in such a way that its incon- 
 venience shall be reduced to a minimum. 
 
 II.— MORALITY. 
 
 We now enter a field where the question of 
 revenue becomes of secondary im])ortaiice to tlic 
 well-being of the peo])le. Human ii.iture as it is 
 exhibited to us in tlie liistory of the past, as it pre-
 
 14 THE PURPOSES OF TARIFF 
 
 sents itself to-day, and as it will most certainly be 
 found in the centuries ahead, is prone to indulge in 
 some form of narcotic, which, when taken in excess, 
 leads to demoralisation of the mental, and collapse 
 of the physical faculties. Usually it is a distillation 
 of strong waters, occasionally a powerful drug like 
 opium. Nature supplies the raw material Avith so 
 profuse a hand, that when manufactured into a 
 iit state for consumption, few of them are costly, 
 and persons of moderate means would ordinarily be 
 able to obtain them in dangerously large quantities 
 with but little sacrifice. Social reformers have hit 
 upon a method of enhancing the cost to such an 
 extent, that only those in affluent circumstances are 
 able to partake copiously or even freely, without 
 depriving themselves of the more innocent comforts, 
 and possibly of the very necessaries of life, while 
 governments, not always too eager to assist in the 
 promotion of morality, find that in this instance at 
 least the pecuniary reward is worth the effort. 
 Thus many of the liquors can only be retailed at 
 several times the price at which they are actually 
 produced. 
 
 So strong however does the craving sometimes 
 become, that no price w^ould place these stimulants 
 beyond the reach of the most needy individual 
 while they had it in their possession. Entire pro- 
 hibition has proved fruitless in checking those who 
 are sufficiently determined, and only adds to the 
 evil, the further one of law-breaking. The most
 
 CONTRABAND TRADE 15 
 
 that can be done is to impose a wholesome restraint, 
 and many an individual is undoubtedly deterred 
 from excess, either from absolute want of means, 
 or from the more laudable desire to avoid financial 
 embarrassment. These duties therefore, while not 
 totally destroying the mischief, do modify it to a 
 very material extent. 
 
 This modification ought to become more favour- 
 able in proportion as cost is increased. In prac- 
 tice however it is always found that there is a 
 point beyond which this ceases to have any efi'ect, 
 if brought about by artificial and removable causes. 
 There are few things men will not do in desperation, 
 and the distillation of spirits is not one of them. 
 In every country where the duty is at all 
 heavy, not the least important part of the work of 
 Government officials connected with the depart- 
 ment controlling it, is to prevent evasion of the law, 
 whether directly, or by the thousand and one sub- 
 terfuges which ingenuity is always ready to invent ; 
 and just as stringency approaches the border line 
 of prohibition, so will the law be set at defiance. 
 
 Besides, all coinitries do not regard tlie matter In 
 quite the same light, and while most impose re- 
 strictions on the traffic, they are very unequal. 
 Carefully as coasts are guarded, there are scores of 
 quiet coves and inlets to be found 011 the most 
 unpromising, where a contra])a]id ti-ade oaii, .nid 
 under exasperating conditions will. Im' coiMlucicd. 
 Just as a metallic currency tends to flow to tliose
 
 1 6 THE PURPOSES OF TARIFF 
 
 places where it can be most })rofitably employed 
 without undue risk, so will commodities, not always 
 quite so legitimately, pass to lucrative markets 
 even with considerable attendant risk. 
 
 Nor can public opinion be ignored ; indeed this 
 is one of the most important matters on which 
 public opinion is constantly asserting itself. Upon 
 many countries the curse of intemperance rests so 
 lightly, that it is not an evil demanding legislative 
 interference and repression, and a temperance re- 
 former would be laughed to scorn. Even where 
 excess is prevalent, the numbers who partake mod- 
 erately are so large, that they are able to make 
 their wishes respected. That there is a growing 
 perception among this class of the necessity of 
 adopting stringent measures to check abuse, is 
 evidenced by the increasing readiness with which 
 restrictions are tolerated, and even advocated on 
 legitimate use, and among English-speaking 
 people at any rate there is no longer any fear 
 of a successful movement in favour of stimulating 
 consumption. When agitation is not making 
 practical progress in the opposite direction, the 
 worst that happens is stagnation. 
 
 Unlike a revenue tariff, that imposed for pur- 
 poses of morality is more costly and cumbersome 
 as area and population are disproportionate. The 
 trade is an internal rather than an external one, for 
 though foreign imports are everywhere to be found, 
 the national beverage is invariably of home manu-
 
 THE LICENSING SYSTEM 17 
 
 facture. In thickly-peopled districts it is easy to 
 control, because each factory is generally of some 
 importance, and able to bear the expense of one or 
 more revenue officers. Where towns and villages 
 are small and far apart, the business is often con- 
 ducted on a corresponding scale, and could not bear 
 the cost of regular, much less of permanent inspec- 
 tion, and thus a system of licences takes the place 
 of fixed tariff. It is not unknown indeed where 
 tariff is high, but generally occupies a subsidiary 
 position, and is sometimes little more than a regis- 
 tration for ensuring more efficient oversight, as well 
 as a guarantee for good behaviour. It is, however, 
 at any time possible to convert it into a principal 
 instrument, and as such is to be found in operation 
 in rising but sparsely-peopled districts, where the 
 direct duty might easily be evaded. 
 
 A somewhat novel but very efficacious expedient 
 has been adopted to check the undue multi])lica- 
 tion of drinksellers. It may not be altogether 
 creditable, but it is nevertheless true, that this is 
 one of the first wants of a new comnnmity, and is 
 rarely long in Ijeing supplied. Inasmuch as the 
 first arrival is welcomed, lie is dealt with tenderly, 
 and the tax imposed is light. But as eacli succes- 
 sive competitor ])uts in an appearance, the cost of 
 the licence is raised all round, and even the original 
 holder, when the period of his grant lapses, must 
 fall into line with the others. It l)ecomes a (|ues- 
 tion of the survival of the fittest, l)ecause a point
 
 i8 THE PURPOSES OF TARIFF 
 
 Svill sooner or later be reached when the licence 
 becomes too onerous to maintain, and some 
 must be allowed to lapse, or else there must be 
 an entire cessation of new ones. Thus, as the 
 community grows, the local exchequer swells, 
 \vhile a guarantee is afforded that it w411 not be 
 flooded and demoralised by an incubus of licensed 
 houses. 
 
 The main point to be borne in mind in connection 
 with tariff under this heading, is that Government 
 is rarely the supreme arbiter in its imposition. 
 Liquor laws have played havoc with more than one 
 political party on both sides of the Atlantic, and 
 they would have been everywhere in a more satis- 
 factory condition to-day had there been less zeal 
 and more discretion displayed in framing them or 
 seeking their alteration. The custodian of national 
 finances must be content to receive whatever the 
 public will give him ; if he endeavour to secure 
 more, he will be ejected, and very likely his friends 
 with him. The day has gone when occupants of 
 that office will volunteer to accept less, and 
 considerable pressure wall have to be used to 
 compel them to do so. It is eminently desirable 
 therefore that opinion upon the question should 
 be healthy and guided by moderation, not only 
 that the exchequer may be protected against 
 Unwelcome and unexpected revolutions, but that 
 the standard of national morality may be raised 
 to a hioher level.
 
 BASIS OF PROTECTION 19 
 
 III. PROTECTION. 
 
 No more thankless task can well be undertaken 
 by any Government, than the construction of a 
 protectionist tariff. The articles which common 
 sense denote as specially suitable for taxation have 
 to be excluded, because it is nobody's interest to 
 have them on the list, while room must be left for 
 others, which, when included, cannot fail to be pro- 
 ductive of hardship. For plumbing the depth of 
 human selfishness, nothing more effective has ever 
 yet been invented than ^vhat is called a protective 
 tariff. While those who clamour for it are preach- 
 ing the virtue of patriotism, and extolling the merit 
 of sacrifice for the encouragement of home industry, 
 the moment their schemes come within the ranofe 
 of practical politics, they resemble nothing so much 
 as a victorious army turned out to loot a captured 
 city. The grower of raw material wants protection 
 against what he chooses to designate the pauper 
 labour or superior advantages of a keen competitor ; 
 the manufacturer of that raw material wants it 
 cheap, and expresses surprise that the grower 
 should desire to enhance the cost of the finished 
 article. So many interests must eventually be 
 disappointed, either by getting nothing at all, or 
 much less than they consider their due, that the 
 claims of the party which can survive the shock 
 must be irreat indeed, toi' political t^catitudc is ever
 
 20 THE PURPOSES OF TARIFF 
 
 the anticipation of ftivoiirs to come, never of ]:)enefits 
 conferred. 
 
 National finance dependent upon a protective 
 tariff must always be in a nebulous and unsatis- 
 factory condition. First to tax the commodity, and 
 then to be compelled to tax the individual because 
 the commodity remains at a respectful distance, is 
 adding- insult to injury, but unless it is done the 
 exchequer must go bankrupt. The foreign manu- 
 facturer or shipj^er who was to provide ways and 
 means, pay the salaries of officials and find the 
 pensions of veterans, diverts his energies to another 
 sphere ; and to conceal the chagrin which his want 
 of thought, or still worse, his revengeful disposition 
 has roused, a substantial addition is made to the 
 national debt, and the cautious investor is added to 
 the number of beneficiaries under the system. He 
 wants interest of course, but perhaps by the time it 
 is payable the foreigner will have lost some of his 
 shyness, and be prepared to part with a portion of 
 his treasure. 
 
 A. nation generally regards an expanding revenue 
 as a sure sign of prosperity, and sound finance will 
 always aim at exceeding rather than falling short 
 of estimates. But every increase of revenue from 
 tariff, must be gall and wormwood to the citizen 
 whose products are being displaced, while he openly 
 rejoices at the falling off which can only finally 
 result in embarrassment. The public need is in 
 fact his opportunity, and he measures his success-
 
 UNCERTAINTY OF OPERATION 21 
 
 and prosperity by the adversity of the national 
 exchequer. So long as his profits remain untouched, 
 it is of small consequence to him how the adverse 
 balance is redressed ; should it become necessary to 
 lower the tariff in order again to attract revenue, 
 he will fight hard against the selection of his 
 particular commodity, and offer innumerable reasons 
 wdiy another should be chosen. Nothing in short 
 raises such keen enemies to the exchequer as pro- 
 tection. Those who live under it and upon it, are 
 constantly exercising their minds to waylay the 
 contributions, which, in the ordinary course would 
 find their way thither, and to pocket them instead. 
 Defrauding the revenue as a rule sits lightly on 
 the conscience, but openly to war against it creates 
 animosities, compared with which the satisfaction 
 of having done something improper but rather 
 smart, becomes a positive virtue. 
 
 Nor is there any finality or continuity in financial 
 arrangements. A revenue tarift' or direct taxation 
 may be steadily continued year after year, Nt)t 
 only is its yield calculable to within a very small 
 percentage, but those who have to contribute to it 
 may sink tlicir ca})ital in investments or ('nt(M'|)rises 
 witli httle fear of a- (nstnrl)iiig hand IxMiigljiid upon 
 them. A manufacturer will know that in the ex- 
 tension of his premises or })lant, he will be free from 
 any demand until a profit has been made which lie 
 can either save or spend. ( )n tin' ot licr linnd. such 
 an extension may l)e commenced \\\ anticij)ation ol*
 
 2 2 THE PURPOSES OF TARIFF 
 
 advantages which are never conferred, or if granted, 
 may bf^ snatched away before they can be availed 
 of There is either an element of speculation in all 
 private enterprise, or if the policy of protection be 
 persistently followed for a course of years, it has 
 to be made continually more stringent, and the 
 speculation and uncertainty are transferred to the 
 national finances. 
 
 However wide a protective tariff may be, there 
 are always large numbers of persons who cannot 
 possibly benefit by it. In every country there are 
 many, indeed the majority of industries, in which 
 foreign competition is impossible. Ready-built 
 houses cannot be imported from abroad and laid 
 down on the sites selected for them. Clothino- 
 made to measure cannot be tried on and fitted a 
 thousand miles a^^ay. The daily and weekly news- 
 paper would be rather stale if made in Germany, 
 and its contents mio-ht also be regarded with sus- 
 picion. There are agricultural products so joerish- 
 able, that fortv-eierht or even twentv-four hours' 
 delay in consumption renders them unfit for food. 
 What equivalent can l^e given to these ? The pro- 
 ducers are compelled to pay an artificial price for 
 many of t,heir requirements, and yet get nothing in 
 return. A paternal Government might grant them 
 a bounty, but bounties are rarely given except to 
 those who undertake to dispose of their commodi- 
 ties abroad. They must struggle on as best they 
 can, and if they create a supply in excess of
 
 DISPUTES AND JEALOUSIES 23 
 
 demand, must take the best price obtainable, 
 instead of selling in the home markets on their 
 own terms, and dumping- the surplus on a foreign 
 one at anything it will fetch. No wonder that 
 discontent enters the mind and permeates the soul, 
 until the wildest socialistic theories gain possession 
 of the whole system. 
 
 Nor does the trouble end here, for degrees of 
 protection cause even more heartburning than none 
 at all. One set of producers secures a tariif which 
 results in absolute prohibition, and their industry 
 consequently contrilmtes nothing whatever to the 
 national revenue. Another set has still to wage 
 a fierce struggle against foreign competition, and 
 demands consideration on the not unjust ground 
 that their particular trade is paying a large amount 
 of taxation. There is no logical half-way house in 
 a protective policy. If a country be capable of 
 producing all it wants of any particular commodity, 
 every inhabitant should be forbidden, under severe 
 penalty and punishment, to obtain it elsewhere, 
 because a Government which accepts a duty is 
 entering into a conspiracy with the foreign ])lun- 
 derer to rol) the innocent manufacturer, and is an 
 accessory before as well as after the offence. Surely 
 when ^sop wrote his fable about the man and his 
 son and his donkey, he had obtained a glance into 
 futurity, and witnessed the high priest of protection 
 labouring to propitiate the worshippers assembled 
 round its altars !
 
 24 THE PURPOSES OF TARIFF 
 
 All this is no mere theorising. Ample illustra- 
 tion will be given in succeeding chapters of* the 
 actual existence of the evils which sound reasoning 
 on the subject would be likely to deduce. The 
 world has had experience of freedom as well as 
 restriction, but wide as it is, most of its inhabitants 
 still find it difficult to divest themselves of their 
 immediate surroundings, and, travelling round a 
 circle, arrive at the point from which they started. 
 Man does reach tliat stage where he honestly con- 
 ceives that what suits him personally must be good 
 for everybody else, and setting a goal before him 
 at which he may or may not eventually arrive, bids 
 others follow, however impossible it may be of 
 general attainment. Because protection does open 
 a road to wealth, there is an eager rush to enter it, 
 utterly oblivious of the fact that it is so narrow 
 that a crowd will be trampled under foot. But the 
 victims below are lost sight of in gazing at the 
 victors above. 
 
 A combination of two of the three purposes for 
 which tariff is levied is generally possible, but the 
 first and the last will no more mix than oil and 
 water. By a coincidence one may lapse into the 
 other, but when revenue ceases to flow freely, pro- 
 tection occupies the field, unless indeed there is 
 no longer anv demand for the particular commodity.
 
 POLITICAL USES OF PROTECTION 25 
 
 Contrariwise, when revenue becomes elastic, pro- 
 tection is no longer afforded, unless it be for a brief 
 period when demand has, without warning, outrun 
 supply, and cannot be immediately filled. But a 
 tariff for revenue and protection combined is an 
 anomaly, and where it is supposed to exist it will 
 be found on analysis to consist of two distinct parts, 
 the first operating in one direction, the second in 
 the other. Where this is the work of a democracy 
 and a freely-elected legislature, the hindrance to 
 political progress is incalculable, for so much time 
 is spent in wrangling over disputed points of 
 finance and trade, that the more important ques- 
 tions of social progress and individual liberty 
 and well-beinof are thrust into the backo-round. 
 Monarchs divert the attention of their subjects 
 from domestic grievances by plunging into foreign 
 complications. Those responsible for the manage- 
 ment of democracies maintain control by i-aising all 
 sorts of intricate economic problems, which would 
 puzzle the brain of a Solon to solve. Government 
 must be carried on and reveiuie raised, but the 
 one will work more smoothly if the other can 
 be depended on. Either fix an amount, wliicli 
 under ordinary circumstances will be forthcoming 
 from the indirect sources selected, or abolish them 
 altogether and make trade free or entirely prohibit 
 it, in each case resorting to the pockets of those 
 who are most likely to profit.
 
 CHAPTEK II. 
 Infant Industries. 
 
 The Growth of Primitive Manufactures — The Conditions Necessary — 
 Coal and Iron — Textiles — Impatience of Settlers — Natural 
 Advantagesof the United States — Wages — Their Gradual Equalisa- 
 tion on the Two Continents — Rapidity of American Expansion- 
 Europe unable to cope with it — Industrial Development in 
 Germany — Former Conditions in Great Britain — Protection 
 really confined to Agriculture — Expansion following Repeal 
 of the Corn Laws — Natural and Artificial Stimulus. 
 
 No more specious doctrine has ever been preached 
 than the economy of building up new industries by 
 means of protective duties. We might be disposed 
 to admit the wisdom of it, if the infant grew to 
 man's estate and gave evidence of self-rehance. It 
 is true such industries do ptow under the forcincr 
 process, sometimes at a rapid rate, but as they 
 shoot upwards and outwards they lose rather than 
 gain in strength, so that while a sapling was 
 sufficient to support them in their vouth, by the 
 time old age is upon them the strongest oak of the 
 forest is scarce stout enough to prevent their 
 collapse. Industries are much like human beings, 
 so long as they are kept by extraneous help they 
 rarely exhibit any haste to emerge from the stage 
 of infancy.
 
 GROWTH OF INDUSTRY 27 
 
 Just as it is natural food that stimulates the 
 development of the child into youth, and youth into 
 the strong man or the healthy woman, so a new 
 country or community must feed upon its own 
 resources if it desire to attain a real measure of 
 prosperity. People do not go into the bush of 
 Australia, or adventure into the wilds of Central 
 Africa, to build locomotives and establish silk 
 manufacturing. There must be something already 
 there to attract them. Either gold casts its magic 
 spell, or the colonist, full of energy, burns to Avield 
 the axe and clear a space where the fruits of the 
 earth may have free play to yield their increase, 
 and in due course provide sustenance for man and 
 beast. He requires tools, from the axe and spade 
 to the complicated reaper or crushing machinery, 
 and he wants them as cheaply as they are to be 
 had. Very likely he takes his first supply of the 
 simplest with him, and whether he wants more 
 complex ones or not, those he has soon wear out. 
 But not only has he to pay the price at the town 
 depot or the country store, but the cost of convey- 
 ance to a remote station possibly doubles it. Axe 
 heads and spade irons he must continue to buy, l)ut 
 the handles he can make himself from the timber 
 he has felled, and thus without knowing it lie 
 introduces the first primitive manufacture into the 
 settlement. In due course he is surrounded l)y 
 neighbours. A mechanic arriving in their midst 
 discovers he can ol)tain constant employment in
 
 2 8 INFANT INDUSTRIES 
 
 making liaudles for axes and spades, and a host 
 of miscellaneous odds and ends which the settler 
 would not have troubled about getting had they 
 not been brouo-ht to his verv door. So the first 
 manufacturer establishes a factory, and manu- 
 facturing industry begins to grow up side by side 
 with agricultural pioneering. 
 
 But to the protectionist, or the man who desires 
 to see his country go ahead, anything so primitive 
 is reofarded with scorn. That is not manufacturing^ 
 they say. We want to see the building with the 
 tall chimney-stack by its side ; to hear the thud of 
 the steam hammer as it falls on the molten metal ; 
 to listen to the deafening buzz of the sjDindle, or 
 drink in the music of the loom as it meanders to 
 and fro, gathering up the weft and the warp. Wait 
 a little, and all that will follow. 
 
 To begin with however, a few questions must 
 be asked and answered. Are coal and iron to be 
 found in close proximity to one another, and in 
 such a situation that they or their products can be 
 easily transported to other fields of industry? If so, 
 then in due course iron manufacturino* will become 
 not only a possibility, but a paying occupation for 
 capital and labour alike. But first, steel rails, 
 waggons, and locomotives will be wanted to tap the 
 source and freely disperse its stream in all directions, 
 and these Avill be obtainable best and cheapest in 
 some old country where the industries have been 
 long established, and are economically worked.
 
 TEXTILE MANUFACTURES 29 
 
 Then may the forge with all its accessories be 
 erected, not necessarily to duplicate the rails and 
 the waggons and the steam engines, but to make 
 the more modest articles which in turn help to make 
 civilisation. 
 
 Or are large quantities of sheep and cattle 
 raised ? Then why should their wool and hides be 
 sent thousands of miles away to be returned as 
 clothing and leather, or even boots and shoes ? 
 Perhaps the community is too small to make the 
 carding, spinning, weaving, and tanning industries 
 possible on a sufficiently important scale to render 
 them remunerative. Then it is waste of energy as 
 well as money to carry them on. Very likely the 
 conditions and wag'es of labour are such, that com- 
 petition with countries where these are more 
 favourable is out of the question. Then that must 
 mean that the demand for labour in the existing 
 industries, whatever they may be, is large enough 
 to absorb the supply on very much its own terms, 
 and it were folly to attract it where at the same 
 rate it would be unremunerative. 
 
 Once more, does the cotton plant floinxsh ? 
 Then the same ])roblem presents itself as in tlie case 
 of wool and liides. If not, are the conditions 
 favourable for converting it into calico, should the 
 raw material be imported ? Are there places where 
 water is abundant, either as motive power in driving 
 the machinery, or for the purposes necessary in the 
 process of manufacture ''. Is tlie atmosphere
 
 30 INFANT INDUSTRIES 
 
 sutHcieutly liuniid to ensure cohesion of the threads ? 
 If so, is the spot where all these advantages are 
 fomid sufficiently near a port of shipment or 
 discharge to reduce cost of transport to a niininunn ? 
 All this granted, then cotton spinning may fear- 
 lessly advance. 
 
 Unfortunately, neither communities nor indi- 
 viduals are willing to allow this to take place in 
 proper sequence. Agriculture may Ije said to be 
 the basis of all settlement, for though gold or some 
 other form of adventure be the original attraction, 
 the discarded and rejected earth will sooner or later 
 bury disappointed hopes in her fruitful womb, and 
 cherish them into new life. Virgin soil, and the 
 keen air and free life of the prairie combined, afford 
 a stimulus which causes everything for a time to 
 be viewed through rose-tinted spectacles. What 
 matters it if clothing and other necessaries do cost 
 half as much again as they ought to ? Is not 
 the recompense ample when the farmer, visiting the 
 rapidly growing city on the occasion of his annual 
 holiday, views the smoke belching forth from the 
 factories and darkening the atmosphere, and prides 
 himself on being the unit of a nation which is well 
 on the way to independence of all others. Thus the 
 very people who are eventually to feel the first 
 pinch of adversity, animate and encourage those 
 who, by dipping freely into the national funds, see 
 their way to the easy accumulation of handsome 
 fortunes.
 
 THE UNITED STATES 31 
 
 Let us apply these tests in a ]3ractical manner. 
 No country ever discovered, and there remain but 
 few still beneath the veil, has been so abundantly 
 blessed by nature as the vast territory enclosed 
 within the boundaries of the United States of 
 America. An immense coast-line fronting- two 
 oceans, and magnificent harbours. Every conceivable 
 variety of climate, from the soft airs and perpetual 
 summer of Southern California, to the icy blizzard 
 of the north. Lakes which are inland seas, and 
 mighty rivers which for himdi'eds of miles are high- 
 ways of commerce, costing nothing to construct or 
 keep in repair, the levees or embankments, upon 
 wliich so much money has been spent, being designed 
 for the protection of the adjoining lands, among the 
 richest in the world and requiring no artificial 
 stimulus whatever for the regular production of 
 abundant and exhausting crops. Mountains teem- 
 ing with mineral wealth, and rolling prairies providing 
 sustenance for millions of four-footed beasts. Gold 
 and silver, coal and iron, light and heat, jjourecl 
 forth from the bowels of the earth, and last, l)ut by 
 no means least, the most intelligent and enterprising 
 beings in God's image who ever trod God's earth. 
 And yet forsooth, these last appeal to the State for 
 protection ! What would ])ublic opinion say of 
 the giant, splendidly proportioned and gorgeously 
 equipped, crying out for help against tlie pigmy who 
 scarce reached to his knees, and whose every advant- 
 age had been gained Ijy long toil aiidpatient])l<)d(hiig?
 
 32 INFANT INDUSTRIES 
 
 Is it possihlo to believe that Pennsylvania and 
 Alabama could never have flourished as coal and iron- 
 ])ro(hu'ni<;' centres, unless prop])e(l up bv protective 
 duties against the industries of far-distant nations, 
 whose output in years gone by was severely taxed by 
 the cost of transport from the inland foundry to the 
 port of shipment, and then across the Atlantic ? 
 The latter, it is true, has diminished, sometimes 
 well-nigh to vanishing point, but the former, as far 
 at anvrate as Great Britain is concerned, remains 
 solid and luiimpressionable. Or can it be that Fall 
 River would never have been utilised, or the scores 
 of spinning mills in the very midst of the cotton 
 plantations never erected, unless a heavy tariff had 
 been imposed on foreign goods made from cotton 
 enterino- the country, and that it would still have 
 been necessary to send the raw material from 
 Georofia to Manchester or Munchen Gladbach, in 
 order that the Georo-ian nem^o miMit have a 
 
 c5 O C5 
 
 coloured shirt to his back ? If these thinofs are 
 possible, then is the inventive genius and untiring 
 energy of the native-born American a sham and a 
 delusion, and he himself the most overrated man, 
 whether in his own or other people's estimation, 
 that ever breathed. 
 
 Waffes of course is the reason assioned for 
 inability to compete. The American labourer 
 scorned the miserable pittance afibrdecl by the 
 manufacturers of Europe, and rightly so, as long as 
 he could do better by cultivating- the soil elsewhere.
 
 WAGES JN AMERICA AND EUROPE 2,0 
 
 So great and so genuine were the inducements 
 offered, that a broad stream of immigration flowed 
 from across the Atlantic, and the population of the 
 United States advanced by enormous strides. But 
 that at once began to equalise matters, slowly and 
 imperceptibly at first, rapidly and visibly as time 
 progressed. The more abundant supply of labour 
 told on the wap-es of tlie American ag-ricultural 
 labourer, and helped to depress them. The relief 
 from over - pressure on the European labour 
 market, assisted no doubt by combination, which 
 only however became possible under the altered 
 circumstances, brought about a rise in wages which 
 thus drew gradually closer together on the two 
 continents. The process was deferred by the intro- 
 duction of protected industries, which for a time at 
 least tend to maintain the reward of the artisan, 
 but it has not prevented in some cases, and will not 
 eventually prevent in the rest, the final and natural 
 consummation. Already we see immigration, at 
 one time so enthusiastically welcomed and earnestly 
 encouraged, scotched if not killed l^y legislative 
 enactments. It was tlie lal)()ur first that liad to 
 be protected, now it is the labourer, though before 
 the United States will have attained the present 
 density of population of tlie United Kingdom, 
 their inhal)itants must multiply fifteen fold. 
 
 Had tliis process of ecjualisation ])een left 
 alone, manufacturing industries in tlic \ n it cd 
 States would Ikinc sprung up without assistance 
 3
 
 34 INFANT INDUSTRIES 
 
 at a period very little later than they were actually 
 forced upon the country. Agricultural wages would 
 have fallen more rapidly, or else those in Europe 
 would have taken less time in attaining the level 
 thev have since reached. Manufactuiino- wagfes in 
 America would have started on a lower basis, and 
 sooner reached the rates they now stand at. Again ' 
 the protectionist says, see what a long innings of 
 prosperity the workman had while wages were high. 
 Quite so, but the cost of living was also high, and 
 for a fair comparison between the continents it would 
 be necessary to consider, not what was paid, but 
 what could be saved after the same comforts had 
 been provided. That the balance would long have 
 been in favour of America is undoubted, because 
 the capabilities of expansion were so enormous, and 
 an intelligent man had so many more chances of 
 exercising his ingenuity than in an old and already 
 well-populated country like Great Britain. But that 
 would have occurred with an entire absence of pro- 
 tection to manufacture, just as it did to agriculture, 
 and Pittsburo- and Fall Biver would still have 
 competed successfully with Staffordshire and Old- 
 ham, though paying a higher rate of wage. 
 
 It is quite possible that another and perfectly 
 legitimate influence would have been at work on a 
 small scale. I have previously maintained, that 
 provided a Government has to support itself bv 
 indirect taxation, it need not necessarily avoid a 
 commodity wliich may some day be produced at
 
 AMERICAN EXPANSION 35 
 
 home, so long as the double condition is fulfilled, of 
 obtaining a revenue and imposing no restraint on 
 the domestic industries actually in existence. That 
 in itself would foster enterprise. But the question 
 is naturally asked, what is the difference between 
 this and protection pure and simple ? It is ad- 
 mittedly difficult to define, but the same intangible 
 border line often exists between revenue and pro- 
 tection, as we have already noticed between comfort 
 and luxury. Moreover, the individual who avails 
 himself of the opportunity thus offered steps warily. 
 He asks himself what the consequences would be if 
 the protection Avere withdrawn, because the tax 
 ceased to be productive. Could he so arrange his 
 affairs as to be able to stand alone in the course of 
 a few years ? He may rightly ask that no change 
 shall be sprung upon him unawares, but he will have 
 no reason to complain if due warning be given that 
 artificial support is to be withdrawn. In such 
 a. case an industry may come into existence earlier 
 than it otherwise would, but it is attended by 
 greater risks than one which patiently waits for 
 maturer conditions. 
 
 The sudden expansion of the United States, 
 moreover, was such that Great Britain would iK)t 
 under any circumstances have found it possible 
 to keep pace with. The great trunk lines of rail- 
 road were commenced, and for a time continued, 
 not because of the existence of coal and iron in the 
 country, but because the products of tlie soil li.id
 
 36 INFANT INDUSTRIES 
 
 t(> 1)0 carried to tlie consumer. True, railroads 
 were constructed later because furnaces and mills 
 had been erected to manufacture iron and steel, 
 but those roads went into the receiver's hands 
 and bankruptcy ; and had they never been built, 
 or their construction deferred, we should have heard 
 less of railroad scandals, and the occupation of the 
 railroad wrecker would have been a sinecure. Had 
 America been content to take a little more of the 
 material from Europe, and a little less eager to 
 supply it all herself, millionaires might have 
 been less plentiful, but stock w^ould not have been 
 watered to such an extent, that in the struggle to 
 earn a dividend on a portion of it, presidents and 
 directors alike have earned the animosity of nearly 
 every independent trader in the Republic. When 
 the enormous cost of land to English railway com- 
 panies is contrasted with the free gift of millions of 
 acres to the American ones, we may well ask what 
 has happened to make freights approach anything 
 like as close as they do. 
 
 A larger demand upon European sujDplies of 
 material, particularly if distril)uted over a wide 
 area and for a prolonged period, would have tended 
 to raise European wages rather than to lower 
 American ones. Activity in the iron trade does 
 not necessarily imply jDrosperity in cotton or wool- 
 spinning, though there is a thread of sympathy 
 running tln-ough all the great industries of any 
 country, and were trade universally free it would
 
 GERMAN EXPANSION 37 
 
 encircle the world. But even should special causes 
 arise to dej^ress one while another is progressive, 
 that can only continue for a very limited period. 
 So rapidly do masters and workmen fall out of 
 the ranks, that unless they are replaced the staif of 
 an industry is quickly depleted, and where one is 
 more prosperous than another, recruits naturally 
 seek it. Whether iron had preceded cotton or 
 cotton iron, both would long since have established a 
 firm footino- in America without the smallest assist- 
 ance, and ought to-day to be able to compete with 
 any similar industries in the world. But America 
 chose rather to play the part of the prodigal 
 son, with the difference between it and the typical 
 one, that it spent its substance in riotous living 
 at home instead of in a far land. Signs are not 
 altogether wanting that it desires to return to 
 steadier habits, but it must be remembered that 
 repentance precedes the fatted calf 
 
 What is true of the United States is equally so 
 of every other country. Conditions may be less 
 favourable and progress slower, but the race is not 
 always to the swift. The industrial expansion of 
 Germany is scarcely less marvellous than that of 
 the great Americcin Piepublic, and protection is 
 again singled out as the chief cause of it. The 
 same thing may be said of Westphalia as of Penn- 
 sylvania, only with this in favour of tlie foi'iner, 
 that the scale of wages began at the bottom and 
 has gradually ascended, instead of tlie reverse.
 
 3S INFANT INDUSTRIES 
 
 Tlu» same results are discernible in both tlie 
 countries named, a deplorable decline in agricultural 
 prosperity, and that notwithstanding the fact that 
 in Germany it is the best protected industry. The 
 phleo-matic character of the people was bound to 
 win it success the moment it g"ot fair play and 
 was relieved from the constant strain of political 
 anxiety which weighed it down until a quarter of a 
 century ago. Its progress has been artificially 
 stimulated, but at what will some day inevitably 
 prove to have been too great a cost. 
 
 It were useless to follow each country where 
 protection reigns supreme, and where the same 
 arguments are urged in its support. It would 
 only mean ringing the changes on a higher or lower 
 keynote. One country, and one onlv, has not yet 
 been enofulfed in the vortex, thoug-h one at least of 
 its self-governing dependencies has emerged from it. 
 It is sometimes contended ho"wever, that Great 
 Britain could not have attained her commercial and 
 manufacturing supremacy had she not started under 
 the powerful patronage of protection, and that at 
 least is worth inquiring into. 
 
 The conditions prevailing fifty years ago and 
 those in existence to-day are so totally distinct, 
 that comparison is difficult, if not impossible. 
 But protection in England never aimed at the 
 encouragement of infant industries, it sought 
 rather to maintain the oldest of all — ag-riculture. 
 The most per fervid protectionist of modern times is
 
 ENGLISH INDUSTRIES 39 
 
 willmtj- to admit that Eno-lish manufacturers were 
 well able to take care of themseh'es. The immunity 
 of the soil from mvasioii while all Europe was a 
 battlefield, the employment of the people in the arts 
 of peace, while those of other nationalities wielded 
 the sword, though they were largely subventioned 
 at English expense, constituted ill themselves a 
 premium which rendered competition prohibitive. 
 True, there was a tariff on all imported manufactures, 
 but it was a hindrance rather than otherwise, and 
 imposed on the chance of mulcting anything that 
 straved into the kino-dom, for the benefit of the 
 treasury, which, reeling under a load of debt, found 
 the greatest difficulty in making ends meet. As the 
 wealth of the nation increased and direct taxation 
 became possible as well as profitable, the worn-out 
 and rusty shackles were struck oft" trade, which 
 became more and more free without attractino' the 
 manufactured ffoods of the foreiofner, who indeed 
 rather increased his custom to his Enoflish rival. 
 To protect manufacturing industry therefore, was 
 about as productive an employment as gilding 
 refined gold. 
 
 Far otherwise was it with agriculture, and the 
 wonderfully constructed sliding scales invented l)y 
 our forefathers almost lead us to the conclusion, 
 even in this scientific age, that the science of pure 
 mathematics has been either lost or stolen. In any 
 case it was labour wasted, l^ecause nearly every 
 other nation on the face of the earth found it rather
 
 40 INFANT INDUSTRIES 
 
 intu'c tliaii it could inaiuige to feed itself, and only 
 the inducement of very hio^h prices persuaded people 
 to starve themselves a little more for the sake of the 
 ortered reward. Then the sliding scale became 
 so like free trade that onlv an expert could detect 
 the difference. 
 
 This is not the })lace to discuss the motives 
 which animated Hichard Cobden and those who 
 acted \\'\\\\ him in the great Corn Law Leamie. 
 That many of the men concerned were actuated by 
 pure love of their species, and on the highest 
 grounds of a noble and unselfish philanthropy is 
 absolutely beyond dispute, that others thought only 
 of the cheaper cost of living, the possibility of 
 reducing the wages of their workpeople, and the 
 probable stimulus to their trade, is equally certain. 
 What is more apparent than anything else, is that 
 any man who values his future reputation should 
 never adopt the profession of prophet, for many on 
 both sides have thus far been hopelessly wrecked. 
 The greatest prosperity ever enjoyed by British 
 agriculture was under Free Trade, and though it 
 now languishes, it can hardly be said to be worse 
 off than in countries where protection is still rife, 
 and where the farmer and landowner are objects 
 of tender solicitude. At anvrate we mav dis- 
 miss it for tlie time being, the clamour for pro- 
 tection is not tQ inaugurate a new, but to 
 resuscitate an old industrv, and therefore rests 
 on totally different grounds, though ruled
 
 FALSE STIMULUS 41 
 
 by exactly the same principles as we have been 
 discussino". 
 
 What might have happened had Great Britain 
 started on even terms with her manufacturing rivals 
 of the present day, I do not care to surmise after 
 penning the preceding paragraph. Financial and 
 economic heresies might have taken as deep root 
 there as elsewhere, and then the great tariff battle 
 would have been still further embittered. Most 
 Englishmen and all Scotchmen, however, are fer- 
 vent advocates of Free Trade, because it suits their 
 pockets ; and as there is hardly likely to be any 
 change in this respect, the dulcet tones of the pro- 
 tectionist charmer only fall on deaf ears. For exactly 
 the same reason the American manufacturer stands 
 by protection, and not because he desires to see his 
 workpeople earn high wages ; he would reduce them 
 below the European standard if he could, though 
 there are honourable exceptions of course. There 
 can be no hope therefore of convincing him, the 
 appeal must rather be made to that wider circle 
 which includes within its circumference the victims 
 of the system. 
 
 Nobody would ever dream of erecting a cotton 
 factory on the summit of Ben Nevis, or constructing 
 blast furnaces on the roof of the Alleghanys, even 
 though subsidised. At least the man who attem])ted 
 it woukl more likely than not be escorted by his 
 fellows to the nearest lunatic asylum. Vet 
 experiments almost as foolish are constantly
 
 42 IXFA.XT INDUSTRIES 
 
 atlriii])lt'(l lIir()iiL;li()iit llu' world. For what can 
 be more ridiculous tliau to endea\'our to establish 
 an industry where the true economic conditions are 
 entirely absent. Either the raw niateiiab of Httle 
 vahie, lias to be transported an innnense distance at 
 considerable cost, or labour has to be attracted by 
 hii]^her wages from some established and profitable 
 trade. And yet Governments wdll deliberately 
 compel their subjects to pay 50 and 100 — 
 yes, and 200 })er cent, more than tlie real value 
 of particvdar commodities, in order that some 
 prentice hand may prove his ability to make them. 
 The same Government, as likely as not, will refuse 
 to permit the establishment of another industry or 
 brancli of it, because the cost of production is 
 so small. Hard working but poverty-stricken 
 foreigners, with a trade at their finger ends, are 
 forbidden to enter the country and pursue it, while 
 complaints are loud of the competition they create 
 at home. Surely the true policy is to encourage 
 everv trade and industrv which, beffinnino- on a 
 cheap basis, can work its way to a higher level 
 and carry its labourers with it, rather than to 
 stimulate those inaugurated at immense cost, which, 
 were the props removed, would collapse like a house 
 of cards, and bury all connected with them beneath 
 the ruins.
 
 CHAPTEE III. 
 Taxing the Foreigner. 
 
 Antipathy to Taxation — Value of Natural Monopolies for Revenue 
 Purposes. Export Duties: — Nitrate of Soda — Sugar— Mint 
 Seigniorage on Mexican Dollars — United States Wheat — Cotton — 
 British Salt and Coal — Textile Machinery. Import Duties: — 
 French Wheat — Analogy to United Kingdom — The Steel Rail 
 Pool in America — Trusts — Antagonism of Free Trade to Trusts — 
 Influence of Protection on Price — Incidence of Revenue Duties — 
 Price versus Market Value. 
 
 Mankind is so constituted as to be ever seeking to 
 diminish, or altoQ;etlier avoid its ol)lio;ations to 
 the State. Men, and women too, will spend money 
 recklessly on the most foolish objects which benefit 
 neither themselves nor anyone else ; but was there 
 ever one who did not grumble at paying a tax ? 
 Whenever it is proposed therefore to make the 
 foreigner provide the national revenue, there is 
 always a delighted crowd ready to applaud the 
 method suggested, without knowing exactly how 
 it is o-oino" to work. The worst of it is that no 
 national patent is possible for so clever an invention; 
 every country in turn will adopt it when once dis- 
 covered, and peo})Ie arc not always economical wluni 
 spending their neighljour's money. Perha})s there- 
 fore it is better on the wIkjIc that each nation
 
 44 TAXIXG THE FOREIGNER 
 
 should I'aisc its own ivvciiue and control its expen- 
 diture, than tliat it .should hand it over to another 
 to do what it likes with. 
 
 Tliat tliere are methods of exacting; tribute from 
 other nations without appealing to the fortune of 
 war is certain. They are few however, and becoming 
 gradually fewer, because while people can establish 
 and permit monopolies in their own midst, they can 
 rarely enforce them on others. A country which 
 is fortunate enough to possess a commodity which 
 does not exist elsewhere, and others must have, is 
 thus able to tax the foreigner by the imposition of 
 an export duty. Salt, for instance, is a necessity in 
 India as in all other lands, and yet is only found 
 there in the most meagre quantities, and for that 
 reason is made an important source of revenue. 
 But su]3pose Great Britain desired to exploit her 
 great dependency and make it a source of revenue, 
 as colonies have been made in the past : by pro- 
 hibiting the importation of salt from other countries, 
 she could secure the mono[)oly to herself, and impose 
 an export duty which the Indian native would be 
 compelled to pay, together with the import duty on 
 his own side. 
 
 A few instances still survive where something; of 
 the sort is done, independent of relationship between 
 colonies and mother countries. The nitrate industry 
 of South America is subjected to such an impost for 
 the benefit of the Chilian Government, which raises 
 nearly half its revenue in this way, and hitherto it
 
 EXPORT DUTIES 45 
 
 has been a tax on foreigners, because nitrate of soda 
 is not produced elsewhere, and is a favourite manure 
 on the continent of Europe, where its properties are 
 found suitable for certain lands and special crops. 
 Whether chemical research, now so busy, will even- 
 tually find a cheaper substitute in an artificial 
 manure, it is of course impossible to say, but 
 should this happen, then if Chili desires to retain 
 the trade, the duty will have to be abolished. 
 
 Other export duties are to be found which are 
 not so successful, and are indeed continued with the 
 full knowledge that they press on the home 
 producer. Since the abolition of slavery in the 
 West Indies, it has been impossible to secure a 
 sufficient quantity of negro free labour for the 
 cultivation of the plantations, and recourse has been 
 had to the East Indies, whence coolies are imported 
 under indentures. As far as the islands and terri- 
 tories under British control are concerned, every care 
 is taken to attend to their welfare, and a fund 
 accumulated to send them home ao-ain when their 
 terms have expired, and this is raised by a small 
 export tax on sugar. It should of course be 
 regarded as a slight increase in the cost of labour 
 rather than a tax. 
 
 Another instance is to be found in Mexico. The 
 Philippine Islands were once dependent upon the 
 viceroyalty of that country when it was a Spanish 
 colony, and all trade l^etween them ;ind Europe 
 passed through Mexico. Every year a large (piantity
 
 46 TAXiyO THE FOREIGNER 
 
 of silver coin or Ijiillioii was dospatclicd from Acjipulco 
 to Manila in pa}inL'nl of nicrchundise sent from 
 Manila' to Acapulco, and was afterwards disseminated 
 throughout the whole of the East Indies by means 
 of local trade. Thus the JNIexican dollar became, 
 and remains to-day, the most accepted currency in 
 many countries in the East, and Mexican silver is 
 minted before being exjjorted. The Government 
 imposes a seigniorage which somewhat more than 
 covers the actual cost of minting, and thus a duty is 
 imposed on one of the principal articles of Mexican 
 export, which is only paid for by the foreigner how- 
 ever, at the value of the silver contained, and the 
 tax consequently falls on the silver mine owner. 
 
 Morocco is another instance where a small duty is 
 levied on almost every article of export, and needless 
 to say this does not contribute to an extension of its 
 trade. Some of the smaller colonies are likewise 
 compelled to make up their revenue by this method, 
 otherwise import duties would be excessive^ while 
 the object, in French and German colonies especially, 
 is to encourage the import of manufactured goods 
 rather than the export of native produce, the 
 dependence of one upon the other being apt to be 
 lost sight of. 
 
 Occasionally an export duty is imposed which is 
 meant to be and actually proves prohibitive, as for 
 example in South Africa, where an ostrich can only 
 be exported on payment of a fine of £100, and the 
 eo-gs of the l)ird, £5 each.
 
 TAXATION OF WHEAT AND COTTON 47 
 
 The question naturally arises, whether any of the 
 great commercial countries could possibly subsidise 
 their revenues by similar duties. What is there, 
 say in the United States upon which they could 
 be levied? That country exported in 1895-96 
 60,000,000 bushels of wheat, and had a duty of 
 5 cents a bushel (equal to about Is. 8d. per English 
 quarter) been charged on it, it would have realised 
 $3,000,000. For the second half of 1896 the export 
 of wheat was unusually heavy, and it is not at all 
 unlikely that the duty would have been paid Ijy the 
 foreigner, as the Indian famine and the Australian 
 drought, with the consequent failure of the wheat 
 crops in both countries, gave the United States the 
 control of the market, and enabled them to some extent 
 at anyrate to fix the price, which there might have 
 been little difficulty in raising another 5 cents a 
 bushel. Still, even had that really happened, it would 
 have been difficult to persuade the farmer that he 
 would not have received those 5 cents had there been 
 no duty. Besides, how often now do the United 
 States control the wheat market ? Year after year 
 for many years, there has been a surplus in the 
 world's production, and the consuming, not the 
 growing countries have established the price. Under 
 such circumstances they certainly would not pay an 
 export duty, which must consequently fall upon the 
 farmers. To tax the export of wheat therefore is 
 an impossibility on economic grounds, putting alto- 
 gether on one side the morality of taxing food ;it all.
 
 4S TAXnVG THE FOREIGNER 
 
 The most iin})ortant crop grown in the I nitcd 
 States for export, is cotton. An export duty of lialf 
 a cent, a pound on the crop of 1894-05 (a large one) 
 wouM have realised 617,500,000, on tliat of 1895-96 
 (a small one) S12, 000,000. Surely liere if any- 
 where is an opportunity for taxing the foreigner ! 
 Moreover, the American staple has never yet 
 been cultivated economically elsewhere, and is so 
 far a practical monopoly. The rich alluvial lands 
 of the Mississippi and its numerous tributaries, or 
 the virgin and well-watered soils of Texas, seem 
 to defy competition. India and China, it is true, 
 grow much cotton, Init for the purposes for which 
 American is utilised, all but the very choicest of 
 it is valueless. The production of Egypt has ra})idly 
 increased, but the A'alley of the Nile is so much more 
 fruitful than even the Mississippi, that its yield is as 
 superior as that of the Indies is inferior. There is 
 still another advantag-e. America retains from one- 
 fourth to one-third of the croj) for consumption in 
 its own mills, and an export duty on the raw 
 material would afford the domestic spinner an 
 equivalent bounty on the manufactured article, and 
 enable him to compete with his foreign rival, even 
 in foreign markets. 
 
 Again however, it is the foreign consumer who 
 more often than not rules the price of cotton, and 
 to enable American planters to do so they would 
 need to enter into a combination to limit the out- 
 put. That in its turn would be extremelv diliicult,
 
 BRITISH SAIT AND COAL 49 
 
 as, independent of jealousies, the weather afiects the 
 yield of the seed put in the ground to fully 25 per 
 cent., and no ring or trust has yet been able to 
 control that. A crop planted to produce a normal 
 consumption might consequently fall short of, or 
 exceed it by more that 10 per cent. When there 
 was a shortage, the European consumer would pay 
 the duty ; when a surplus, the American planter ; 
 that is, when the price was high owing to 
 scarcity, it would be forced still higher, and when 
 low in consequence of abundance, the result to the 
 planter would be more disastrous than ever. An 
 export duty on cotton therefore is as much out of 
 the question as on corn. 
 
 There is no occasion to go through the entire 
 list of commodities, in which scarcely one is to be 
 found to which objection would not be taken, and 
 to tax the foreigner by this means would necessitate 
 the annual readjustment of the tarift'. American 
 traders find a quadrennial one quite frequent enough 
 as it is. 
 
 Turning now to the exports of Great Britain, the 
 bulk of them are at once out of court. They con- 
 sist of manufactured articles. British manufacturers 
 find it hard enough to meet foreign competition, 
 and the most trivial additional burden would 
 destroy their trade altogether. There are one 
 or two natural products however, wliidi, like 
 wheat and cotton in America, it is at least advisable 
 to pass under review. Salt and coal form more or 
 4
 
 50 TAXLXG THE FOREIGNER 
 
 Jess important items in tlic trade returns. Anyone 
 acquainted witli the history of the Salt Union will 
 hardly recjuire to be told the consequences that 
 follow an artificial rise in the price of tliat particular 
 commodity ; those who have not the knowledge 
 may find it profitable to acquire it. But coal is on 
 a somewhat difi"erent basis. It is a raw material 
 entering more or less into the production of every 
 other. The output of the mines in Great Britain is 
 colossal, and in 1896 reached 195,000,000 tons. 
 Such fio-ures are bewdlderino;, and to a non-scientific 
 mind it must appear incredible that this can go on 
 ■year after year without the surface of the earth 
 collapsing. Certain it is however that, though 
 there is no sign of it yet, exhaustion must be 
 somewhere in the not very remote future. 
 
 Of the quantity named, about 150,000,000 tons 
 was retained for home consumption, some 10,000,000 
 used for steamer coal, and the remaining 35,000,000 
 tons exported for use abroad, to some extent also for 
 the supply of steamers at foreign ports. It is con- 
 tended that a duty should be imposed on this 
 -export, in order if i30ssible to put a stop to it, as it 
 w^ould most eff'ectually, because coal is an article of 
 world w^ide production, and can be raised in other 
 countries quite as cheaply as in Great Britain. 
 Germany in particular is stimulating its foreign 
 trade in coal, and of an output in 1896 of up^^■ards of 
 80,000,000 tons, exported 13,500,000, or about 
 17 per cent, of the total against the British 23 per
 
 TEXTILE MACHiyERY ^i 
 
 cent. ; but then it must be remembered that both 
 the merchant and naval fleets of the two countries 
 are altogether disproportionate to their size and 
 trade. Should our industries and our hearths ever 
 be threatened with natural scarcity, restriction may 
 become a necessitv, but under existing; conditions it 
 need not be anticipated. Electrical science is mak- 
 ing such rapid progress, that in another generation it 
 may provide most of the motive power as well as 
 light and heat, and then the demand for coal will 
 become extremely limited. British coal owners are 
 therefore acting wisely in disposing as ra^Didly as 
 possible, provided it is on profitable terms, of what 
 in the future may be a drug. It will be time to cry 
 halt when the danger really looms in sight. 
 
 Besides, to prohibit, or even to check the export 
 of coal, would inflict enormous loss on British 
 shipowners, wdiose principal outward cargo it is. 
 Indeed in the same year, 1896, though the total 
 tonnage cleared from the various ports of the United 
 KiuQ-dom reached a fio-ure exceeding- 52,000,000 
 tons, that of general merchandise was under 
 8,000,000, and the rest was coal. No more serious 
 blow therefore could well be aimed at British com- 
 merce. 
 
 Among British exports of manufactured goods, 
 textile machinery was accountable in 1896 for 
 .£6,750,000. AVe are told that we are making a 
 whip for our own l)acks, and that the countries 
 which take our machinery eventually take our
 
 52 TAXING THE FOREIGXER 
 
 trade with it. In the manufacture of textile ma- 
 chinery however, whieli during the last few years 
 has been very largely for foreign account, as 
 most British manufacturers have supplied them- 
 selves with the latest and best, some 30,000 hands 
 are constantly employed, and after all it matters 
 very little whether they are earning a living in 
 machine shops, or in cotton and woollen mills. 
 Indeed, in the former they not only receive a 
 hio;her rate of waoe, but the material used is 
 produced almost entirely by British labour, and 
 employs many thousands more, while cotton and 
 wool are brouoiit from the ends of the earth. 
 And if England refused to supply the machinery, 
 it would be made elsewhere ; a foolish restriction 
 of this sort is said to have led to the establishment 
 of the greatest ironworks in Belgium, which now 
 compete so keenly and so successfully with the 
 British trade. 
 
 The hope of taxing the foreigner for the benefit 
 of the British exchequer by placing a duty on 
 exports, is consecjuently a delusive one, and few if 
 an\^ Eno-lishmen are foolish enouoh to induloe it. 
 Either they must go on paying, or find some other 
 way out of the difficulty. 
 
 It is in the realm of imports where the protec- 
 tionist feels himself on firm ground. He points 
 confidently to the rates and taxes paid by the 
 native manufacturer which add to the cost of his 
 goods, while free imports escape. Not altogether-
 
 IMPORT DUTIES 53 
 
 though, for the shipowner who carries them, the 
 railway company, the distributor, and the retailer, 
 all have to bear their share like the manufacturer. 
 All the same it does on the surface look unfair, 
 until we come to consider that these foreign com- 
 modities have already been more or less enhanced 
 in price in their own country by similar rates and 
 taxes, though perhaps not levied in the same way. 
 The state, county, and municipal taxation in the 
 United States, for instance, levied on real and 
 personal property, averages eight dollars per head 
 of the population, one-third of which is devoted to 
 purposes of national education. The only exception 
 is when bounties are granted, with which we shall 
 have occasion to deal hereafter. 
 
 It is bad policy to spoil a good case by claiming 
 for it more than is really due. As a Free Trader 
 therefore, I frankly and unreservedly admit that 
 protective duties are not always paid in full by the 
 consumer, but they are still less often paid by the 
 foreigner. No such sweeping assertion can be made 
 on either side, and to arrive at the truth we must 
 analyse each individual case. That of course 
 is utterly impossible here, but one or two illustra- 
 tions will serve to draw out a few of the principles 
 which have invariably to be considered. 
 
 In highly protected France, foreign wheat must 
 pay a duty of 7 francs per 100 kilogrammes, or double 
 hundredweitj-ht as it is called in Eno-land, before 
 it can pass to the consumer. This is equal to
 
 54 TAXING THE FOREIGNER 
 
 alunil r2s. Gel. a {juarter, or 38 cents, a 1)iisliel. It 
 rarely happens however that French wheat sells 
 ill tlie home markets at this excess over the prices 
 quoted say in London, Liverpool, or New York, 
 therefore the consumer is not mulcted in the entire 
 7 francs. But the reason of this is that France, as a 
 rule, imports little foreign wheat, and grows what she 
 wants at home, and as supply and demand are fairly 
 balanced, competition makes the market price. But 
 two things may, and one of them at least sometimes 
 does happen. France grows more wheat than she 
 requires for home consumption, and wants to sell the 
 surplus abroad. This she can only do by taking the 
 price ruling in foreign markets, and as cost of pro- 
 duction has been enhanced by the general system of 
 protection, that results in a severe loss. France 
 therefore cannot grow wheat for export like Hungary 
 or Russia, and it is only when nature has been more 
 than usually bountiful that this can ever occur. She 
 merely tries to meet her own requirements. Now 
 it is most improbable that this is the real economic 
 capacity of French land. Either it ought to l)e 
 able to produce more and become exporting, or part 
 of it could be more advantageously applied to 
 another purpose, and some of the wheat purchased 
 abroad. 
 
 Occasionally however the French wheat crop 
 fails, and for the people to be fed, large foreign 
 supplies are necessary. This happened in the year 
 1891, and as the Russian crop failed at the same
 
 FRENCH WHEAT 55 
 
 time, tlie outlook was somewhat serious. It was 
 recognised by the Government that the price of 
 wheat in France would be the price ruling in foreign 
 markets, with the cost of freight added, plus the 
 duty, every centime of which in this case would 
 have to be paid by the consumer, not only on the 
 wheat imported, but on that grown at home as well. 
 Even a protectionist French Government dare not 
 face an angr}^ populace clamouring against dear bread, 
 and the duty was temporarily reduced to 3 francs, 
 in spite of the protests of the agricultural com- 
 munity, who wanted high prices to compensate for 
 short crops. This was all the more significant from 
 the fact that it occurred while the French Parlia- 
 ment was engaged in framing a new tariff, under 
 which most duties were considerably augmented ; yet 
 the utmost concession made to the protectionists, 
 who were in a large majority, was that the reduc- 
 tion should not become operative until August the 
 first, and should cease on June the first following. 
 
 Surely no franker admission was ever made of 
 the utter helplessness of protection to meet an 
 unlooked-for emergency. 
 
 As a rule France needs a small foreign supply, 
 and as the market for wheat is a very fluctuating 
 one, a favourable moment has to be seized for 
 securing it. Purchases may be made during a time 
 of depression wlicn holders are anxious to realise, 
 and a cheap sale is (^onckuled to move an important 
 parcel. In sudi a case the seller may really be
 
 56 TAXING THE FOREIGNER 
 
 paying a portion of the duty, but this can only 
 happen on rare occasions on a. scale fjir too insig- 
 nificant to estaljlish a principle or base an argument 
 upon. 
 
 English protectionists may perhaps claim that the 
 moral of all this is, that protection enables France to 
 feed herself with wheat, and that if imposed in 
 Enoland it would do the same. Had Eu^lish laud 
 actually gone out of cultivation through the operation 
 of Free Trade, its continuance would have been a 
 matter for serious consideration, if not an inipossi- 
 Ijility, because after all, agriculture is still and 
 must remain the greatest British industry. But 
 what has really taken place has been a gradual 
 displacement of wheat in favour of other crops, and 
 the land is more widely and intensely, as well as 
 more diversely cultivated than ever. Much loss and 
 suffering have doubtless accompanied the process, 
 as they always must when a body so conservative as 
 farmers can no longrer trudgje alono- the time-worn 
 ruts. Some land has become derelict, but only on 
 account of the excessive and inalienable charges 
 upon it. There is no other country in the world 
 where the laud could bear such burdens of rent and 
 tithe combined, and in many instances of tithe 
 alone, and remain profitable to the cultivator. 
 
 Moreover, it is quite certain that unless an exces- 
 sive import duty were imposed, it would be many 
 years before England again harvested enough wheat 
 to meet her own requirements, if indeed that ever
 
 BRITISH AGRICULTURE 57 
 
 occurred ; and, meanwhile, the whole duty would be 
 paid by the consumer just as it was in France in 
 1891, because the price of foreign wheat, plus the 
 duty, would rule the English markets with very 
 occasional exceptions. The risk of scarcity of food 
 in case of war is no doubt unpleasant to con- 
 template, but there are others still greater, and it 
 would be madness for England to cast away her 
 commercial and industrial supremacy in order to 
 make prejDarations for an eventuality that may 
 never arise. 
 
 With France it is different, and the abandon- 
 ment of protection to agriculture there is for the 
 present impossible. It would be manifestly unfair 
 to the French farmer to tax him heavily for bounties 
 and to make him pay dearly for protected commodi- 
 ties, and then leave him in the lurch. Fiscal reform 
 in France must begin at the other end. Besides, she 
 is exposed to greater risks than England in case of 
 war, and cannot rely upon foreign sources for her 
 food supply. Protection therefore is the curse of 
 militarism, and the penalty imposed for a Europe 
 armed to the teeth, and not by any means a sound 
 and wise economic policy. 
 
 Let us now for change of scene travel across the 
 Atlantic. The United States is the land of railroads, 
 and as might be expected, the plant set up for 
 equipping them is gigantic. Everything however 
 is protected, from the locomotive to the sleeper, and 
 protected so highly, that it amounts to proliibition.
 
 5S TAXING THE FOREIGNER 
 
 111 the autuinii of 1890, an aniioiiiicement was made 
 that the manufacturers of steel rails, amalo-amated 
 into a pool, would thenceforth charge at least $28 a 
 ton, and might shortly raise the price. American 
 railroads have discovered too often that there is a 
 hook under that sort of worm, and they did not bite. 
 English mills could have rolled and laid down rails 
 in the United States at much below $28, but the 
 duty 2^revented them. 
 
 In February 1897, the pool suddenly collapsed, 
 and in three days sales of about 700,000 tons, 
 sufficient to lay a single track more than 6000 miles 
 in length, that is, to build a new double track railway 
 right across the American continent, were made at 
 prices varying from 815 to $18 a ton, probably below 
 actual cost. ]\Iany railroads supplied their require- 
 ments for a long time ahead, and orders are said to 
 have been booked for further large quantities on very 
 little better terms. Such are the facts ; "what do 
 they signify ? 
 
 Secure in their own market and able to make 
 big profits, the American steel rail makers were too 
 greedy, and turned out more than were wanted. 
 Instead of competing against each other and 
 bringing down the price, they agreed" to pool their 
 stocks, charge $28 a ton to all buyers, and divide 
 the proceeds on some principle agreed to among 
 themselves. But nobody would buy, and some of 
 the makers who needed money could no longer 
 wait. Could we penetrate the secrets of the ring,
 
 AMERICAN STEEL RAILS 59 
 
 we should probably discover that diligent enquiries 
 were made as to what chance there was of disposing 
 of a large quantity of rails abroad. It would have 
 paid to sell half a million tons to foreign consumers 
 at $12.50 a ton, and make a loss of $4 or $5, if by 
 so doing they could have ensured the sale to their 
 own railroads of another half million at $25, and 
 netted a profit of $7 or $8. Either for so large a 
 quantity no demand existed, or the weight of the 
 rails was unsuitable, so the American railroads got 
 them at cost jirice instead. 
 
 Now here is protection, yet so far from the con- 
 sumer paying the duty, he gets his commodity at 
 less than the price at which it could be imported 
 free. But that was never the intention of the steel 
 rail makers, and only indirectly their fault. If 
 indeed rails can be produced in the United States at 
 $15 to $18 a ton, then the argument set forth in the 
 preceding chapter is incontrovertible. Pennsylvania 
 does not require protection, and every cent imposed, 
 so far from going to assist an infant industry, is a 
 flagrant robbery of the consumer for the benefit of 
 the producer. The latter wanted the dut}', not to 
 keep him alive, but to make $12 a ton profit. The 
 protectionist says to-day his system is necessary to 
 encourage native industries against foreign competi- 
 tion, to-morrow he gloats over the fact that these 
 same industries are selling their commodities at 
 lower prices than the foreigner, and that })rote(;ti<)n 
 makes things cheaper, not dearer. There is some
 
 6o TAX/AG THE FOREIGNER 
 
 iiu'onsistoiicy liei'c, aiul the only oxpl;iiiiitioii of it is, 
 that when tliievcs fall out, honest men come by their 
 own. 
 
 What befell the steel rail pool is of course liable to 
 liappen to any other protected industr}^, and if such 
 a thing became at all general, the consumer would 
 indeed have occasion to rejoice. But protected indus- 
 tries, in America especially, have learned how to protect 
 themselves against this calamity. Theyno longer form 
 pools liable to sudden dissolution, but Trusts under 
 despotic management, and impervious to every attack 
 from within or without. Having first combined a 
 sufficient number of the concerns interested, they 
 either force the rest to join, or proceed to ruin them, 
 and then, not only dictate the price of the commodity 
 they deal in from New York to San Francisco, and 
 from ]\Iaine to Southern Texas, but defy competition, 
 domestic or foreign. The former is easy, the latter 
 only a matter of calculation. They know what the 
 foreign article will cost after the duty has been 
 paid, and sell their own at 1 or 2 per cent. less. 
 The profit may be 5 per cent., or it may be 150, but 
 they allow nobody else to share it with them. 
 
 President M'Kinley during his electoral campaign 
 propounded one of the most extraordinary fallacies 
 ever uttered, when he maintained that Trusts were 
 the offspring and outcome of Free Trade. Under it 
 they could not exist, because foreign traders with 
 large capital could not be crushed like the smaller 
 ones at home. They might be invited to enter the
 
 INCIDENCE OF PROTECTION 6i 
 
 ring, but the swarm would be so great that the 
 profit eventually pertaining to each member would 
 not be worth taking. President M'Kinley and Free 
 Trade are as far asunder as the poles and the 
 equator, yet the offspring of the latter poured out 
 their money like water, and worked day and night 
 to secure the return of the candidate of Protection. 
 Surely here is another inconsistency ! 
 
 Two broad principles may be laid down as the 
 result of a protective tariff. When it is prohibi- 
 tive of course nobody pays any duty. The foreigner 
 loses his trade and, if he cannot transfer it elsewhere, 
 his profit, but contributes nothing to the revenue of 
 the protected country. The consumer however, on 
 every purchase he makes of a protected commodity, 
 pays to the producer, not to the Government, a tax 
 equivalent in amount to the difference between his 
 actual outlay and the cost he would have incurred 
 had the market been open to free foreign competi- 
 tion. 
 
 When the duty is not prohibitive, and the 
 Government derives a revenue, in three cases out of 
 four, if not nine out of ten, the consumer and not 
 the foreign producer contributes it. The latter may, 
 when a tariff is raised, consent for a time to cut his 
 prices and work at a loss, in the attempt to retain 
 his market, but after a very short experience he 
 invariably relinquishes it to his more favoured rival. 
 Only in such instances, or where surplus stock is 
 shipped to a protected market for tlie purpose of
 
 62 TAXING THE FORETGNER 
 
 heiiio" got rill of, does the forei^'ner pay, ami lie 
 never does that while there is a free market open 
 elsewhere. 
 
 No pretence is ever made that a revenue tariff is 
 a tax on the foreigner, and in that respect it is 
 perfectly honest. The British duties on spirits and 
 tobacco, on tea and coffee, are paid by the consumer, 
 and are meant to be. They are as much an internal 
 tax as the house duty, or the income tax, or a 
 licence to use armorial bearings. Their incidence 
 may be unfair, but they claim to be just what they 
 are. Still, it does not follow that no portion of them 
 is ever paid by the foreign producer. Stocks miiy 
 have accumulated to such an extent that, to force 
 them oft', concessions iu price must be made. The 
 puljlic will increase their consumption if they can 
 get them cheap enough, and care nothing about the 
 dut}'. Did it not exist at all they might be will- 
 ing to pay just as much, and consequently the pro- 
 ducer or merchant loses it. But that is an accident 
 of the system, not its design. 
 
 Arguments as to who pays the duty based on 
 prices are altogether misleading, as so many elements 
 enter into the making of them. It is no uncommon 
 practice in countries where protection is rampant, to 
 endeavour to prove that it cannot hurt the consumer, 
 because prices of protected commodities have fallen 
 so heavily during the last five or ten years. But all 
 commodities have been aftected alike, and protection 
 has more than once been invoked in the effort to
 
 PRICE AND VALUE. 6z 
 
 maintain them. Comparisons must not be made 
 with last year, or even with last month, but with 
 the same commodities in a free market. If the 
 protected market is relatively no higher, then the 
 consumer is fortunate, but the difference is the 
 measure of his loss, rarely, if ever, of his gain. 
 
 Two instances will suffice in conclusion. In 1874 
 the remaining duty on sugar in the United Kingdom 
 was abolished. The price at that time was 30s. per 
 cwt., now it is under 10s., yet nobody would contend 
 that the abolition of the 3s. tax has been the cause 
 of the decline. The consumer did almost at once 
 obtain the benefit, but a long series of events which 
 would make a history by themselves, have gone to 
 reduce sugar to its present price. Similarly in the 
 negotiations for a treaty of commerce with Greece in 
 1890 the British Government ao-reed to reduce the 
 duty on currants from 7s. per cwt. to 2s. The price 
 on the English market then was 26s., now it is 18s. 
 It has been many shillings lower, and probably 
 would be so now but for the political misfortunes of 
 Greece, and the attendant risks to the crop, l)ut even 
 the smaller difference is much greater than the 
 rebate of 5s. Greek currant growers hoped to 
 retain some of the advantage ; as a matter of fact 
 the British consumer promptly secured it all. 
 Other circumstances have tended to lower the price 
 still furtlier, notal)]y over-production, tlie refusal of 
 tlie French government to allow distillation to 
 be continued except on onerous terms, and Inst, l)ut
 
 64 TAXIXG THE FOREIGNER 
 
 by no mean.s least, the disonleied state of Greek 
 finances, and the depreciation of the currency. A 
 taritf may relatively alter prices, it cannot control 
 market value. 
 
 The inventor who can saddle his own and his 
 nation's taxes on the back of the foreigner, has yet 
 to be born.
 
 CHAPTER ly. 
 The British Tariff. 
 
 Customs and Excise Revenue — Antiquated Nature of Existing Tariff 
 — Spirit Duties — The Beer Duty — "Wine — Tobacco — Cigars — A 
 Neglected British Industry — The Breakfast-Table Duties — Non- 
 Dutiable Imports — Breadstuff's and Food — Raw Materials — 
 Labour — Sugar — Effect of Foreign Bounties — How to meet 
 them — Sources of Tea and Sugar Supplies — Manufactured 
 Articles — Cotton and Woollen Textiles — Leather — Glass — Iron 
 and Steel — Paper — Watches and Clocks — Gloves — Silks and 
 Ribbons — Linen Fabrics — Sundries — Summary of Suggested 
 Reforms. 
 
 The tariff imposed in the United Kingdom is 
 unique in the small number of items it con- 
 tains, and is one of the very few possessed by 
 any civilised and trading country, which can be 
 printed in good type on two ordinary octavo pages 
 and leave a wide margin. It is nevertheless, an 
 eminently productive one, the receipts from customs 
 duties aggregating for the financial year ending 
 31st March 189(3 ' no less a sum than £21,040,000, 
 while excise duties levied on beer and spirits made 
 at home were responsible for £27,530,000 more. 
 The total revenue of the kingdom was £109,527.831, 
 
 ^ Since the above was written the figures for the year ending 31st 
 March IHfjT have been given l)y tiie Chancellor of the Exchequer in 
 his budget speech. As they have not yet been issued in detail, I 
 prefer to deal witli those of 1890. 
 
 5
 
 66 THE BRITISH TARIFF 
 
 but this inchuled a considerable sum derived from 
 the post office, telegraphs, and other productive 
 sources, for which tlie public receive full vahie in 
 return. The amount collected from taxation was 
 approximately £92,500,000, and out of this customs 
 and excise contributed some £49,000,000, or over 
 tifty per cent. — not a bad proportion for a country 
 which long ago discarded jDrotection. Between 
 seven and eight millions of this total was diverted 
 to the relief of local taxation, and the balance 
 applied to Imperial purposes. 
 
 There is not however in any single item, the 
 faintest tinge of a protective tendency, and in this 
 respect the tariff is thoroughly sound. Neverthe- 
 less, it is full of anomalies, and like most institutions 
 verging on to a venerable age, demands radical re- 
 forms. Nothing of any consequence has been added, 
 and nothinof excluded, since the abolition of the suo-ar 
 duties in 1874, and it is impossible for a period of 
 a quarter of a century to elapse without many 
 changes in the channels of trade and the economic 
 conditions of the people. The specific rate on 
 nearly every article has been altered to suit the 
 exigencies of the revenue, but while on the one 
 hand no Chancellor of the Exchequer has ever been 
 bold enough to eliminate an item, and deprive him- 
 self and his successors of a source of income which 
 can always be made elastic, none on the other 
 has dared to suggest an addition in face of the pre- 
 vailing sentiment of the country. Yet it is quite
 
 THE SPIRIT DUTIES 67 
 
 possible that a tariff might now be framed, differing 
 in many essential points from the one in operation, 
 which, without departing a hair's-breadth from the 
 principle underlying it, might be more in consonance 
 with modern requirements. Unfortunately, free 
 traders sometimes bring discredit on their cause by 
 upholding an antiquated system as it is, because it 
 cannot be abolished either in whole or in part, 
 while periodic consideration and readjustment 
 would destroy many of the objections urged 
 aefainst it. 
 
 Let us first of all then, consider the tariff as it 
 stands. The most important part of it constitutes 
 a combination of revenue and morality, inasmuch as 
 the duties on intoxicating liquors are aimed at, and 
 do most materially check consumption. For the 
 financial year 1895-96, nearly eight and a quarter 
 million gallons of imported spirits paid £4,420,000, 
 while 32 million gallons distilled at home con- 
 tributed £16,800,000,^ the former at the rate of 
 10s. lOd., the latter 10s. 6d. a gallon. As in 
 most cases this exceeds the original cost, the 
 price of the licpior to the consumer is more than 
 doubled. The purchaser of a pint of whisky or 
 brandy, for instance, not only pays for the raw 
 materials, the cost of distillation, and the profits of 
 the distiller and any intermediate hands tln-ough 
 which it may pass, but one-eighth of the 10s. 6d. 
 
 ' A drawback on spirits a:id beer exported somewhat reduces the 
 net revenue.
 
 68 THE BRITISH TARIFF 
 
 duty, say Is. 4d., plus the profit which the 
 seller demands on the outlay of that sum, so that 
 the consumer in reality pays about 15s., and not 
 10s. 6d. a gallon, as a consequence of the customs 
 and excise duty. 
 
 Without entering into the question of the 
 advisability of increasing or diminishing the rate, 
 we can, from the moral point of view for which it 
 is partially imposed, see the possibility of very 
 material improvement in the manner in which the 
 duty is levied. The temperance reformer has been 
 very busy since the principle of the spirit duties 
 was established. The chemist and the medical man 
 have also taken their share in the work, and their 
 researches have brought to light many important 
 facts. We need not side with the extremists who 
 declare alcohol in every form to l^e rank poison, 
 nor with those who declare that except in very 
 excessive quantities it is harmless. It is probably 
 largely a matter of the physical constitution of the 
 individual consumer. But there is ground common 
 to both. The defamer of alcohol admits that some 
 kinds are worse than others, that, for instance^ 
 newly-distilled sj^irit is maddening in its effects, 
 while the matured article may be temporarily 
 soothing. The advocate proclaims the latter to be 
 positively beneficial, and admits that the former 
 does possess some drawbacks. One thing is beyond 
 dispute, that the man whose regular beverage is 
 well-matured whisky does not often drink to excess^
 
 THE BEER DUTY 69 
 
 and rarely becomes a confirmed drunkard, because 
 when that inclination takes hold of him, he craves 
 for something stronger. Of course it may, and 
 often does happen, that the one leads to the other. 
 Yet no distinction whatever is made between the 
 two in the matter of duty. 
 
 Now it stands to reason that new spirit must 
 be cheaper than old. In the first place, the 
 materials used in the distillation of the article 
 made for immediate or early consumption, are 
 invariably cheaper than those entering into the 
 composition of one meant to stand the test of time. 
 Nor can the latter be kept for nothing. There is 
 loss of interest on the capital sunk, besides ware- 
 house rent, fire insurance, and a certain amount of 
 leakage. A universal and indiscriminate duty of 
 10s. 6d. a gallon therefore is a direct encourage- 
 ment to the consumption of new, cheap, and 
 deleterious spirit. 
 
 The remedy is a simple one. E,aise the standard 
 of duty to 12s. 6d. a gallon, and allow a rebate of 
 Is, for every year the spirit is kept in bond up to a 
 period of say five years, which will probably cover 
 the cost of keeping it. These figures are not 
 absolute, and to maintain the national income from 
 this source, elaborate calculations would have to be 
 made before an exact basis could be arrived at. 
 But the principle can be adojoted, tlie revenue will 
 not suffer, good old spirit will ])e as clieap as the 
 bad new, public morality will gain, and the tem-
 
 70 THE BRITISH TARIFF 
 
 peraiice retoniuM- will I'or once have scored a 
 point without inclining- the hostiUty of any but 
 the more unprincipled members of "the trade" 
 who aim at profiting by the misery and crime they 
 create. 
 
 Tlie beer duty for the year with which we are 
 deahng was ^^aid on 33,825,000 barrels, at the rate 
 of 6s. 9d. for the specific gravity of 1055, and 
 amounted to £11,305,000. As a barrel contains 3G 
 gallons, the cost to the consumer of a pint, inclu- 
 sive of the profit on outlay, is not more than a 
 halfpenny, and he may be considered therefore to 
 escape very cheaply. Indeed, there are several 
 reasons why the duty should be materially 
 increased. Beer diinking may not be responsible 
 for a proportionate amount of crime to spirits, its 
 results tend rather to debauchery. In proportion 
 to the alcohol it contains however, it pays nothing 
 like its equivalent. A gallon of beer of 1055 
 specific gravity contains one-tenth part of a gallon 
 of proof spirits, which pays 10s. 6d. duty. The 
 corresponding beer duty would ])e Is. per gallon, 
 or 36s. per barrel, instead of the 6s. 9d. now 
 charged. Finally, the report of the Royal Com- 
 mission on the Finances of Ireland has demon- 
 strated that country to be considerably over- taxed, 
 due largely to the fact that whisky is the national 
 beverage, and not beer. Part of the injustice at 
 anyrate can be remedied by increasing the l^eer 
 duty, and reducing taxation in some way from
 
 WINE 71 
 
 which Ireland will benefit, without interferinof at 
 all with the spirit duties. 
 
 Similar questions enter into the brewing of 
 beer as into the distillation of spirits, and there is 
 a Pure Beer League in existence which advocates 
 differential duties. Experts are not altogether 
 agreed about the facts, and I lay no claim to be 
 one, and therefore make no pretence to settle the 
 dispute. The great bulk of the liquor brewed is 
 pure and wholesome, and therefore the question is 
 of minor interest compared with spirits. 
 
 Of the wine duties little need be said. It has 
 been the policy of successive Governments to 
 encourage the consumption of the lighter kinds in 
 the hope of displacing spirits. Nearly 11 million 
 gallons of this description contributed £540,000, 
 while less than half the quantity of the more highly 
 alcoholised produced £565,000, the respective rates 
 being Is. and 2s. 6d. a gallon. SiDarkling wines, to 
 whichever class they belonged, paid 2s. a gallon 
 more, amounting to £150,000. As wine is, with 
 rare exceptions, an undoubted luxury, and one 
 indulged in principally by the wealthy, the duties 
 do not err on the side of being excessive. But here 
 the graduated principle has already been intro- 
 duced, and it commends itself as both just and 
 wise. 
 
 After alcoliolic licpiors, the item of by far the 
 greatest importance is uimianufactured tobacco. 
 64,500,000 pounds yielded a gross revenue of
 
 72 THE BRITISH TARIFF 
 
 .£10,200,000, at the rate of os. 'lA. per ])oun(l. The 
 (hitv on tobacco caiiiiol in any sense l)e said to be 
 a moral tax, and it* such a thing as an Anti-Smoking 
 League does exist, it counts discretion the better 
 part of valour.^ Tobacco is a comfort rather than 
 a hixury, and is the solace of poor and rich ahke. 
 The use of it is rarely demorahsing, its abuse, Hke 
 that of everything else, carries its own punishment, 
 which does not necessarily involve other people. 
 Its consumption is moreover limited by natural 
 bounds. A man may empty his pockets of a con- 
 siderable sum on beer or spirits in a very short time ; 
 he may smoke hke a furnace, and find it difficult 
 to get through an ounce of tobacco costing three- 
 pence or fourpence in several hours. He may be 
 none the better after the performance, but few 
 people attempt it, and there is probably no pleasure 
 in life enjoyed on the whole with such moderation 
 as tobacco. 
 
 Yet this is the commodity singled out for an 
 altoofether exorbitant tax. Were it orimnallv an 
 expensive one, something might be said in favour 
 of the impost as being not out of proportion to its 
 value. But for the vear endino^ 31st December 
 1896, the import of unmanufactured tobacco into 
 the United Kingdom was 83,558,757 lbs., valued 
 at £2,410,949, or an average price of sevenpence 
 
 1 Since writing the above, my attention has been dra'mi to the 
 " English Anti-Smoking Society and Anti-Xarcotic League " (not 
 Limited in name, though I should judge so in membership).
 
 TOBACCO AND CIGARS 73 
 
 per pound, yet a duty of 3s. 2d. is imposed, more 
 than five times its original cost. It may be main- 
 tained that threepence to fivepence an ounce is not 
 an excessive price to pay for the limited quantity 
 each individual consumes, but that is not the ques- 
 tion if the principle be wrong. A lower price 
 would not greatly stimulate consumption ; it would 
 rather provide millions of wage-earners throughout 
 the kingdom with a few pence per week to spend 
 on other things. A steady and persistent reduc- 
 tion should be made in this charge, until it is 
 brought down to no more than half the present 
 rate. The Exchequer certainly cannot afford to 
 lose the £5,000,000 per annum involved, but com- 
 pensation must be sought in other directions. 
 Were the beer duty, for instance, raised one 
 shilling per barrel for three successive years, bring- 
 ing it up to 9s. 9d. or 10s., and the corresponding 
 rebate made on tobacco, the latter would, at the 
 end of the term, be reduced to Is. 6d. per pound, 
 and still be largely in excess of say Germany and 
 the United States. Moreover, as Ireland is a large 
 consumer of tobacco, she would directly benefit, 
 and gain relief from some portion at least of her 
 excessive taxation. 
 
 Of manufactured and partly manufactured 
 tobacco, embracing negrohead and cavendish, 
 the import was trivial, 875,000 lbs., and at rates 
 varying from 4s. to 4s. Od. ])er lb. contributed 
 £175,000 to the revenue. Any concession to the
 
 74 THE BRITISH TARIFF 
 
 iiiinianufactiiivd article must be extended to this as 
 well. 
 
 When we cenie to cigars we are on different 
 ground. The (piantity cleared from bond dining 
 the period under review was 2,180,000 pounds, and 
 paid duty at the rate of 5s, per pound, amounting 
 to £545,000. Cigars are very often expensive 
 luxuries, and the 5s., instead of being many times 
 their value, may be only 5 or 10 per cent, of it. 
 The tax therefore is not an unjust one. But the 
 price of cigars varies enormously, and what is a 
 severe impost on one costing twopence or three- 
 pence, is light on another worth a shilling. A great 
 quantity of the cheaper kind are manufactured in 
 the United Kingdom, and here at last we have an 
 opportunity of benefiting a home industry without 
 any infringement of free trade principles. Were the 
 dutv on foreigfn cig-ars retained as it is, and no 
 question asked as to what became of unmanufac- 
 tured tobacco after the duty on it was once paid, a 
 great stimulus would be afforded to British cigar- 
 making, and employment found for many hands. 
 It is doubtful even whether the foreign import 
 would be curtailed, as the penny or two- 
 penny cigar of fair quality would largely displace 
 the pipe or cigarette. It is nothing uncommon to 
 see the German mechanic returning from his work, 
 or the dravman drivino- his horses throutrh the 
 streets, with a cigar rather than a pipe between his 
 teeth, Avhile the consumption in the United States
 
 BREAKFAST TABLE DUTIES 75 
 
 equals about sixty per annum of the entire 
 population, ao-ainst four in the United King- 
 dom. 
 
 We pass now to articles of general consumption 
 other than alcoholic liquors and tobacco, which find 
 a place in the tariff. We are at once in the realm 
 of taxation falling largely on the poorer classes, but 
 still legitimate enough if levied in moderation, because 
 it avoids what may be termed strict necessaries, and 
 places no restraint on production. Tea, coffee, and 
 cocoa, currants and raisins, are provided after bread 
 and meat and clothing, or at any rate should be, 
 and those who can afford to buy them can also afford 
 to contribute their mite to the treasury, and indeed 
 this is frequently the only taxation they pay. Most 
 of the articles named however are too insignificant 
 to be economically taxed, and during the financial 
 year under review, coffee, cocoa, and chicory, con- 
 tributed between them £350,000, and dried fruits 
 £400,000, or a total of only three-quarters of a 
 million. In a budget exceeding one hundred millions 
 sterling, these might easily be replaced, but as they 
 do not inflict any special hardship, and no agitation 
 exists against them, they are permitted to remain. 
 Some day, a Chancellor of the Exchequer hard 
 pressed to balance his accounts may exact another 
 one or two millions from them, so that each one in 
 turn avoids distvn-bing so promising a milcli cow. 
 We might almost invent a foui-th |)in|)ose of tariff 
 in addition to the three dealt witli in the first
 
 76 THE BRITISH TARIFF 
 
 cha])tcr. and call it " ()])|H»rtiiiiist." Under this 
 heading; these (hities would nndonhtedly fall. 
 
 Tea however is another matter. The consump- 
 tion for the same period exceeded 225,000,000 lbs., 
 and at fourpence per lb. increased the national 
 income by £3,750,000. It responds to its purpose 
 therefore far more readily and efficiently than the 
 others. We will have something more to say about 
 it presently. 
 
 Having exhausted what is on the list, w^e must 
 now turn to what is not there, in order to determine 
 whether, among the multitude of articles imported 
 into the United Kingdom, there are not some which 
 might be made dutiable. Exports have already 
 been dealt with in the previous chapter, and need 
 not therefore be brought under review again. I 
 am aware that many free traders consider it rank 
 financial heresy to suggest the addition of anything 
 to the tariff, but even at the risk of being disowned 
 and finding myself homeless — for I cannot expect 
 any protectionist to pity me and afford me shelter 
 — I must subject free imports to a rigid analysis. 
 
 First and foremost we meet with articles of 
 food. So far as they are necessaries of life, they are 
 beyond the pale of argument. Living animals and 
 dead meat, wheat and all kinds of bread stuffs, 
 bacon and hams, butter and cheese, eggs and 
 poultry, i:)erishable fruits and vegetables, must 
 be held sacred as the sustenance of the common 
 people, whereby life is rendered tolerable, and they
 
 J?AJV MATERIALS 77 
 
 are enabled to pursue their daily avocations. 
 Immense as the import of these articles is, the home 
 production of many of them is still greater, and 
 keen as is the competition, farmers thrive and land- 
 lords draw big rents. Changes in cultivation must 
 continually go on, and the old-fashioned rotation of 
 crops go by the board, but the very diversity of what 
 the land now produces has done much to improve the 
 health and stamina of the nation by constant change 
 of diet. For agriculture there is no protection 
 other than just laws wisely administered. 
 
 The next great class of commodities consists of 
 raw materials. Where they cannot be j)roduced 
 at home, even protectionists concede that their 
 import should be free. Possibly however that 
 very circumstance may rouse the suspicions of the 
 free trader, but the protectionist, this once at any 
 rate, is right. To increase the cost of the materials 
 of manufacture would mean to handicap the export 
 trade of the country. If jorotectionists would only 
 see that labour is the most important of all raw 
 materials, they perhajDS would not be so anxious to 
 tax that by increasing the cost of livino-, and 
 necessitating the payment of high and sometimes 
 extravagant wages. The labourer is entitled to get 
 all he can, but the living ^vage, if the minimum he 
 demands, is also not very far removed fioni the 
 maximum he can at })resent hope to obtain. In 
 one sense the protectionist does recognise labour 
 as a connnodity, because in some countries he
 
 78 THE BRITISH TARIFF 
 
 is eiulfavouriiig t<> proliihit its iinpurtiitiou 
 altoii:etlier. 
 
 As far as the United Kingdom is concerned, 
 the most im])ortant raw materials are cotton 
 and wool, jute and hemp, hides and tallow, 
 timber and metallic ores — whether of iron, lead, 
 copper, or tin. In a minor category, but in their 
 way of no less consequence, are chemicals and 
 dye stuffs, paper materials and ivory, oils and 
 indiarubber, if indeed the |)ost otHce does not 
 deliberately destroy the last-named trade by its 
 red-tapism, for by refusing to forward the samples 
 of English merchants on the ground that they 
 emit an unpleasant odour, it is driving the busi- 
 ness into continental hands. So ripfidlv indeed 
 has it attempted to enforce its rules, that blocks 
 of wood, carefully wrapped up and bearing the 
 stamp of rubber merchants on the covers, have 
 been refused transmission, and returned to the 
 senders with the postage stamps defaced.^ There 
 are others too numerous to mention, but they 
 are either trivial or too essential to meddle 
 Avith. 
 
 There is still another laro-e class from which 
 the tariif list is really recruited, articles of con- 
 sumption not strictly necessaries. Wines, spirits, 
 and tobacco are heavily taxed as it is, — tea, coffee, 
 
 ^ The Post Office authorities have lately begun to evince a greater 
 sense of their responsibilities towards the trade and commerce of the 
 countrv in general.
 
 SUGAR 79 
 
 cocoa, and dried fruits less so, but yet sufficiently. 
 Spices are a semi-luxury and might be included, 
 were it not advisable to abolish all the smaller 
 duties. Sugar is a large item in this class, and 
 is free. 
 
 Under ordinary circumstances, sugar should 
 undoubtedly remain where it is. It has how- 
 ever been the subject of the most extraordinary 
 financial leg-islation of modern times. When the 
 sugar duties were abolished in 1874, this com- 
 modity was imported in the raw state principally 
 from the British West Indies, Cuba, and the 
 East Indies, and refined either in England or 
 Scotland. But by the stimulus of bounties, beet 
 cultivation has been engaged in to an enormous 
 extent on the continent of Europe, and bounty- 
 fed manufactured beet sugar has largely driven 
 out its cane rival, and closed refinery after 
 refinery engaged in its manipulation. The pro- 
 cess has provided the United Kingdom with 
 cheap sugar, which is an unqualified blessing, 
 but it lias almost destroyed an important 
 industry, whicli is an equally unqualified 
 misfortiuie. 
 
 Had this occurred by fair means, it would 
 have been a matter for regret, but like many 
 another unfortunate industry, it would have 
 been impossible to render it national assistance. 
 The pity of it is however that it has been 
 deliberately brought aljout by methods which
 
 So THE BRITISH TARIFF 
 
 cast every principle of political ecoiioniy to the 
 winds. It is not necessary to maintain, as some 
 people do, that the object of France, Germany, 
 and Austria is first to niiii the British refiner, 
 then destroy the cultivation of cane sugar, and 
 finally, when the monopoly is safe for their own 
 beet, charge whatever price they think proper. 
 Under such conditions no monopoly would last 
 very long. These countries have thought simply 
 of themselves and altogether ignored the 
 foreigner, and where they have compelled their 
 own consumers to pay extravagant prices, while 
 sellino- abroad at nominal ones, it has been 
 solely with the view of helping agriculture, and 
 encouraging an infant industry, which, as we 
 have liut recently experienced, is only another 
 instance of becoming w^eaker as it grows older. 
 
 V?i\\ this state of thing's be remedied without 
 injury to the British consumer ? Is it possible 
 so to tax sugar as to relieve those who pay the 
 impost of an equivalent sum in another direc- 
 tion ? It is practicable by substituting sugar for 
 tea. 
 
 Moreover, a graduated scale of duties can be 
 introduced. It would not be possible to tax 
 Continental beet and leave West Indian cane 
 free, because that A\ould be contrary to com- 
 mercial treaties to which Great Britain is a 
 party. But it is possible to establish a classifica- 
 tion without infrinmna' them. Let raw cane
 
 SUGAR CONSUMPTION 8i 
 
 sugar pay a stipulated duty, raw beet the same 
 amount, plus the continental bounty, and manu- 
 factured beet plus the additional bounty again. 
 Let the rate be fixed to bring in to the revenue 
 the amount now received from tea, and abolish 
 the duty on that commodity entirely. 
 
 But before we can settle so large a question 
 in so offhand a manner, we must consider the 
 results, not only financially and economically, 
 but from a utilitarian point of view as well. 
 Would the health or comfort of any considerable 
 body of people suffer ? Sugar is much more 
 largely consumed than tea, of the former about 
 ninety pounds per annum for every man, woman, 
 and child in the kingdom, and of the latter 
 only six pounds. If the one were restricted and 
 the other encouraged, might not some injury 
 accrue ? 
 
 In the first place, 90 pounds is not the real indi- 
 vidual consumption. Brewers have used upwards 
 of 100,000 tons per annum for many years past, the 
 latest return crediting them with 114,000 tons. 
 Jam and marmalade manufacturers, bakers, con- 
 fectioners, and biscuit makers, use enormous (|uaii- 
 tities, which however it is utterly impossible to 
 get at, and only a rough estimate can be made. 
 Probably fully one-third, and possibly nearly one- 
 half the total consvunption of sugar in the United 
 Kino'dom is accounted for in this way ; maiiv 
 single firms use 1000 tons per aniiinii. Domestic 
 6
 
 82 THE BRITISH TARIFF 
 
 requirements therefore do not at the outside exceed 
 GO pounds per head of the population. Now should 
 an extra charo^e of say a halfpenny a pound he 
 imposed, this Avould liardly he likely to aifect the 
 use of the article ; it has certainly not heeii noticed 
 that a rise of 5s. per cwt. in the price interferes 
 with consumption. Besides, it would not he an 
 extra payment in reality, because the same house- 
 holds use tea, and would have the money refunded 
 to them on that. As a pound of fruit and a pound 
 of sugar go to make jam, the manufacturer ^\•ould 
 recoup himself by charging an additional farthing 
 a pound on his production. Brewers, bakers, and 
 others use such small quantities in proportion to 
 their outturn, that they could not well charge the 
 impost to their customers, and it would serve to 
 reduce slightly their own profits. 
 
 Let us see then, how the amount of £3,750,000 
 now received from tea would be levied, and how 
 subsequently distributed. 
 
 For the year ending 31st December 1896, the 
 import of sugar into the United Kingdom was 
 385,000 tons cane, 400,000 tons raw beet, and 
 740,000 tons refined beet. The actual consumption 
 was about 100,000 tons less, but that does not 
 greatly affect the calculation. The average bounty 
 paid by exporting countries on their beet is now 
 supposed to be Is. 3d. per cwt. on raw, and Is. 9d. 
 per cwt, on refined. The sum works out something 
 like as follows : —
 
 SUGAR BOUNTIES 83 
 
 385,000 tons cane at Is. 6d. per cwt., . . £577,500 
 
 400,000 „ rawbeetat Is. 6d. + ls. 3d. = 2s. 9d. 
 
 per cwt., 1,100,000 
 
 740,000 „ refined beet at Is. 6d. + Is. 9d. = 
 
 3s. 3d. per cwt., .... 2,405,000 
 
 £4,082,500 
 
 The average duty Avoiild thus be 2s. 1\^. per 
 cwt., but to be on the safe side we must calculate 
 that the consumer wT)uld have to ]3ay the maximum, 
 though that is hardly likely, and even with the 
 addition for profit on outlay the tax would not 
 reach a halfpenny a pound l)ut any small difference 
 would probably be rectified in the better quality 
 suj)plied. As a matter of fact the duty might be 
 levied at threepence less, but the Chancellor of the 
 Exchequer would naturally want to be on the right 
 side in case of any falling off;' in the consumption, 
 or displacement of the various proportions. 
 
 Though the nominal rates of bounty are well 
 known, their incidence and distribution are matters 
 of considerable doubt, as the calculations are made, 
 not always on the quantity actually exported, but on 
 the sugar supposed to be contained in the beets, and 
 it is acknowledged that manufacturers by this means 
 secure nnich more than the official figures would 
 point to. It lias been stated indeed that the 
 French bounty amounts to 4s. 6d. per cwt. Into 
 that questi(Hi I do not propose to enter here, and 
 have contented myself with the su[)|)ositioii tliat 
 the published rates are the real ones. Strict
 
 84 THE BRITISH TARIFF 
 
 iiu[uiry would, df course, have to be made before 
 the details of such a scheme were finally settled, 
 and the result might be a reduction on raw, and a 
 further increase on retined. 
 
 Nor is such discrimination any novelty, as the 
 duties prior to repeal in 1874 were divided into 
 four classes on raw suo-ars. varvino- from 2s. to 
 2s. lOd. per cwt. according- to quality, while refined 
 was charged at 3s. The variation is of course 
 greater in this instance, but there is good reason 
 for it. 
 
 Just as there would be a profit charged on the 
 outlay of the sugar duty, so would there be a 
 saving on that of tea, and the consumer would 
 receive, not the fourpence per pound only, but four- 
 pence plus another penny, say fivepence in all. 
 Then he would pay — 
 
 |d. per pound on GO pounds sugar, . 2s. Gd., and receive 
 .5d. per pound on G pounds tea, . 2s. Gd. 
 the one just compensating for the other. 
 
 He might also have to pay an additional farthing 
 a pound on any jam purchased. But the financial 
 portion of the scheme is practically equalised. 
 
 The advantages of the substitution are not yet 
 exhausted. An excessive consumption of sugar is 
 perhaps less injurious than of tea. The mischief 
 done by the latter is generally in the mode of its 
 preparation, and caused 1:>y people drinking the 
 liquor after it has stewed for hours, or by adding
 
 INCIDENCE OF SUGAR DUTIES 85 
 
 fresh boiling water to old leaves. Were the retail 
 price of a fairly good tea reduced from Is. 2d. 
 or Is. 3d. a pound to 9d. or lOd., there might 
 be no great increase in the consumption of the 
 liquor, Ijut there would be of the leaf, a fresh 
 spoonful of which might often be emptied into 
 the pot after it had been relieved of its 
 exhausted contents. By this means health might 
 actually be conserved. 
 
 Again, the average consumption of sugar in a 
 wealthy household is greater than in a poor one, 
 and the reverse is the case with tea. Sugar is used 
 for so many things where money is plentiful, and a 
 lavish or even abundant table provided. On the 
 other hand, the rich have a multiplicity' of drinks 
 and divide their favours. Among the poor, where 
 alcohol is e:j:cluded or moderately partaken of, 
 tea is the principal, often the only other beverage, 
 and the tea bill quite an important item in the 
 weekly household exj)enditure. Thus the in- 
 cidence of a tax on sugar would be more largely 
 against the rich, and in favour of the poor, than on 
 tea. 
 
 But the most obvious advantao^e of all is the 
 justice of the change advocated. Pi'otests have 
 been made in vain against the unfair operation of 
 the bounties, and it is now time to adopt more 
 practical measures. If British refiners can hold 
 their own with fair ])lay, tliey are entitled to it, 
 and if tlie iiidnstrv of Bi'itish colonics can l)e saved,
 
 8(1 THE BRIl^ISH TARIFF 
 
 cominon si'iise (U'liiaiuls it. If continental nations 
 like to continne tlio bounties, by all means let tlieni 
 do so. l)nt let the money go into the British 
 exchecjuer. That would afiord an object lesson 
 in protection which they would not forget in a 
 hurry, and instead of taxing the foreigner, they 
 would be able each year, by calculating the differ- 
 ence between the duty actually paid on beet sugar, 
 and the amount chargeable at the minimum rate, 
 to realise what relief they were themselves affording 
 to the British taxpayer. 
 
 Some day continental Governments will grow 
 tired of the system and abolish the bounties. 
 When they do so, and not till then, they will be 
 entitled to claim and receive equal treatment with 
 cane suofar. The loss of reveruie which this would 
 entail might be made good by increasing the 
 minimum duty, or by transferring the loss intact to 
 some other tax, and thus affording relief to the 
 consumer. And eventually a British Chancellor 
 of the Exchequer, gladdened by a handsome budget 
 surplus, may again abolish the sugar duty, and, by 
 a round-about method, the taxation of tea will be 
 g-ot rid of Meanwhile, there is nothing- to fear 
 from retaliation. The Governments concerned would 
 be the fii'st to recognise, if they did not openly 
 admit, the wisdom of the proceeding, and would be 
 too anxious to retain the British markets for their 
 producers to hanker after revenging so obvious an 
 act of justice.
 
 SUGAR AND TEA PRODUCTION 87 
 
 Had the existing state of aftairs prevailed when 
 the budget surplus of 1874 was disposed of, it may 
 reasonably be presumed that tea rather than sugar 
 would have been the favoured commodity. Sugar 
 was then largely the product of British colonies, 
 tea principally of a foreign country, and a man does 
 not usually slap his friend in the face and confer 
 his favours on a perfect stranger. How^ different . 
 the circumstances are now will be seen at a glance 
 from the following figures : — 
 
 Imports of Sugar. 
 
 
 1874. 
 
 1896. 
 
 Cane from British possessions, 
 
 245,000 tons. 
 
 155,000 tons. 
 
 ,, Foreign countries, 
 Beet, raw, from Foreign countries, 
 
 335,000 „ 
 125,000 „ 
 
 2.30,000 „ 
 400,000 „ 
 
 „ refined „ „ 
 
 126,500 „ 
 
 740,000 „ 
 
 
 831,500 tons. 
 
 1,525,000 tons. 
 
 There was also imported in 1874 about 10,000 
 tons refined cane from foreio'n countries, 
 
 o 
 Imports of Tea. 
 
 1874. 1896. 
 
 From China, . 133,452,693 lbs. 35,299,730 lbs. 
 
 „ India, . 17,608,598 „ 127,721,885 „ 
 
 „ Ceylon, . 484,135 „ 94,859,965 „ 
 
 „ Other countries, 11,237,384 „ 7,512,542 „ 
 
 162,782,8J.0 lbs. 265,394,122 lbs. 
 
 All tilings being ecpial, British possessions are 
 certainly entitled to receive generous treatment in 
 preference to foreign and rival countries. 
 
 There still remains ;in interesting class of 
 British impoi-ts to be dealt with, namely, manu-
 
 S8 THE BRITISH TARIFF 
 
 t'acturt'd artit-lcs. which tii;ini'(l in the tr;i(h' rt'tiinis 
 of IS!)G tor fS I. iMO, ()(»(). To him|) these together 
 and suggest a dntv of twenty or twenty-five per 
 cent. (»n the lot is a manifest absurdity, and again 
 se])arate analysis is the only way of arriving at 
 sound conclusions. 
 
 There are many insignificant items amounting in 
 value to a few hundred thousand ])Ounds each at 
 the outside, some of which might perhaps reasonably 
 lend themselves to taxation. Where trade is con- 
 ducted on so gigantic a scale however, they are not 
 worth consideration, and maybe summarilydismissed. 
 Of the first importance are cotton and woollen 
 textiles, because Great Britain depends largely 
 for prosperity on these very industries. . Cotton 
 goods figin-e for £3,525,000, but we soon realise 
 how small this is, when we find British exports of 
 yarns and textile fabrics made from cotton during 
 the same period were valued at £61,250,000, or 
 nearly eighteen times as much. Besides, some 
 portion of the 2>\ millions consists of goods sent 
 merely to some continental country for a finishing 
 process, perhaps only to be returned as French 
 prints, for which there is always a demand, and 
 £500,000 was re-exported. At anyrate cotton 
 manufacturers have not yet been heard to complain 
 of foreign competition on English soil, and they 
 almost entirely monopolise the home market. 
 
 With woollen fabrics it is somewhat different. 
 Their value amounted to £10,770,000, or allowing
 
 MANUFACTURED GOODS 89 
 
 for re-exports, to a little over ten millions net, 
 while woollen yarn was responsible for a further 
 £2,050,000. These figures compare with British 
 exports of the same goods of £18,270,000 and 
 £7,225,000 respectively, and are therefore much 
 less favourable than the case of cotton. The export 
 of wearing apparel, the bulk of which w^ould be of 
 woollen material, though no doubt largely mixed 
 with cotton, was valued at a further £5,230,000. 
 Yarn, for the industry in which it is used, is a raw, 
 or at the most a partly manufactured material, and 
 may be allowed to escape on that plea if on no 
 better. The fabrics do compete severely with 
 British manufactures, but they owe their advantage 
 largely to their foreign name and production, as 
 French dress materials are frequently insisted on. 
 If that were all there would be no harm done in 
 making the purchasers pay a little more for them, 
 but there is a principle at stake. Among the 
 imports are large quantities of cheaper goods, and 
 clothing is as necessary as food. Once begin to tax 
 it, and it is impossible to draw distinctions or to 
 say where it may end, and it is l)etter to forego a 
 little satisfaction and revenue combined than run 
 the risk of committing" a wide-reaching injustice. 
 Cotton and woollen fabiics alike therefore may 
 retire from court. 
 
 Leather and dressed liides aiii<n]iit('<l in value 
 to £7,600,000, straw plaiting to £910,000. As 
 these are partly manufactured materials for cover-
 
 90 TJIE BRITISH TARIFF 
 
 iiii;- tilt' It'ct and the head respect ivclv, tliev claim 
 iinnniiiitv. In \'\v\\ of the enormous (juantitv of 
 liides axailahlc in the United States, it is but 
 natural that the tainiinii,' industry should flourish 
 there, particularly as the weight of a wet hide is 
 so much o-reater before than after conversion into 
 leather. While Great Britain tans her own, she 
 mav fairly concede the same rio-ht to America, and 
 purchase whatever additional quantity of leather 
 she wants in the cheapest market. Boots and 
 shoes, principally French and Belgian, amounted 
 to £520,000, again an item for which fashion is 
 largely responsible. Our own export of them 
 amounted to £1,800,000, so there is not yet any 
 danger of foreigners ousting British manufacturers 
 
 o o o 
 
 from their own markets. 
 
 Glass of all kinds, including window glass and 
 bottles, was imported to the extent of £2,740,000. 
 Here, for some reason or other, continental manufac- 
 turers fairly beat the British on their own ground. 
 There is no pretence that foreign glass is sold in 
 England at a loss, and yet the English works 
 cannot successfully compete. There is something 
 wrong somewhere, and what it is can best be 
 explained by the glass manufacturers themselves. 
 To impose a duty Avould be naked protection. 
 Besides, glass is a necessity, and used nuich more 
 by the poor than by the rich in most of its varied 
 forms. Taxation would fall directly on the con- 
 sumer, who would gain no corresponding benefit,
 
 IRON AND STEEL— PAPER 91 
 
 and it is therefore out of the question. An 
 export valued at £900,000, demonstrates that the 
 British industry is not yet played out. 
 
 Manufactured iron and steel, includino- sewinof 
 machines worth £300,000, finding its way into 
 the country, was valued at £6,000,000, but as 
 £900,000 was again exported and consisted 
 evidently of transit goods, the net result was only 
 some five millions. Ao-ain this is insig-nificant 
 when compared ^^•ith the British exports, valued at 
 £23,800,000, together Avith machinery for a further 
 sum of £17,000,000, implements, tools, and railway 
 carriages and waggons for £3,000,000, cycles for 
 nearly £2,000,000, hardware and cutlery£2, 120,000. 
 The British iron trade has recently shown an 
 amount of vitality which has surprised its warmest 
 friends, and is well able to take care of itself witli- 
 out Government intervention. Some portion of the 
 import was no doubt legitimate enough, but how 
 the remainder came over will be a matter for con- 
 sideration later on. 
 
 Paper is responsible for the very respectable 
 total of £3,140,000. British ])aper manufacturers 
 must bestir themselves. Tliey possess one of the 
 oldest and most respectable industries in tlio king- 
 dom, and have largely gone to sleep over it. They 
 are able to turn out work which cannot be touched 
 in quality, and should 1h' ('([ually al)le to ])r()(lu('e 
 material tlmt cannot be beaten in pi'icc Tlicy 
 have adhered far too lono- to old methods, and
 
 9 J THE BRITISH TARIFF 
 
 t;iilt'(l to kt't'j) ]);ice with modern invention and 
 nKxlern re([niienients, relying- upon their reputation 
 and the monopoly thev formerly enjoyed. Tlie con- 
 sequence has been that they have looked on while 
 foreign rivals have captured their business. It 
 wei'e greater kindness to stir a few of them up 
 with a long pole, than to afford the entire industry 
 protection. There are plenty of firms fully alive 
 to the necessities of the hour, and these not only 
 manage to do a large and profitable trade at home, 
 but to export £1,630,000 Avorth into the bargain. 
 
 Watches and clocks and the dift'erent parts 
 thereof were valued at £1,550,000. These may be 
 either comparative luxuries or necessaries, but in 
 this instance they fall under the latter rather than 
 the former description. Imported watches and 
 clocks are mostly of a cheap, but by no means 
 inferior description, and find their way largely to 
 the pockets and chimney-pieces of the working 
 classes. As it is as necessary for a working man 
 to turn up punctually at his appointed task as to 
 leave it or take his meals, he must not be deprived 
 of the means that enable him to do so. English 
 watch and clock makers are skilled mechanics who 
 earn cr-ood Avasfes, and whose lot will remain a satis- 
 factory one while they prevent the trade from 
 becoming overcrowded, — not a difficult matter, as 
 a long apprenticeship must be served. 
 
 The list is becoming exhausted, and thus far we 
 have arrived at nothing practical. Two items now
 
 GLOVES AND SILKS 93 
 
 ajipear however, which call for closer scrutiny. 
 Gloves were imported to the value of £2,340,000, 
 and silks and ribbons and materials made from 
 them, to the large sum of £16.700,000. Now 
 these are luxuries pure and simple, for the gloves 
 are of the kind which are not necessaries, and 
 include few of the woollen ones so useful in winter 
 to protect the hands from the inclemencies of the 
 weather. The poorer classes no doubt buy gloves 
 and silks, and especially ribbons, but they only do 
 so with surplus earnings, or if otherwise they 
 deserve no sympathy. No principle of free trade 
 will be infringed by taxing them, and as there is 
 a more or less important home manufacture, it is 
 quite possible that the foreigner may have to cut 
 his profit to compete, and so contribute part of the 
 revenue. An import duty of 10, 15, or even 20 
 per cent, would realise a considerable sum, and if 
 it enabled Macclesfield and Spitalfields to hold up 
 their heads once more, no Englislnnan need cry 
 over it. If the French Government, to retain the 
 market for its own manufacturers, granted tliem a 
 further bounty, that too would go into the British 
 exchequer, and leave the Britisli ^^•earer of Frencli 
 silks and gloves no worse oft' tlian l^efore, tliongli 
 the British industrv miolit not revive. 
 
 Nor is there in this instance any important 
 export trade to jeopardise. Silks in 189G were 
 shipped of the declared value of £1,420,000, and 
 there was a re-export of foreign goods amounting
 
 94 TITE BRITISH TARIFF 
 
 to £725,001), upon Avhicli of course, in case of duty 
 beino- levied, a draMlnick would be allowed. It is 
 also just possible that some portion of the lart^er 
 item was wrongly described, and consisted really of 
 foreign manufactured silks which may or may not 
 have gone through an additional process in Great 
 Britain. In the case of being subjected to duty, 
 scrupulous care would naturally be taken to pre- 
 serve the identity of the imported goods, in order 
 that the drawback might be claimed. The export 
 of haberdashery and millinery, worth a further 
 £1,520,000, would scarcely be affected, as the 
 value of such goods is generally much more in the 
 workmanship than the material. Nearly the 
 w^hole of it moreover is to British colonies and would 
 be retained. Of gloves the re-export was under 
 £200,000, again almost entirely to the colonies. 
 
 And if bv some strano^e chance the entire 
 industry were to be transferred from foreign to 
 British hands, the revenue would not suffer total 
 loss of duty, because it would be necessary to 
 import either the raw material or the partly manu- 
 factured yarn, upon which a charge would likewise 
 be imposed, though not necessarily on so high a 
 scale as on the finished fabrics. 
 
 The monthly Board of Trade returns lump a 
 innnber of items together as " other articles," and 
 only publish details in the annual digest, but some 
 of them at least are of sufficient importance to 
 deserve mention.
 
 LINENS AND LACES 95 
 
 Rubber manufactures figure for £630,000, cork 
 £640,000, cordage and twine, £690,000, matches 
 £360,000, and are all too insignificant, even were 
 there no other objections. China, porcelain, and 
 earthenware, a good deal of it of an ornamental rather 
 than a general character, was valued at £850,000, 
 but on the otiier hand the export amounted to 
 £2,170,000. Diamonds for £4,600,000, not included 
 in the official Board of Trade returns at all, 
 would be a fair object of taxation, were concealment 
 less easy. Musical instruments, for £1,170,000, 
 afford an undoubted incentive to the cultivation of 
 musical taste, and the cheaper descriptions of 
 German pianos at anyrate are an immense improve- 
 ment on similar priced goods of English make. 
 Toys also figure for £1,050,000, but afford infinitely 
 more than that amount of pleasure to those into 
 whose hands they fall, and the cause of the children 
 must be held sacred. 
 
 Linen yarns and manufactures were worth 
 £1,180,000, but only £400,000 consisted of tissues, 
 the rest being yarn — mostly from Belgium — and 
 consequently a semi-raw material. On the other 
 hand, exports of linen fabrics amounted to upwards 
 of £5,000,000, and of yarn to a little over 
 £1,000,000. The linen trade has suffered much 
 more from Lancashire than from foreign competition, 
 Ijy the gradually extending use of cotton goods for 
 domestic pur])oses ; and of late years a new enemy 
 in the shape of jute has ])ut in an ap])earance.
 
 96 THE BRITISH TARIFF 
 
 Wli;it is wanted is the (leiiioiistratitui of the 
 superiority of liax over both cotton and jute to 
 those who can afford it, or else greater economy in 
 the cost of })roduction, and it is to these that the 
 north of Ireland must pay most attention. Climatic 
 conditions are unequalled in the production of these 
 fabrics, and with proper enterprise Belfast should 
 experience no difficulty in retaining its position as 
 the centre of the Avorld's linen industry/ 
 
 Laces were valued at £1,100,000, and 
 embroideries at £840,000, together £1,940,000, 
 and here once more we are on less solid ground. 
 Still, they are necessary to make our wives, our 
 sweethearts, and our homes becoming, and enter so 
 largely into the adornments of everyday life that 
 it w^ere cruel to enhance their cost, particularly 
 when their use is helping to elevate the tastes of 
 the people. Expensive laces and embroideries are 
 luxuries no doubt, but their inclusion with a large 
 class of cheap goods makes discrimination difficult. 
 Besides, some of them are made from silk, the laces 
 alone of that material being valued at £225,000, 
 and would be included in the schedule. Then 
 £400,000 worth are re-exported, so that the final 
 total is by no means as formidable as it looks. 
 
 Ornamental feathers for £1,140,000, and 
 
 artificial flowers for £560,000, are in every respect 
 
 ^ A report from the British Consul-General in Germany, issued since 
 the above was in type, states that linen tissues manufactured in that 
 country are actually sent to Belfast to be bleached, because nowhere 
 else in the world can the same purity of colour be obtained.
 
 SKINS AND FURS 97 
 
 more suitable objects of taxation. But here we are 
 met by a fresh difficulty, inasmuch as half the 
 former item is imported from British possessions, 
 South Africa contributing most of it in the shape of 
 ostrich feathers. In theory that ought not to stand 
 in the way, but it would hardly be politic to single 
 out an article in which a colony is so largely 
 interested. Besides, nearly half are re-exported, 
 and against the £413,000 received from France 
 there is a set off of £120,000. Germany took 
 £125,000 and the United States £210,000, against 
 an import from both these countries of only £13,000. 
 The same objection does not apply to artificial 
 flowers, but by themselves they are hardly worth 
 attention. 
 
 Prepared skins of the sheep, goat, rabbit, and 
 seal represent a value of £2,700,000, Init again 
 British possessions are responsible for over 
 £1,700,000, Australia and South Africa being 
 specially prominent. For this reason then, if for 
 no other they must be passed. Furs, however, 
 were valued at £1,060,000, and fur maiuifactures at 
 £780,000 respectively, and the same objections 
 would hardly apply here, for though Canada is 
 interested in the trade, she supplied less than 15 
 per cent, of the total. They are, to(j, distinct 
 luxuries, and fall into the same category as silks 
 and gloves. But the re-export of the one was 
 valued at £1,020,000, and of the other at 
 £210,000. The number of skins imjDorted was 
 7
 
 qS the BRITISH TARIFF 
 
 iipwauls of 'J, GOO, 000, mid of those exported only 
 7,250,000, so that the British trade appear to have 
 secured some 2,350,000 for the small sum of 
 £40,000. On this basis it must be extremely 
 profitable, and it would be a pit}^ to disturb it by 
 any custom-house regulations, particularly as the 
 value upon which the duty would ultimately have 
 to be paid would only be some £600,000. 
 
 The list is now exhausted, and resolves itself 
 into two articles, namely : — 
 
 Silks and Eibbons, . . £16,700,000 
 
 Gloves, .... 2,340,000 
 
 £19,040,000 
 
 ^vdlich at an ad valore'in duty of 20 per cent. 
 would yield a revenue of nearly £4,000,000, and 
 would be contributed in a manner which offends 
 against no principle either of justice or political 
 economy. 
 
 It is evident that the British tariff, satisfactory 
 though the basis upon which it is constructed may 
 be, is very far from perfect, and may be radically 
 reformed without much ultimate chanye in the 
 revenue derived from indirect taxation, to very 
 great advantage. The plan upon ^^•hich this can 
 be carried out may be briefly summarised as 
 follows : — 
 
 (l) A readjustment of the spirit duties without 
 altering- their amount.
 
 GENERAL SUMMARY 99 
 
 (2) The substitution of a duty on sugar 
 
 equivalent to that on tea. 
 
 (3) The increase of the beer duty to a more 
 
 adequate level with that on spirits, the 
 revenue derived to be applied to a 
 reduction on tobacco. 
 
 (4) The inclusion in the tariff of certain specified 
 
 manufactured goods. 
 
 (5) The abolition out of the proceeds of these 
 
 new duties of those on the minor articles 
 of consumption. 
 
 (6) The application of the balance of the new 
 
 and increased duties to a remission of 
 other taxation, preferably the income tax. 
 
 This need not by any means be a final readjust- 
 ment, but once adopted, wise consideration 
 should be given to the tariff at not too frequent 
 intervals, but within such reasonable periods as 
 important changes in the habits of the people and 
 the variations of trade may demand.
 
 CHAPTER V. 
 The United States Tariff. 
 
 Frequency of Changes — Avowed and Real Purposes — Extent 
 and Detail of the Tariff — Summary of Schedules — Principles 
 of their Construction. Chemicals : — Drugs — Chemical Manufac- 
 tures — Vegetable Products — Exemptions. Earthenware : — 
 Building Materials — Domestic Utensils — Glass and Glassware. 
 Metals : — Tin — Iron and Steel — Cotton Ties — Tinplates — Cut- 
 lery and Tools — Copper and Lead. Timber : — Conflicts between 
 Succeeding Administrations. Sugar: — The Domination of the 
 Sugar Trust — Resulting Scandals. Tobacco axd Cigars. 
 Wines and Spirits. Agricultural Products : — Breadstuff's — 
 Dairy Products — Fruit and Vegetables — Meat and Provisions — 
 General Result of Protection on the Industry. Textiles : — Raw 
 Materials. Cotton : — Varus — Tissues — Complicated nature of 
 Duties — Extent of Import Trade. Wool : — Yarns — Fabrics — 
 Severitj' of M'Kinley Tariff — Illustrations — Effect of Duty on 
 Raw Wool — Extent of Trade. Silk. Flax, Hemp, and Jute : 
 — Linen Tissues and Embroideries. Paper and Books. Mis- 
 cellaneous : — Coal — Leather and Gloves. The Free List : — 
 Agricultural Implements — Tourists' Wearing Apparel — What 
 Protection has done and is doing for the United States. 
 
 Which? As during the years 1890-94 the 
 country was under three distinct ones, and at 
 the beginning of 1897 a fourth is well within 
 siofht,^ there is an abundant selection, and amid 
 such superfluity one finds difficulty in making a 
 choice. There is common ground in all of them 
 however, and it is well fenced round with pro- 
 
 1 The new tariff has become law just as this is going to press, and. 
 will be dealt with in an Appendix at the end of the volume.
 
 OPPOSING PURPOSES loi 
 
 tection. That is never the avowed object. The 
 tariff which came into operation on the 6th 
 October 1890, and which has always been asso- 
 ciated with the name of President M'Kinley, is 
 officially described as " An Act to reduce the 
 revenue,^ and equalise duties on imports, and for 
 other purposes," and so rapidly and effectively 
 did it accomplish the first purpose, and bring 
 the national treasury to the verge of bankruptcy, 
 that the object of the Act of the 1st August 1894, 
 usually known as the Wilson Tariff, M^as declared to 
 be "to reduce taxation, to provide revenue for the 
 Government, and for other purposes." The " other 
 purposes" in each instance are delightfully vague, 
 and may mean anything and include everything. 
 
 The strongest condemnation of the M'Kinley 
 Tariff is to be found in President M'Kinley's own 
 words. Referring to the anticipated re-enact- 
 ment of that measure in all its main features, 
 he is reported to have said in his inaugural 
 address delivered on the 4th March 1897: — "I 
 earnestly hope and expect that Congress will, 
 at the earliest practicable moment, enact a 
 revenue legislation — fair, reasonable, conservative, 
 and just — which, tvhile supplying sufficient revenue 
 for public purposes, will be also generally helpful 
 to every section and every enterprise. . . . The 
 paramount duty of Congress is to stop deficiencies 
 by restoring protective legislation, ivhich is always 
 
 ' Tlie italics are the author's.
 
 I02 THE UNITED STATES TARIFF 
 
 the Jirnu'st prop of the Treasury." Is it the facts 
 or only the opinions which have undergone so 
 radical a transformation since 1890? 
 
 Needless to say, the simj^licity we noticed as 
 so marked a feature of the British tariff, is 
 entirely absent in those of the United States, 
 and they present more the appearance of sub- 
 stantial text-books for the use of advanced 
 students, though hardly in the science of politi- 
 cal economy. The M'Kinley Act, with the accom- 
 panying instructions as to its operation and 
 enforcement, covered seventy-two large and closely 
 printed pages in the edition issued by the Inter- 
 national Customs Tariff Bureau. The clauses of 
 dutiable articles numbered 472, the index alone 
 covering nearly four pages in double columns, and 
 enumerating 370 commodities or groups of com- 
 modities. As in such a catalogue, doubt would 
 often arise as to whether a particular article were 
 included or not, a free list had to be appended^ 
 which specified 289 more, and if at any time an 
 unexpected seven-hundred and sixty-second com- 
 modity put in an appearance at a United States 
 port, it was graciously stipulated that it should 
 be admitted on payment of a 10 per cent, ad 
 valorem duty if unmanufactured, and 20 per cent. 
 if otherwise. 
 
 The Wilson Tariff is a slight improvement on 
 this. Printed in precisely the same form, it is 
 compressed into forty-one images, though most of
 
 SUMMARY OF SCHEDULES 103 
 
 the instructions, being unchang-ed, are not repeated. 
 The dutiable clauses number 362, the free list is 
 responsible for 328 more, and the index occupies 
 only 3 pages, and confines itself to 334 commodi- 
 ties or groups. The more important transfers 
 from one list to the other we shall have occasion 
 to notice as we o'o on. 
 
 To attempt to analyse so stupendous a mass 
 of detail, would in itself demand a volume much 
 larger than this, an expenditure of time, most of 
 which might be devoted to better purposes, and 
 an amount of technical knowledge such as no one 
 individual ever yet possessed. We must content 
 ourselves therefore with an examination of p'eneral 
 principles, and an occasional application to specific 
 industries. Moreover, as anything earlier than 
 the year 1890 in United States tariffs has long- 
 since been regarded as ancient history, it will 
 answer no present purpose to stray beyond 
 the two bearing the names of M'Kinley and 
 Wilson. 
 
 There is a further advantaofe in confinino- our- 
 selves within these limits, as l)oth proceed on 
 much the same lines, the one in fact is an 
 amendment of the other. So many disputes are 
 constantly arising regarding the classification of 
 specific articles, that after a decision is once arrived 
 at, the customs authorities are naturally anxious 
 that changes in the tariff should l)e in the rates of 
 duty, not in the groupings of commodities.
 
 I04 THE UNITED STATES TARIFF 
 
 Tlie schedules then in eacli histance are lettered 
 A to N, and are as follows : — 
 
 A Chemicals, Oils, and Paints. 
 
 B Earths, Earthenware, and Glassware. 
 
 C Metals, and Manufactures of. 
 
 D Wood, and Manufactures of. 
 
 E Sugar. 
 
 F Tobacco, and Manufactures of. 
 
 G Agricultural Products and Provisions. 
 
 H Spirits, Wines, and other Beverages. 
 I (Jtrtton Manufactures. 
 
 J Flax, Hemp, and Jute, and Manufactures of. 
 
 K Wool, and Manufactures of. 
 
 L Silk and Silk Goods. 
 
 M Pulp, PajDer, and Books. 
 
 N Sundries. 
 The conundrum propounded to any one after 
 reading this list, omitting even Schedule N, " What 
 has been omitted ? " w^ould be a poser, yet jjossibly 
 a more than usually intelligent guesser of riddles 
 and solver of mysteries, particularly if he were 
 an Englishman acquainted with the tariff of his 
 own country, might rejDly tea, coffee, and cocoa, 
 and truly they have to be sought for on the free 
 list. Not that 1 would advocate their disjDlace- 
 ment for a moment, but the very mention of these 
 commodities jDrovides us with a key to the under- 
 lying principle, w^hich is to tax nothing that cannot 
 be produced at home, and everything that can. 
 
 Bearing this in mind, a flood of light will be
 
 CHEMICALS 105 
 
 let in upon many of the schedules and clauses, which 
 might otherwise remain enshrouded in darkness. 
 Where details of imports or exports are given by 
 way of illustration, it will be understood that they 
 are, unless otherwise stated, for the fiscal year 
 ending 30th June 1896, which represented a full 
 working year under the Wilson Act. As it only 
 actually came into operation on the 28th August 
 1894, two of the twelve months of the previous year 
 were under the M'Kinley Act ; indeed, the figures 
 for both 1893-94 and 1894-95 were influenced by 
 tariff changes, prospective and actual, and must be 
 scrutinised in consequence with more than usual care. 
 Schedule A, embracing chemicals, oils, and paints, 
 is further subdivided into acids, ammonia, coal tar 
 productions, oils, paints, colours and varnishes, lead 
 products, potash, medicinal and chemical prepara- 
 tions, soap and soda. In the M'Kinley Act it is 
 represented by ninety-two distinct clauses, and in 
 the Wilson by seventy-nine. It is indeed fitting 
 that so far-reachinof and inclusive a tarifl!* shoidd 
 commence with a class of articles which in some 
 form or other enter into the daily life of every man, 
 woman, and child. The humble l)lacking, which 
 nevertheless adds so much to the personjd appear- 
 ance, is rated in the one at 25 per cent, and in the 
 other at 20 per cent., and still th(^ value of the 
 import was $137,0 11. Most of this was from France, 
 but the United States ex[)orte(l ])lacking to the 
 value of .$533,000, of which upwaids of $.'U)0. ()()()
 
 io6 THE UNITED STATES TARIFF 
 
 was to the United Kiiiirdoni. To move to the other 
 extivmitv. haii- washes, pomades, dentifrices, and sucli 
 like are taxed 40 per cent., reduced from 50 per cent. 
 There is some crisis in tlie life of nearly every 
 individual, and often more than one, when drugs 
 moi'e or less expensive are necessary to preserve 
 existence, and here we might expect that a Govern- 
 ment would at least abstain from doing anything 
 to increase their cost. Yet an all-round duty of 10 
 per cent, is imposed if in anything but their raw 
 state, meaning considerably more to the needy 
 patient. Even such simple preservatives of 
 health as magnesia and Epsom salts are taxed 
 respectively 3 cents, and I cent per pound, about 
 30 per cent, of tlieir value, and were nearly half as 
 much again. Such an impost is as unwise as it is 
 exasperating. Castor oil is eminently a poor man's 
 remedv, and was taxed at 80 cents a gallon, 
 mercifully reduced however to 35 cents, while cod 
 liver oil, the great preservative of weak chests, 
 likewise pays 20 per cent, on its value. Many of 
 these are not American productions at all. but their 
 enhanced cost enable cheap United States concoc- 
 tions of doubtful value, both pecuniarily and 
 remedially, to be palmed oif instead of the simple 
 provisions of beneficent nature. The United States 
 is eminently the land of patent medicines, and the 
 annual export alone is valued at upwards of tw^o 
 million dollars, of which unfortunately the United 
 Kingdom gets about half How many millions worth
 
 CHEMICALS 107 
 
 more United States citizens themselves swallow is 
 wisely excluded from the j^urview of Government 
 statistics. 
 
 Paris green and London purple look innocent 
 enough, and most people would no doubt ask what 
 they were fo]\ When the fatal cotton worm attacks 
 the cotton plant, an immediate application of one 
 or other of these substances is absolutely necessary 
 to save the crop. So effectively have they been 
 used in past years, that the pest, if not extermi- 
 nated, is now but a rare visitor, so Paris green and 
 London purple are enhanced in value by an import 
 tax of 12^ per cent., plus any additional profit the 
 seller likes to put on. 
 
 Lnportant as are the domestic items in this 
 schedule, they sink into insignificance when placed 
 alongside those which enter into the great manu- 
 facturing industries. Chemical research has done 
 more to cheapen commodities than any other single 
 agent, and the chemical industry is but the hand- 
 maiden to nearly every other of importance it is 
 possible to name. In the promotion of American 
 manufacturing enterprise, cheap chemicals are an 
 absolute necessity of progi-ess, yet even they must 
 as far as possible be produced in the United States, 
 and not purchased in the most favourable markets. 
 Caustic soda, soda crystals, and soda ash, are all 
 commodities of wide use, yet are rated at h cent, }- 
 cent, and \ cent per ])ouiid respectively, half 
 of what they formerly were. This looks very
 
 io8 THE UNITED STATES TARIFF 
 
 moderatt^ until expressed as $11.20, $2.80, and 
 $5.60 a ton' respectively, and contrasted with the 
 actual vahu". wlieii they are found to be equal to 
 something like 30 per cent, ad valorem. As some 
 27,500 tons of caustic soda, of the value of upwards 
 of $1,000,000, and over 110,000 tons soda ash, 
 were imported and paid the duty, the increased 
 cost was in this instance at anyrate paid by the 
 consumers, as English chemical works do not 
 ship their products to the United States at a 
 loss. One of the principal firms in the trade 
 indeed pays its proprietors from 30 to 50 per 
 cent, per annum on a very large capital. Other 
 chemicals, coal tar products, colours, etc., paying 
 duty, were imported to the value of $10,000,000 
 additional, and increased in price to the consumer 
 by at least 30 to 50 per cent. Little wonder that 
 every other schedule of the tariff becomes a 
 necessity, for Schedule A handicaps them all. 
 
 Cotton seed oil was rated under the M'Kinley 
 Act at 10 cents a gallon, but freed under its 
 successor. Few items are quite so utterly absurd 
 as this, as the United States is pre-eminently 
 the home of the seed-crushing industry, where the 
 material is actually on the spot. Salad olive oil 
 pays 35 cents a gallon, but despite this, 942,598 
 gallons were imported. Well refined cotton oil 
 is an excellent substitute, and was at one time 
 
 ^ The ton is taken at 2240 pounds. Throughout the Xorth 
 American Continent the hundredweight is literally 100 pounds, and 
 the ton consequently 2000 pounds.
 
 CHEMICALS 109 
 
 largely shipped to Spain and Italy, where a change 
 of casks was supposed to transform its nature, as it 
 did its name, and the duty was no doubt imposed, yet 
 unsuccessfully, to encourage the domestic use of the 
 native product. The latest returns show France to 
 have taken nearly five million gallons, partly no 
 doubt for similar purposes. 
 
 The most justifiable article on the list is opium, 
 and, though a drug, there is a strong tendency to 
 use it as a narcotic, which should be checked. 
 The duty of $12 per pound has been reduced to $6, 
 and the import was valued at $900,000, a decided 
 increase on previous years under the higher tariff. 
 In the realm of paints, not even artists' oil and 
 water colours are exempt, and anyone artistically 
 inclined, desirous of making use of the preparations 
 of some of the famous makers in Europe, is com- 
 pelled to pay an additional 25 per cent, on tlieir 
 value. 
 
 There are of course important exemptions, 
 particularly of natural products not indigenous to 
 the United States. The import of logwood in its 
 rough state was valued at over $1,500,000, and of 
 indigo at slightly under $1,750,000. Gums 
 amounted to $7,000,000, and vegetable and essential 
 oils to upwards of $4,000,000. 127,000 tons of so 
 valuable a fertiliser as nitrate of soda were admitted 
 free, though the United States pay great attention 
 to the manufacture of maimres, principally liow- 
 ever of phosphates, in which some ])aits of the
 
 no THE UNITED STATES TARIFF 
 
 countrN' arc iiaturallv ricli. and of wliicli four or 
 five million dollars worth are annually ex])orted. 
 Bleachiiii^ powder is also welcomed, and together 
 with free chemicals, sucli as potashes and brimstone, 
 and others of more or less indefinite nomenclature, 
 represented something like $20,000,000. Whether 
 so important a group "will escape the next readjust- 
 ment it is impossible to predict. One effect a high 
 tariff on chemicals most certainly has. While 
 it does not prevent a total import valued at 
 850,000,000, it destrovs all chance of a considerable 
 export trade, the total, exclusive of patent medi- 
 cines, being only some 86,500,000 of an extremely 
 miscellaneous character. 
 
 Such are a few of the leading^ features of the 
 first schedule, and the entire tariff w^ill be found to 
 maintain its reputation, good or evil, from which- 
 ever point it is looked at. It contains scarcely an 
 item that does not offend on economical or human- 
 itarian grounds, and has apparently been framed to 
 give impartially as much annoyance as possible to a 
 nation of seventy millions of people. 
 
 Schedule B devoted to earths, earthenw'are, and 
 glasswares, is also subdivided into brick and tile, 
 cement, lime, and plaster, clays or earths, earthen- 
 ware and china, glass and glassware, marble and 
 stone and manufactures of, stone and slate. Here 
 the domestic threshold is crossed, and the privacy 
 of the dwelling invaded, for both in the construction 
 ■of the home and the furnishinfr of it with the most
 
 BUILDING MATERIALS iii 
 
 necessary utensils, the hand of* the tax-gatherer Ues 
 heavily. 
 
 There is absolutely nothing in this class ad- 
 mitted duty free beyond glasses suitable for optical 
 instruments, imported to the value of $93,600. 
 Bricks and tiles are rated at 25 per cent, upwards, 
 according as they are plain, or glazed and decorated, 
 but this class of material surely needs no protection. 
 Clay is so universal a commodity, that ordinary 
 building- brick will rarely stand addition to its cost 
 beyond cartage or drayage for a short distance, and 
 railroad, much less ocean freight and charges is out 
 of the question. Fancy brick and tile made from 
 special clays may occasionally be an exception, but 
 their use is limited. It is hardly surprising 
 that the import recorded is exceedingly small, 
 the wonder would be if it were greater, even 
 without the check of any duty at all. 
 
 Not all building materials however are so 
 favourably situated. Roman and Portland cement 
 is required from abroad in immense quantities, 
 535,000 tons Ijeing valued at upwards of $3,800,000. 
 This is a trade which Germany has specially laid 
 itself out to capture, and England is being gradually 
 elbowed out, the former now svi})])lying about twice 
 the quantity of the latter comitry. I'lie duty at 8 
 cents ])er 100 ]h)Uii(1s, ('(pial to about $lf ])er ton, 
 thus realises about $1,000,000, t(>» small an aiiioniit 
 if regarded as revenue, too large to .-idd to a coiii- 
 moditv so necessary to eiisnrc st.'ibilitv and st icii<'-tli
 
 112 THE UNITED STATES TARIFF 
 
 to [)ul)lic aiul private works alike. In rough 
 marble we meet for the first time a method of 
 levying tluty wliicli we shall henceforth come across 
 in varying forms, the rate being 50 cents per cubic 
 foot, reduced from 65 cents, while manufactures of 
 the stone pay 45 per cent, ad valorem, against a 
 former 50 per cent. ; granite, freestone, sandstone, 
 and limestone, pay no^v 7 cents per cubic foot, and 
 formerly 11 cents ; slate tables, chimney pieces, etc., 
 20 per cent. ; and roofing slates also 20 per cent., 
 which effectively shuts out the superior qualities 
 found in such abundance in Welsh quarries. 
 
 It is inside rather than outside the dwelling 
 where the pressure of this schedule is most 
 severely felt. Everything alike, from the commonest 
 brown or vellow earthenware mue:, to the choicest 
 china teacup, falls within its scope, and every- 
 thing costs fully half as much again as it ought 
 to, while under the M'Kinley tariff most things cost 
 double. On common earthen^vare the charo-e is 
 20 per cent., against a former 25 per cent., but in 
 the other descriptions the fall has been from 60 per 
 cent, to 35 per cent., while the cost to the consumer 
 includes of course the profit on the outlay of these 
 heavy duties. Nor is this an instance where the 
 home manufacturer is able to shut the foreig-ner 
 out, as the imjDort amounted to $10,500,000, and 
 English potteries are known to earn fair profits, so 
 that this is eminently one of the instances where a 
 remission of the three or four million dollars duty
 
 GLASS 113 
 
 would benefit the users of china and eartlienware to 
 the extent of several millions more.' Needless to 
 say there is no export trade in American earthen- 
 ware worth speaking of, its total value falling short 
 of $150,000. 
 
 Glass bottles or utensils of any sort pay from 
 f to 1-g- cent per pound, according to capacity, nor 
 do they escape the vigilant eye of the customs 
 collector when entering the United States filled 
 with some liquid, for they must pay the duty just 
 the same, lest as empties they should compete with 
 home bottle makers. Cut and decorated glass pays 
 40 per cent., and the interests of scientific research 
 were carefully guarded by the imposition of 45 
 per cent, on laboratory glass. It is window, crown, 
 and plate glass however which apj^eals most to 
 patriotic sentiment for support against the foreigner, 
 and the care taken to exclude him from dipping too 
 deeply into the American pocket will be best 
 illustrated l)y quoting intact clause 9 1 of the Wilson 
 Act, and placing in brackets the corresponding 
 duties charged under the M'Kinley Act : — 
 
 " Unpolished cylinder, crown and common window glass, 
 not exceeding 10 x 15 inches square, 1 cent per pound 
 (Ifc); above that and not exceeding 16 x 24 inches square, 
 li cents (1|- c); above that and not exceeding 24 x 30 
 inches square, If cents (2f c.) ; above that and not exceed- 
 ing 24 X 3G inches square, 2 cents (2^- c.) ; all above that 
 21- cents (31 c.) : Provided, That unpolished cylinder, crown 
 and common window glass, imported in boxes, shall be 
 packed fifty square feet i)er box, as nearly as sizes will 
 8
 
 114 THE UNITED STATES TARIFF 
 
 permit, and the duty shall be computed thereon, according 
 to the actual weight of fjlass." 
 
 These duties vary from about 15 to 70 per cent. 
 ad valore'ni. 
 
 Such a clause may work more smoothly than it 
 reads, it certainly converts the Government into 
 trade inquisitor, and dictates to the foreign manu- 
 facturer how he is to conduct his business and 
 pack his goods, if he wishes the inestimable 
 privilege of trading with the United States of 
 America. The four succeeding clauses, dealing with 
 crown, plate, and silvered glass of various descrip- 
 tions, are framed in the same manner, only the 
 duties are chargeable on the still more intricate 
 scale of measurement per square foot, instead of 
 weight per pound. Not only the tax, but the 
 method of levying it, is well calculated to frighten 
 the most enterprising manufacturer or merchant. 
 It is indeed fairly successful in accomplishing this, 
 as the value of cylinder, window, and bottle glass 
 imported, was but little over $1,500,000. Silvered 
 glass was valued at 81,200,000, plate glass at 
 $800,000, and other glass not specified in detail, 
 at nearly $4,000,000. 
 
 The remarks made in the previous chapter 
 regarding the English glass trade are amply 
 illustrated here. Belgium, France, and Germany 
 supplied the United States to the extent of 
 $5,750,000, Great Britain following far in the rear 
 with less than $500,000.
 
 METALS 
 
 "5 
 
 Schedule C, metals and metal manufactures, 
 embraces, as may well be imagined, almost every 
 conceivable article extracted from mineral ores — iron 
 and steel, copper, lead and zinc, — but tin is con- 
 spicuously absent, as so far every effort to discover 
 this metal in payable quantities in the United 
 States has been unsuccessful, and there exists a 
 strong inclination to reprimand Providence for 
 want of foresight. 
 
 The M'Kinley tariff did indeed tempt Providence 
 to amend its ways, and imposed a duty of 4 cents 
 per pound, or $90 per ton, to stimulate prospecting 
 and production. Unless however the latter 
 reached 5000 tons in any year up to 1st July 1895, 
 the duty was to be abolished and tin to resume its 
 place on the free list. The condition was not 
 fulfilled, only the Wilson Act hastened the transfer 
 by nearly a year. Tin remains a foreign commodity, 
 and 22,500 tons, of the value of $6,750,000, had to 
 be imported during the year. 
 
 All iron and steel manufactures as a matter of 
 course are included ; bars and rods, hoops and bands, 
 beams and girders, sheets and plates, are indiscrim- 
 inately intermingled. Steel ingots and billets, rails 
 and railroad iron of every description, and wire of all 
 sizes follow. Hammers and anvils, nails and screws, 
 bolts and bars, locks and keys, are not omitted; indeed 
 here we have the typical country store, supposed to 
 supply everything from an anchor to a needle, 
 only Government wants \{<s cents per ])onn(I on tin'
 
 ii6 THE UNITED Sl^ATES TARIEF 
 
 weii;'ht of the one, and 25 per cent, on the value 
 of most kinds of the other — if the American 
 manufacturer cannot waylay it. 
 
 The duty of $4 a ton on pig and scrap iron 
 is quite as effective in keeping it out, as the 
 M'Kinley tax of $6.75 ; indeed, unless it were 
 conveyed free as ballast from a foreign country, 
 it is difficult to see how a product costing no 
 more than $8 to $12 a ton could enter, as it could not 
 naturally pay freight and charges to a country so 
 prolific in iron ore as the United States, where an 
 export trade of considerable magnitude is now in pro- 
 cess of development. The year 1895 was one of 
 enormous activity in the American iron industry, 
 and the domestic output of pig was close upon 
 nine and a half million tons. 1896 experienced a 
 sharp falling off, but tlie import was 88,000 tons, a 
 mere fraction compared with the total ; the United 
 Kingdom being responsible for 58,000 tons^ and 
 Germany for 23,000 tons. Judging from the 
 average value of nearly $25 per ton, it must have 
 been special brands of high quality. 
 
 Despite the heavy charge of $12 to $25 per ton 
 on bar, hoop, and sheet iron, and steel ingots, 60,000 
 tons entered United States ports of the value of 
 $3,300,000, showing that the country is not yet 
 quite independent of foreign makes of special 
 qualities. This quantity is of course infinitesimal in 
 
 1 This must have been, principally during the last six months of 
 1895, as the British returns record an. export of pig iron to the United 
 States for the whole of 1896 of only 30,000 tons.
 
 COTTON TIES 117 
 
 comparison with the total American output and 
 consumption, and affords the best proof that the 
 duties, if needed at all for protective purposes, are 
 absurdly high. Steel rails and railroad iron for 
 instance, are rated at -i^ cent a pound, or $7.84 
 a ton, against to cent under the M'Kinley Act. 
 Yet immense quantities have been sold at prices 
 varying from $15 to $18 a ton. The price then 
 ruling at tide water in Great Britain was about 
 $22 or $23, inclusive of overland carriao;e and 
 makers' profit. Adding freight and duty they could 
 not be laid down in the United States at less than 
 $30, and American makers were free from foreio-n 
 competition at anything below that figure. They 
 too could have sold at $22 or $23 and made a good 
 profit, yet availing themselves of protection, they 
 endeavoured to exact $28, and only failed for 
 reasons already alluded to. 
 
 Hoop iron was rated under the M'Kinley tarifi' 
 at 1 to Ittt cents a pound, equal to $22 to $29 
 a ton, under the Wilson Act 30 per cent, ad 
 valorem, which is generally speaking- a considerable 
 reduction. Tlie M'Kinley Act however specially 
 singled out cotton ties for baling- purposes, and 
 imposed -^^ cent a pound, or nearly $5 a ton extra, 
 raising the duty on them to about $30 a ton. The 
 avowed object of this was to compel cotton planters 
 to buy American instead of English ties, as they 
 had long; been accustomed to. Ther(^ was a 
 particular hardship in this exaction. Tlicy were
 
 iiS THE UNITED STATES TARIFF 
 
 already compelled to pay a high price for the 
 jiite bagging to wrap round the bales, which was 
 heavily protected, and under section J of the 
 M'Kinley Act still appeared at lyV to lyo cent per 
 square yard, equal to about 50 per cent, of its 
 value. Some years earlier a bagging trust had 
 been formed on very similar lines to the larger ones 
 which have since gained such notoriety, and its 
 members demanded an extreme price for their 
 manufacture, limiting it only to the cost at which 
 it could be imported from Europe. Planters and 
 all interested in the trade revolted, and a deter- 
 mined effort was made to substitute a material 
 made from low grade cotton for the jute. It 
 failed, principally for reasons concerning weight 
 into which there is no need to enter, and the cotton 
 interest remained at the mercy of the jute-bagging 
 manufacturers. 
 
 The redeeming feature was that the iron bands 
 or ties could be .purchased on reasonable terms. 
 But while before they had been chastised with 
 w^hips, the M'Kinley Act proceeded to chastise 
 them with scorpions, by increasing the cost of the 
 ties likewise by $30 a ton, equivalent to a tax of 
 10 to 12 cents a bale. Cotton planters and 
 merchants sent Democrats to represent them in 
 Congress, bagging and tie manufacturers, well 
 knowing on which side their bread was buttered, 
 consistently supported the Republican party. The 
 Wilson Bill recognising the crying injustice inflicted
 
 TIN PLATES 119 
 
 by this special legislation, placed both bagging and 
 ties on the free list, and the import of the latter, 
 which had almost disappeared for several years, 
 rose again in the autumn of 1895 to 3500 tons, 
 equal to the binding of one million out of a total 
 crop of over seven million bales. They were valued 
 at an average price of $30 per ton, just the figure 
 the M'Kinley tariff sought to impose on them. 
 The new tariff, it is said, will resuscitate the duties 
 on both bagging and ties. 
 
 Perhaps the most striking feature of the 
 M'Kinley Act was its determined attempt to 
 establish, at all costs, a domestic manufacture 
 of the tin plates so extensively used in the canning 
 and other industries of the United States, and 
 previously obtained almost exclusively from South 
 Wales. The duty imposed was 2to cents per 
 pound, practically $50 per ton, which meant the 
 doubling of the price of an article so essential to 
 the great agricultural and fishery interests. Even 
 so exorbitant an impost as this entirely failed to 
 destroy foreign competition, while it naturally 
 exasperated those who had to pay it. The later 
 Act just halved the duty. 
 
 No tariff legislation for many years so utterly 
 disorganised a trade as this attempt to force an 
 industry on an unwilling people before the time 
 for it was ripe. The duty was not to become 
 operative until the first of July 1891, nine months 
 later that is than the general enactment, ostensibly
 
 ijo THE UNITED STATES TARIFF 
 
 to i;ive the Aiiiericau manufacturers time to 
 conclude their arrangements. This period of 
 grace was made use of for another purjDose, 
 and the import of Welsh j)lates was enormous. 
 The British export to the United States 
 for 1891, nearly the whole of it in the 
 iirst six months, reached 325,000 tons, and it 
 might have been supposed that that would have 
 been the end of it. Not so however, for the 
 American market became so over - stocked and 
 demoralised, that the home manufacturers were 
 completely at the mercy of importers, and made 
 little or no attempt to compete. The demand 
 consequently continued to fall on the Welsh 
 material, and the export during 1892 and 1893 
 was still upwards of 250,000 tons, despite the 
 excessive duty, which meant that American con- 
 sumers were going on paying something like 
 double the actual value. 
 
 But the years 1895 and 1896 witnessed an 
 immense growth in the American industry, and 
 high tariff enthusiasts will need all their wits to 
 explain how this could happen under a 825 rate 
 when a $50 one failed to accomplish it. The 
 British export in 1896 fell to below 120,000 tons, 
 and the capacity of the American works is said to 
 have risen to some 300,000 tons per annum. The 
 real facts of the case are that the industry has now 
 become possible owing to the immense fall in the 
 price of sheet iron, coupled with more economical
 
 IRON AND STEEL IMPORTS 121 
 
 methods of manufacture ; and were the duty entirely 
 abolished, it is extremely doubtful if South Wales 
 could win back the trade without the assistance of 
 some huge trust to raise the price of the sheets to 
 an abnormal figure. Meanwhile, it is affirmed that 
 Welsh tin plates have actually been manufactured 
 from American iron imported for the purpose, 
 because it is cheaper than English. 
 
 The more highly finished and expensive articles 
 are treated in quite proportionate terms to the 
 commoner and heavier descriptions of iron and 
 steel. Wire pays from 1^ to 2 cents a pound, say 
 $28 to $45 per ton. Cutlery 25 per cent, to 50 
 per cent, of its value, files 3 to 8 cents a piece, 
 according to size and value. Common nails pay 
 22|- per cent., wire nails 25 per cent., and horseshoe 
 nails 30 per cent., all about half the rates ruling 
 under the M'Kinley Act, yet quite high enough to 
 amount to prohibition. Pens pay 8 cents per 
 gross, and pins 25 per cent, of their value. Even 
 quicksilver, so necessary to the mining industry, 
 is charged 7 cents per pound, and the flasks 
 additional. 
 
 The total value of all iron and steel imported 
 was $25,000,000, nearly the whole of it from 
 Great Britain, Germany having supplied less tlian 
 $3,000,000. English protectionists wlio call out 
 against foreign competition, would do well to con- 
 trast this with tlie £5,000,000 imported into their 
 own country during the same period uiid^r absolutely
 
 12.- THE UNITED STATES TARIFF 
 
 free trade conditions. The British export amounted, 
 as I mentioned in the last chapter, to £31,000,000, 
 and of machinery to £17,000,000 more. The corre- 
 sponding figures for the United States were 
 £5,250,000 and £3,000,000 respectively. The 
 year 1896-97 will probably show a considerable 
 increase in United States exports, owing to trade 
 depression, the collapse of the ring, and great 
 cheapening in the cost of production, in other 
 words, to the triumph of natural causes over 
 protection. 
 
 Copper and lead are mined in great quantities 
 in the United States, and in the former there 
 is an export trade which amounted in the year 
 under review to 87,000 tons. Under such circum- 
 stances foreign competition is hardly likely or even 
 possible, yet to make assurance doubly sure a 
 duty of 828 per ton was imposed by the M'Kinley 
 Act. It is now on the free list, and the import, 
 never more than trifling, has actually fallen off. 
 
 On the other hand, the production of lead is 
 insufficient to meet domestic requirements, and 
 the 85,000 tons of pig lead and lead ore required 
 to make good the deficiency must pay one cent and 
 three-quarter cent per pound respectively, and 
 formerly had to pay just double, a present exac- 
 tion in round figures of one and a half to two 
 million dollars per annum. 
 
 One of the features of the Wilson Act was the 
 transfer of timber from the dutiable to the free
 
 TIMBER 123 
 
 list, and schedule D consequently contains but four 
 clauses, one of which provides for a duty of 35 per 
 cent, on tooth-picks. The preceding tariff had ex- 
 empted many of the fancy and expensive furniture 
 and cabinet woods, grown chiefly in Central and 
 South America, but had rigorously maintained an 
 impost of $1 to $2 per thousand feet on the 
 commoner kinds in every-day use, thus reversing 
 the natural order of things. The primeval forests 
 of the United States have long since fallen beneath 
 the woodman's axe, and though there is still 
 abundance of timber throughout the country, it is 
 no longer so prolific as to be valueless. The duty 
 consequently can only have been aimed at Canada, 
 where the lumber industry is still an important one, 
 and was an attempt to make Canadian timber at 
 least dear, if it could not be entirely excluded. 
 There was something particularly spiteful about such 
 a tax, as rough timber is not an article which can 
 bear heavy transport charges, and as a consequence 
 Canada could only supply the wants of a few of the 
 boundary States, or where lengthier transport is 
 possible l^y water. The trade is of considerable 
 value, amounting to about $20,000,000, of which only 
 $3,500,000 of manufactured wood came under the 
 operation of the tariff law. The state of affairs under 
 the M'Kinley Act teaches an instructive lesson. 
 The value of imports under this schedule in 1891-92 
 was $20,000,000, in 1892-93 $23,000,000, botli years 
 of protection. No sooner was free trade instituted
 
 1J4 THE UNITED STATES TARIFF 
 
 tliaii the tii;-iiiv.s fell oii'. The effort to destroy 
 the Canadian lumber trade resulted in fact in 
 ignominious failure, the only outcome having 
 been to impose a heavy tax on northern builders 
 and users generally. There is an export trade in 
 timber worth about $30,000,000 per annum, but 
 chiefly from southern ports. 
 
 Schedule E, consisting of but three clauses in 
 the Wilson Act, though reduced from eleven in the 
 preceding one, created more discussion, and re- 
 sulted in greater scandal than all the rest of the 
 Bill put together. It deals with sugar, and there 
 is no more powerful monopoly in the United States 
 than the Sugar Trust, which has given ample proof 
 of its ability to destroy all dangerous competition 
 wherever and whenever it arises. It always wants 
 to buy raw sugar cheap and sell the refined pro- 
 duct dear, and a prolonged and bitter contest 
 took 2^1ace over the fixing of the tests and the 
 settlement of the duty. 
 
 As Louisiana is an important sugar-growing 
 State, the planters located there naturally wanted 
 protection against the product of Cuba and the 
 Philippines, and this was accorded them under the 
 M'Kinley Act in the form of a bounty of 2 cents per 
 pound, for Europe is not the only continent where 
 this vicious system has thriven. The Sugar Trust 
 triumphed by methods which will not bear in- 
 vestigation, and a committee of the United States 
 Senate deputed to make one has been openly defied.
 
 SUGAR 125 
 
 A prominent broker, who rightly enough refused to 
 divulge the names of his clients, engaged in gigantic 
 speculations, was committed to gaol, while his prin- 
 cipals, who were really the guilty parties and well 
 known, escaped on technical subterfuges, and allowed 
 their agent to bear the punishment, though only 
 at the expense of greater ignominy to themselves. 
 
 The Wilson Act, true to its avowed object of 
 providing revenue, abolished the bounty which had 
 proved so severe a drain upon the Treasury, and 
 substituted a duty on imported raw sugar of 40 per 
 cent, ad valorem, affording protection to the home 
 grower to that extent. A differential duty of 
 ^ cent per pound additional on refined sugar 
 gave the Trust that much advantage, increased by 
 a further tenth of a cent on sugar imported from 
 bounty-paying countries. The Trust moreover 
 had been actively preparing for the event. The 
 import for the year ending 30th June 1894 was 
 valued at $127,000,000, for the one ending 30th 
 June 1895 at $76,500,000 only, and of that 
 $30,000,000 was rushed in before the duty became 
 operative. The history at best is a sordid one, 
 and the motives which made it purely personal, 
 and to tlie selfislmess of protection must in this 
 instance be added the tyranny which can be and 
 is sometimes exercised by mammoth capitalists. 
 
 To Schedules F and II, dealing witli tobacco, 
 wines, spirits, and otlier l:)everages, there can be 
 little objection.
 
 126 THE UNITED STATES TARIFF 
 
 Tobacco is a natural j)i'oduct of the United 
 States, a country capable not only of supplying 
 its own requirements, l)ut raising a large addi- 
 tional quantity for export. Nevertheless there is 
 only one place in the world able to supply the 
 wants of the connoisseur, and America, like every 
 other country, must import its choice leaf from 
 Cuba. The duty of 35 cents per poimd on un- 
 stemmed and of 50 cents on stemmed, though 
 many times the excise rate imposed on the leaf 
 of native growth, which has to be paid in addition, 
 must be regarded as a tax on luxury rather 
 than rank protection. On wrapper tobacco the 
 duty is exceedingly high, $1.50 per pound on 
 unstemmed, and 82.25 on stemmed. Cigars, 
 cigarettes, and cheroots pay a specific duty of 
 $4 per pound, and a further 25 per cent, ad 
 valorem, and these rates are much the same in 
 every tariff. 
 
 Alcoholic beverages are also largely of home 
 production, and the duties imposed on those of 
 foreign countries can hardly be regarded as pro- 
 tective, though Californian wine growers desire 
 to make them so. In beverages of this sort 
 however it is usually more a matter of taste than 
 of price, and the duties on still wines of 30 cents 
 per gallon if under 14 per cent, of alcoholic 
 strength, and of 50 cents if over, and on spark- 
 ling wines at the rate of $4 per dozen pints, w^ill 
 certainly not tend to the consumption of native
 
 AGRICULTURAL PRODUCTS 127 
 
 liquors by those who do not appreciate them. 
 Neither will French brandy at $1.80 per gallon be 
 displaced by rye whisky and similar distillations 
 rated much lower. 
 
 Schedule G is in many respects the most ex- 
 traordinary in the whole tariff. It deals exclusively 
 with agricultural products and provisions, and 
 here at least we might suppose that protection was 
 absolutely useless. A country which annually 
 exports hundreds of millions of dollars worth of 
 breadstuffs, meats, vegetables, and animal products 
 of almost every description, must be a cheap producer 
 to make headway against so many competitors 
 throughout the world. We naturally wonder 
 therefore what can be contained in the 57 clauses 
 of the Wilson Act, not to mention the 82 of its 
 predecessor. 
 
 It will be news to most people that the wheat 
 growers of the Western, or indeed of any of the 
 States of the Union, are being ruined in their own 
 country by foreign competition, whatever may be 
 taking place elsewhere. Yet in the later tariff, 
 wheat is scheduled at 20 per cent, ad valorem, and 
 in the previous one at 25 cents per bushel. Was 
 this duty imposed with an idea that because the 
 figures appeared in the list, farmers would be 
 deluded into the notion that they were receiving 
 so mucli more for the contents of their granaries 
 tlian they otherwise would ? It cainiot be that 
 Canadian competition is feared from across the
 
 I2S THE UNITED STATES TARIFF 
 
 border, as it would ])e altoo-etlier too hnniillatiiio- 
 an admission that a wealthy nation of 70,000,000 
 of people could be beaten on its own ground by a 
 comparatively poor neighbour not enjoying nearly 
 the same natural advantages, and numbering all 
 told some 5,000,000 souls. Nor does wheat stand 
 alone, — barley, rye, oats, buckwheat, and maize all 
 keep it company at rates which we might call 
 prohibitive did they not merit a more derisive 
 adjective. The duties on imjDorted breadstuffs 
 capable of being produced in the United States, 
 added just $130,000 to the national revenue. 
 
 Butter and cheese at four cents a pound, reduced 
 from six, eggs at three cents a dozen, and hay at 
 two dollars a ton, potatoes at fifteen, and onions at 
 twenty cents a bushel, are all in the same category. 
 The M'Kinley tariff, fearful no doubt of the 
 competition of the British farmer, further rated 
 fresh milk at five cents a gallon, and cabbages at 
 three cents a piece. The German immigrant was 
 more considerately treated, for his sauerkraut was 
 admitted free, and he availed himself of the 
 privilege by importing $7895 w^orth of it, about 
 one fourth only of the year previous. But then it 
 keeps for an indefinite period. A similar favour 
 was extended to the Italian labourer, who was 
 allowed to have his Bologna sausages (made by the 
 way in Germany) free, and ate 359,260 pounds 
 of that savoury article. But alas ! the American 
 sausage maker has captured the receipt, and has
 
 AGRICULTURAL PRODUCTS 129 
 
 promised, with the assistance of a 25 percent, duty, 
 to capture the market too. The Frenchman was 
 likewise encouraged to partake of his dehcate dish 
 of snails, but if he hankered after them there is no 
 record of it. The Hebrew, safely established in the 
 promised land, was invited to recall the wanderings 
 of his fathers in the wilderness, by partaking of 
 manna untaxed, but either on these liberal terms 
 the price was still not sufficiently tempting ; or he 
 was otherwise occupied. And lastly, the English 
 alderman was encouraged to spend his holidays and 
 his money in the New World, whither his beloved 
 turtle might follow him without fear from the 
 sacrilegious hands of the custom - house official. 
 Whether he himself actually arrived we do not 
 know ; if so, then judging from the absence of any 
 return of imports, he must for once have been 
 content to put up with the companionship of his 
 turtle-dove. 
 
 In the taxation of foreign dried fruits there 
 might be a little more sense were the Treasury very 
 hard up for revenue, and tlie people unable other- 
 wise to provide it. But apples, oranges, and 
 lemons are scheduled no doubt to protect the home 
 orchards from low prices, though judging from the 
 rates at wliicli American sfreeii fruits sell in Ensf- 
 land, tlio duty cannot do tliem much good. 
 
 Meat and provisions, fresli ;ni(l preserved .-ilikc, 
 receive the same grandmotherly attention. Livc^ 
 animals pay a duty of 20 ])er cent, ad valorem, and 
 9
 
 I30 THE UNITED STATES TARIFF 
 
 an ai;-itatioii exists to increase it to the iiuich 
 higher M'Kinley rate of $10 per head, owing to 
 inciu'sions over the southern border. Yankee iiesh 
 and blood may be denied to Mexican skin and bone, 
 though it is difficult to see how the immense and 
 increasing meat and cattle trade with Europe is to 
 be encouraged by the adoption of such a course. 
 For once jiossibly, the United States Government 
 may take a leaf out the book of its British riv^al, 
 which in 1896 distinguished itself by passing a 
 Cattle Exclusion Bill. But for a country which 
 exports live cattle to the value of thirty-five million 
 dollars a year, and fresh beef to more than half 
 that amount in addition, a raid against foreign 
 animals is utterly absurd. 
 
 The entire schedule was no doubt partly framed 
 to blind the eyes of the suffering and depressed agri- 
 cultural industry, which whatever may be said, 
 does not flourish under protection. One of the first 
 objects of the farmer who is thriving is to invest 
 his capital in live stock ; the surest sign of his 
 decay is w^hen he reduces the number, unless of 
 course necessitated by scarcity of food, of which 
 there has been no lack in recent years in the 
 United States. In this respect the following 
 official report issued on the 11th February 18U7 
 tells its own tale : — 
 
 "The United States Department of Agriculture has 
 to-day issued its annual report upon the number and value 
 of domestic animals on farms and ranches in the United
 
 AGRICULTURAL STATLSTLCS 131 
 
 States in January 1897, of which the leading features are 
 shown in the subjoined tables : — 
 
 NUMBERS AND PRICES OF FARM ANIMALS. 
 
 , 1897. , , -1896. , 
 
 Stock. No. Value. No. Value. 
 
 Horses .... 14,435,000 $451,800,000 15,124,000 $500,140,000 
 
 Mules .... 2,216,000 92,400,000 2,279,000 103,204,000 
 
 Milk cows . . . 15,942,000 369,300,000 16,138,000 363,956,000 
 Oxen and other 
 
 cattle .... 30,508,000 504,500,000 32,085,000 508,928,000 
 
 Sheep .... 36,819,000 67,500,000 38,299,000 65,168,000 
 
 Swine .... 40,600,000 167,400,000 42,843,000 186,530,000 
 
 Percentage Average farm price. 
 
 Stock. decrease in No. 1897. 1896. 
 
 Horses 5-0 $31.45 $33.07 
 
 Mules 2-3 41.70 45.29 
 
 Milk cows 1-0 23.16 22.55 
 
 Oxen and other cattle . 4-9 16.54 15.86 
 
 Sheep 3-9 1.83 1.70 
 
 Swine 5-2 4.12 4.35 
 
 "The total value of all animals amounts to $1,652,900,000, 
 against $1,727,926,000 in 1896, a decrease in round numbers 
 of $75,000,000, or 4 per cent. This decrease in the total 
 value has now been steadily progressing since 1893, when 
 the total was $2,483,507,000, or over $830,000,000, or 33 
 per cent, more than now. 
 
 " The number of horses and mules has been increasing 
 during the year in the South Atlantic and Gulf States, but 
 decreasing generally elsewhere ; milk cows have been 
 increasing in the Eocky Mountain and Pacific States, 
 while they have remained nearly stationary elsewhere ; 
 several Eocky Mountain States also show an increase in 
 oxen and other cattle, and in sheep ; the same region, and 
 also the South Atlantic States, report an increase in swine. 
 The great central States show a decrease in all kinds of 
 stock, so that the downward movement in number re])orted 
 a year ago still continues. The destruction of sheep by
 
 132 THE UNITED STATES TARIFF 
 
 dogs was large in the South, and the percentage of loss from 
 such depredations for the whole country, excluding the 
 Eocky Mountain ranges, was I'l per cent., or about 250,000 
 altogether. 
 
 " In the average price there is a falling oft' of from 5 to 
 8 per cent, in horses, mules, and swine ; but a furtlier 
 increase of 3 to 7 per cent, in cattle and sheep. The total 
 value of horses, mules, and swine has declined 10 per cent, 
 each during the year, while that of oxen and other cattle 
 has declined 1 per cent. On the other hand, the total 
 value of milk cows shows an increase of 1 per cent, 
 and of sheep an increase of 3 per cent, since January 
 1896." 
 
 The reduction in the number of animals it will 
 be seen, cannot be attributed to a fall in their value, 
 for both cattle and sheep are steadily rising, Avhile 
 swine have been cheapened by the great fall in the 
 price of their principal food, — maize. The industry 
 is exhausted by the exactions made upon it from 
 all quarters, for while it is compelled to sell 
 its own produce cheap if it is to find a market 
 at all, the commodities it requires in exchange 
 are universally and artificially enhanced in cost. 
 The manufacturer demands the straw as well 
 as the wheat, and the agriculturist may go to the 
 devil. 
 
 The great textile industries are amply provided 
 for in Schedules I, J, K, and L. The raw materials 
 used in them are mostly to be found on the free 
 list. It would be ridiculous for cotton to be any- 
 where else, as the United States is pre-eminently 
 the home of its growth and production. Yet an.
 
 TEXTILES— RAW MATERIALS 133 
 
 agitation exists to transfer it, because the sewing 
 thread factories require the Egyptian staple, and 
 some of the Southern planters think they ought to 
 make the American answer the purpose. The great 
 accomplishment of the Wilson Act was to place 
 wool on the free list, w^iereas previously the duties 
 had varied from 11 to 36 cents per pound on the 
 better descriptions, and 32 per cent, to 50 per 
 cent, ad valorem on the niferior ones. Nothing 
 ever quite so much roused the ire of the 
 American protectionist as this, and he threatens 
 a terrible revenge. Wool growers indeed demand 
 a bounty to assist them in rearing their flocks, and 
 clothing their fellow-creatures. Why not grace- 
 fully round off the schedule, by making provision 
 for a bounty to the owner of the happy mothers of 
 puppies and kittens ? 
 
 Raw silk has been free from duty under 
 both tariffs, and the latest import exceeded 
 $26,000,000 in value. Flax, hemp, and jute 
 are not quite so fortunately situated, as if 
 subjected to the slightest preparation, and techni- 
 cally known as " hackled," they become dutial)le. 
 The free imports reached $8,000,000, and the 
 dutiable or hackled about $650,000. Mexican 
 istle and sisal grass represented $4,000,000 more, 
 also free. 
 
 It is of course the manufactures of tliese 
 materials which come within the all-])ervading 
 arms of the custom-house authorities. No cotton
 
 134 THE UNITED STATES TARIFF 
 
 j^oods whatever are admitted free, and the duties 
 are calculated on a most complicated principle, 
 though how these materials can enter the States at 
 all is a mystery. Yarns commence at 3 cents per 
 j)t)und, for what are known as fifteens, and increase 
 by 1- cent for every number of greater fineness, 
 which makes the generally used or medium counts 
 dutiable at about 6 cents. Under the M'Kinley 
 Act the rate began at 10 cents, and went some- 
 where beyond the clouds. The present tariff is 
 equal to an average of 40 per cent, ad valorem, 
 yet admits of an import of about $1,000,000, 
 principally very fine yarns for conversion into 
 thread. 
 
 The value of cotton cloth depends largely upon 
 the fineness or otherwise of its texture, and a 
 system has been adopted of levying the duty in 
 accordance with the number of threads found in 
 the square inch. This will best be explained by 
 reproducing clause 253 of the Wilson Act :— 
 
 " Cotton cloth, not Ijleached, dyed, coloured, stained, 
 painted, or printed, exceeding fifty and not exceeding one 
 hundred threads to the square inch, counting the warp and 
 filling, and not exceeding six square yards to the pound, 
 1|- cents per square yard ; exceeding six and not exceeding 
 nine square yards to the pound, li cents i^er square 
 yard ; exceeding nine square yards to the pound, If cents 
 per square yard ; if bleached and not exceeding six square 
 yards to the pound, 1 h cents per square yard ; exceeding 
 six and not exceeding nine square yards to the pound, If 
 cents per square yard ; exceeding nine square yards to 
 the pound, 2\ cents per square yard ; if dyed, coloured,
 
 COTTON TISSUES 135 
 
 stained, painted, or printed, and not exceeding six square 
 yards to the pound, 2f cents per square yard ; exceeding 
 six and not exceeding nine square yards to the pound, 'o\ 
 cents per square yard ; exceeding nine square yards to 
 the pound, 3i cents per square yard : Provided, That on 
 all cotton cloth not exceeding one hundred threads to the 
 square inch, counting the warp and filling, not bleached, 
 coloured, dyed, stained, painted, or printed, valued at over 
 7 cents per square yard, 25 per cent, ad vcdorein ; bleached, 
 valued at over 9 cents per square yard, 25 per cent, ad 
 valorem] and dyed, coloured, stained, painted, or printed, 
 valued at over 12 cents per square yard, there shall be 
 levied, collected, and paid a duty of 30 per cent, ad 
 valorem." 
 
 Three similar clauses follow, stipulating the 
 duties on cotton cloths exceeding 100 and not 
 exceeding 150 threads to the square inch, exceeding 
 150 and not exceeding 200, and finally exceeding 
 200 threads, the rate rising as high as 6|- cents per 
 square yard, and these charges, while much more 
 graduated, are considerably lighter than under the 
 M'Kinley Act. Were the funds of the United 
 States Treasury at all redundant, a good round 
 sum might be set apart towards founding a 
 technical school where these intricacies miglit be 
 studied, and possibly mastered. No doubt it is an 
 interesting as well as highly intellectual occupation 
 to count the threads in pieces of calico, particularly 
 If ill the end a dispute arises as to whether 
 the hinidred and fifty-first falls within or be- 
 yond the inch measure. And it is well paid 
 for besides, so that the solution of the problem
 
 136 THE UNITED STATES TARIFF 
 
 of tlie uiieinj)loyed would be close at hand, if 
 the United, States would only import their 
 prints and shirtings instead of making them at 
 home. 
 
 Made-up clothing of cotton pays an even 40 per 
 cent. Goods manufactured from cotton chenille, 
 such as curtains, table-covers, etc., 40 per cent., 
 likewise a considerable reduction on the former 
 rate. Laces and embroideries pay 50 per cent. 
 Stockings and hose, again, were beautifully 
 graduated in the M'Kinley Act, by a clause similar 
 to the one quoted, substituting dozen pairs for 
 square yards, but in the later one are rated at 30 
 to 50 per cent. Despite these restrictions, the 
 import of certain classes of goods is large, and the 
 United States have not yet captured what may 
 be described as the Nottingham trade. Laces, 
 embroideries, window curtains, etc., figured for 
 nearly 811,000,000, stockings and hose for 
 $6,000,000 more, and their relative cost to the 
 wearer will be appreciated when the enormous duty 
 is taken into account. Bleached, dyed, etc., cloths 
 were valued at $5,000,000, but fashion no doubt, 
 had something- to do with this item, while clothinof 
 amounted to §2,700,000, and miscellaneous goods 
 to nearly 87,000,000 more. 
 
 The United States paid altogether in 1895-96 
 $32,500,000 for imported cotton goods, which must 
 eventually have cost the wearer nearly twice as 
 much as would have been the case in England, the
 
 THE WOOLLEN SCHEDULE 137 
 
 average duty upon them being estimated at 
 nearly 50 per cent. If the same applies in any 
 degree to goods of home manufacture, we gain 
 some insight into the expense of living in that 
 country. 
 
 English looms supply nearly half the American 
 requirements of foreign cottons, Switzerland and 
 Germany dividing most of what is left. France is 
 only able to secure about 10 per cent, of the total. 
 Most of the German trade is in knitted goods, such 
 as stockings and hose, and of the Swiss in 
 embroideries — in both of which England occupies a 
 greatly inferior position. 
 
 The woollen industry has ever been the spoilt 
 child of American protectionism, petted one day 
 and whipped the next. The owners of woollen 
 mills, we may rest assured, entertain no objection 
 to free wool in its raw state, and are entirely out 
 of sympathy with the demand for its taxation. 
 They have no objection to clothing being dear, but 
 they do draw the line at dividing the profit. 
 When this commodity was placed on the free list 
 therefore, manufacturers submitted with ill-con- 
 cealed chagrin to a corresponding reduction in 
 their own duties, 
 
 The clauses of Schedule K, nmnbering 34 
 in the M'Kinley Act, were reduced to just 19 
 in its successor. These figures are still out of 
 proportion to the reductions made in the duties, 
 the extravagant nature of which will best be
 
 138 THE UXITED STATES TARIFF 
 
 illustrated by qiu^tiiio- one or two of tlie clauses of 
 the former Act. 
 
 The M'Kinley tariff divided wool into three 
 classes — (1) Merinos, etc.; (2) Leicesters, Cots- 
 wolds, etc.; (3) the commoner wools usually imported 
 from South America and the countries of Eastern 
 Europe, Egypt and Syria. And the duties imposed 
 were — 
 
 Class I. Class II. 
 
 Unwashed, 11 cents per pound. Unwashed, 12 cents per pound. 
 
 Washed, 22 ,, ,, If scoured, 36 ,, „ 
 
 Scoured, 33 ,, „ 
 
 Class III. 
 32 per cent, ad valorem if value under 13 cents 
 per pound, and .50 per cent, if over. 
 
 As the annual United States production of wool 
 is estimated at over 300,000,000 pounds, an addi- 
 tional selling value of only 10 cents a pound given 
 to it by these duties would mean a tax on con- 
 sumers of $30,000,000. 
 
 Clause 391 of the tariff is as follows : — 
 
 " On woollen and worsted yarns made wholly or in part 
 of wool, worsted, the hair of the camel, goat, alpaca, or 
 other animals, valued at not more than 30 cents per pound, 
 the duty per pound shall be two and one-half times the 
 duty imposed by this Act on a pound of unwashed wool of 
 the first class, and in addition thereto, 35 per centum ad 
 xalorem ; valued at more than 30 cents, and not more than 
 40 cents per pound, the duty per pound shall be three times 
 the duty imposed by this Act on a pound of unwashed wool 
 of the first class, and in addition thereto, 35 per cent, ad 
 valorem ; valued at more than 40 cents per pound, the duty
 
 THE WOOLLEN SCHEDULE 139 
 
 per pound shall be three and one-half times the duty 
 imposed by this Act on a pound of unwashed wool 
 of the first class, and in addition thereto, 40 per cent, ad 
 valorem." 
 
 Clause 392 reads : 
 
 " On woollen or worsted cloths, shawls, knit fabrics, and 
 all fabrics made on knitting machines or frames, and all 
 manufactures of every description made wdiolly or in part 
 of wool, worsted, the hair of the camel, goat, alpaca, or 
 other animals not specially provided for in this Act, valued at 
 not more than 30 cents per pound, the duty per pound shall 
 be three times the duty imposed by this Act on a pound of 
 unwashed wool of the first class, and in addition thereto, 40 
 per cent, ad valorem ; valued at more than 30, and not more 
 than 40 cents per pound, the duty per pound shall be three 
 and one-half times the duty imposed by this Act on a 
 pound of unwashed wool of the first class, and in addition 
 thereto, 40 per cent, ad valorem ; valued at above 40 cents 
 per pound, the duty per pound shall be four times the 
 duty imposed by this Act on a pound of unwashed wool 
 of the first class, and in addition thereto, 50 per cent, ad 
 valorem." 
 
 And a footnote adds : 
 
 "By an Act of Congress, approved 9th May 1890, tlie 
 Secretary of the Treasury is authorised and directed to 
 classify as woollen cloths all imports of worsted cloth, 
 whether known under the name of worsted cloth or under 
 the name of worsteds, diagonals, or otherwise." 
 
 Clauses 393, 394, and 395 deal witli blankets, 
 flannels for underwear, and women's and children's 
 dress goods on the same principle, possibly with a 
 few more complications, and need not be (quoted. 
 Clause 396 is as follows : —
 
 I40 THE UNITED STATES TARIFF 
 
 " On clothing, ready-made, and articles of wearing 
 apparel of every description, made up or manufactured 
 wholly or in part, not specially provided for in this Act, 
 felts not woven, and not specially provided for in this Act, 
 and plushes and other pile fabrics, all the foregoing 
 composed wholly or in part of wool, worsted, the hair of the 
 camel, goat, alpaca, or other animals, the duty per pound 
 shall be four and one-half times the duty imposed by this 
 Act on a pound of unwashed wool of the first class, and in 
 addition thereto, 60 per cent, acl valorem.'" 
 
 Clause 397 follows : 
 
 " On cloaks, dolmans, jackets, talmas, ulsters, or other 
 outside garments for ladies and children's apparel, and goods 
 of similar description, or used for like purposes, composed 
 wholly or in part of wool, worsted, the hair of the camel, 
 goat, alpaca, or other animals, made up or manufactured 
 wholly or in part, the duty per pound shall be four and 
 one-half times the duty imposed by this Act on a pound of 
 unwashed wool of the first class, and in addition thereto, 60 
 per cent, ad valorem." 
 
 Carpets, druggets, mats, and rugs, are provided 
 for ill succeeding clauses, into which however we 
 need not go in detail. 
 
 These clauses may mean anything or nothing to 
 a careless and indifferent reader, but they suck the 
 very life l^lood out of a people subjected to their 
 operation. That clothing should be expensive to 
 the wealthy is a hardship, though one they can very 
 well put up with, but that it should be heavily 
 enhanced in cost to the poor and needy, or even to 
 the moderately well-to-do, is a crying iniquity and a 
 scandalous abuse. And how dear it was in the 
 United States under this Act we will no\v see.
 
 COST OF CLOTHING 141 
 
 We will suppose that the clothing of the work- 
 ing classes of America is made from yarn, which, 
 on entering the country, would pay the lowest rate 
 of duty, and in order that the calculation may be 
 as favourable to the Act as possible, we will take 
 the extreme price at which this could happen, 
 namely, yarn at 30 cents per pound. 
 
 Cost of yarn at any United States port, 30 cents per pound. 
 
 Duty 2i times 11 cents, . . 27.50 „ 
 
 35 per cent, ad valorem, . . 10.50 „ „ 
 
 Cost of yarn to weaver, . . 68 cents per pound. 
 
 Should foreign ^voven cloth instead of yarn be 
 used, the cost would be 
 
 Value at United States port, . 30 cents per pound. 
 
 Duty 3 times 11 cents, . . 33 „ „ 
 
 ^ per cent, ad valorem, . . 12 „ ,, 
 
 Cost of cloth to clothier, . . 75 cents per pound. 
 
 Let the wearing apparel ready-made be now 
 imported, in the shape of a suit of clothes weigh- 
 ing say six pounds, and costing forty shillings — a 
 price at which an English working man would 
 purchase articles of very good (piality. 
 
 Cost of suit £2, or . . . . .*ii^ 10.00 
 Duty on six pounds at 4^ times 11 cents per 
 
 pound, say 50 cents, .... 3.00 
 
 60 per cent, ad vcdorcm, . . . 6.00 
 
 Cost of suit to wearer, .... .^19.00
 
 142 THE UNITED STATES TARIFF 
 
 Women's and children's outer garments it is 
 difficult to illustrate, owing to the great variety of 
 weight and value. Any reader may work out an 
 example for himself, based on clause 397. 
 
 It cannot be supposed that the yarn merchant, 
 the cloth factor, or the clothier would lie out of these 
 heavy disbursements without ample recompense, 
 and we are forced to the conclusion therefore that 
 the M'Kinley tariff might have increased the cost 
 of the cheapest clothing to at least two and a half 
 or three times what it should be. Such an Act can 
 only be fitly described by labelling it in the biggest 
 type ever yet cast, " Cruel." 
 
 It must not be overlooked that duties on the 
 raw material are infinitely more effective than 
 when imposed on manufactured goods. Short of 
 combination, which has not yet taken place in the 
 American woollen industry, there is no limit to the 
 number of manufacturers who can enter the business 
 and thus create competition, which may, and as a 
 rule does, keep the price of the cheaper sorts of 
 clothing at a moderate level. But the moment 
 wool itself is touched, the entire position is 
 changed. The country has never yet produced 
 sufficient for its own requirements, and as the 
 deficiency must be imported, the price will be that 
 ruling in the cheapest foreign market, plus the 
 duty, which in turn will regulate the value of the 
 home production as weU. When it is maintained 
 by protectionists, that the cheaper clothing
 
 SILKS 143 
 
 did not sell at the outrageous prices which the 
 M'Kinley tariff would have warranted, the only 
 answer is, that it was an accident which that tariff 
 did its best to prevent, though it failed in the attempt. 
 
 The Wilson Act, though instituting sweeping 
 reductions, is still bad enough. The duties on yarn 
 and cloth are mostly from 40 per cent, to 50 per 
 cent, ad valorem, and on made-up clothing they are 
 generally 50 per cent, and as at these rates York- 
 shn-e is able to do a large and profitable business 
 with the United States, it may be reckoned that 
 the cost of clothing is now only about doubled. 
 The difference between the two Acts is not of 
 course additional profit or loss to the spinner and 
 manufacturer, because under the M'Kinley the 
 cost of the raw material was so much higher. And 
 this is threatened once more. 
 
 The imports of women's and children's dress 
 goods reached $20,000,000; of woollen and 
 worsted cloths, $22,000,000 ; and of ready-made 
 clothing, $1,250,000. The total value of dutiable 
 woollens of all kinds was over $50,000,000, and the 
 average rate of duty 48 per cent. This it must be 
 remembered is with free wool, while under the 
 M'Kinley Act it would have been almost doubled in 
 price. Despite the enormous increase of cost that Act 
 entailed, the im])ort for 1892-93 was valued at 
 $33,000,000, but in the year following, dry goods 
 houses so restricted their operations, in view of the 
 reduction of the duties, that the figure fell to
 
 144 THE UNITED STATES TARIFF 
 
 $16,000,000. Great Britain has by far the largest 
 share of the trade, — only in dress goods are France 
 and Germany serious competitors. 
 
 An enhanced cost of silk and silk goods is 
 scarcely so objectionable as of woollens and cottons, 
 and Schedule L may be allowed to pass with little 
 comment. The rates, both under the M'Kinley 
 Act and the Wilson Act, were and are undoubtedly 
 excessive, the partially manufactured material 
 paying 50 cents per pound, changed in the latter 
 to 20 per cent, ad valorem, thrown silk being 
 rated in both at 30 per cent. In manufactured 
 goods little alteration has taken place, the rates 
 being some 50 to 60 per cent, in the one, and 45 to 
 50 per cent, in the other. So popular however are 
 foreign silks in the United States, that in spite of 
 the heavy duties over $26,500,000 were imported, 
 and were the rate only a little more reasonable 
 this source of revenue would be perfectly legitimate. 
 England of course makes a very poor show here, 
 France doing about $11,000,000 of the trade, 
 Germany and Switzerland another $10,000,000 
 between them, and Great Britain under $2,500,000. 
 
 Flax, hemp, and jute textiles, covered by 
 Schedule J, are both numerous in quantity and in 
 their uses. I have previously alluded to jute 
 bagging for cotton baling, and grain bags made 
 from the same material are likewise on the free list, 
 though subject under the M'Kinley Act to a duty 
 of 2 cents per pound. Hemp, twines, and cordage
 
 PAPER AND BOOKS 145 
 
 pay 35 per cent, against a former impost of '2\ 
 cents per pound, and those made from grass fibres, 
 such as Mexican istle, pay only 10 per cent, against 
 1|- cents. All these charges are more or less 
 serious hindrances to important industries. Oil- 
 cloths and linoleums pay 25 to 40 per cent., against 
 40 per cent, and upwards under the M'Kinley 
 Act. 
 
 It is of course under flax, that the greatest 
 strain of this schedule is felt, and there is little to 
 choose in this respect between the two tariffs. 
 Collars, cuffs, and shirts made from linen now pay 
 50 2^er cent, of their value, against a graduated 
 scale rising to a somewhat higher figure. Laces 
 and embroideries, the product of Belfast and 
 other linen weaving centres, pay 50 per cent, 
 against 60 per cent., but the linen cloths which 
 constitute the bulk of the imports are subjected to 
 35 per cent. only. Many of these goods, while not 
 absolute necessaries, are scarcely luxuries, and if 
 they are to be taxed at all, it should be on a 
 greatly reduced scale. The import of these 
 fabrics, principally linen, was $19,000,000; free 
 goods, like gi^ain bags and Calcutta and Dundee 
 burlaps, representing $8,000,000 more. Great 
 Britain, and of course India, almost monopolise the 
 entire trade. 
 
 Schedule M devoted to pulp, paper, and Ijooks, is 
 unwise as well as irritating, and amounts to a tax on 
 knowledge, which was so objectionable a feature of
 
 146 THE UNITED STATES TARIFF 
 
 the Middle Ages, and indeed until comparatively 
 
 recent times. One would scarcely expect to see it 
 
 adopted by a nation which prides itself upon its vast 
 
 intellifrence, and the encouratrement it cfives to learn- 
 er ' o o 
 
 ing. Yet all books printed in the English language 
 are subjected to 25 per cent, duty, presumably with 
 the object of compelling everything of interest to 
 American readers to be printed in their own 
 country. The United States have evidenced their 
 sense of justice by their adhesion to the principle of 
 international copyright, and they surely might go a 
 step further and abolish the tax on it. 
 
 The paper trade is peculiarly international, as in 
 almost every country there is some special manu- 
 facture which either cannot be made at all, or only 
 at increased cost, elsewhere. This is illustrated by 
 the fact that while the United States imported over 
 $3,000,000 worth, they likewise exported $2,000,000, 
 and it is evidently a business where exchange 
 should be encouraged rather than repelled. Yet 
 duties averaging 25 per cent, are still enforced. 
 
 At last we approach the end of our summary, 
 thankful that the alphabet is not quite exhausted. 
 The miscellaneous articles under Schedule N. in- 
 clude buttons and coal, corks and dice — not an 
 unusual combination, dolls and jewellery — likewise 
 sometimes observable in company, furs and feathers, 
 pencils, photographic and smokers' materials. The 
 principal item however is leather and leather manu- 
 factures, an industrv in which the United States is
 
 COAL AND SUNDRIES 147 
 
 supposed to excel, and for which it enjoys un- 
 equalled facilities. Yet 10 to 20 per cent, is 
 not considered too much to demand on any goods 
 that may find their way thither, though the 
 M'Kinley Act thought 35 per cent, none too little 
 on some. Gloves naturally fall under this heading, 
 and are charged $1.50 to $4 per dozen pairs 
 according to length, with $1 per dozen pairs extra 
 if lined. The former tariff also imposed a dozen 
 rate, but stipulated that in no case should the 
 amount levied be less than 50 per cent, of the 
 value, while in most instances it is now under 40 
 per cent. The glove import was valued at 
 $6,750,000, and, as I have elsewhere observed, is a 
 fair subject for reasonable taxation. Morocco leather 
 or skins figured for $3,000,000 more, and other 
 kinds for another $3,000,000. The exports cf 
 leather, naturally of a much coarser and cheaper 
 description, fell just short of $13,000,000, while boots 
 and shoes, harness, saddles, etc., were accountable 
 for about $1,500,000 additional. 
 
 Notwithstanding duties averaging over 35 per 
 cent, on so simple and usually inexpensive an article 
 as buttons, the import of them reached nearly 
 $1,500,000. Bituminous coal, though paying 40 
 cents a ton, figured for over $3,500,000 — British 
 Columbia supplying about 800,000 out of a 
 total of 1,250,000 tons. The United Kingdom was 
 responsible for 75,000 tons only, jn-obably con- 
 veyed principally as ballast to Pacific ports, San
 
 148 THE UNITED STATES TARIFF 
 
 Francisco being the great consumer of foreign coal. 
 As a set-off against the former item, Canada took 
 3,000,000 tons of coal from the United States. 
 
 Gunpowder and similar explosives, mulcted at 5 
 to 8 cents per pound, equal to 30 per cent., figure 
 for over half a million dollars. Toys, including 
 dolls, almost entirely from Germany, reached 
 $2,500,000, but the jewellery was estimated at much 
 more and came to nearly $8,000,000. This would bo 
 a fair subject of taxation were smuggling not so 
 easily accomplished, and this fact must always 
 render it difficult for honest people to prosper in 
 the trade, though I do not mean to cast the 
 slightest reflection on those actually engaged in it. 
 The guilty do not openly associate themselves with 
 the business. 
 
 And now, lest anything should have been 
 
 omitted, clause 362 of the Wilson Act and 472 cf 
 
 the M'Kinley, stipulates for — 
 
 "Waste, not specially provided for in this Act, 10 per 
 cent, ad valorem," 
 
 while a special paragraph following the free list 
 
 further provides, 
 
 " That there shall be levied, collected, and paid on the 
 importation of all raw or unmanufactured articles, not 
 enumerated or provided for in this Act, a duty of 10 per 
 cent, ad valorem ; and on all articles manufactured, in 
 whole or in part, not provided for in this Act, a duty of 20 
 per cent, ad valorem." 
 
 Little comment need be made on the free list. 
 It is remarkable rather for what is not on it thart
 
 WEARING APPAREL 149 
 
 what is, and with this part of the subject I have 
 just dealt. Several items have already been re- 
 ferred to, but there are at least two others calling 
 for passing notice. Ploughs, reapers, and agri- 
 cultural implements generally, are free of duty, 
 and at first sight this might appear an important 
 concession to the greatly oppressed agricultural 
 interest. Not so however, because the United 
 States manufacturers of these implements have long 
 enjoyed a deservedly high reputation for the work 
 they turn out, and the moderate price at which it 
 is put on the market, so much so indeed that 
 the exjDort of these articles was valued at over 
 $5,000,000, a fair annual average. Still it is rather 
 hard that, unlike their neighbours engaged in other 
 industries, they are not permitted to charge the 
 domestic user 30 to 50 per cent, more than 
 they can afford to sell at. 
 
 Wearing apparel, the property of citizens return- 
 ing from a foreign shore, is also allowed free entry. 
 It is sometimes said tliat a moderate-sized American 
 family can spend a holiday of two or three months 
 in Europe, and defray the greater part of the cost 
 out of the saving they effect in stocking their 
 wardrobes with British, German, or French clotliing 
 for the ensuing twelve months. It is quite certain 
 that no sensible American ever returns home from 
 Europe without a very complete outfit. The 
 labourer, sweltering at tlie furnace or toiling at 
 the loom, must })ay tlie extravagant prices
 
 I50 THE UNITED STATES TARIFF 
 
 necessitated by extreme protection, while his 
 employer can supply himself with better material 
 at half the price. One would like to know 
 whether the United States ironmaster, or even 
 the cloth manufacturer, is so enamoured of the 
 system under which he lives and prospers, as to 
 be able to resist the temptation of employing the 
 English tailor, or of allowing his wdfe and daughters 
 to patronise the French costumier and milliner. 
 There is an agitation certainly to put a stop to 
 this abuse, and make wearing apparel dutiable, 
 however imported, but inasmuch as it would solely 
 affect the pockets of the rich, it is hardly likely to 
 prove successful. The figures for two years under 
 the M'Kinley, and two under the Wilson Tariff, are 
 interesting, as showing the result of excessively high 
 prices. The value of wearing apparel and household 
 effects, entered as the property of tourists and 
 travellers returning home, for personal use, was in — 
 
 1892-93 . . $3,500,000) ._„. . 
 
 \ M Kmley. 
 1893-94 . . 2,750,000/ "^ 
 
 1894-95 . . 2,250,0001 „^., 
 
 - Wilson. 
 1895-96 . . 2,500,000j 
 
 Such then is protection, as illustrated in the 
 United States of America. There is now and 
 again a ringing of the changes, but what does it 
 amount to ? The Wilson Act reduced the M'Kinley 
 duties in many instances by 50 per cent, or more, 
 and in most others by 25 to 50 per cent. But it
 
 RESULTS OF PROTECTION 151 
 
 is much the same thing as offering a starving man, 
 who has only ten cents in the world, a loaf of 
 bread foi" twenty-five, and when he protests he has 
 not got it, telling him he can have it at the greatly 
 reduced price of twelve and a half Still we must 
 be thankful for small mercies, and a reduced tariff 
 does benefit the consumer much more than appears 
 on the surface. It may not greatly increase 
 imports, and therefore has nothing tangible to 
 show, but it does compel the home manufacturer 
 to reduce prices ; to sell his loaf in fact at twelve 
 and a half cents instead of twenty-five, which is a 
 distinct gain to those who have the money. That is 
 why the cry of red ruin is raised whenever duties are 
 reduced. It takes the manufacturer ten or twelve 
 years to pile up the immense fortune to which he 
 considers himself entitled in five or six, and he is 
 consequently an aggrieved and injured individual. 
 
 We wnll defer to a later chapter consideration 
 of the influences exercised by this system on the 
 economic life and industry of the people who adopt 
 it. That a liberty-loving and self-governing nation 
 like the United States should so long have been 
 content to live under it, is one of those things 
 utterly incomprehensible. Possibly the rapidity 
 of their expansion has blinded them to what has 
 been going on, and the ease witli nn liicli money has 
 hitherto been made and accumulated, has resulted 
 in some indiflerence as to the way in which it went. 
 It says little for their political intelligence and
 
 152 THE UNITED STATES TARIFF 
 
 economic knowledge, but speaks volumes for their 
 untiring energy and daring enterprise that they 
 have survived the ordeal. The check however 
 has come at last. The eaofer rush forward has had 
 to give way to a sudden standstill, prolonged 
 beyond any former precedent, and if care is not 
 taken, it will prove but the forerunner of a head- 
 long descent. No nation, however industrious and 
 determined, can survive the steady transfer of its 
 wealth and influence to a limited and autocratic 
 class, and any policy with such a tendency must be 
 sternly repressed. 
 
 That the American people Avill extricate them- 
 selves before irretrievable ruin has overtaken them, 
 nobody who knows anything of them or of their 
 history will for a moment doubt. But there is only 
 one way of effecting a thorough and radical reform in 
 the system, and that is by sweeping it away entirely. 
 Let warning be given, that two, three, four, or Ave 
 years hence, as the people of the United States may 
 themselves determine, protection shall cease, and 
 those profiting so largely by it at present will be 
 afforded ample time to readjust their respective 
 industries on true and economic principles, and 
 where that is not possible, to transfer their capital 
 and energies to other spheres of labour where they 
 will be assured of a reward. Then a tariff* may 
 take its place which shall provide ample revenue, 
 without offending against righteousness and justice. 
 i^An Afjpendix to this Chapter luill he found on page 433).
 
 CHAPTER VI. 
 
 The Tariffs of France and Germany. 
 
 France : — PrevailingEconomic Conditions of the Country — Tariff as a 
 Source of Revenue — The Nature of French Protection — Analysis 
 of Foreign Trade — Export Statistics — Absence of Competition in 
 French Products — National Character and Economic Policy — 
 Tariff Rates — Textiles — Iron and Steel — Chemicals — Exemption 
 of Raw Materials — Agricultural Products^ Surtax on Indirect 
 Imports — Colonial Tariff Policy — Reciprocity. 
 
 Germany : — Moderation of Tariff — Simplicity of Arrangement — 
 Revenue Duties — Protective Duties — Chemicals — Iron and 
 Steel — Textiles — Leather — Earthenware — Agricultural Products 
 — Advantages enjoyed by Home Manufacturers — Retaliation and 
 Reciprocity — Tariff Wars with Russia and Spain — Strained 
 Commercial Relations with United States — The Denunciation 
 of the British Treaty — Causes of Industrial Expansion in 
 Germany. 
 
 The economic conditions in France are so totally 
 different to those prevailing in Great Britain or the 
 United States, that we could hardly be surprised to 
 find the fiscal arrano;ements of these countries at 
 total variance. The French are the most heavily 
 taxed people in Europe, if not in the world, yet 
 they carry their load contentedly, and even prosper 
 under it. Important sources of revenue open to 
 many other countries are however narrowed and 
 rendered difficult in France. The production of 
 wine is one of the most important of her industries,
 
 154 THE TARIFFS OF FRANCE AND GERMANY 
 
 and a prolific source of wealth, aiul anything tending 
 to check the consumj)tion at home or the export 
 abroad would be regarded as a serious blow at her 
 prosperity. Neither does the moral aspect of the 
 question count for much, as drunkenness or even 
 excessive drinking is not a French vice, and tlie 
 light natural beverages which are most popular are 
 not in any way harmful, A French Government 
 would no more think of imposing a heavy excise 
 tax on light alcoholic liquors than an English 
 one would on raw cotton. It is never safe to 
 predict what a Government of the United States 
 may or may not do, in that or any other direction. 
 
 Under such circumstances it is natural to find 
 that commodities like tea, coffee, and cocoa are 
 regarded as luxuries, just as wines and spirits are else- 
 where, and are heavily taxed accordingly. Tea paj^s 
 208 francs per 100 kilos., coffee in the bean 156 
 francs, roasted or ground 208 francs, and cocoa in 
 the bean 104 francs, equivalent respectively to about 
 tenpence, sevenpence halfpenny, and fivepence per 
 English pound; but as the ordinary drink of the 
 people is free from such excessive burdens, there is 
 little need to quarrel with these duties. Raw sugar 
 likewise pays 60 francs per TOO kilos., and' refined 
 68 francs, and not even French colonies and 
 possessions are exempted or allowed any rebate on 
 this tarifi", though they benefit by a surtax recently 
 imposed on foreign sugar. This is equal to twopence 
 halfpenny and threepence respectively, and makes
 
 PROTECTION IN FRANCE 155 
 
 the price of sugar, which in moderate quantities is 
 more a necessary than a luxury, considerably more 
 than double, sometimes treble, what it is in the 
 United Kingdom, and explains why French consump- 
 tion per head is only about one-third of the British, 
 and less than half the American. There is of course 
 another aspect of the French sugar question, which 
 does not concern us here. Most spices are rated 
 like tea, one or two, mace and nutmegs for instance, 
 50 per cent, higher. 
 
 Tobacco and cio-ars do not fall within the same 
 category as wines and spirits, and the manufacture 
 of them is a government monopol}^, private import 
 of either the manufactured or unmanufactured leaf 
 being strictly prohibited. Those who can afford 
 something better than the State factories produce, 
 are indeed permitted to import for their personal use 
 up to 10 kilos., say 22 pounds per annum, on pay- 
 ment of 36 francs per kilo., or 13s. a pound. The 
 tobacco regie is a most important source of revenue, 
 of which I shall have more to say hereafter. 
 
 Were the entire French tariff framed on this 
 principle, high though the duties are, we should 
 have to regard it as levied for revenue only. But 
 these items are only single stars in a vast firmament, 
 and are so shut in Ijy others created for protective 
 purposes as to ])e almost lost. For protection is 
 even more rampant in France than in tlie United 
 States of America, and as one scans the 720 
 enumerated commodities, it is only now and again
 
 156 THE TARIFFS OF FRANCE AND GERMANY 
 
 that the eye catches the word free. But protection 
 ill France has developed into a science, if not indeed 
 into a fine art, and one does not find in its whole 
 range, any clauses which enable special industries to 
 accumulate rapid and enormous fortunes at the 
 expense of the community at large. The design 
 is to give everybody a little, and this has been 
 accomplished so far as human ingenuity can eftect 
 it. If the peasant farmer has to pay somewhat 
 more for his cotton blouse and w^ooden sabots than 
 he would have to under a system of free trade, he is 
 also able to get a rather higher price for his wheat, and 
 rye, and barley. This equalises matters, or perhaps 
 we should rather say neutralises them, — as how much 
 better ofi" is a man in the end whose receipts and 
 expenditure alike are increased by fifteen or twenty 
 per cent. ? The Frenchman however believes that 
 the system gives him full control of his own 
 markets, and excludes foreign competition, and in 
 that he is right, Ijut it also shuts him out from other 
 markets, and prevents him competing with the 
 foreigner elsewhere. That he also recognises, and 
 quietly submits, content to make the most of the 
 unique position he occupies towards almost every 
 other civilised and wealthy nation. 
 
 For France is to both Europe and America Avhat 
 Bond Street is to London, or Broadway to New 
 York. Thither people with too much money in 
 their pockets wend their way, and invariably succeed 
 in lightening them. France is the purveyor to west
 
 NATURE OF EXPORTS 157 
 
 ends, and inhabitants of these regions given to 
 purchasing luxuries, do not as a rule enquire too 
 closely into their legitimate value. They have one 
 of their own, made up to a not inconsiderable extent 
 by the pleasure they are supposed to afford. French- 
 men do not mix up in the vulgar crowd of English- 
 men and Germans and Americans, struo-o-lino- to 
 sell a gross of thimbles, and would shrink from the 
 idea of competing for a contract to construct a 
 railroad across China, and equip it with rolling 
 stock. They would gladly undertake the work if 
 offered, but it would have to be in their own time 
 and on their own terms. Until that happens, they 
 are content to go on supplying the people who do 
 take the contracts, and make money out of them, 
 with the choicest of wines for their dinner tables, 
 the loveliest of silks for their wives and dauoditers, 
 and the most recherche articles in leather, in o-lass, 
 in pottery, or in a hundred other materials for orna- 
 ments or presents. And on the whole they make a 
 very decent living out of it without much worry. 
 
 French exports in 189G were valued at 
 fcs. 3,404,643,000' (£136,200,000). We have only 
 to examine the details of the returns a little closely, 
 to discover to what an extent this trade in luxuries 
 reaches, and consequently how dependent France is 
 on the prosperity as well as the goodwill of her 
 neighbours. 
 
 ' These figures, as well as those iuimediately following, are based 
 on 189o valuations, and will eventually be subjected to some slight 
 alterations.
 
 158 THE TARIFFS OF FRANCE AND GERMANY 
 
 Wines . 
 
 Brandy and spirits . 
 
 Silk ' . 
 
 Silk yarns 
 
 Silk fabrics . 
 
 Jewellery and plate 
 
 Toys and fancy goods 
 
 Millinery and artificial flowers 
 
 Table fruits . 
 
 Ornamental feathers 
 
 Curios, books, and engravings 
 
 Perfumery . . . , 
 
 Olive oil, syrups, and jams 
 
 Carriacjes 
 
 Mirrors .... 
 
 £9,850,000 
 
 1,950,000 
 
 3,850,000 
 
 250,000 
 
 9,950,000 
 
 1,000,000 
 
 5,250,000 
 
 2,800,000 
 
 1,100,000 
 
 1,900,000 
 
 1,900,000 
 
 500,000 
 
 450,000 
 
 500,000 
 
 1,100,000 
 
 £42,350,000 
 
 Every item may be regarded as an absolute 
 luxury, and they constitute almost one-third of the 
 total exports. They are not things people who can 
 afford to buy care to go without, but unlike the 
 staple necessaries of life, most of them can easily 
 be replaced without disturbing the regular flow 
 of existence, or creating any keen sense of loss. 
 But this list is by np means exhaustive, inasmuch 
 as a great proj)ortion of the goods included in the 
 one immediately following also rank as luxuries, the 
 woollen fabrics particularly being mostly high priced 
 and of special quality : —
 
 DETAILS OF EXPORTS 
 
 159 
 
 Woollen manufactures . 
 
 Cotton manufactures 
 
 Prepared skins 
 
 Leather g-oods 
 
 Porcelain, glass, and crystal 
 
 Musical instruments 
 
 £11,600,000 
 . 5,200,000 
 . 3,600,000 
 . 3,300,000 
 800,000 
 500,000 
 
 £25,000,000 
 
 In striking contrast to this are the exports of 
 the principal food products and manufactures : — 
 
 Breadstuffs .... £1,250,000 
 
 Fresh vegetables . 
 Salt and fresh fish . 
 Cattle and dead meat 
 Butter . 
 Eggs and cheese 
 
 850,000 
 1,200,000 
 1,250,000 
 2,150,000 
 1,250,000 
 
 £7,950,000 
 . 2,750,000 
 
 £10,700.000 
 
 Sugar of course receives the stimulus of 
 bounties, without which its shipment to foreign 
 countries would be wull nigh impossible : — 
 
 Iron and steel . . . £900,000 
 
 Raw and refined sugar 
 
 Machinery 
 
 Tools and metal goods . 
 Copper and copper goods 
 Tartrates and chemicals . 
 
 1,900,000 
 3,550,000 
 1,700,000 
 2,400,000 
 
 1-10,450,000
 
 i6o THE TARIFFS OF FRANCE AND GERMANY 
 
 Raw wool was exported to the value of 
 .£5,000,000, but, on the other hand, the import was 
 worth nearly £15,000,000, or about treble. The 
 remainder is made up of a miscellaneous collection 
 of articles, rarely exceeding £1,000,000 in any indi- 
 vidual instance, and they constitute the small change 
 of a retail store rather than the iDig- coin of a com- 
 mercial bourse. The British trade returns, it is true, 
 also show a good deal of this small change, but it is 
 lost among the large money. It must further be 
 borne in mind that the bulk of the cheaper and 
 rouo;her manufactured articles which France does 
 export are to her own colonies and possessions, and 
 consequently as a competitor with the great indus- 
 trial nations she is a nonentity. 
 
 France might of course, by charging extra- 
 vagant prices, lose some of this special trade, but 
 so long as she keeps within reasonable bounds there 
 is little to be afraid of. Who would dream of 
 drinking champagne " made in Germany " for in- 
 stance. And though both England and Germany 
 may turn out quite as good woollen fabrics, or distil 
 equally delicious perfumes, the stamp upon them 
 " made in France " at once enhances the desire of 
 possession and the value with it. 
 
 All these things must be paid for, and 
 paid for largely in other commodities. Kaw 
 materials not produced at home, such as cotton, 
 jute, and copper ore, or tropical and semi-tropical 
 produce like tea and coffee, are the first purchases
 
 OUTLETS FOR FRENCH INDUSTRY i6i 
 
 made with the proceeds of exports. But when 
 these are provided for, there remains a substantial 
 balance still to be liquidated in some way or other. 
 In recent years a great deal of gold has been 
 taken, not direct into France, but by Russia, to 
 whom it has been lent. Every country buying 
 French luxuries however is not prepared to pay 
 either in o-old or raw materials, and France takes, 
 though no doubt reluctantly, such things as coal, 
 and cotton and woollen yarns, chemicals and 
 machinery, all of which she can make herself, 
 but it is better to receive it that way than not 
 at all. 
 
 Certain industries are bound to suffer under such 
 a system. Besides, with a population so stationary 
 as that of France, and a country so well provided 
 with railways and otlier public works, there is little 
 scope for that expansion which manufacturers and 
 traders are always pining for. Industries like iron 
 and steel, earthenware, and even cotton, which is 
 after all mainly concerned with the production 
 of cheap and useful, rather than expensive and 
 ornamental fabrics, find themselves restricted within 
 the boundaries of their own territory, with little 
 chance of making headway beyond. French manu- 
 facturers might it is true, like those of some other 
 nationalities, produce more than is necessary for 
 home consumption, and force off the surplus at best 
 prices obtainable in foreign markets. I^)ut tlicy 
 do not believe in making deliberate losses, and
 
 i62 THE TARIFFS OF FRANCE AND GERMANY 
 
 are so far versed in the principles of political 
 economy, that they prefer a small business with 
 something to show for it at the end of the year to a 
 large one with nothing. They have attempted to 
 solve the difficulty in another fashion, and by open- 
 ing up colonics and securing foreign possessions of 
 their own, they obtain markets as secure as those of 
 France itself. Alo-eria and Tunis, Tonkin and 
 Madagascar, are not nursed as outlets for surplus 
 population, but rather for the surplus products of 
 that population. It matters little that the adminis- 
 tration costs many millions of francs per annum, 
 and is a heavy drain on the national exchequer ; 
 the taxes to provide it are paid with little reluctance, 
 and the fact of being able to supj^ly these countries 
 with everything they want, and much that they 
 don't, is regarded as ample compensation for the 
 outlay. 
 
 This absence of growth of the population intro- 
 duces us to another aspect from which to survey 
 the fiscal and economic policy of France. That it is 
 causins; serious misg;ivino;s anions' French statesmen 
 and thinkers is no longer concealed, and it is evident 
 that if a change does not take place ere long, France 
 must sink to a second or third rate European State, 
 at anyrate where heads count. The causes are 
 admitted with equal candour, and spring from an 
 innate selfishness of national character, families being 
 carefully restricted in size in order that each mem- 
 ber may enjoy more of this world's goods. This
 
 RESULTS OF FRENCH PROTECTION 163 
 
 carefulness is bound to reflect itself in commer- 
 cial dealings, both among themselves and with 
 foreigners, and is, as a matter of fact, at the 
 bottom of the protective system. The French know 
 Avhat their own home trade amounts to, and are 
 determined to keep it to themselves. If they gave 
 part of it away, they might not get an equivalent 
 in return. They might get more, but the risk is 
 not worth running, particularly as they like to 
 know the ground is quite firm before they tread on 
 it. It is only in jDolitics the Frenchman is a 
 revolutionist, in every other walk of life he is the 
 most conservative of his species. 
 
 When we take all these tliino;s into consideration 
 therefore, protection for French industry seems quite 
 as natural as free play and free trade for British. 
 The Frenchman is under the paternal care of official- 
 ism from the moment of his birtli to the day of his 
 death, and interference with his trade and industry 
 is rarely if ever resented, because he is convinced 
 it is for his good. Nearly all Frenchmen are in 
 consequence avowed and honest protectionists, the 
 free traders of the nation are but a handful whose 
 voices ring through the wilderness with scarcely a 
 responsive echo. I have not the slightest desire to 
 defend protection in France or anywhere else, but 
 there are degrees even of heresy, and there are 
 heretics whom one would hesitate about trying to 
 convert, lest their now opinions made them worse 
 instead of better. And it may be admitted that a
 
 1 64 THE TARIFFS OF FRANCE AND GERMANY 
 
 nation situated like the French does reap the 
 maximum of benefit with the minimum of draw- 
 back in an all-pervading and moderate measure of 
 protection. Were she to relinquish it and step forth 
 into the arena of commercial combat, her wits would 
 be sharpened and her pockets more rapidly filled, 
 but she does very well as it is, and it is just possible 
 that were all the rest of the world to confess and 
 recant the protectionist heresy, France would still 
 cling tenaciously to her opinions. 
 
 A simple illustration will show that no detail is 
 too minute for French protection to encompass. 
 There is nothing extraordinary in a piano paying a 
 duty of 50 francs, but a concertina is sometimes 
 considered a musical instrument and pays 1 franc, 
 while the humble tambourine or noisy castanets are 
 charged 50 centimes. Anyone wanting a complete 
 catalooue of musical instruments mioht do worse 
 than turn up the French tariff", and there is no single 
 instance of one appearing on the free list. 
 
 Eegard is likewise paid to simplicity, and nearly 
 everything is charged on gross or net weight, at a 
 specified duty per 100 kilogrammes (220 pounds 
 English). 
 
 It will be understood that all rates subsecjuently 
 referred to are on this basis, and the English 
 equivalent may be roughly arrived at by multiplying 
 the rate of duty by the figure 10, which will give 
 the amount chars^eable on the Enolish ton of 2240- 
 pounds, and calculating the number of francs at
 
 TEXTILES 165 
 
 ninepence halfpenny or even tenpence each. The 
 exact equivalent is 1015 kilos, to the ton, and 
 25.25 francs to the £ sterling. 
 
 The United States tariff, as we have had occasion 
 to observe, formerly reached the zenith of its 
 oppressiveness in manufactured woollen goods, and 
 may do so once more. It would be extremely bad 
 policy on the part of the French government to 
 place such duties on these fabrics as would materially 
 enhance their selling price above that of other 
 countries, which are such free and willing customers. 
 As a matter of fact the rates vary from threepence 
 to about ninepence per square yard according to 
 the weight of the material, and as the price generally 
 runs to some shillino-s the ad valorem rate is 
 moderate. Still the very fact that it exists tends to 
 increase the cost of production, whether destined for 
 home or foreign use, and English and American 
 wearers of French materials should bear in mind 
 that when the British manufacturer can produce 
 goods of equal quality and finish, tlie cliances are 
 they will be fully ten per cent, cheaper, and con- 
 sequently better value for the money. This applies 
 with even greater force to purely fancy articles such 
 as embroideries, upon which the duties are con- 
 siderably heavier, but there of course the French 
 expect to profit by their superior skill of workman- 
 ship, real or suppositious. Woollen fabri(!s mixed 
 with cotton are naturally rated at a lower, tliose 
 witli silk at a hiirher, level.
 
 1 66 THE TARIFFS OF FRANCE AND GERMANY 
 
 Cotton manufactures are treated on very similar 
 principles, only each process they undergo adds 
 to the weight of the impost. Yarns, for instance, 
 are rated from a little over a halfpenny per 
 pound on very coarse, to more than a shilling 
 on very fine counts, the medium ones running 
 from about three halfpence to threepence. When 
 this is converted into unbleached calico, the duties 
 are at once calculated on a more elaborate scale 
 according to weight and the number of threads 
 contained in a square of 5 millimetres, ecjual to about 
 one-fifth of an inch. The coarsest fabrics weighing 
 4 ounces and upwards to the square yard pay about 
 twopence halfpenny per pound, say a halfpenny per 
 yard, while very fine ones weighing one ounce 
 or less to the yard pay two shillings, which however 
 is only equal to about three halfpence per yard, as 
 there are so many more yards to the pound. If 
 these goods are bleached the duty is at once 
 increased 20 per cent., if dyed 30 per cent., and 
 if printed, from rather more than a farthing to 
 a penny per yard additional, according to the 
 number of colours. These duties, from an ad 
 valorem point of view, naturally vary in accordance 
 with fluctuations in the prices of yarn and cloth, 
 which in their turn are dependent on raw cotton, 
 but in any case they lack the extravagance 
 of the corresponding ones in the United States, 
 the home of the raw material. The foreiofn 
 trade in cotton tissues is of much less value than
 
 IRON AND STEEL 167 
 
 that in woollens, but the same remarks apply to the 
 comparative prices of English and French goods. 
 
 The protection afforded to the French iron and 
 steel industry is somewhat more on the American 
 scale. Common pig iron at fcs. 1.50 per 100 kilos, 
 is much the same as $4 per ton ; iron and steel rails 
 pay 6 francs, equal to about £2 10s. per ton. 
 Steel ingots and billets are rated at 5 to 6 francs, 
 sheet and plate iron 7 to 11 francs; tinplates at 
 12 to 13 francs correspond very closely to the 
 \\ cent, per pound in America, and is of course 
 just half the rate under the M'Kinley tariff.- 
 There is however more justification for such duties 
 in France, as the conditions of production are not 
 so favourable. Steel rails cannot be rolled there 
 at £3 to £3 10s. a ton, as ores are neither so 
 profuse nor so rich, nor is the industry on any- 
 thing like so gigantic a scale. 
 
 The total output of pig iron for 1896 was just 
 2,000,000 tons, that of wrought iron and steel to- 
 gether barely 1,500,000 tons, the values of the latter 
 being estimated at about £4,500,000 and £7,500,000 
 respectively, or about one-half of the British 
 export alone. The British consumption of coal, 
 as we have already noted, was 150,000,000 
 tons, and the export another 45,000,000 ; but 
 the total production of French mines was but 
 28,000,000 tons, while the import amounted to 
 11,500,000 more, or a total of under 40,000.000 
 tons. That in itself is ample proof of the limited
 
 i68 THE TARIFFS OF FRANCE AND GERMANY 
 
 scope of French manufacturing industry. France 
 cannot construct a few thousand miles of railway 
 every year, nor are Madagascar and her other 
 possessions quite ripe for such extensive develop- 
 ment. And not only does this apply to railways, 
 but to almost every other undertaking in which 
 large quantities of metal are absorbed. There is 
 a steady demand for all sorts of finished iron and 
 steel, but it is of miscellaneous character rather 
 than of great weight. 
 
 Chemicals are far more generally subjected to 
 duties than in the United States, and there is 
 very little here on the free list. Nitrate of soda 
 escapes, as does superphosphate of lime and most 
 other chemical manures. Crude borax is free, 
 but when refined, or partially so, pays 8 francs. 
 Caustic soda at fcs. 6.50 is equal to £2, 10s. per 
 ton against $11.20 in America; soda crystals 
 fcs. 1.90, or 15s. against 32.80. Nitric and 
 sulphuric acids are free, but hydrochloric pays 30 
 centimes or half-a-crown a ton. Most natural dyes, 
 being largely used by the textile trades are free, 
 but prepared colours are more or less heavily rated. 
 
 There would be little profit in going through 
 the entire list, as we are dealing with the princi- 
 ples of the tarifi" rather than its details. And the 
 treatment of the manufactured goods already 
 referred to aflbrds a fair index to all the rest. 
 
 Raw materials, when entering largely into 
 manufacture, are rigidly maintained on the free
 
 AGRICULTURE 169 
 
 list, even though they may be j^roduced at home. 
 Cotton, India rubber, gmns, and dye-woods, we 
 should naturally expect to lind there, but flax, 
 hemp, and silk can be and are cultivated in 
 France, and as we shall see later on, are encour- 
 aged by bounties. Wool, hides, and tallow are 
 likewise free, but receive no bounties, and cattle 
 and sheep breeders have to be content with the 
 protection afforded them on the carcases as dead 
 meat. Some reference must however be made 
 to agricultural products, as agriculture, repre- 
 sented by the army of small proprietors who 
 cultivate her lands, is really the basis of the 
 wealth and prosperity of France. 
 
 Where so large a proportion of the population 
 is dependent on the land, and consequently pro- 
 duces much of its own food, a higher price is of 
 less consequence than to a community engaged 
 principally in industrial pursuits of another 
 order. Dear bread in France is a much less 
 serious evil than it would be in Great Britain, 
 whose manufacturing supremacy depends so largely 
 on the cheap cost of living. Nor is there the same 
 hardship to the very poor, for while in one country 
 they are congregated in large towns, where bread, 
 however cheap, is almost unobtainable to tliose 
 who cainiot pay for it, in the other, they are more 
 widely scattered throughout the rural districts, 
 where food, because it has not to be ])()Ught by 
 many who have it in abundance, is regarded as of
 
 170 THE TARIFFS OF FRANCE AND GERMANY 
 
 less value. We see this amply illustrated in 
 England, Mhere tramps who devote their attention 
 to farm houses and village communities wax fat, 
 while their fellows in the towns are starvins". 
 
 The tax on food in France is consequently 
 less heavy than the tariff, taken by itself, would 
 lead us to imagine, particularly as the selling price, 
 both wholesale and retail, is often below foreign 
 cost plus the duty. Wheat, which for a long time 
 paid 5 francs per 100 kilos., was increased by a law 
 passed in February 1894, and now stands at 7. 
 Rye, the principal bread stuff of the poorer classes, 
 pays 3 francs, equal to about five shillings per 
 quarter, just the rate the English farmer sighs for 
 to begin with. Barley, oats, maize, and rice, pro- 
 vided the last is in the husk, are rated the same, 
 but in order to ensure employment for the home 
 rice miller 8 francs is charged when imported 
 cleaned for use. Potatoes pay 40 centimes only, 
 between a farthing and a halfpenny the English 
 peck of 20 pounds. 
 
 Fresh meat, which is much more of a luxury in 
 France than in either England or America, is rated 
 comparatively high, when the import and not the 
 retail selling price is taken into account. 25 francs 
 on beef and 32 on mutton is equal to a penny and 
 three-halfpence per pound respectively, not very 
 excessive perhaps on prime cuts which cost nine- 
 pence or a shilling to the consumer, but decidedly 
 stiff on the cheaper products of the United States,
 
 FRUIT 171 
 
 Argentina, and Australia, which can be retailed at 
 threepence to sixpence. Hams and bacon likewise 
 pay 25 francs, but the outcry raised some years 
 ago about disease in American hog products, has 
 led to a very rigid examination on debarkation, for 
 which an extra 1.50 francs is charged. Tinned 
 meats are admitted at 15 francs, but as the weight 
 of the tin is included, the reduction is more 
 apparent than real. Of animals, oxen pay 10 francs, 
 sheep 15.50 francs, and pigs 8 francs per 100 kilos, 
 live weight. 
 
 Dairy products, such as milk, butter, and cheese, 
 escape much more lightly. Milk indeed at fcs. 2.50 
 per 100 kilos, is merely nominal, while butter and 
 cheese at 6 and 12 to 15 francs respectively, repre- 
 sent a farthing and a halfpenny per pound. And 
 here we witness the paternal care of the Govern- 
 ment for its children dwelling on the frontiers of 
 neighbouring countries, who are permitted to deal 
 with them in perishable products in a retail way 
 without let or hindrance. The trade in timber indeed 
 is thrown open to forests and plantations within 
 some miles of the boundaries, pi-ovided a like 
 concession is made to France. Such friendly inter- 
 course is in strikinfjf contrast to the hard and fast 
 lines drawn between the United States and Caiinda. 
 
 Fruits, as might be expected, constitute an 
 important section of the French tariff, and culti- 
 vators of the vine in particular clamour for heavy 
 protection, not only against foreign wines and
 
 172 THE TARIFFS OF FRANCE AND GERMANY 
 
 grapes, Init anything capable of distillation, the 
 plea being that Aviiies prepared from foreign 
 material are apt to damage the reputation of 
 native liquor. Hothouse grapes and fruits pay 
 about sixpence per pound, and common table or 
 wine grapes at 8 francs per 100 kilos, are highly 
 taxed when their actual value is considered. 
 Formerly wines and spirits were largely distilled 
 from dried currants and raisins imported from 
 Greece and Spain, and the duty was 15 francs. In 
 November 1894 this was raised to 25 francs, say 
 a penny a pound, and has tended to check the 
 consumption for this purpose, as the value of 
 the fruit itself is often little more. 
 
 To such an extent does France carry out her 
 protective policy, that she cares for the interests of 
 merchants and importers as well as of cultivators 
 and manufacturers. Foreign commodities imported 
 from countries other than those of actual produc- 
 tion, pay a surtax in addition to the ordinary tariff 
 rate, and this precludes wholesale dealers from 
 making purchases anywhere but in their own 
 markets. In the case of wool an exception is made 
 in favour of the fleeces of Australia, the Cape, and 
 India, in order that munufacturers may obtain the 
 benefit of the London sales, where the selection is 
 the finest in the world. With cotton however it 
 is otherwise, and the penalty of 3 francs, or nearly 
 an eighth of a penny jjer pound, shuts French 
 spinners off for six months in the year from the only
 
 THE FRENCH SURTAX 173 
 
 large market, because by March or April little that 
 is desirable is as a rule obtainable outside Liverpool. 
 They must consequently either supply twelve 
 months' requirements in six, or take their chance 
 with whatever selection is offerino- in the much 
 more restricted market at Havre. Coffee, spices, 
 and tea are even more heavily surcharged, the last 
 indeed to the extent of 60 francs, or nearly 
 threepence a pound. Articles on the free list, even 
 treated in the same manner, are chemical manures, 
 and dyes must not be shipped in transit through 
 another country if they are to enjoy the privilege 
 of free entry. Were all French commerce carried 
 in French ships, this enactment might be sup- 
 posed to be entirely for the benefit of the ship- 
 owner, but as so much of the transport service is still 
 effected in foreign bottoms, this can hardly apply. 
 
 The regulation often leads to serious dispute, 
 as foreign raw materials may be prepared in a 
 country other than that of their oi'igin and then 
 shipped to France. Elaborate distinctions conse- 
 quently have to be drawn up as to what must pay 
 the surtax, and what may enter free from it. As an 
 instance, raw hides are free from duty if imported 
 direct, but subject to 3 francs if through another 
 comitry. Large numbers of foreign cattle are 
 slaughtered at Enghsli })orts, and consequently 
 hides imported from Great Britain are charged 3 
 francs unless positive evidence is forthcoming that 
 they are the skins of British cattle.
 
 174 THE TARIFFS OF FRANCE AND GERMANY 
 
 The rates which I have quoted are in every 
 instance from the minimum tariff, which is apphc- 
 able only to countries having commercial treaties 
 or arrangements with France. These include 
 most of the great trading countries, but Italy 
 is markedly absent, not on political grounds, 
 because Austria-Hungary and Germany, the other 
 members of the Triple Alliance, are entitled to 
 the privileges of the lower duties. Possibly the 
 admission of Italy would remove some of the 
 friction between the two peoples so constantly in 
 evidence. Several of the principal South American 
 Republics, Brazil and Chili for example, are like- 
 wise absent, and these must all pay according to 
 the general tariff, which on many commodities, and 
 especially on manufactured goods, ranges from 10 
 to 50 per cent, higher. Trade under such circum- 
 stances must naturally be greatly impeded. 
 
 Colonies and possessions are invariably sub- 
 jected to the French tariff on all foreign imports, 
 but treated as part of the country for all French 
 goods. Free trade between the Colonies them- 
 selves is likewise permitted. 
 
 Protection in France goes much deeper down, 
 and has many more ramifications than in the 
 United States, yet there is something less incon- 
 gruous about it. It is difficult to imagine an 
 American citizen patiently looking on while the 
 number of threads in his shirt are being counted. 
 The Frenchman, after the process was completed,
 
 GERMAN PROTECTION 175 
 
 would be as likely as not politely to offer the 
 rest of his garments for similar inspection. The 
 foreigner journeying into France is rarely in a hurry; 
 if he. is, he Avill soon know better, and regards 
 with more amusement than vexation the dilio-ent 
 search made among his baggage for soap and 
 matches, the latter article being a monopoly. But 
 the moment he lands at New York he feels as 
 though he wants to be in San Francisco next day, 
 and all his surroundino^s encouragfe the desire. 
 That he should be hindered by having his trunks 
 turned inside out, and all sorts of questions asked 
 about his belongings is at least annoying, and he 
 pines for the liberty of the British custom house, 
 where, provided he eschews alcohol and tobacco, he 
 may do much as he pleases and get away without 
 demur. Nor is this contrast between France and 
 the United States confined to so simple an inci- 
 dent. It permeates national character through and 
 through, and because we find protection rampant 
 in one country, is rather a reason why we should 
 expect it to be absent in the other. 
 
 There is a widely prevalent opinion tluit 
 Germany owes her industrial expansion antl pro- 
 sperity to protection. That can hardly have 
 arisen from a study of lier tarifi", whicli an 
 American })rotectionist would be apt to laugh 
 to scorn for its moderation. That its object is 
 largely protective is true, but tlie German maiui- 
 facturer who wants to profit by it cannot afiord
 
 176 THE TARIFFS OF FRANCE AND GERMANY 
 
 to go to sleep. In most instances it just gives 
 him a little advantage in the home markets and 
 that is all, and it certainly offers no temptation 
 to reckless extravagance in cost of production. 
 
 To begin with, the tariff aims at doing its work 
 in the most ^^I'actical way, and without annoyance 
 or undue loss of time or money to anybody. With 
 very few exceptions the rate is levied on 100 
 kilogrammes gross or net; in the latter case, fixed 
 tares are allowed, subject to alterations, as the 
 size or shape of the packages used in any particular 
 trade may undergo change. Nor is there any 
 counting of threads or measuring of yards and 
 inches. The principal commodites are grouped 
 into sections, and then usually into a few large 
 subdivisions, so that the importer or merchant may 
 be able to tell at a glance what the duty on any 
 specific article is. 
 
 The heaviest duties, as in the case of the French 
 tariff, are levied for revenue, and are to be found 
 in the section devoted to colonial produce. The 
 German imbibes his national beverage, lager beer, 
 without feelinp- that he is beino^ taxed for his 
 indulgence, but when he wants the luxury of tea, 
 coffee, or cocoa, he must pay for it. They are 
 charged respectively 100, 40, and 35 marks per 
 100 kilos., about fivepence halfpenny, twopence 
 farthing, and twopence per English pound, less than 
 half the rates in France, and not much more than 
 those in England. Sugar however, is again the
 
 COLONIAL PRODUCE 177 
 
 prominent feature, and until recently was rated 
 at 36 marks. But in May 1896 Germany, follow- 
 ing the example of other beet-producing countries, 
 increased the bounties on export, and at the same 
 time raised the duty to 40 marks to compensate 
 for it ; so that now, sugar like coffee pays twopence 
 farthing per pound, making its cost to the consumer 
 fourpence or over, and materially checking the con- 
 sumjDtion, which is a few pounds per head less than 
 in France. Tobacco on the other hand is very 
 moderately rated, namely at 85 marks, or fourpence 
 halfpenny per pound, against three shillings and 
 twopence in England. Cigars and cigarettes pay 
 one shilling and twopence, which throws most of 
 the manufacturing into German hands, so that an 
 excellent weed of German make may be had for 
 fifteen or twenty pfennige, while a foreign one 
 costs at least double. 
 
 Germany is also a wine-producing country, and 
 the yield of her Rhenish vineyards is higlily 
 appreciated abroad. It is frequently strengthened 
 to suit the foreign palate, and the importa- 
 tions for this purpose pay only a nominal duty. 
 Wine in the cask, for consumption in the 
 country, is charged 20 marks, weight being still 
 preferred to liquid measure ; bottled, it rises to 
 48 marks, and on s})arkling wines to 80, while 
 brandies and other sj)irits pass at 125, and liqueurs 
 at 180. All alcoholic liquors are thus very 
 lightly taxed. Dried fruits are also rated under
 
 1 78 THE TARIFFS OF FRANCE AND GERMANY 
 
 this heading at 4s. j^er cwt., and green fruits, such 
 as oranges and lemons, at 2s. Dates and ahnonds 
 pay 5s., and spices of all kinds about threepence 
 per pound. 
 
 The moderation here exhibited is characteristic 
 throughout, and no German manufacturer will ever 
 accumulate a gigantic fortune out of the high 
 prices he is permitted to charge domestic con- 
 sumers. Germany is the home of chemical research, 
 and next to protection her success is attributed to 
 technical knowledge and untiring patience in the 
 perfecting of her products, though as a matter of 
 fact, these should hold the first place. Under such 
 circumstances heavy duties on chemicals and drugs 
 would be grotesque, and Germany does not lay 
 herself open to ridicule. The section is extremely 
 short, and the most noticeable items are caustic soda 
 and caustic potash, in which all foreign manu- 
 facturers apparently dread English competition, 
 if the duties they impose are any criterion. The 
 charge is 4 marks or £2 per ton, while bi-carbonate 
 of soda is rated at 25 s. There can be little 
 objection to the taxation of ethers, chloroform, and 
 volatile oils, but articles like artists' colours and 
 lead pencils might well be exempted, especially as 
 the Bavarian manufacture of the latter is in almost 
 universal use throughout the world. No foreign 
 Government is able to resist matches, which, 
 whether of wax or wood, are rated at 10 marks, 
 or 5 s. per cwt. England barely escaped a similar
 
 IRON AND STEEL 179 
 
 tax many years ago, but the public protests against 
 it were so vigorous and determined, that no statesman 
 or economist has ever ventured to suggest it since. 
 
 It is the textile and iron and steel industries 
 which are specially singled out as affording a 
 powerful illustration of the ability of German 
 manufacturers to make cheap sales abroad, on 
 account of their large profits at home. Most 
 heavy ironwork, such as rails and fish plates for 
 railway use, bars and angles, tyres and axles, are 
 rated at M2.50, or 25s. per ton; plates and sheets 
 3 marks, or 30s.; tin plates 5 marks or 50s. 
 Such duties are of course quite high enough, and 
 represent 15 to 25 per cent, ad valorem at existing 
 low prices, but are extremely moderate when 
 contrasted with the 50 to 100 per cent, in the 
 United States, where conditions of production are 
 more favourable. The commoner and heavier sorts 
 of tools, such as hammers, axes, scythes, and 
 hayforks, pay 10 marks; the cheaper makes of 
 Sheffield goods 15 marks; and the best cutlery, 
 scissors and steel ware, 24 marks, which calculated 
 on single articles is but a trivial impost. Sewing 
 needles, steel pens, and clock movements however 
 are more exacting, and at 60 marks are more than 
 threepence per pound, thougli most of these articles 
 are extremely light weight, and the difference in 
 cost is hardly appreciable. Watches and watcli- 
 cases and movements are rated quite noniiiially, at 
 only a few pence each.
 
 I So THE TARIFFS OF FRANCE AND GERMANY 
 
 In textiles, cotton yarns, singles of coarse counts 
 pay 12 marks or just over a halfpenny per pound, 
 startinof at about the same level as in France. But 
 there they part company, as the medium counts 
 which are those most generally used are at 18 
 marks well under a penny per pound, and the finer 
 ones which are often expensive, and in which 
 English competition is most to be feared, are little 
 over the penny. Doubled yarns are 10 to 20 per 
 cent, higher, but so is their value, while if bleached 
 or dyed the rates are nearly twice as much. Very 
 fine and strong yarns for embroidery and thread 
 making go as high as about threepence, but the 
 ad valorem rate is no greater. 
 
 Unbleached calicos and fabrics of almost every 
 description are charged 80 marks, or about fourpence 
 per pound, equal to a penny per yard on coarse 
 cloths, but not more than a farthing on the finer 
 and costlier ones, in which there is greater risk of 
 competition. Bleached goods are 25 per cent. more. 
 Cotton hosiery and trimmings are 120 marks ; 
 curtains, laces, and embroideries 230 to 275 marks, 
 but a considerable quantity and value of such 
 goods often go to make up a pound or kilogramme 
 in weight. Under this section the cheaper class of 
 goods is undoubtedly well protected, the dearer 
 and better ones scarcely at all. 
 
 Keen as is the competition between Saxony and 
 Lancashire, the shipments of the latter to Germany 
 are quite important, the yarn in 1896 having been.
 
 TEXTILES i8i 
 
 valued at upwards of £2,000,000, and goods at 
 £1,800,000, and the trade is steadily growing year 
 by year, Germany on the other hand is only able 
 to send us some £850,000 all told, and makes 
 little headway. British exports to Holland are 
 likewise greatly in excess of imports, and some, 
 perhaps a great portion of this, is likewise destined 
 for Germany. 
 
 Woollen yarns vary from 3 to 24 marks per 100 
 kilos., that is, from one-eighth of a penny to a little 
 over one penny per pound, and the higher rate 
 includes dyed material. Woollen fabrics at 135 
 and 220 marks according to weight is no more 
 than threepence to sixpence per square yard, and 
 in case of very light materials even less. Duties 
 to be worth anything at all, either for reveime or 
 protection, could hardly be fixed much lower. 
 
 Unbleached linen yarns made from flax, jute, or 
 hemp vary from an eighth of a penny to a halfpenny 
 per pound ; dyed, printed, and bleached from a 
 halfpenny to three-farthings ; sewing thread three- 
 halfpence to threepence. Ropes and cordage pay 
 rather less than a halfpenny, and thin twines a 
 little over a penny per pound. Linen fabrics are 
 correspondingly reasonable. If unbleached, the 
 rate varies from 12 up to 60 marks according to 
 fineness, this ])eing the solitary schedule in tlie 
 German tariff in wliicli there is any ])retence at 
 the enumeration of tliivads. Bleached, dyed, or 
 piintcd fabrics are dividcnl into two classes, those
 
 1 82 THE TARIFFS OF FRANCE AND GERMANY 
 
 having less than 120 threads to 4 square centimetres 
 (1^ inches) paying 60 marks, and above that 
 number double, or threepence and sixpence per 
 pound respectively. A good many pocket handker- 
 chiefs and one or two shirts are required to make 
 up this weight. Even damask and table napery 
 are charged only at 150 marks, so that a handsome 
 table cloth will pay no more than one or two 
 shillings duty. The finest laces may be imported 
 on payment of twopence an ounce, and everyone 
 knows what a considerable value may be compressed 
 into even this small compass. 
 
 Silks on the other hand are considerably 
 enhanced in value by the time they have passed 
 throuoii the custom house. The unmanufactured 
 article, like all other raw materials for textiles, is 
 admitted free, but anything prepared or made up 
 into fabrics is heavily weighted. Thread at 140 
 marks is less than a halfpenny an ounce, but fabrics 
 pay 600 marks, or two and ninepence per pound, 
 which is a premium on low bodices and short 
 sleeves. Gauze and crape of the same material cost 
 1000 marks or threepence halfpenny an ounce ; 
 ribbons of pure silk threepence, and of half silk 
 three-halfpence, which increases the cost per yard 
 in proportion to the width. 
 
 Garments of silk are naturally more expensive 
 still if imported ready-made. The suit of woollen 
 clothing however, costing in England forty 
 shillings, and which as we have seen if imported
 
 EAR THEN WARE 1 83 
 
 into the United States under the M'Kinley Act 
 would have been quite doubled in price, has no 
 more than five or ten shilling's added to its value in 
 Germany. Underwear of linen or cotton is still 
 lower, and is allowed to enter at the rate of about 
 eightpence per pound. The latest production of 
 the Parisian milliners' art is charged something less 
 than one shillino-. 
 
 Among the coarser manufactured or partly manu- 
 factured commodities, leather does not figure quite 
 so favourably. Dressed or half-dressed sheep and 
 goat skins are scheduled at purely nominal rates. 
 Sole leather, and Brussels or Danish glove leather 
 are rated at 15s. per cwt., morocco at 18s. Belting 
 leather at M 45 is nearly twopence halfpenny per 
 pound. Gloves at 1 mark per kilo, represent but 
 a very small charge per pair. 
 
 Common bricks, tiles, and earthenware pipes 
 are on the free list, fire bricks at 5s. per ton, glazed 
 and architectural building materials of similar 
 character at 7s. 6d. Ordinary earthenware, l)urut 
 in one colour, pays 4s. per cwt. ; white porcelain 
 5s. ; coloured and ornamented 10s. ; so that tlie 
 cost of a single dinner or tea service is very little 
 enhanced, though the coarser and heavier articles 
 of domestic use are more heavily penalised in 
 proportion. Vessels of common glass are rated at 
 4s. per cwt., window and plate glass is divided into 
 three sizes, and rated accordingly at equal to three, 
 four, and five shillings. Polished, ground, ;ind
 
 iS4 THE TARIFFS OF FRANCE AND GERMANY 
 
 mirror glass is charged 12s., and the most 
 expensive decorated material pays no more than 
 15s. per cwt., the highest figure in the schedule. 
 The contrast between these figures and those of the 
 
 o 
 
 United States tariff is very striking. 
 
 Timber is likewise admitted at low rates, and 
 for use in frontier districts free, provided it has 
 been drawn by beasts of burden and not shipped 
 by rail, the object of which is to prevent it being 
 sent from any considerable distance. Brushes, 
 which have occupied so much of the time and 
 attention of the British Parliament of late years, 
 are admitted in any quantity, with apparently no 
 question as to how they are made or by whom, on 
 jjayment of Is. 6d. per cwt. up to 12s. for very fine 
 materials, which do not come under any of the 
 textile grou^^ings. 
 
 Low as most of these rates are from the modern 
 standpoint of protection, there does not exist any 
 serious agitation for their increase. There is 
 agitation for heavier duties it is true, but it proceeds 
 from the agrarian and not the industrial party in 
 the empire, and how sharply divided these two are 
 recent events have abundantly proved. Not that 
 agriculture lacks protection — indeed in that 
 respect it is better off than anything else. Wheat 
 and rye are rated at M 3.50, equal to 7s. 6d. per 
 English quarter, which at the present price of the 
 former cereal is high, and of the latter extravagant. 
 Barley is only charged 2 marks, or 4s. 6d., the
 
 AGRICULTURE 185 
 
 important brewing interest having no doubt to be 
 considered, but prepared malt pays nearly double 
 Fresh meat at 15 marks is equal to three farthings 
 per jjound, and pork fresh or cured at 17, to nearly 
 a penny. On the grounds of disease, there has 
 been a determined effort to exclude American 
 bacon and hams entirely, and much friction has 
 arisen with the United States in consequence. 
 Vegetables at 4 marks per 100 kilos., or 2s. per 
 cwt., would add somewhat appreciably to the cost 
 of this nutritious and necessary diet were it 
 enforced, but it is doubtful whether the German 
 market gardener can often exact anything at all 
 from his customers above the value of neighbouring 
 countries. Butter and cheese at 16 and 15 marks 
 respectively are increased in cost by nearly a 
 penny per pound, so that on the whole the 
 agriculturist is very well cared for. His grievances 
 result from causes which protection will not cure, 
 and are hardly therefore associated with the 
 question of tariff, though we shall have something 
 to say about them later. 
 
 The only important commodities remaining to 
 be mentioned are oils, which play a most important 
 part both in industrial and domestic life. As far 
 as the former are concerned the duties are mode- 
 rate, and no more than 2 to 4 marks or Is. to 2s. 
 per cwt. on such descriptions as ])ahii, cocoanut, 
 castor, linseed, and cottonseed oils, l)ut it is 
 somewhat surprising that anything should Ix' l(>vied
 
 1 86 THE TARIFFS OF FRANCE AND GERMANY 
 
 at all, as they partake largely of the nature of raw 
 materials. Tallow and beef and mutton fats come 
 under the lowest rate ; blubber and train oil at a 
 middle one. Lig-htino- and lubricatino;- oils how- 
 ever are more unsparingly dealt with. Petroleum 
 pays 6 marks, oils used in the manufacture of 
 candles 10 marks, and lubricants the same. This 
 .schedule must on the whole be pronounced more 
 unwise than any in the entire tariff. 
 
 Such then is the German tarift', and the British 
 or other foreiofn manufacturer who imag-ines that 
 were protection entirely abolished he could enter 
 the markets of his rivals and undersell them, has 
 seriously miscalculated the actual facts. The duties 
 do afford an advantao^e no doubt, but in the 
 language of the Stock Exchange or the produce 
 markets it is more a jobber's turn than a dealer's 
 profit. With the exception possibly of iron and 
 steel, the rates are nowhere such as to enable the 
 manufacturer to charge extravagant or even high 
 prices to the domestic consumer, and it may be 
 questioned whether in many instances he gets 
 anything more than if protection did not exist. 
 The average German, both in the shop and on the 
 exchange, is fairly keen in striking a bargain, and 
 if goods are to be had cheap he will try to get 
 them. Besides, the British manufacturer himself 
 has a very decided advantage in his own markets 
 against his foreign competitors. He is on the spot 
 and knows his customer's requirements, or at least
 
 HOME MANUFACTURERS 187 
 
 ought to. Delivery can be arranged to suit, and 
 when goods are wanted there are no awkward and 
 unexpected delays of steamboats, or loss and 
 damage through numerous transhipments, to say 
 nothing of the added cost. The buyer has the 
 seller within reach in case of inferior quality or 
 other reclamations, and even should there be 
 nothing of the sort, he will pay a little more for 
 the privilege of grumbling, so dear to every English- 
 man. British manufacturers realise all this, and do 
 not hesitate to quote higher prices to the domestic 
 than to the foreign trader, particularly if they 
 suspect the latter is receiving offers from elsewhere. 
 It is because this principle — a perfectly legitimate 
 one, if exercised in moderation— is pushed too far, 
 that foreign rivals are often able to step in and 
 pilfer trade, and not, as is sometimes supposed, 
 because they are selling goods at a loss or can make 
 them cheaper. Both they may occasionally do, but 
 they are not the only culprits, and the British manu- 
 facturer could likewise tell a thing or two worth 
 knowing in that way, were he only so disposed. 
 The tariff with which we have been dealing is a 
 
 o 
 
 minimum or conventional one, applicable only to 
 such countries as have commercial treaties or similar 
 arrangements with Germany. There is another 
 and much higher scale always ke})t in pickk^ for 
 recalcitrant peoj)le who do not sufficiently appreciate 
 the value of German manufactured goods, and 
 when, as sometimes happens, they show a most
 
 iSS THE TARIFFS OF FRANCE AND GERMANY 
 
 determined preference for others, the brine is con- 
 centrated still more highly. A law promulgated 
 on the 18th May 1895 enacts that— 
 
 " Dutiable goods proceeding from States that treat 
 German ships or products less favourably than those of 
 other States may, in so far as existing treaties are not 
 thereby violated, be burdened with a surtax ranging up to 
 100 per cent, of the tariff" duty imposed on such goods. 
 Goods free of duty in virtue of the tariff may, under the 
 same conditions, be burdened with a duty not exceeding 20 
 per cent, oxl valorem." 
 
 Nor is this an idle threat, for within recent 
 years two European countries have come under the 
 drastic regulation, or something akin to it, and 
 both Spain and Russia have been engaged in tariff 
 wars with Germany, in the latter instance with 
 most disastrous consequences to their mutual com- 
 mercial intercourse. An ordinance dated 29 th 
 July 1893 singled out commodities of Russian origin, 
 and imposed on them a special tariff, the stringency 
 of which may be judged from one or two examples. 
 Wheat and rye are both cereals largely exported 
 by Russia, and for which Germany Avas and is a 
 good customer. The conventional duty is M3.50, 
 and the general 5 marks ; but all Russian produce 
 was condemned to pay M7.50. The delicacy 
 known as caviare, and almost entirely of Russian 
 preparation, is ordinarily rated at 150 marks, but 
 was raised to 225. Eggs paying 2 and 3 marks 
 were raised to M4.50. Pigs at 5 to 6 marks each 
 could only change their nationality for 9 ; petro-
 
 RE TALI A TION 1 89 
 
 leum, in the production of which the wells at Baku 
 lead those of Pennsylvania and the American oil 
 regions a hard chase, was raised from 6 to 9 marks, 
 no doubt with considerable regret that the United 
 States should be permitted to enjoy such an 
 advantage ; tallow, instead of 2, paid 3 marks; and so 
 on throughout the list, the trade returns between 
 the two countries having- been scanned with the 
 utmost care, and every likely article of import sub- 
 jected to the increased rates. And so hastily were 
 they put in force, that the return of the Kaiser from 
 his holiday could not be awaited, but were 
 
 " Given at Cowes, on board my yacht ' Hohenzollern/ 
 29th July 1893. 
 
 " William." 
 
 This estrangement was entirely due to the con- 
 vention entered into between France and Kussia 
 just at this period, under which the former guaran- 
 teed " most favoured nation " treatment, but the 
 latter went one better, and made her new and 
 wealthy ally concessions equal to 10 to 20 per 
 cent, over all other countries. Eighteen months 
 of this contest proved enough for both parties, 
 and on the 29th January 1894 a treaty of com- 
 merce and navigation was concluded between 
 them, breathing nothing l)ut eternal amity and 
 cordiality. Not only were the most favoured nation 
 regulations restored in each case, but special i)ro- 
 tection was extended to the travellers and agents 
 of firms domiciled in the respective countries in
 
 iQo THE TARIFFS OF FRANCE AND GERMANY 
 
 their endeavours to do business with their neigh- 
 bours, and now all goes well again. 
 
 No sooner was the difficulty with Kussia settled 
 than a fresh one arose with Spain, and on the 25th 
 May 1894 an ordinance was published surtaxing 
 all Spanish products. Kye was once more rated 
 at M 7.50. Iron ore was raised from 1 mark to 1.50. 
 Dried fruits, upon which the conventional duty is 
 8 marks, and the general 24, were scheduled at 
 the prohibitive figure of 36, or 18s. per cwt., and 
 raisins form one of the most important crops of the 
 Iberian peninsula. Similarly oranges, lemons, and 
 citrons were raised from 12 to 18 marks. Wines 
 and spirits suffered equally. Olive oil, at 3 marks 
 conventional and 10 general, was rated at 15. 
 Everything in fact was increased by 50 per cent, on 
 the extreme duties. This state of affairs lasted 
 rather over two years, and was eventually repealed 
 on 25th July 1896. 
 
 The United States have been more than once 
 threatened with something of the same sort, and 
 there is constant exasperation over one dispute or 
 another. Reference has already been made to 
 the difficulties arising about bacon and hams, 
 and by an ordinance dated 11th December 1895 
 all tinned meats were excluded from the benefit 
 of the conventional duty 15 to 17 marks, and 
 rated at the full one of 20, this being specially 
 aimed at the United States. It is a poor game 
 at best, and amounts to cutting one's nose to spite
 
 GERMAN EXPANSION 191 
 
 one's face, because as a rule German traders suffer 
 quite as much as the offending foreigners. The 
 possible consequences of the recent denunciation of 
 the treaty of commerce between Enofland and 
 Germany are not altogether agreeable to con- 
 template on either side. 
 
 Germany is always active in framing and putting 
 into operation commercial treaties, and all European 
 States, with the exception of Portugal, now^ ^i^j^^y 
 conventional duties. British and Dutch colonies 
 are upon the same basis, by virtue of their connec- 
 tion with the mother countries. The South African, 
 and most of the South American Republics, 
 Brazil however again excepted, also come within 
 their scope, so that the Imperial Zollverein may at 
 present be said to trade with the whole world on 
 equal terms. 
 
 The commercial policies of France and Germany 
 afford a strong contrast, the one content to profit 
 by the sale of what are practically monopolies, the 
 other pushing and edging her way in everywhere. 
 In one instance protection is a vital force, in the 
 other almost a dead letter, except for purposes of 
 retaliation. For plain living is as cheap, if not 
 cheaper in Germany than in Great Britain, and 
 that is the best proof that protection is inoperative. 
 Food and clothing cost no more, though perhaps 
 the qualities in each instance are on the whole a 
 little inferior. But that is of small consequence, 
 because if the peoj)le have as much as they want of
 
 192 THE TARIFFS OF FRANCE AND GERMANY 
 
 good and ^^•holesome diet, and are warmly clad, they 
 can do their work efficiently. Nor are wages in the 
 standard industries now much lower than in the 
 adjoining island. The cause of British discomfiture, 
 if such exist, must be sought in other directions 
 than protection. 
 
 The principal one is close at hand, and is both 
 natural and legitimate. A house furnisher going 
 over a well appointed residence makes it his busi- 
 ness to point out articles of his trade which 
 would improve appearance as well as comfort. But 
 set him in an empty country mansion of ample 
 dimensions, and bid him " furnish it," and his heart 
 leaps within him. At the conclusion of the Franco- 
 German War, Germany was much in the position 
 of the empty mansion, and her peoj)le have been 
 engaged in furnishing it ever since. The energy 
 induced by the work has commenced to overflow its 
 former limits and to seek new channels, and the 
 stubborn fact has to be faced, that the most 
 dano-erous rival to the commercial and industrial 
 supremacy of Great Britain is not the nation that 
 is the most protected, but the one that comes 
 nearest to free trade.
 
 CHAPTER YII. 
 Bounties. 
 
 Sugar : — Nature of Drawbacks — Tendency to develop into Bounties 
 — Efforts to stimulate the Beet Industry— Continental Bounty 
 "Wars — Germany Antagonistic to the System — Cost to Consumers 
 — Hidden Bounties — Surtax on Foreign Sugar in France — 
 Futility of the System — Possibilities of Increased Consump- 
 tion — Decline of the British and Colonial Industry — Fairplay 
 but no Protection. 
 
 Shipping : —British Subsidies — Carriage of Mails — German Subsidies 
 — French Construction Bounties — Navigation and Mail Subsidies 
 — Other European Bounties — United States Shipbuilding — 
 American Coasting Service — Mail Payments — The Canadian 
 Subsidy. 
 
 Railway.s : — The German System — Cost compared with Great 
 Britain — Watered Stock — Results of German State Control — 
 French Subventions — Division and Remuneration of Capital — 
 Total Cost to the Treasury — American Railroads. 
 
 Miscellaneous : — France — Canada — Australia — Sale of Surplus 
 Products — General Influence on Trade. 
 
 Whenever a commodity is subject to an import 
 duty, or an internal or excise tax on production, it 
 is customary to refund it, or to discharge the owner 
 from habihty for payment on such portion as may 
 not be used for home consumption but exported 
 to foreign countries. The princijDle is just and 
 equitable, though hardly in accordance witli tlie 
 popular idea of taxing the foreigner, which, carried 
 to its logical issue, would impose the duty on 
 everything belonging to In'm that could l)e laid hold 
 13
 
 194 BOUNTIES 
 
 of, irrespective of ultimate destination. This 
 rebate or drawback is best known in Great Britain 
 in connection with the export of beer, which is 
 about the only dutiable commodity shij^ped abroad 
 to any value. Most beer-drinking countries brew 
 their own, but there are certain English specialities 
 known all over the world, and the land which had 
 never seen the black bottle with Bass's label would 
 hardly be counted civilised. Any general export 
 trade in English beer however is quite out of the 
 question. Some half-million barrels only are ex- 
 l^orted out of a total production of nearly thirty- 
 five millions. 
 
 Now althoucrh the drawback mav be the full 
 amount of the duty chargeable, the very fact 
 that there is a duty at all enhances the cost of 
 production, which on export really amounts to 
 a small tax. The restrictions which are necessary 
 for carrying on the trade, whatever it may be, are 
 always more or less costly, both by the presence 
 and supervision of revenue officials, and the more 
 involved and often more expensive routine neces- 
 sary to clear the goods, whether for a home or a 
 foreign consumer. It follows that it is unwise 
 for a country desirous of encouraging an export 
 trade in any joarticular commodity which is not 
 a monopoly, to impose any tax or restriction, 
 external or internal ; either upon its manufacture 
 or free movement, and this applies equally to such 
 articles as spirits and tobacco, though the moral
 
 DEVELOPiMENT OF SUGAR BOUNTIES 195 
 
 phase of the question, in the former case at any 
 rate, is of so much importance that a Gov'ernment 
 is amply justified in departing from the strict 
 economic principle. 
 
 Let us apply this to sugar. Most countries 
 place it in the category of luxuries, and regard it 
 as a taxable commodity. A certain quantity of 
 it is as necessary to a healthy individual as salt, 
 but beyond that it may be regarded as a 
 luxury, and the principle of taxing it moderately 
 is therefore legitimate enough. The beet-growing 
 countries of continental Europe act on this, and 
 impose a duty, not only on all foreign sugar im- 
 j)orted, but on all sugar grown at home. It was 
 found however, many years ago, that opportunities 
 offered for building up an export trade, and in 
 connection with this the c[uestion of drawback had 
 at once to be considered. The disadvantage to 
 which I have referred no doubt occurred to those 
 who were interested in the matter, and a small 
 bonus in addition to the drawback was granted as 
 compensation, to enable dutiable sugar countries 
 to compete with those in the East and West Indies 
 where there was no such restriction. And thus we 
 get at the principle of the sugar bounties, which, 
 once admitted, were capable of expansion in all 
 directions, and as far back as the beginning of the 
 present century, attenq)ts were made to give an 
 artificial stimulus to the cultivation of sugar by 
 money premiums and reduced rates of transport
 
 196 BOUNTIES 
 
 to the seaboard, M'lien the ultimate destination 
 was a foreign country. 
 
 Had it gone no further there would have been 
 little ground for complaint. But there is nothing 
 in this world quite so greedy as protection. It is 
 always wanting more. Beet growers and sugar 
 manufacturers, having once inserted the wedge, 
 were always on the alert to drive it home. The 
 trade grew, and they kept urging on their re- 
 spective governments to increase the bonus, in 
 order that eventually they might capture, if not 
 the whole, at least the greater part of it, and this 
 they have now succeeded in doing. The govern- 
 ments concerned appear to have been on an 
 inclined plane, and quite unable to resist the 
 pressure put upon them, yielding inch by inch 
 until the bounties have assumed their present 
 magnitude — M2.50 per 100 kilos, on raw, and M3 
 to M3.55 on refined in Germany, and fcs. 3.50 
 and fcs. 4.50 respectively in France. Austria - 
 Hungary is second only to Germany in extent of 
 production, and likewise grants bounties, but 
 owing to isolation from the seaboard the sugar is 
 exported through other countries, and the general 
 public hear less about it. Kussia is likewise a 
 great producer, but requires most of it for home 
 consumption. Holland and Belgium carrv on 
 the industry very extensively, and of course grant 
 bounties too. But it will be sufficient for our 
 purpose if we confine our attention to Germany
 
 THE FRENCH SYSTEM 197 
 
 and France, as all the others are on more or 
 less smiilar lines. 
 
 Germany is at least honest with regard to these 
 bounties. Her Government does not like them, 
 and frankly says so, and the last ordinance issued 
 regarding them expressly stipulates the right of 
 instantaneous repeal provided other countries are 
 willing to lead the way, or follow, unlikely 
 events at the moment. It likewise publishes 
 annually the amount of drawback paid to exporters, 
 while the French Government returns are com- 
 plicated, and the actual payments difficult, if not 
 impossible, to estimate. Nor do German exporters 
 get more than they are openly entitled to, 
 and the rates of M2,50 to M3.55, equal to about 
 Is. 3d. and Is. 9d. per cwt. respectively, may be 
 regarded as operative. 
 
 France, on the other hand, w^orks the machine 
 more scientifically, and though she has been the 
 last of the beet-growing countries to raise officially 
 the rates of bounty, it w^as undoubtedly her unfair 
 competition which led the others to act. The 
 fcs. 3.50 and fcs. 4.50 per 100 kilos, are the direct 
 rates now paid, it is true, but how much more 
 is there behind ? The tax on sugar is 
 fcs. GO per 100 kilos. ; but partly to stimulate the 
 extraction of tlie utmost possible quantity of juice 
 from the root, and partly to assist the export of 
 the product, half only of the nominal duty is 
 charged on tlie yield between 7| and li)\ per
 
 1 98 BOUNTIES 
 
 cent., while anything above the latter figure is 
 divided into two parts, one paying the full, the 
 other half duty, or an average of 75 per cent. Thus 
 when the sugar is exported, and the drawback or 
 credit claimed at the full rate, a bonus of 50 per 
 cent, is given on one portion of it, and very often 
 25 per cent, on another. 
 
 The burden of these bounties is transferred intact 
 to the shoulders of the home consumer, and a 
 portion at anyrate of the import and internal 
 duties levied are meant to pay for them. We 
 have a means of estimating- what this amounts to. 
 The German bounty has recently been raised from 
 Ml.25 to M2.50 on raw sugar, and from M2 to 
 M 3 on refined, and, at the same time, the import 
 duty was increased from M 36 to M 40. Now 
 from this it is evident that the Treasury authorities 
 consider a tax of 4 marks per 100 kilos, necessary to 
 compensate them for an increase of Ml to M 1.25 
 in the bounty, and in proportion to this the amount 
 of the tax equivalent to the M 2.50 and M 3 would 
 be M 10 to M 12, that is, German consumers 
 pay at least 10 marks per 100 kilos, more than 
 they would be called upon for, did the bounties not 
 exist. It is all very well to point out in the official 
 returns of national expenditure the amount paid 
 for these bounties, and expatiate upon it as a wise 
 incentive to ag-ricultural and manufacturino- industrv: 
 but if every time the German hausfrait poured a 
 pound of sugar into the domestic basin she would
 
 AMOUNTS OF FRENCH BOUNTIES 199 
 
 only say to herself, " On that sugar I made a 
 present of 5 pfennige to my English sister, who is 
 also at this moment pouring a pound into her 
 basin," the phrase would soon grow monotonous, 
 and she would want to know what her English 
 sister had ever done for her, that she should be so 
 generous. Then the matter would assume an 
 entirely different aspect. 
 
 In addition to this it must not be overlooked 
 that the price of sugar in Germany is the market 
 value, plus the duty, 'plus the bounty, as if the 
 domestic consumer did not pay the last item as 
 well as the other two, the owner would export 
 it to secure the extra allowances. 
 
 France, for reasons already stated, makes the 
 English consumer a much handsomer present still. 
 The Economiste Fran(}ais, probably the highest 
 economic authority in that country, recently pub- 
 lished an estimate of what the indirect or hidden 
 bounty amounts to, that is, the sum the French ex- 
 porter receives in drawback, over and above what he 
 originally paid or was liable for. In the year 1886 
 it had reached the extravagant figure of over 15 
 francs per 100 kilos., or about six shillings per 
 cwt., owing to the much greater quantity of juice 
 extracted from the root than the excise officials 
 calculated and charged for. Steps were taken to 
 reduce it to something more reasonable, and tlie 
 present law and method of levying the duty was 
 the outcome. Since 1800 it has fluctuatinl round
 
 200 BOUNTIES 
 
 () francs, say alx^iit half-a-crown per cwt., but has 
 ag'ain shown a tendency to increase, owing to 
 improvements in manufacture, every nerve of 
 course beinii' strained to extract additional 
 saccharine matter, because each extra ounce means 
 so much additional bounty. 
 
 With the direct bounties now given, the total 
 amounts once more to fullv 10 francs, or over four 
 shillings per cwt., and the tax paid by French 
 consumers to meet it must be at least a penny 
 per pound. A refining tax of 4 francs on all sugar 
 for home consumption has been openly imposed to 
 pay the direct bounty, with the stipulation that 
 should it prove insufficient in any one year the 
 bounties in the year succeeding are to be reduced 
 to cover the deficiency, but if that ever happens it 
 is much more likely that the French Chambers will 
 vote a supplementary credit rather than risk the 
 angry protests of the refiners. Provision for the 
 hidden bountv is made in the ordinarv excise 
 tax. 
 
 Nor is this all. Factories for extractinp- the 
 
 o 
 
 juice are invariably in close proximity to the beet 
 fields, but the refineries are often at consider- 
 able distances. When the raw sug-ar destined for 
 eventual exportation is shipped from one port to 
 another where the refinery is situated, or conveyed 
 overland a minimum distance of at least 250 
 kilometres, a reduction of duty of 2 francs is 
 granted, equivalent to a further bounty. Added
 
 RESULTS OF SUGAR BOUNTIES 201 
 
 to all this are the galling restrictions imposed on 
 foreign sugar. We have already had occasion to 
 notice the surtax on commodities imported from 
 other than the country of origin, but in the case 
 of sugar this is levied indiscriminately at the rate 
 of 9 francs on raw and 10 francs on refined, though 
 if after refining the product is re-exported, this 
 surtax is refunded, but without the addition of the 
 bounty. These complicated regulatioiis require all 
 the intellectual faculties of an expert to grasp, and 
 the attitude of the French Government towards 
 the sugar industry more nearly resembles a gambler 
 throwing his last stake, than a common-sense man 
 of business endeavouring to make ends meet and 
 earn a livelihood. 
 
 From whatever point of view these bounties 
 are regarded, they have been a failure. That they 
 have helped to destroy West Indian sugar planta- 
 tions, and ruined British sugar refiners, and shut 
 up the refineries is certain, as tliousands of people 
 interested know to their cost. That of course 
 miofht be a matter for conm-atulation rather than 
 otherwise in the beet-growing countries ; but how 
 have they benefited themselves ? The growers 
 complain that they are ruined because i)rices liave 
 declined so heavily; and despite the trciiiciidous 
 fallint'' ofi' ill tlic |)r()ducti(>H of cniic su^ar in < 'iil);i 
 owing to the revolution, the ci-oj) of I S!);") '.HI li.iving 
 totalled only some 300,000 tons against over 
 1,000,000 in the preceding year, the vahit*
 
 20 2 BOUNTIES 
 
 lias droppetl to the lowest ever recorded. 
 Consumers, though uiial)le to act together, are 
 a powerful body, and have in this instance at 
 anyrate captured the bounty for themselves at an 
 even greater ratio than it has been granted. On 
 the other hand, the teni|)tation of the bounty has 
 stimulated producers, who, in their reckless com- 
 petition against cane, have grown more than 
 sutEcient for the world's requirements. 
 
 More than sufficient" that is, in a relative sense, 
 because the possibilities of increased consumption 
 must be enormous, when the 30 lbs. per head in 
 France or the 27 lbs. in Germany are contrasted with 
 the 88 of Great Britain, or even the 68 of 
 the United States. Not only is there room for 
 expansion in its domestic use. but in those 
 numerous industries into which it so largely enters 
 in Eno'land. The difference is more than half a 
 hundredweight per inhabitant, and were only half 
 this made up the requirements of the popula- 
 tions of France and Germany alone, with their 
 100,000,000 of population, or close upon it, would 
 be 1,250,000 tons per annum. There is no natural 
 commodity in the world which requires less stimu- 
 lus to encourage its use than sugar, and wherever 
 it has been made cheap its consumption has 
 steadily increased. But most governments, with a 
 perversity worthy of a better cause, continue to 
 make it dear. Great Britain is the only country 
 in Europe which exemjots it from taxation,
 
 THE BRITISH AND COIONIAL INDUSTRIES 203 
 
 and in most of the others the national revenue 
 derived from it, together with the sums paid 
 in bounties, are far in excess of the prune cost. 
 Only Denmark, Switzerland, and Turkey, the 
 last, in fiscal matters, far in advance of any of its 
 continental neighbours, subject it to a moderate 
 exaction, — nowhere else is it less than 15s, per cwt. 
 
 The argument that bounties stimulate pro- 
 duction and provide employment for the industrial 
 population of the country paying them, is utterly 
 fallacious. Abolish them and give the industry 
 fair play without let or hindrance, and the world's 
 consumption, which is now no more than 10 to 12 
 pounds per head of the entire population, Avill 
 double itself in the same number of years. 
 
 The real boon required then by cane and beet 
 growers alike is not bounties, whether great or 
 small, but the adoption of measures which will 
 materially cheapen the cost of the article to the 
 consumer. The British Government is at present 
 in a position to give a helping hand in this 
 direction, sucli as nobody else can. 
 
 A Avord of warning is however necessary. 
 Sooner or later the British puljlic will be roused 
 against the manifest injustice of these l^ounties, 
 and West India planters and Britisli refiners would 
 be more than human did they not take advantaire 
 of the circumstance to get a little more than tliey 
 are entitled to. And there is another side to 
 the question which must not be overlooked. Tiie
 
 204 BOUNTIES 
 
 (lepressiiMi of" the sugar industry is not by any 
 means due entirely to the operation of continental 
 bounties. Economy in production and utilisation 
 (.)f waste-products have more to do with it than 
 anything else. The sugar cane after the juice is 
 extracted is cast aside as worthless. All beet- 
 growing are likewise cattle-raising districts, and 
 the green tops as well as the j^ressed pulp are used 
 for food. The British industry which suffered most 
 and is now practically extinct, was that devoted to 
 the production of loaf or lump sugar. It has been 
 almost entirely replaced by crystals, and a well- 
 known English firm has had quite as much to 
 do with that as the French bounty. 
 
 Moreover, Germany and not France has been 
 the keenest and most successful competitor, and 
 until lately the bounties granted by that country 
 were little more than nominal. Neither the West 
 Indian nor the British industry can have been 
 possessed of much backbone if they were to be 
 ruined by sevenpence halfpenny, or even a shilling 
 per cwt. Now that the rates have been doubled, 
 j^rompt and energetic action is called for. Not 
 on the lines of the absurd convention of 1889, 
 Avhich placed the English supply of sugar entirely 
 at the mercy of one or two continental countries — 
 Germany among them, and which would have 
 prohibited the import from any country paying 
 bounties, whether large or small. There is another 
 and simpler way of coping with the ditficulty, and
 
 BRITISH SHIPPING SUBSIDIES 205 
 
 the motto of any government A\4iich seeks to put it 
 into operation must be "Fairplay, but no Protection." 
 
 In the pubhc mind at any rate, bounties are 
 generally associated with sugar, l)ut they are an 
 economic evil which is rapidly growing, and they 
 assume no more insidious form than when applied 
 to shipping. There are so many different ways of 
 granting them w^ithout detection, and of making 
 extravagant payments for services rendered, or 
 supposed to be rendered, to the State. Several of 
 the great British lines receive a small annual 
 subsidy from the Government, in return for which 
 their best steamers are held at the disposal of the 
 Admiralty as fast cruisers in case of an outbreak of 
 war, in which Great Britain is involved. But for 
 that purpose costly additions are made in their 
 original construction which would not be necessary 
 were they only required for the merchant service, 
 and welcome though the subsidy no doubt is, part 
 of it is only interest on the extra capital outlay. 
 On the other hand, the Government is assured of a 
 splendid addition to its navy in an emergency, 
 without prolonged negotiation, and the risk of 
 being squeezed financially, 
 
 The total amount of these subsidies is under 
 £50,000 per annum, of which the two great Trans- 
 atlantic Companies receive about £15,000 eacli, the 
 Peninsular and Oriental Company £11,500, and tlic 
 Canadian Pacific Railway Company £7,500 towards 
 the fast service between Vancouver and Austi-alia.
 
 2o6 BOUNTIES 
 
 The iiuiulu'r (^i steamers actually subsidised is 
 eleven, but the Admiralty has a further right of 
 call upon foTU" of the Cunard and ten of the Penin- 
 sular boats for transport service, so that as a matter 
 of fact the payment is less than £2000 j)er vessel. 
 
 There can be no economic objection to an 
 arrangement of this sort, provided it is moderately 
 and not extravagantly paid for. There are many 
 advocates of its extension, but unless restricted 
 within very narrow limits, and to the best and 
 newest ships, it would speedily lend itself to 
 jobbery and favouritism. There is another way 
 however of subsidising, namely, by contracts for 
 carrying mails, which is such an important function 
 of all fast steamers. The British lines are paid, 
 and paid well for this service, but not more than 
 they are entitled to, considering all the circum- 
 stances of the case. There are season trades to 
 every part of the world, times of the year when the 
 great steamship companies strain every nerve for 
 the quickest and most efficient dispatch possible, 
 and times when they would rest on their oars, and 
 only work their slower and less expensive boats. 
 But by their contracts they are compelled to run 
 the best available all the year round, and they 
 loyally adhere to them, though the New York 
 correspondent of the " Times'' never fails to let the 
 world know when a slow steamer has taken the 
 place of a quick one, altogether ignoring the fact 
 that vessels, like journalists, require an occasional
 
 GERMAN SUBSIDIES 207 
 
 rest and overhauling. There is no doubt whatever 
 that all the mail lines run some of their steamers at 
 one time or other during the year without any 
 profit, if not at an actual loss, and are fairly entitled 
 therefore to a liberal scale of remuneration. There 
 is no secret about what is paid for these services, 
 and the companies naturally make the best terms 
 they can for themselves. 
 
 That is all the British Government does for 
 British shi23ping, and it is all that can fairly be 
 asked on strict economic lines. Other Governments 
 however go a great deal further, and Germany is 
 usually singled out as an instance of stimulating 
 her shipping trade, like orchids, in a hot-house. 
 But in this, as in direct protection, Germany is by 
 no means so great a sinner as she is i-epresented. 
 One line, the North German Lloyd, Mdiich now 
 possesses a greater tonnage than any other company 
 in the world, is subventioned to the extent of about 
 £200,000 per annum, but this was to enable it to 
 establish a regular service with the Far East and 
 Australia, and as it has now accomplished it and is 
 making it pay, the probability is that ere long the 
 subvention will be withdrawn.^ This concern in 
 its former history overreached itself and got into 
 financial difficulties, Imt in 1894 it was reorganised 
 and a heavy loan raised for that purpose. But the 
 fact that it was able to borrow M 35,000,000 at 4 
 
 1 I notice the North German Lloyd has recently demanded an 
 additional £75,000, to enable it to add to the number of ports of call 
 in the Far East.
 
 2oS BOUNTIES 
 
 |K'r cent, interest with a cajDital of M 40,000,000 
 already in existence, proves that confidence was 
 felt in it. Its adverse balance, after writing off 
 large snnis for depreciation, was that year upwards 
 of M 4.500.000, and was drawn from a reserve fund 
 which liad l)een specially constituted, but that gave 
 it a fresh start, and for 1896 it declared the fairly 
 substantial dividend of 4 per cent. 
 
 The other great German Line, the Hamburg 
 Steam Packet Company, is not believed to be directly 
 subsidised at all, but is less handicapped than many 
 of its British ri^'als. It is not, for instance, com- 
 pelled to I'un its fast boats through the winter months, 
 nor does it even lay them up ; for availing itself of 
 the magnificent accommodation they afford, these 
 steamers are dispatched on pleasure trips to the 
 Mediterranean and southern climes, and earn on 
 these voyages a very fair dividend on the entire 
 capital of the Company. German merchants and 
 corresjDondents are not inconvenienced, because 
 they can still address their mails by Southampton 
 and Queenstown, and have them delivered as 
 quickly as by their own fast boats. A Company 
 which has for several years increased its dividends, 
 and for 1896 declared the handsome one of 8 
 per cent., after waiting off a large amount for 
 depreciation, needs no subsidies. 
 
 At Avhat rates the conveyance of mails is paid 
 for is not so definitely known, and here at 
 least the German lines may have an advantao-e
 
 FRENCH SUBSIDIES 209 
 
 over their British competitors. The postal and 
 telegraph service of the German Empire is a big 
 thing, but it pays, and if the steamship companies 
 do get more than they are reasonably entitled to, 
 it is only out of the profits of the entire system. 
 The estimate of the Imperial Budget for 1896-97 
 reckoned upon a gross profit of over thirty millions 
 of marks, or about £1,500,000, which was just a 
 little more than the realised surplus of the two 
 previous years ; but against this there is a charge 
 for central administration, so that the net income 
 is about £1,000,000 sterling. If German steamers 
 are heavily subventioned therefore for mails, it is 
 not directly at the expense of the taxpayers. 
 
 But with France it is far otherwise. She, as we 
 have already seen, is the real delinquent over the 
 sugar bounties, and does nothing to atone for it in 
 the treatment of her shipping. From the time the 
 keel of a vessel is laid on the stocks, to the moment 
 she is broken up for old iron, her owners are 
 squeezing the Government, and draw gold rather 
 than blood at every pressure. A tonnage bounty 
 is given on everything 1)ni]t in French slii|)yards, 
 the rates being 65 francs per gross ton on iron and 
 steel ships, 40 francs on wooden vessels over 150 
 tons gross, and 30 francs on smaller ones. Furtlun- 
 bounties are given on tlie engines of steamers ; but 
 inasmuch as British nuiriiH^ engineers are able to do 
 the work so ninch cheaper than French ones, the 
 question was raised onlv <|uite recently, whether a 
 14
 
 2IO BOUNTIES 
 
 vessel built in a French yard might not be fitted 
 (Hit in a British one without foregoing anything 
 more than the bounty on the machinery. French 
 engineers naturally protested, and won the day, so 
 that British work does not desecrate ships which 
 fly the tricolour from their mast heads. 
 
 The moment the bounty-constructed vessel gets 
 up steam or sets sail, she becomes the recipient of a 
 navigation subsidy. This is calculated at the rate 
 of fc. 1.70 per ton for every thousand miles covered 
 during the first year, with a reduction of 6 centimes 
 for every subsequent year. A new French steamer 
 of say 5000 tons, would consequently earn a bounty 
 of about £2000 for every voyage to New York and 
 back, irrespective of what it received for freight and 
 passengers. An instance has lately been recorded of 
 a large iron sailing ship making a voyage round the 
 world which occupied just twelve months, and 
 resulted in a subsidy of upwards of fcs. 100,000, or 
 £4000, in addition to another fcs. 3000 paid as 
 a premium for apprentices. The speed may be fast 
 or slow, the payment is the same, only there is 
 a strong incentive to cover as great a distance 
 as possible, particularly in the early years 
 of a vessel's life. Still the only result is that 
 France keeps some of her shipping, as she does 
 most of her trade, in her own hands, and makes 
 little or no attempt to compete in foreign ports. 
 If the Government is good enough to provide shijD- 
 owners with dividends, why should they throw
 
 PAYMENTS FOR MAILS 211 
 
 them away by carrying goods at low rates for 
 foreimiers ? 
 
 The French budget for 1897 makes provision 
 for these bounties to the extent of fcs. 11,000,000, 
 say i.'450,000. This is certain to be an under- 
 estimate, as the Government does not care 
 to make the figures appear too large, and for 
 1896 a supplementary vote of fcs. 2,750,000 was 
 required, bringing the total payment for the year 
 up to fcs. 14,250,000, or £570,000. 
 
 But French shipping bounties do not end here, 
 and further heavy allowances are made under the 
 guise of mail service. How excessive these are, we 
 will best ascertain by contrasting them with the 
 amounts disbursed by the British post-office for 
 similar services. 
 
 France. 
 
 New York & West Indies, £450,000 
 
 India, China, & Japan, . 240,000] 
 
 Australia & New Caledonia, 125,000/ 
 
 East Africa & Indian Ocean, 75,000] 
 
 West Coast of Africa, . 20, 000 J 
 
 Mediterranean, . . 55,000 
 Algeria, Tunis, Tripoli, & 
 
 Morocco, . . . 35,000 - 
 
 Corsica, .... 15,000 
 
 Calais and Dover, . . 10,000 
 
 Great Britain. 
 £245,000' 
 
 435,000 
 30,000 
 
 25,000 
 
 £1,025,000 £735.000 
 
 > Including Canada, £G0,000.
 
 212 BOUNTIES 
 
 The deiiiaiids on the carrying capacities of 
 British mail steamers are certainly much greater 
 tlian n})()n French ones, yet they are only paid 
 three-fourths of the amount, of which moreover 
 the colonies contribute £200,000. It must be 
 remembered too that the greater part of the 
 correspondence of the United Kingdom with 
 Europe, and a good deal of that with the East, 
 passes through Dover and Calais. One half at least 
 of the French payments must be regarded as a direct 
 bounty, so that French shipping is subsidised to 
 the extent of one to one and a quarter millions 
 sterling per annum. 
 
 Other European countries follow this vicious 
 example. Denmark, for instance, with its small 
 merchant fleet, allows a payment for every ton of 
 dauy produce or fish landed by a Danish steamer 
 at a British port. The Netherlands Koyal Steam 
 Packet Company, trading principally with the 
 Dutch possessions in the East Indies, draws an 
 annual navigation bounty of £50,000. Italy does 
 her utmost to encourage shipbuilding and shipping, 
 and would pay the owners of a 5000 tons steamer 
 of 2000 horse power, £13,000 if constructed in an 
 Italian shipyard, while for every voyage she sub- 
 sequently made, say to or from New York, they 
 would receive about £500. Austria- Hungary 
 offers more extravagant inducements still, but 
 until she reaches Salonica, she can make no pre- 
 tence to being a maritime power, her single port of
 
 SHIPPING COMPETITION 213 
 
 any importance at present, namely Trieste, being 
 too far out of the way. 
 
 It is terribly hard for the British shipowner 
 to compete against wholesale subventioning of 
 this sort, which permits of low freights. 
 Foreigners however, are sharp witted enough not 
 to give the British merchant the advantage of 
 them, and their steamers do not cross to English 
 ports and offer to carry cargo for next to nothing. 
 But the English owner is omnipresent, and there is 
 no port in the world ojoen to him where he does 
 not try to capture a freight, and usually gets it 
 on some terms or other, not it is to be feared 
 always profitable. Complaints are often made by 
 British shippers of what looks very like discrimi- 
 nating rates against Lhem, as a steamer will par- 
 tially load in a foreign port at a low freight, and fill 
 up in a British one for the same destination at a con- 
 siderably higher rate. To procure the first at all they 
 mu8t cut low, though it may not J^ay, and ib is rather 
 creditable than otherwise that they should beard 
 the lion in his den, and carry off some of the si)oil. 
 
 German steamers do make regular calls at 
 English ports like Southampton and Plymouth, 
 and get wliatever share of the mails is addressed 
 specially for them, receiving payment in accord- 
 ance with the weight carried. Tliis concession 
 of the British post office is naturally objected 
 to by British companies, but it wisely declines to 
 cancel any facilities of which Illnglisli corresj^on-
 
 214 BOUNTIES 
 
 dents may be able to avail themselves. Nobody 
 addresses letters by a German liner unless they 
 know there is likely to be a saving of time in 
 delivery, and whenever that is possible it should 
 be conceded. Besides, the summer calls of these 
 steamers is a decided benefit to English trade, as 
 manv American tourists are enabled to spend the 
 last weeks or days of then- holiday in England, 
 who would not do so were they compelled to 
 embark at Hamburg or Bremen, from one or other 
 of which ports then- return tickets are available. 
 
 It would be strange mdeed if the bounty 
 system had not crept, surreptitiously or otherwise, 
 into the United States. The M'Kinley tariff, as 
 we have had occasion to observe, did nothing by 
 halves, and when dealing with sugar did not con- 
 fine itself to the miserable Is. 3d. or Is. 9d. per 
 cwt. prevalent on the continent of Europe, but 
 boldly marked it at 2 cents per pound, or 9s. 4d. 
 per cwt. That the Act of 1890 did not include 
 shipping within its scope, and make some extrava- 
 gant provision for it as it did for tinplates, its 
 authors have never ceased to regret, and if recent 
 declarations are to be regarded, they mean to make 
 full atonement for the omission. For all that a 
 very costly experiment was made, and two steamers 
 were constructed and launched at Philadelphia, 
 which could have been better built at little more 
 than half the money on the Clyde or Belfast 
 Lough. These, together with two others trans-
 
 SHIPBUILDING IN AMERICA 215 
 
 ferred from the British to the American flag, now 
 constitute a heavily-subsidised American Line. It 
 takes the form of a payment for mails, and amounts 
 to over £3000 for every voyage from New York to 
 Southampton, whether they carry one bag or a 
 thousand. As one thousand bags is a somewhat 
 high average, and the weight will vary from 80 to 
 100 tons, the payment is thus at the rate of £30 to 
 £40 per ton. British steamers are paid only for 
 what they carry, and it requires a big mail to earn 
 £1000. As the four American liners manage to 
 put in about 55 voyages per annum among them, 
 the difference is equivalent to a subsidy of 
 £110,000, a dividend of over 5 per cent, on the 
 £2,000,000 of capital sunk, or which would have 
 been sunk had they all been built in the United 
 Kingdom. The United States post office is not 
 worked at a profit, and this money consequently 
 comes out of the pockets of the taxpayers, or 
 rather, as American finance is worked at present, 
 is added to the national debt. The £400,000 
 granted to the North German Lloyd has to be 
 distributed among about sixty steamers, the 
 £110,000 of the American line is absorbed by four. 
 But the M'Kinley Act did not entirely neglect 
 shipping. It provided in one of its clauses that, 
 
 " Material for ]juilding vessels for foreign aceount may be 
 imported in bond, and no duty charged, provided the purpose 
 is fulfiHod, and the ships do not engage in llic coastwise 
 trade."
 
 2i6 BOUNTIES 
 
 Tt forgot one important provision however, 
 and did not stipulate that American mechanics 
 were to be compelled to labour in American 
 shipyards at a wage of a dollar a day, and 
 consequently the world did not rush eagerly 
 to seize the privilege of having its fleets 
 built in United States harbours. 
 
 But it went further, and in the succeeding clause 
 enacted that articles needed for repair of American 
 vessels in foreign trade were to be admitted free 
 of duty. Even this was ineflective, and one of the 
 American liners has been known to cross the Atlantic 
 propelled by one screw, in order that the damaged 
 machinery connected with the other might be 
 repaired in England ; while certainly one, if not 
 both American-built boats have in the course of 
 their short lives paid private visits to English 
 graving docks. The stipulation in the next Act 
 must be more rigid, and forbid any vessel sailing 
 under the American flag to be repaired in a foreign 
 port, while it can reach one in the United States 
 either under steam or under sail. 
 
 In spite of all this, the United States possess 
 a very considerable merchant fleet, but it is engaged 
 almost entirely in the coastwise service. As no 
 foreign-built vessel, even if owned by an American, 
 is permitted to enter into competition, American 
 shipbuilders enjoy a monopoly, and charge what 
 they please for the tonnage engaged exclusively in 
 the Atlantic, Pacific, or Gulf Service, or on the
 
 THE AMERICAN MAIL SERVICE 217 
 
 great lakes. As these vessels cany principally 
 agricultural produce, and the freights are naturally- 
 enhanced by their extravagant cost, a fresh burden 
 is imposed on the unfortunate southern planter or 
 western farmer, who has to carry the shipbuilder 
 as well as the woollen and iron manufacturer on his 
 shoulders. 
 
 Hitherto shipping bounties have only indirectly 
 affected British owners. They have not had to 
 compete against them in their own ports, because 
 the foreign ships which do bid for British trade are 
 of an inferior class, and owe the advantage they 
 possess to the less stringent regulations under which 
 they are navigated. When shipowners send their 
 craft to foreign ports however, they cannot expect 
 to have quite so much their own way, particularly 
 in these days of high protection, and must simply 
 take their chance. But vague threats are beginning 
 to be whispered of a determined and wholesale 
 effort to call into being a United States merchant 
 fleet which is to monopolise as far as possible the 
 foreign trade of United States ports. This can 
 only be effected under existing circumstances by 
 enormous subventions. The American people are 
 perfectly at liberty to build as many ships as they 
 like, liow they like, when they like, and with 
 whatever money they like ; but when the American 
 Government steps in and begins to })ay a ])ortion 
 of the freights of exporters to British ports, it will 
 be time for the British Government to follow and
 
 .MS BOUNTIES 
 
 claim it for the relief of the British taxpayer. The 
 American Government may pay the freights of 
 British exporters, and consequently of United 
 States consumers if it likes, that is entirely its 
 own affair. 
 
 The results of a subsidised American line so 
 far as they have been experienced are not of a very 
 satisfactorv nature, and the mail service, if not 
 disorganised, becomes occasionally something of a 
 scandal, in the creation of which the British 
 postal authorities are to blame quite as much as 
 the American. It seems absurd that Avith three 
 fast steamers sailing nearly every week, it should 
 sometimes happen that two or three mails are 
 delivered one on top of the other, and then for 
 nearly a week to elapse Avithout one. The United 
 States post office naturally reserves everything it 
 can for the steamers sailing- under the American 
 flag, and consequently another steamer as fast or 
 faster sailing the same day gets nothing. Though 
 as a rule compelled to ship one portion of a week's 
 mail by a British steamer, it is invariably the smaller 
 half (if there be such a thing), while the British 
 post office in self-defence adopts the same tactics 
 on the reverse route. Not a very sweet taste of 
 protection and bounties this ! Surely it is possible 
 to arrange between the three lines for sailings 
 every other day, and for all mails on both sides of 
 the Atlantic to be despatched w4th equal regu- 
 larity. Then with few exceptions there would be
 
 THE NEW CANADIAN SUBSIDY 219 
 
 as regular a service as between London and Edin- 
 buro-h, or New York and Chicago. 
 
 The most important subsidy ever countenanced 
 by a British Government has just been conceded 
 for a fast service between the United Kino-dom and 
 Canada. The amount is $750,000, say £150,000 
 per annum, two-thirds of w^hich is to be contributed 
 out of Canadian, the remaining third out of British 
 revenues. How totally different in principle this 
 bounty is to' the foreign ones we have just been 
 discussing will be apparent at a glance. 
 
 To begin with there are weighty political 
 grounds for the establishment of rapid intercourse 
 between Great Britain and the largest of her self- 
 governing colonies. Such intercourse has hitherto 
 been provided through the United States, but the 
 hostility of certain sections of the people of that 
 country as well as of foreign nations generally, 
 makes a more direct route advisable, if not 
 absolutely necessary. The geographical situation 
 of Canada, wdth its ports closed against naviga- 
 tion for several months in the year, renders a fast 
 service on ordinary commercial conditions an im- 
 possibility ; consequently, to ensure it, monetary 
 concessions must be made which would otlicrwise 
 be unnecessary. 
 
 Besides, Canada now offers an alternative route 
 to the Australasian Colonies, whicli is absolutely 
 under British control. Were Great Britain in- 
 volved in hostilities with a continental power, the
 
 2 20 BOUNTIES 
 
 probability is tliat the Suez Canal would no longer 
 be available for the intercourse of her ships with 
 either the East or the Antipodes, and there would 
 remain the route round the Cape' of Good Hope, or 
 across the United States and from San Francisco. 
 It is of course highly improbable that botli these 
 would be blocked at the same time, but sentiment 
 as it exists at present, demands a highway through 
 British territory in preference to any other. 
 
 The necessities of the case being conceded, the 
 conditions under which the subsidy is granted 
 must be considered. In the case of France and the 
 United States the services which are so exor- 
 bitantly paid for are not unique, they admittedly 
 could be, and are actually performed for very much 
 less, and the bounty is given principally to stimu- 
 late the construction of tonnage which may or may 
 not be required. In the Canadian contract, 
 competition has been allowed full play ; the 
 firm which has hitherto enjoyed the monopoly of 
 the mails finds itself shut out in the cold, and an 
 untried and comparatively unknown opponent 
 occupies its place. In either of the countries 
 alluded to the new departure would have been 
 made the occasion of a handsome concession to 
 some favoured individuals. Possibly the same 
 thing might have happened in Canada had there 
 not been a radical and altogether unexpected 
 change of government, for whatever else may be 
 said of the political party which so long enjoyed
 
 DIVERGENT OPINIONS 221 
 
 the upper hand in the Dominion, it cannot be 
 accused of havino^ foro-otten its friends. As those 
 friends are often the openly avowed enemies of the 
 party which has suddenly come uppermost, they 
 can hardly expect a continuation of the favours to 
 which thev had m-own so accustomed. 
 
 It is stoutly maintained by the former con- 
 tractors, and those associated with them, that the 
 service cannot be carried out for the subsidy 
 agreed upon, and that the arrangement is bound 
 to end disastrously for one, if not both parties 
 to it. Only time can prove the correctness or 
 otherwise of this contention, but it may at once 
 be admitted that the conditions appear unduly 
 onerous. It is not the size and speed of the vessels 
 which are too exacting, as similar ones already sail 
 the ocean. Possibly however the difficulties of 
 navigation have been underrated, and the penalties 
 for non-performance are extremely severe. There 
 may be no actual intention of enforcing them when 
 every precaution has been taken to ensure the 
 fulfilment of the contract, but there is just the risk 
 that political animus may some day take unreason- 
 able advantage of them. There can be no 
 guarantee against anything of the sort while 
 great industrial cor])orations identify themselves 
 with l)arty ratlier tliaii with ii;itl()ii;il iiitci'csts. 
 Whatever haj)pens to the suljsidised, the sub- 
 sidisers will receive full value for their money, 
 and the word bounty in its stricter meaning,
 
 22 2 BOUNTIES 
 
 is conseinu'iitlv liardlv applicable \\\ the present 
 instance. 
 
 Closely allied with the shipping trade is inland 
 transit, Avhether by rail or canal. Here at least is 
 a preponderating advantage enjoyed by German 
 over British traders. The German railway system, 
 or more than 90 per cent, of it, is owned 
 and controlled by the State. Acquired originally 
 for strategic purposes, it has been converted into a 
 mighty engine for the promotion of trade. The 
 Government can and does, facilitate certain 
 industries at the expense of others, and in this way 
 grants what is fully equivalent to a bounty. But 
 there are natural advantages without the necessity 
 of creating artificial ones. The total mileage of 
 the German system is about 28,000 English 
 miles, that of the United Kingdom just over 
 21,000. But while the former has cost to construct 
 some £560,000,000, the latter stands capitalised at 
 rather more than £1,000,000,000, that is, whereas 
 the German system has cost some £20,000 per mile 
 the British works out at £47,250, so that a British 
 railway must earn nearly two and a half times as 
 much as a German one to make the same return. 
 True the £1,000,000,000 is not all genuine 
 capital, £90,000,000 being watered or duplicated 
 stock, for which no consideration has ever been 
 paid. It is high time indeed that this process was 
 stopped, if British trade is not to be permanently 
 injured. One great English company is at the
 
 THE COST OF RAILWAYS 223 
 
 present moment seeking to double its ordinary 
 stock/ and enormously increase its preference, and 
 if successful, others will want to follow, with the 
 result that in a very few years the capital will be 
 swollen to £1,500,000,000, or even £2,000,000,000. 
 
 This may appear a matter of small consequence 
 in itself, but there is a deep policy actuating it. 
 When dividends are good, traders are apt to 
 agitate for reductions in rates, but by artificially 
 increasing the capital the dividends may be 
 nominally, though not actually, reduced, and this 
 circumstance used as a buttress ao-ainst concessions. 
 The excessive cost, in the first instance, of building- 
 British railways was not the fault of the companies, 
 but due entirely to the rapacity of landowners who 
 regarded themselves as entitled- to any exorbitant 
 demand they liked to make, and unfortunately 
 were only too often able to enforce. But that is no 
 reason for making bad worse, and in face of the 
 serious competition of foreign railways nothing 
 must be j)ermitted which will tend in the least to 
 extravagance of management, or even of demand. 
 
 It is evident that all other things being equal, 
 German rates of carriage should be no more than half 
 those in the United Kino-dom, Init on the other 
 hand distances are iinicl) greater, which tends to 
 
 1 Tlie Midland Railway Act of 1897 has now accomplished this. 
 TliG ordinary stock has been converted into equal amounts of j^re- 
 ferred and deferred, and by a stroke of the pen the capital of the 
 English railway system has been increased by this one item alone by 
 £34,500,000.
 
 2 24 BOUNTIES 
 
 e(iiialist;' matters somewhat. But the German 
 Government takes neither distance nor anything 
 else into consideration when bent on assisting a 
 new or strugghng industry. Shipbuilding on the 
 Baltic for instance, has lately sprung into great 
 activity, and the State railways convey all materials 
 required at a greatly reduced rate. Cotton-spinners 
 in Saxony receive their raw material at less than 
 the normal charge for freight. Exporters are like- 
 wise specially favoured, and have their goods 
 conveyed to port of shipment often at merely 
 nominal rates. This is undoubtedly unfair to 
 other German interests, but it is equally disastrous 
 to British competition, and this fact is a strong 
 inducement to continue the policy, though some 
 day perhaps the German sufferers may success 
 fully protest against it. Meantime British trade 
 has to struggle against a bounty far more wide 
 reaching than that on sugar. 
 
 Again, this is done without any levy on the 
 German taxpayer. For the year ending 31st 
 March 1895, the working- of the State railways 
 resulted as follows :- — 
 
 Gross receipts, . . . £70,500,000 
 
 Working expenses, . . 43,000,000 
 
 Net receipts, . . £27,500,000 
 
 For the year ending 31st December 1894 the 
 returns from the railways of the United Kingdom 
 were : —
 
 J^AILJVAV EARNINGS 225 
 
 Gross receipts, . . . £84,311,000 
 
 Working expenses, . . 47,208,000 
 
 Net receipts, . . £37,103,000 
 
 The net receipts for the United Kingdom for 
 1895 amounted to £38,046,000, or nearly a milHon 
 increase, but as I have no official returns of the 
 German State system for the corresponding period 
 I cannot compare them. No doubt they increased 
 likewise, as greater briskness in trade was 
 characteristic of both countries. 
 
 We thus see that upon a considerably greater 
 system the net returns were nearly £10,000,000 
 less. Had the German gross traffic equalled the 
 British, the corresponding net receipts would have 
 been increased by about £5,000,000, and the 
 difference between them would have been but 
 £5,000,000. There would have been no reason 
 however for any such increase, as the amount is 
 more than sufficient as it is to meet the interest on 
 the obligations pertaining to the railways, and any 
 further j^rofits arising from a growth of traffic would 
 l)e applied to a reduction of rates. In other words, 
 the German Government is able to grant a substan- 
 tial l)ounty to industrial interests, which in Great 
 Britain would be divided among railway share- 
 holders, and as the trade of the country increases, 
 this Ijounty will iiicre^ise with it. 
 
 The net receij)ts oC I)iilisli railways wcic 
 equal to 3|- per cent, on the entire r;ipital, or to 
 15
 
 2 26 DO UNTIES 
 
 rather iiK^re than 4 per cent., If the watered stock 
 is taken into account, whereas the Imperial 
 German Government is able to borrow all it needs 
 at 3 per cent., while the capital itself is so much 
 less. It is true the German railway loans are 
 mostly State loans, and pay a somewhat higher rate 
 of interest, but all that will some day be needed to 
 reduce it is the Imperial guarantee. Meanwhile the 
 net return of the system works out at nearly 5 per 
 cent., so that over and above the concessions and 
 bounties, a substantial sum accrues in mitigation of 
 taxation. 
 
 After the payment of all interest for the year 
 1896-97, there is an estimated balance carried to the 
 credit of the Imperial revenues on the railways for 
 which it is directly responsible, of over M 23,000,000 
 or £1,150,000 sterling, reduced somewhat by extra- 
 ordinary expenditure estimated at M 7,000,000. 
 But the fact nevertheless remains, that after all 
 liabilities have been discharged and an important 
 stimulus given to industry, there is still a balance 
 of over three quarters of a million sterling for the 
 relief of the Imperial German taxpayer. 
 
 Here then British traders suffer under a 
 disability which must remain permanent, and can 
 only be combated by increased energy and vigilance. 
 The transfer of the railways to the State would not 
 obviate it, because it would be unfair to demand 
 for £550,000,000, or even £750,000,000, what had 
 cost shareholders nearly £1,000,000,000 to
 
 FRENCH RAILWAYS 227 
 
 construct, and which upon an earning capacity of 
 3f to 4 per cent, has a market value of some 
 £250,000,000 more. Besides, there are many and 
 perhaps insuperable difficulties connected with State 
 manag-ement in Great Britain which do not exist in 
 Germany. In the latter country the Government 
 is almost despotic, makes whatever regulations it 
 likes, and defies public opinion as reflected in 
 the Beichstag. But in England, where tlie popular 
 voice is supreme and makes and unmakes ministries, 
 there would be a constant, and, it is to be feared, 
 disastrous strutrofle between different sections of the 
 industrial community for special rebates and other 
 privileges. Still, the day is 23robably not far 
 distant, when other interests than those of share- 
 holders will have to be represented on the boards of 
 the great railway companies, and when manage- 
 ment will be devoted to something more than the 
 earninof of increased dividends. 
 
 While Germany can offer such a substantial and 
 legitimate bounty as this to her manufacturing 
 industries, we need not fly to protection nor to 
 steamship subsidies for reasons why she has become 
 so keen a rival to Great Britain. 
 
 Railways in France, though nominally the 
 property of companies as in Great Britain, are 
 actually under state C()iitr(tl ;iiid management. A 
 process of consolidation of all tin- minor coni})anies 
 has gone on, until the entire system has been 
 absorbed into five, or at the most six great under-
 
 2 2S BOUNTIES 
 
 takiiio-s, the divlckMuls upon the capital stock being 
 guaranteed by government. Of the five important 
 ones, the Northern, Southern, Eastern, Western, 
 and the Paris-Lyons and Mediterranean Railways, 
 only the first earns sufficient net income to meet 
 the whole of its oblio^ations to its shareholders 
 without dipj^ing into the national purse. The 
 capital arrangements of French railways, moreover, 
 differ widely from the English ones. The ordinary 
 stock of the former constitutes only a small per- 
 centage, of the latter considerably more than a 
 third of the total. In France the indebtedness 
 is mostly in the form of obligations bearing 3 
 per cent, interest, but issued in days gone 
 by considerably below par. They partake too 
 of the character of lottery loans, as fixed amounts 
 are drawn annually and repaid at par, the difference 
 between that and the issue price constituting the 
 prize. With the gTowing cheapness of money these 
 obligations have naturally increased in value, and 
 while many were originally issued at less than 
 fcs. 400, some indeed below fcs. 300 per 500 franc 
 bond, the market value of most of them is now 
 about fcs. 470 to fcs. 480, and all new issues are 
 upon this basis. 
 
 These obligations bear some resemblance to the 
 debenture and preference stocks of British railways, 
 and the earnings of the companies are amply 
 sufficient to meet them. The ordinary stocks 
 however are much more favourably situated than
 
 RAILWAY SUBVENTIONS 229 
 
 the prefereiice, inasmuch as they enjoy an absolute 
 government o-uarantee. The Northern Railway, 
 for instance, is guaranteed a dividend of fcs. 54.10 
 per 500 franc share until the year 1914, but as a 
 matter of fact earns over fcs. 60 on an averag-e. 
 All the others fall short of the guarantees, which, 
 from an English point of view, are excessive, that 
 of the Paris-Lyons and Mediterranean being 
 fcs. 55 or 11 per cent., the Southern, fcs. 50 or 10 
 per cent., the Western fcs. 38.50 or 7f per cent., 
 and the Eastern fcs. 35.50 or 7 per cent. Needless 
 to say the market price of these shares is very 
 high, the average yield being barely 3 per cent., 
 as the Government rigorously fulfils its engage- 
 ments and disburses many million francs per 
 annum to make up the dividends. Should it ever 
 happen that the actual earnings of any of the 
 companies are in excess of the sums required, the 
 surplus will go, not to the shareholders, but to the 
 Government, in reduction of what is somewhat 
 facetiously termed a debt. 
 
 The total outstanding ordinary stock of these 
 companies is little over fcs. 1,000,000,000, or 
 <£40,000,000, yet provision is made in the Budget 
 for an estimated expenditure of fcs. 55,250,000 to 
 cover the interest guarantee upon it. Tlic (lovci-ii- 
 ment claims as a set-off, a very large figure for 
 taxes and for postal and military facilities, all of 
 which are more sentimental tlian real, as it caimot 
 be supposed, for instance, that were the railways
 
 2 30 BOUNTIES 
 
 ])rivat('lv owned they would be allowed to escape 
 their proper share of taxation, British companies 
 at any rate enjoy no such immunity. Military 
 and strategic considerations no doubt compel 
 France, like Germany, to keep a tight grip over 
 the railway system, l)ut the advantages, whatever 
 they may be, are scarcely calculable in francs and 
 centimes. 
 
 These shares, like the obligations, are subject to 
 annual drawing and redemption at par. There 
 would be manifest hardship however in paying oif 
 at fcs. 500 what sells in the open market at 
 1000 to 2000, and though the stock is 
 cancelled, the holder receives an action de 
 jouissance, or profit share, which entitles him to 
 any annual dividend in excess generally of 3|^ jDer 
 cent., so that he is in reality no worse off. These 
 railway concessions, it must be borne in mind, are 
 all terminable sooner or later, when it will be open 
 to the Government to make fresh and perhaps less 
 exacting conditions. When the time arrives the 
 stock itself will have been redeemed, and it will be the 
 actions de jouissance which have to be dealt with. 
 
 Interest payments on ordinary shares con- 
 stitute only a small portion of the obligations of 
 the State to the railways. Under a law of the 
 17th June 1873, for instance, the Minister of 
 Finance has to provide an annuity of fcs. 20,500,000 
 to the Eastern Company, while there are a number 
 of others amounting to fcs. 50,000,000 additional.
 
 AMERICAN RAILROADS 231 
 
 The Minister of Public Works is responsible for 
 further annuities amounting to fcs. 40,000,000, the 
 total sum which the Treasury has to find being- 
 close upon £7,000,000. Whatever name may be 
 given to it, this is really a bounty, and though 
 Government may juggle the figures and claim to be 
 recouped by services rendered, the fact remains 
 that the money is found and the trade and industry 
 of the country directly relieved to a proportionate 
 extent, though eventually it has to be refunded in 
 the form of taxation. 
 
 In the United States the railroads, with one or 
 two notable exceptions, are entirely free from Govern- 
 ment control. No systems in the world however 
 have been the recipients of such enormous bounties 
 as some of the great trunk and trans-continental 
 roads. They have had literally millions of acres 
 poured into their lap, acres which are to-day worth 
 untold millions of dollars. True, it was the onlv 
 way in which the country could be developed, and 
 for that reason little objection can be taken to it. 
 But the treasure has been squandered, and the 
 roads themselves wrecked and thrown into bank- 
 ruptcy. Had American railroads been lioiiestly 
 financed and economically managed, they miglit 
 have been worked to-day at rates which could not 
 have been touched by any other country, and the 
 advantage would have been such that no system 
 of protection could possibly afford. Little wonder 
 that the industrial population rises in i-cvolt against
 
 J 3-^ BOUNTIES 
 
 the exactions, and protests against providing money 
 tor dividends on stock which represents nothing but 
 the booty of manipulators. But what American 
 agriculturists and European investors have lost, 
 European industries have gained, as they are not 
 called ii[)()n to compete against rates which could 
 not exist in the older continent. The question of 
 American railroads is however far too bigf to be 
 dealt with casually in a work of this sort. 
 
 Bounties are paid on commodities other than 
 sugar, and again France leads the way. There is 
 no need to go into detailed particulars, and it will 
 be sufficient to state the amounts provided in the 
 Budget for the industries participating, and which 
 appear partly in the estimates of the Ministry of 
 Commerce and partly in that of Agriculture : — 
 
 Deep Sea fisheries, 
 
 £140,000 
 
 Breeding of silkworms, . 
 
 180,000 
 
 Silk spinning, 
 
 120,000 
 
 Flax and hemp cultivation, 
 
 100,000 
 
 Viticulture, . 
 
 20,000 
 
 Mineral Oils, 
 
 10,000 
 
 
 £570,000 
 
 Again these figures fall considerably short of 
 the payments actually made, and supplementary 
 estimates were voted in 1896 of £80,000 
 on fisheries and £50,000 on silk spinning, 
 and will, as likely as not, be repeated in 1897.
 
 BOUNTIES FROM PROTECTION 233 
 
 While France adheres to protection and admits raw 
 materials free, it is jDerhaps only consistent that 
 bounties should be given to the producers of such 
 commodities as silk, flax, and hemp. 
 
 Sugar bounties are not unknown in Australia, 
 and in Canada iron • manufacturers receive 
 substantial payments on all they produce. The 
 new tariff provides for $3 per ton on all pig iron 
 smelted from native ore, and 82 if from foreign 
 ores. Puddled bars, if made of Canadian iron, 
 receive S3 per ton, and steel ingots, if containing 
 at least 50 per cent, of native iron, also get $3. 
 The principle of these and all similar subsidies is 
 utterly indefensible. 
 
 There is another form of bounty still to be dealt 
 with which is not direct, but springs from, and is 
 provided for by protection. When a protective 
 duty is imposed which is really effective, that is, 
 enables the native producer to make all that is 
 required for home consumption, his first aim is to 
 take care that the market is kept fully supplied 
 with the domestic commodity, so that the foreign 
 one may be excluded. It is however utterly 
 impossible to gauge the demand in a country so 
 wide, say, as the United States, particularly if it 
 be of a fluctuating natiu'e, and depeiidciit upon 
 prosperous or adverse seasons in other industries. 
 Moreover, wliere protection ensures large proflts, 
 the tendency is to over-produce, in th(» h(>]-)e of 
 additional sales bein^r eifected. Tliis means
 
 234 BOUNTIES 
 
 that more actually is produced than is required 
 for home consumption, and a surplus remains 
 on the hands of the producer. It could be dis- 
 posed of no doubt at a reduction, l^ut to make 
 it would be bad policy, because that might 
 necessitate a reduction in the price of the bulk as 
 well as the surplus. 
 
 The only alternative is to export the latter, and 
 sell it in a foreign country at the best j^rice it will 
 fetch. Great Britain being the only large free 
 market in the world, most of these stocks are 
 diverted thither, and British buyers are offered 
 bargains unobtainable anywhere else. How often 
 do we hear the remark, "I do not know how such 
 a thing can be made for the money." It cannot be, 
 and never was, and the purchaser is getting it for 
 less than cost price, in order that a buyer in 
 another country may be comjoelled to pay for the 
 same article 50 per cent, more than its value. 
 
 That such competition is unfair there can be 
 no question, and it often bears hardly on small 
 manufacturers engaged in the industries liable 
 to be affected. Like many other evils however, 
 it has its compensations, in this instance the 
 advantage gained by the consumer. When a great 
 store is opened in the midst of a number of small 
 traders, whom it undersells, and perhaps in the 
 end ruins, the law does not step in and compel 
 it to close its doors or raise its prices. Low 
 prices are regarded as for the public good, and
 
 OVER-PRODUCTION 235 
 
 the public is always on the lookout for a bargain. 
 Underselling cannot be restrained by legislation 
 and must work its own cure, which means collapse 
 and bankruj)tcy if carried too far. The extent 
 to which it can be carried on is therefore limited, 
 and not even American manufacturers gfo on 
 deliberately making goods to sell below cost in 
 England or elsewhere. They would rather sell 
 all they produce at a profit at home, than export 
 a portion abroad at a loss ; but it often happens 
 that in the determination to keep ahead of the 
 home demand, there is a regularly recurring 
 surplus, Avhich keeps a foreign, and generally a 
 British market, slightly but regularly supplied. 
 Nor must it be forsfotten that there is another 
 side to the question, for such goods must be paid 
 for, and almost invariably are in commodities sold 
 at a profit, so that while the producer is selling 
 to the foreign consumer at less than cost price, 
 he is probably purchasing from the foreign pro- 
 ducer what he might not otherwise require, at a 
 reasonable profit. On which side of the account 
 the ultimate balance is to be found need hardly 
 be pointed out. 
 
 Protectionists are well aware of this, and in 
 order to Ijlind tlie eyes of the victims of the 
 system, exhiljit apparent exultation over tlieir ability 
 to undersell foreigners in their own markets, without 
 explaining the cause. No man who is not a lunatic 
 or a criminal sells goods at a loss for whicli he
 
 2s6 BOUNTIES 
 
 can realise a profit, and few men deliberately 
 maniifiicture sfoods on those terms either. So far 
 from protection in this instance meaning the 
 taxation of the foreigner, it amounts to a bounty, 
 granted him at the expense of the home consumer. 
 
 There are times, even under sound economic 
 conditions, when such sales may be necessary. 
 Over-production is not confined to protected 
 countries, and is an evil well known, though not 
 so widely diffused, m Great Britain. The British 
 manufacturer, under such circumstances, often 
 recognises the inadvisability of flooding his own 
 markets with cheap commodities, which they will 
 require time to digest, and defer the period when 
 he can supply them again profitably. It is then 
 the consumer handicapped by protection has one 
 of his few opportunities of striking a bargain, and 
 it is then the wail of the protectionist is heard 
 demanding higher duties. 
 
 Against the operation of bounties of this sort 
 no country is able to protect itself, as when a 
 sacrifice is decided on, duties, while intensifying, 
 will not prevent it. But every Government can 
 and should protect its peojole and its industries 
 against deliberate payments, granted to enable 
 cheap sales to be made in foreign markets. By all 
 means encourao-e foreiofn Governments to o-rant 
 these bounties, but let them be attached for the 
 relief of the general taxpayer, and not confined to 
 the individual consumer.
 
 CHAPTER YIII. 
 Tariff and Taxation. 
 
 Sources of Indirect Taxation — Proportion to Direct — Distribution of 
 Taxation in Great Britain — Taxation in United States — Eevenue 
 * Derived compared with Actual Burdens — Cost of Collection — 
 Effect of Protection on National Finances — Taxation in France — 
 Sources of Eevenue compared with United Kingdom — National 
 Expenditure — Cost of Debt — Why France is able to prosper 
 under it — Taxation in Germany — Imperial and State Systems — 
 Moderation of Debt and Taxes — State Contributions — Prussian 
 Budget — Immense Advantages enjoyed by Germany over her 
 Industrial Competitors. 
 
 That the incidence of taxation exercises im- 
 mense influence on trade is an axiom which 
 nobody would care to contest. Free traders and 
 protectionists alike, subscribe their respective creeds, 
 because they believe the system they support 
 throws national taxation on the shoulders of 
 those who ought to bear it, in the latter instance 
 erroneously supposed to be the foreigner. We 
 cannot do better therefore than inquire as closely 
 as possiljle how the various revenues bear upon 
 individuals and communities, according as they live 
 under a stringent ^ or a moderate tariff. 
 
 To begin with, let us acquaint ourselves witli 
 the amounts actually received from indirect 
 taxation in the countries whose tariffs we have
 
 J3S TARIFF AND TAXATION 
 
 been considering. The years are not always 
 identical, because I have chosen the latest for 
 which I have been able to obtain the fullest and 
 most reliable details, but as there have been no 
 radical changes in taxation in any of the States for 
 a year or two, the differences between one and 
 another will not vary greatly. 
 
 From customs duties there was received, or 
 estimated to be received, by 
 
 Great Britain, 1895-96 .... £21,040,000 i 
 
 United States, 1895-96 .... 32,000,000 - 
 
 France, 1897 16,400,000 ^ 
 
 Germany, 1896-97 17,800,000 * 
 
 Tobacco, included in the British Customs 
 returns, falls largely under the head of internal or 
 excise revenue in the United States and Germany, 
 where the plant is cultivated, and in France it is a 
 strict Government monopoly. 
 
 From excise revenue on commodities there was 
 received during the same period by 
 
 Great Britain— Spirits and Beer .... £27,530,000 
 
 United States— Spirits and Beer . £21,700,000 
 
 Cigars and Tobacco . 6,150,000 
 
 Oleomargarine . . 190,000 
 
 28,040,000 
 
 ^ Actual. The returns for 1896-97 show some increase, but as 
 it is an all-round one, the proisortions will not vary appreciably. 
 - Actual at S5 to £. 
 3 Budget estimate at fcs. 25 to £. 
 * Budget estimate at M 20 to £.
 
 REVENUE FROM COMMODITIES 239 
 
 France— Alcoholic and otlier liquors . 
 
 £1S,G00,000 
 
 
 Tobacco Eegie 
 
 15,250,000 
 
 
 Sugar, Salt, etc. . 
 
 8,650,000 
 
 
 Matches and Gunpowder 
 
 1,600,000 
 
 
 
 
 £44,100,000 
 
 Germany — Spirits and Beer 
 
 £7,140,000 
 
 
 Sugar and Salt . 
 
 6,230,000 
 
 
 Tobacco . . . . 
 
 560,000 
 
 13,930,000 
 
 Now we will contrast these sums raised from 
 the taxation of commodities, with the total revenues 
 of the respective countries — 
 
 
 
 
 Per- 
 centage. 
 
 Excluding 
 
 Postal 
 Revenue. 
 
 Great Britain, 
 
 . £48,570,000 
 
 £109,530,000 
 
 44% 
 
 51 % 
 
 United States, 
 
 60,040,000 
 
 81,900,000 
 
 73% 
 
 92% 
 
 France, 
 
 60,500,000 
 
 133,250,000 
 
 45% 
 
 49 % 
 
 Germany, . 
 
 31,730,000 
 
 62,770,000 
 
 51 % 
 
 52% 
 
 Great Britain, the United States, and France 
 each include the gross revenue received from postal 
 and telegraph service, amounting respectively to 
 £14,300,000, £16,500,000 (the telegraphs are 
 private property in the United States, and ai'e 
 therefore not included), and £9,000,000 (inclusive 
 of telephones). Germany merely brings into account 
 the net revenue out of gross receipts amounting to 
 £14,700,000. In the first three cases therefore 
 the percentage of indirect to total taxation is 
 materially increased ; in fact, in the United States 
 practically the wliole revenue is derived from com- 
 modities. 
 
 Most reasonable men will concede that the 
 principal burden of taxation ought to fill on the
 
 2 40 TARIFF AND TAXATION 
 
 sliouldt'i's of tlu' wealthy, and tliat labour and 
 industry sliould be as free as possible, and only 
 contribute on acquired results. We will endeavour 
 to find out to what extent this operates in the four 
 countries we are dealing with. 
 
 The simplicity of British taxation enables us to 
 arrive at fairly definite conclusions. There are but 
 few commodities liable to duty, and the direct taxes 
 are limited in number, so that if we can draw an 
 equitable line between poor and rich, we may be 
 able to apportion the respective payments of each. 
 
 A large proportion of the w^ealth and annual 
 income of Great Britain is drawn from trade and 
 industry, and by means of the income-tax returns 
 we can form an estimate of the number of rich 
 people in the kingdom. An annual return is made 
 of the number of j^ersons assessed under Schedules 
 D and E, which include all profits earned in trades 
 and professions, and incomes received from employ- 
 ment and pensions. Parliament in its wisdom has 
 decreed that those in receipt of an income of 
 £400 a year, or under, shall be entitled to a rebate 
 of £160, and at this point we may fairly draw the 
 line. It would of course be absurd to class people 
 in receipt of £400 per annum as poor, many such, 
 where they have only themselves, or at the most 
 one or two others to support, may live on this 
 amount in comparative luxury, and might w^ell 
 afford a liberal contribution to taxation. But most 
 people with incomes below this cannot afford a
 
 BRITISH WEALTH AND POVERTY 241 
 
 considerable outlay in any one direction, and a 
 certain amount of discretion is necessary in their 
 expenditure. An additional payment, say in taxa- 
 tion, precludes them making an outlay on some- 
 thing else, and in this sense at least taxation 
 becomes an important question. 
 
 On the other hand, there are many persons 
 with incomes of over £400 per annum who find it 
 difficult to make ends meet. Their families may 
 be large and expensive, and they may be compelled 
 to maintain a position in society which strains 
 their resources to the utmost. They are conse- 
 quently less able to bear taxation than others in 
 the enjoyment of smaller incomes, but we may here 
 reasonably set one off against the other, and class 
 all under £400 as j^oor, and all over as rich. The 
 former will include the vast majority of the middle 
 class of the community. 
 
 For the year ending 5th April 1895,^ there 
 w^ere assessed to the income tax in the United 
 Kingdom of Great Britain and Ireland some G4,000 
 
 1 This was the culminating year of a i^rolonged and severe trade 
 depression, and the number of persons assessed at £400 per annum 
 and upwards fell off to the extent of 10,000, showing how dependent 
 the country is for its income on good trade. The figures under 
 Schedule E were more extraordinary still, and exhibited the heavy 
 fall that had occurred in the market value of clerical and similar 
 highly paid labour. In 1894, upwards of 32,500 persons repcjrted 
 themselves as in the enjoyment of salaries or pensions of £400 jjcr 
 annum and upwards, a year later the number had fallen to less than 
 19,000. This represented a drop of upwards of £6,000,000, against 
 which however there was, by way of set off, an increase in assessable 
 salaries of under £400 per annum of nearly £2,.50n,O00. 
 
 16
 
 242 TARIFF AND TAXATION 
 
 persons in receipt of £400 per aniunu and upwards 
 under Schedule D, and 19,000 more under Schedule 
 E, or too-ether 83,000 persons. They contributed 
 about £4,000,000 out of a total of £15,000,000, 
 but for all that they constitute the majority of the 
 income tax payers of the kingdom. The remainder 
 of Schedule D, for instance, contributed to the 
 revenue upwards of £5,000,000 on railway divi- 
 dends, and profits from foreign, colonial, and British 
 joint-stock undertakings, the great bulk of which 
 is drawn by the trading and professional classes. 
 Schedule C, under which another £1,200,000 was 
 contributed, also falls largely upon this class, both 
 directly and indirectly, as it represents dividends 
 from consols and any other Government stocks and 
 annuities, large amounts of which are held by 
 banks, insurance companies, and other undertak- 
 ings assessed under Schedule D. It owns too a 
 great deal of property, both in land and houses, 
 upon which the tax is paid under other schedules 
 for which it is imjDossible to make any return 
 of persons. There are numerous incomes, both 
 large and small, enjoyed by persons not in any 
 trade, profession, or employment ; but if we state 
 the number in receipt of over £400 at another 
 40,000, we are probably going beyond the mark. 
 On the other hand, the 64,000 assessments referred 
 to, included firms and private companies, embrac- 
 ing in many instances more than one individual. If 
 then Ave say that the number of individuals in the
 
 DISTRIBUTION OF TAXATION 243 
 
 United Kingdom in the enjoyment of an annual 
 income of £400 and upwards is 150,000, we are 
 probably not very far wrong. Possibly in years of 
 great trade activity there may be ten or even 
 twenty per cent. more. 
 
 These 150,000 persons have many others depen- 
 dent on them. A family is generally supposed to 
 average five persons, but in the case of rich people 
 there are invariably a number of relations desirous 
 of being included within the charmed circle. But 
 again, many such families include more than one 
 income tax payer. As if I err at all, I am desirous 
 of doing so by over- rather than under- estimat- 
 ing the numbers of the wealthy, I will assume 
 that each income tax payer represents nine others 
 besides himself, from the new-born babe to the cen- 
 tenarian, and that consequently the wealthy people 
 in the kingdom in the classification I have adopted 
 number 1,500,000. As the total population is now 
 about 40,000,000, that would leave 38,500,000 to 
 come under the head of the other classification of 
 poor, that is from the pauper to the recipient of a 
 competency of £400 per annum. The percentages 
 are 3f and 96^ resj^ectively. 
 
 I will now allocate in tabular form the 
 £92,550,000 actually i-aised by taxation in 1895-9G 
 between these two classes, and then state the reasons 
 which have mduced me to divide the total amounts 
 in this particular Avay : —
 
 244 
 
 TARIFF AND TAXATION 
 
 
 
 
 Rich. 
 
 Poor. 
 
 Imported 
 
 Spirits — lium, . 
 
 £50,000 
 
 £2,030,000 
 
 
 Brandy, 
 
 500.000 
 
 875,000 
 
 
 Gin, 
 
 10,000 
 
 160,000 
 
 
 Unenumerated 
 
 50,000 
 
 700,000 
 
 
 Liqueurs and per- 
 
 
 
 fumed Spirits 
 
 35,000 
 
 
 British Spirits, 
 
 800,000 
 
 15,580,000 
 
 Beer, . 
 
 
 300,000 
 
 10,850,000 
 
 "Wine, . 
 
 
 1,000,000 
 
 250,000 
 
 Cigars, . 
 
 
 450,000 
 
 100,000 
 
 Tobacco, 
 
 
 350,000 
 
 9,850,000 
 
 Customs 
 
 Sundries, and '\^'are 
 
 
 
 house Charges, 
 
 25,000 
 
 50,000 
 
 1 Licences 
 
 — Brewers, Distillers, 
 and Tobacco ]\Ianu- 
 
 
 
 
 facturers, . 
 
 35,000 
 
 
 
 Liquor Eetailers, . 
 
 1,500,000 
 
 500,000 
 
 
 Tobacco Eetailers, 
 
 10,000 
 
 70,000 
 
 
 Auctioneers, Pawn- 
 
 
 
 
 brokers, and Plate 
 
 
 
 
 Dealers, . 
 
 150,000 
 
 30,000 
 
 
 Hawkers, 
 
 
 20,000 
 
 
 Gun, Game, Servants, 
 
 
 
 
 Carriages, Armorial 
 
 
 
 
 Bearings, eic, . ■ . 
 
 930,000 
 
 80,000 
 
 
 Dog, . . . . 
 
 100,000 
 
 400,000 
 
 Tea, . 
 
 
 150,000 
 
 3,600,000 
 
 Coffee, Cocoa, and Chicory, . 
 
 175,000 
 
 175,000 
 
 Dried Fruits, . . . . 
 
 200,000 
 
 200,000 
 
 Estate,Legacy,& Succession Duties 
 
 , 13,600,000 
 
 500,000 
 
 Income Tax, . . . . 
 
 14,000,000 
 
 2,000,000 
 
 Land Tax 
 
 
 1,000,000 
 
 20,000 
 
 Stamps, 
 
 
 7,000,000 
 
 340,000 
 
 House Duty, . . . . 
 
 1,000,000 
 
 490,000 
 
 Eailway Passenger Duty, 
 
 L'GOJ'JOO 
 
 
 £43,680,000 £48,870,000 
 
 ^ Practically the entire revenue derived from licences is devoted to 
 the relief of local taxation, the Imperial Exchequer having benefited 
 to the extent of less than £250,000 of the total.
 
 INCIDENCE ON RICH AND POOR 245 
 
 This is fairly equally divided, the proportions 
 being respectively ^1\ per cent, and 52^ per cent.; 
 that is, some 4 per cent, of the population pay 
 rather less than half the total taxation, and the 
 remainder is contributed by the other 96 per cent. 
 It is worth noting- that this 52^ per cent, 
 corresponds very closely with the 51 per cent, 
 derived from indirect taxation, as shown on 
 page 239. So that it may be said roughly that 
 the poor pay now all the indirect, the rich all 
 the direct taxes. 
 
 There can be no doubt that the 4 per cent, 
 possess more than half the accumulated wealth of 
 the kingdom ; a very large part of the 9 6 per 
 cent, has none at all, and lives simply from hand 
 to mouth. If Ave turn again for a moment to 
 income tax assessments, we find that about 570,000 
 })ersons were scheduled under D and E, as in 
 receipt of incomes between £160 and £400, and 
 the great majority of all such are in trade or 
 employment. At the outside therefore this class 
 will embrace and represent 5,000,000 of people, 
 leaving considerably over 30,000,000 of the popuhi- 
 tion receiving or dependent on £3 per week and 
 under, and it is not easy to accumulate wealth 
 on that. \n strict proportion to their means, 
 the rich are still under taxed, Ijut this is 
 less open to criticism in view oP the fact tliat 
 what is paid hy the poor is princi])ally on beer and- 
 spirits. Tlie inecpiality may be rectified to some
 
 246 TARIFF AND TAXATION 
 
 extent by the reduction of the tobacco duty 
 a heady advocated. 
 
 Reverting now to the table, rum is essentially 
 a poor man's drink, and I have charged barely 3 
 per cent, in the first column. Brandy, on the other 
 hand, is an expensive liquor, and of the two and 
 a half million gallons consumed, I have placed the 
 large proportion of about one million to the account 
 of the rich. Foreign gin occupies much the same 
 position as rum, but the consumption of it is trifling. 
 The unenumerated is principally cheap stuff", worth 
 less than a shilling a gallon, imported from 
 Germany, but sweetened spirits and liqueurs are 
 specialities of the wealthy. 
 
 A man does not as a rule indulge more largely 
 in alcoholic drinks because he is wealthy, his greater 
 responsibilities and probably superior education 
 teach him rather to be abstemious. In charsfino* 
 under 4 per cent, of the population then with 
 5 per cent, of the spirit duties, I am making 
 allowance for hospitality they may extend to poorer 
 friends and neighbours, and not supposing that 
 they themselves consume more than a fair average. 
 Wine and cigars however are such decided 
 luxuries, that I have charged them with by far the 
 larger portion, though cheap wine, and particularly 
 cheap cigars, are indulged in by the poorer section. 
 
 Tobacco, on the other hand, is the refuge of the 
 poor, and in allowing the 150,000 highly rated income 
 tax payers some 12 pounds per annum in addition
 
 ANALYSES OF TAXES 247 
 
 to their cigars, I am probably providing them with 
 as much as they ever smoke. Of the large number 
 of retail licences throughout the kingdom, I have 
 assumed that three-fourths of the payments are 
 drawn from wealthy brewers, distillers, and property 
 owners, or that the tenants are themselves men of 
 substance. These fees are individually too small to 
 be transferred to, or recouped from, the consumer. 
 
 Brewers, distillers, and tobacco manufacturers 
 are invariably wealthy men ; the great majority 
 of tobacco retailers are poor ones. Gun, game, and 
 carriage licences are indulged in almost exclusively 
 by the rich, but a few of the poorer class own 
 guns, and there is a licence on hackney carriages 
 of 15s., the whole of which is not paid by wealthy 
 car proprietors. The rich own more dogs in pro- 
 portion to the poor, but the canine friends of the 
 latter are very numerous. 
 
 For reasons which I have stated elsewhere, the 
 tea duty is likely to be paid in somewhat greater 
 proportion by the larger than by the smaller class, 
 but I have contented myself by dividing it in their 
 respective ratios. The remaining duties on con- 
 sumables I have distributed ec[ually, as with the 
 exception of currants, on which the charge is 
 only 2s. per cwt., they are only very sparingly 
 used by the poorer classes. 
 
 Passing now to the direct taxes, we deal fii-st 
 with the estate or death duties. Tliese were 
 instituted specially as a charge on accunnilated
 
 --4S TARIFF AND TAXATION 
 
 wealth, and payiiients on small bequests such as 
 the poorer class are likel}'' to make are calculated 
 upon a very low percentage. The estates of 
 deceased persons under £300 pay a nominal 
 registration only, from £300 to £500, thh'ty to fifty 
 shillings, and from £500 to £1000, two per cent. 
 Most individuals possessing private estates of much 
 over £1000, draw very rapidly towards theclass enjoy- 
 ing over £400 per annum. On the other hand, small 
 legacies are often received, which, owning to distance 
 or absence of consanguinity, pay a heavy rate. 
 The £500,000 placed in the second column will 
 represent a very large capital sum passing every 
 year in small amounts by death. 
 
 With the income tax we have ag-ain reliable 
 figures to work upon. The 570,000 persons assessed 
 at under £400 per annum, actually paid £1,550,000, 
 and they undoubtedly constitute the great majority 
 of all w^ho are liable. I have added about a third to 
 the amount for those who pay under other schedules 
 either as agriculturists, or on investments and real 
 estate. 
 
 Land is not often owned by poor people, and I 
 have placed a merely nominal sum of the tax 
 against that class. Great numbers of them likewise 
 escape house duty, while those of moderate means 
 pay on a more moderate scale. Mansions, especially 
 if situated in the country, escape far more lightly 
 than they are entitled to, otherwise this tax would 
 be much more productive.
 
 PRINCIPLE OF BRITISH TAXATION 249 
 
 Stamps cover a very wide area, but the bulk of 
 the revenue is collected from transactions more 
 germane to the wealthy than the poor, or even the 
 well-to-do. Bill stamps, for instance, form a very 
 small tax on commerce, far too insignificant to be 
 passed on, and besides, foreigners are charged with 
 a considerable projDortion of it on foreign bills of 
 exchange. The Stock Exchange and public com- 
 panies contribute largely, and transfers of real 
 estate account for much more. I have charged 
 but 5 per cent, therefore to one class, and the 
 remainder to the smaller one. 
 
 These divisions are, of course, more or less 
 despotic, but if they err in occasional instances to the 
 extent of 5 or even 10 per cent, from the real facts, 
 they still present us with a fair idea of the incidence 
 of British taxation. It has been the consistenb 
 policy of successive Governments, for at least two 
 generations, to lighten the burdens on the poorer 
 classes, so far as they are not connected \\\\\\ the 
 drink traffic, and to transfer them to the wealthier. 
 The first serious departure from this was made by 
 the Agricultural Bating Act of 1896, for though 
 there are many persons connected with the landed as 
 with every other interest requiring relief, this Act 
 dealt it out in inverse I'atio to as it was needed. 
 The reversal, or even the suspension ofllie principle 
 is however only temporary, and the political l);irty 
 which has been mainly responsible for taxation 
 reform in the past will one day again be in the
 
 2 50 TARIFF AND TAXATION 
 
 ascendant, and able to cany It In directions where 
 there is still ample room for it to work. 
 
 In the meantime, the vast majority of the 
 British population have but little to complain of on 
 the score of taxation. A reference to the table 
 will Ije convincing, that a man who is satisfied 
 with mere existence need pay nothing at all. It is 
 only when he begins to grope after comforts, or to 
 plunge into dissipation, that he feels the hand of the 
 tax-gatherer intruding more or less deeply into his 
 pocket. 
 
 Far difierent is it in the United States of 
 America, where an individual desirous of living in 
 any kind of decency finds it almost impossible to 
 escape the net, or to creep through the meshes when 
 he is in. Practically the entire revenue is collected 
 from taxation on commodities. The amount 
 received from customs and internal revenue was 
 upwards of $306,000,000. Included in the latter 
 however are the licence duties paid by distillers, 
 brewers, and liquor dealers, amounting to $6,000,000, 
 and a similar tax upon oleomargarine of $265,000. 
 This is the nearest approach to a personal tax, as 
 the amount is too small to levy on consumers, the 
 licence of a retailer costing only $20 to $45, and of 
 the bioffifest rectifiers, 8200. Consular and other 
 fees amounting to another $3,000,000 are invariably 
 added to invoices, and become as much a charge 
 on the consumer as the duty. $3,000,000 profits 
 on coinage, $2,000,000 from sinking fund on Pacific
 
 UNITED STATES TAXATION 251 
 
 railroads, and $1,000,000 from the sale of public 
 lands, cannot be regarded as taxation at all, 
 and the $1,750,000 derived from a tax on 
 national banks can hardly be called direct. 
 Nor do the few remaininor and insignificant 
 items fall under that heading either. In the 
 previous year's return of internal revenue there 
 was, it is true, an item of $77,130.90 for income 
 tax, but the Supreme Court j)romptly put the 
 extinguisher on that, and the only practical attempt 
 to tax acquired wealth was thus for the time 
 defeated. 
 
 It is utterly impossible to tabulate and analyse 
 the incidence of American taxation as we have done 
 British. It miofht not be difficult to allocate the 
 $12,000,000 paid on silks, or even the $22,500,000 
 on woollen manufactures. Nor, on the other hand, 
 would it require much effort to distribute the 
 $30,000,000 on sugar ; but on what principle is 
 the $4,000,000 on chemicals or on earthenware, or 
 the $10,000,000 on iron and steel, to be divided ? 
 It is necessary therefore to proceed on more 
 general principles. We may however divide the 
 population of the United States into two classes 
 much in the same way as with the United 
 Kingdom, drawing the line perha])s a little higher 
 up, owing to the greater cost of living, and making 
 it $2500 per annmn instead of £400. The jx-r- 
 centages falling on either sidi^ would pi()l)al)lv n<>t 
 now greatly differ.
 
 252 TARIFF AND TAXATION 
 
 Were we to distribute the taxation between the 
 two classes on the basis apparent in the United 
 Kingdom — namely, the direct to the rich, and the 
 indirect to the j^oor — we should arrive at the start- 
 ling result that the latter provided fully 90 per cent, 
 of the revenue, and the former nothing at all. 
 
 It may be fairly conceded however that some of 
 the $160,000,000 of customs revenue was paid by 
 the well-to-do and the wealthy. Imported articles 
 are, as a rule, too expensive for the poor to indulge in, 
 as the extravagant duties, ^particularly where they 
 are specific and not ad valoron, shut out most of 
 the cheaper goods, which the doinestic manufacturer 
 is prepared to supply at just a trifle less. But the 
 duties actually paid at the custom house form an 
 infinitesimal part of the taxation imposed on the 
 American people. It may be that the small rich 
 class contributes about half as much as the large 
 poor one, against about equal proportion in the 
 iTnited Kingdom, but it certainly recoups itself 
 many times over out of the protection afforded it. 
 
 The internal revenue of $146,000,000, derived 
 almost entirely from beer, sjDirits, and tobacco, falls 
 like similar taxes in England, principally upon 
 the poorer class. These duties are lower, in 
 some instances very much lower — on beer, $1 per 
 barrel of 31 gallons; on spirits, 81.10 per gallon 
 against 10s. 6d.; on tobacco, 6 cents per pound 
 against 3s. 2d.; on cigars, 83 per 1000, taking 80 
 to the pound, equal to Is. per pound against 5s.;
 
 WHERE TAXATION FALLS 253 
 
 and on cigarettes weighing under 3 j^onnds per 
 1000, 50 cents. The consequence of these light 
 duties on tobacco and cigars is that the revenue 
 received is almost equally divided, and the number 
 of cigars and cheroots which paid the $3 rate was 
 4,237,755,943, and of cigarettes at 50 cents 
 4,042,391,640, the manufacture of which must have 
 afforded employment to an enormous number of 
 hands compared with the similar industry in Great 
 Britain. 
 
 But having said this much about the customs 
 revenue, it is about all there is in its favour. It is 
 not absolutely comjDulsory, but it is the millionaire, 
 and not the pauper, who can escape it if he will. 
 The former may carefully eschew imported articles, 
 and when he wants an outfit go to England for it, 
 and pay his expenses out of the difference in the 
 cost. He may confine his drinks to tea and coffee, 
 and sweeten them witli Louisiana sugar, and may 
 otherwise evince his patriotism by using only 
 domestic goods when he cannot import foreign ones 
 as personal effects, and at the end of the year, when 
 he has contributed his mite to the national 
 exchequer, he will take $4.90 change out of a $5 
 bill. The workpeople he employs may neither 
 smoke nor drink nor purchase imported articles, 
 but they cannot go to England for their clothing. 
 They have consequently to i)ay the })rices 
 demanded by tlie liome manufacturers and 
 clothiers, which, as we discovered, would under
 
 2 54 TARIFF AND TAXATION 
 
 the M'Klnley Act have cost very much more than 
 abroad. Whenever a working man buys a suit of 
 clothes therefore, or his wife a new dress, he may 
 reckon that quite one-half of the amount is 
 taxation. Did the money go to support and carry 
 on the government of his country, there might 
 have been a little consolation in it, but it was 
 divided between the wool grower and the cloth 
 manufacturer, and helped to make one, if not both, 
 rich at his expense. 
 
 That is where taxation falls in the United 
 States, and its amount is incalculable. What is the 
 good of cheap tobacco, and cheap drinks, and free 
 tea and coflPee, if everything else a man touches is 
 taxed over and over again to its utmost capacity ? 
 For it is rarely a single tax on any one commodity. 
 As in clothing the wool is taxed, then the yarn, 
 and finally the cloth, so in other things, the com- 
 ponent parts which make them up have all to bear 
 their share. We saw how far-reaching the chemical 
 schedule was for instance, consequently most 
 thinofs into which chemicals enter are taxed throug'h 
 them. If any United States citizen is really 
 anxious to know how much a year he contributes 
 in this way, let him find out how much everything 
 he purchases, except ordinary foodstufis, would cost 
 in England, add 10 per cent, for legitimate 
 difference in price, and then deduct the total from 
 what he actually pays, and he will arrive at some- 
 thing like the result.
 
 COST OF COLLECTION 255 
 
 Some things of course, are rather cheaper, 
 particularly to the Western citizen. Breadstuffs 
 and animal food are obtainable at prime cost. 
 A well-known American ironmaster, a short time 
 ago addressed a letter to a London journal, in which 
 he referred to the cheap cost of living in the 
 United States, and claimed that a pound sterling 
 went further there in the purchase of necessaries 
 than in Great Britain, and singled out items of food 
 and drink which cost less. That is all very 
 well as far as the particular commodities are 
 concerned, but is poor consolation to the producers 
 of them. There was no mention made however of 
 sugar, enhanced to begin with by a 40 per cent, 
 duty, since raised to 75 per cent., and then by an 
 extravagant dividend for the Sugar Trust, nor did 
 he refer even to that natural product, so necessary in 
 so many households where neither gas nor electric 
 light can be turned on at will, petroleum, charged 
 for at any price his friends of the Standard 
 Oil Company like to fix. Clothing of course is not 
 food, neither are steel rails, and besides, the pool 
 only collapsed after the letter was written. 
 
 Nor have we yet exhausted the evils of the 
 system, for the cost of adiniiiistratioii is in ilscll' a 
 grievous burden on the revenues of the Ilcptibhc. 
 To collect $146,000,000 of internal taxation, with 
 its complex requirements of gangers, brewery, 
 distillery, and factory superintendents, and stamp 
 distributors cost just $4,000,000, but $14,000,000
 
 256 TARIFF AND TAXATION 
 
 more of customs revenue added over $3,000,000 to 
 the charge, and brought it up to nearly $7,250,000. 
 The total expenditure on the customs service is 
 returned as $17,969,000, and on internal revenue 
 $4,203,000, but these figures are inclusive of draw- 
 backs. The result is that the net i^evenue 
 received from both sources is about equal, the cost 
 of collection about double. 
 
 There are some most extraordinary details 
 connected with this. At Natchez in Mississippi, the 
 total revenue received in 1894-95 was $1.10. It took 
 two people to gather it in, and cost $500. The same 
 persons received their $500 for 1895-96, but on the 
 last day of the fiscal year they were still whistling 
 for the one dollar and ten cents. Two people 
 at Annapolis, in Maryland, bagged between them 
 in 1894-95, $28.45, and only charged $956.25 for 
 their trouble. No doubt out of consideration for 
 the fact that in 1895-96 they had no sport at all, 
 they reduced their demand to $825.75. Teche, in 
 Louisiana, however, enjoys the record, having had 
 expended upon it $2624.50 without collecting a 
 cent, though it is only fair to add that about 300 
 coastwise vessels touched at the jDort, and required 
 some official attention. There was a slight amount 
 of work at the other two of the same sort, but 
 Galena, in Illinois, and Paducah, in Kentucky, 
 each received $350 without apparently having done 
 a stroke of any sort to earn it. There were fifty 
 customs ports in whicli the aggregate duties did not
 
 UNITED STATES CUSTOMS DETAILS 257 
 
 reach $50,000, and there are innumerable instances 
 where the amount expended was far in excess of 
 that received. 
 
 New York is the great centre of the import trade, 
 and there the percentage was reduced to a minimum. 
 But 1932 persons were employed in dealing with the 
 revenue of $109,000,000. The officials of the cus- 
 tom houses in London and Liverpool occupy a few 
 moderate-sized apartments, and have plenty of 
 elbow-room. The New York staff, with their wives 
 and families, would found a colony which would 
 make German mouths water. The M'Kinley Act 
 provided for the apjDointment of nine appraisers at 
 an annual salary of $7000 each, whose duties, no 
 doubt, partly consist of superintending the counting 
 of threads in tissues and fabrics ; but to prevent so 
 splendid a piece of patronage being made the cause of 
 too much jobbery, it was stipulated that only five were 
 to be selected from one political party. The post is 
 no sinecure however, if we are to judge from the fact 
 that for the last financial year over 20,000 protests 
 were lodged by importers against the classification 
 of their goods, and on the 30th September 189n 
 there were no fewer than 43,420 cases awaiting 
 final decision, affecting some 200 classes of imports. 
 
 The manipulation of direct taxes for a like 
 amount would cost less than liaH'tlic nioiicv, as tlie 
 machinery is already largely in existenc(! for State 
 and municipal purposes. 
 
 And what has high protection resulted '\\\ '. IIj) 
 17
 
 258 TARIFF AND TAXATION 
 
 to ami iiK'lusive of the year 1890, there had been 
 for many years a constant surphis of revenue over 
 expenditure, and the national debt had undergone 
 ra]iid diminution. It was necessary to put an end 
 to that, and the ordinary way of doing it was to 
 reduce taxation. That was not the protectionist's 
 method of going about it however. In the first 
 place, the country was searched high and low for 
 the sisters, the cousins, and the aunts, of anyone 
 who had supplied the federal troops with groceries 
 during the civil war, and when found they were re- 
 warded for the patriotism of their relatives by a more 
 or less substantial pension. In a country where every- 
 body is supposed to work and earn their living, the 
 pensionlist for 1894-95 amounted to $141,395,228.87, 
 and for 1895-96 $139,434,000.98, nearly half the 
 taxation of the country. The recipients of over 
 $100,000,000 are classed simply as " invalids," a very 
 convenient designation, which might easily be made 
 applicable to fully 99 per cent, of the human race. 
 
 The next process was to pass an " Act for 
 reducing the revenue," but had the tariff of 1890 
 been termed " An Act to create annual deficits, 
 and increase the national debt," the United States 
 Congress would have had to be congratulated on 
 the most successful legislation it ever achieved. 
 The $85,000,000^ surplus of 1889-90 dwindled to 
 
 ^ The gross surpluses were larger still, the expenditure including 
 tlie premiums paid on redeemed government bonds. The actual differ- 
 ence between ordinary revenue and expenditure this particular year 
 was §105,000,000.
 
 THE NATIONAL FINANCES 259 
 
 $27,000,000 in 1890-91, to $10,000,000 in 1891-92, 
 to $2,500,000 in 1892-93, and then finally dis- 
 appeared. The results for the succeeding years 
 were— 
 
 1893-94 . . . $69,803,260 deficit 
 
 1894-95 . . . 42,805,223 „ 
 
 1895-96 . . . 25,203,246 „ 
 
 $137,811,729 
 
 while for 1896-97 there will be a further one of 
 many million dollars,^ so that in four years, budget 
 deficiencies will have been created amountincr to 
 
 o 
 
 some thirty to thirty-five millions sterling, without 
 any practical attempt to stop the drain. 
 
 Such a state of things would be a disgrace to a 
 semi-bankrupt South American Republic, how much 
 more so to one of the richest nations on earth, count- 
 ing seventy millions of people, and requiring not 
 much more than half the revenue of many European 
 countries with only half the population. Nor will 
 posterity record any blame against the administra- 
 tion of ex-President Cleveland, during whose term 
 of office this happened. It struggled manfully to 
 impose a just and equitable tax to cover the deficit, 
 but was defeated by those who will live in America, 
 make money in America, accept all ilic jirotection 
 
 ' In consequence of tlie enorinouB sums jiaid in ciistnnis <lul ios in 
 order to forestall the new tarid', the delicit ])romises to he under 
 J$20,000,000 against the original estimate of §01,500,000. Wlmt in- 
 fluence this will have on the finances of 1897-08 remains to he seen.
 
 26o TARIFF AND TAXATION 
 
 the American Government afFords to life and pro- 
 perty, and then resolutely refuse to contribute 
 directly a cent towards the cost. Besides, no 
 stretch of the imagination can bring the year 
 1893-94, when the greatest deficit occurred, under 
 the Wilson Tariff, which only came into operation 
 on the 28th August of the latter year. The forces 
 which led to the disaster had been steadily 
 accumulating, and it was only the old story of one 
 man sowing the wind, and leaving his successor to 
 reap the whirlwind. And now, almost identically 
 the same Act, enacted in 1890 to reduce the 
 revenue, is to be re-enacted in 1897 to increase it. 
 AVe have had the result in practice, and no theory 
 is ever likely to reverse it. 
 
 The moment w^e touch the subject of French 
 taxation, we stand in amazement and awe at its 
 amount as well as its ramifications. The Budo-et 
 
 o 
 
 Estimate for 1897 is fcs. 3,331,902,951, or at 25 
 francs to the £ sterling £133,276,118, only a 
 trifling portion of which is derived from sources 
 other than taxation. No wonder the French 
 people groan under the weight, though so far they 
 have shown no signs of rebellion, and their pros- 
 perity is marvellous considering the absence of 
 growth in the population. 
 
 The principal business of a French Minister of 
 Finance is naturally to invent new taxes, and not 
 to remit old ones. The laws under w^hich the 
 revenue is collected are consequently innumerable,.
 
 FRENCH TAXATION 261 
 
 and incredible though it may appear, money is still 
 gathered into the Treasury under edicts passed 
 during the E-eign of Terror a century ago. One 
 item is levied, for instance, under the law 27 Ven- 
 demiaire an II., another under those of 13 Fructidor 
 an v., 19 Brumaire an VI., and 9 Frimaire an VII., 
 a third under 22 Frimaire an VII., and 22 Ventose 
 an VII. , and so on. Indeed there is scarcely a year 
 since the great upheaval of 1789 which lias not 
 provided fiscal legislation still operative. It can 
 well be imagined therefore what a complicated 
 machine French taxation is, and how it permeates 
 the social and political system of the country and 
 people. 
 
 The recapitulation of the anticipated budget 
 receipts gives the income as follows : — 
 
 Taxes and other revenues Fcs.2,497,403,325 say £100,000,000 
 
 State monopolies 
 
 State domains and forests 
 
 Miscellaneous receipts 
 
 Exceptional receipts 
 
 Revenue in repayment of 
 
 expenditure, or for 
 
 local purposes 
 
 As these figures will convey little or no idea as 
 to how the money is raised, I have for purposes of 
 comparison with taxation in England prepared the 
 following table : — 
 
 1 Totals will vary slightly where the English equivalents arrived 
 at hy difTerent methods of distribution are given in even money. 
 
 658,499,52-t 
 
 26,350,000 
 
 50,620,750 
 
 2,000,000 
 
 57,320,535 
 
 2,300,000 
 
 205,000 
 
 10,000 
 
 07,793,817 
 
 2,700,000 
 
 Fes. 3,331,902,951 
 
 „ £133,300,0001
 
 262 
 
 TARIFF AND TAXATION 
 
 DIRECT TAXES. 
 
 Land occnpiod by liousos caiul 
 buildings 
 
 Lauded estate 
 
 Property in Mortmain, an( 
 mine royalties . 
 
 Personal property, and door 
 and window tax 
 
 Income tax on dividends, etc 
 
 Trade licence tax 
 
 Transfers of real estate 
 
 Transfers of personal estate 
 
 Property dealt with judiciallj 
 or extra-judicially by way 
 of mortgage hypotheca- 
 tion, etc. 
 
 Life settlements and donations 
 
 Death duties 
 
 Stamp duties on insurance 
 and transport contracts, 
 cheques, receipts, and 
 business documents and 
 securities 
 
 Bourse tax on contracts 
 
 Horse, mule, and carriage tax 
 
 Dog tax 
 
 P)icycles, billiards, and clubs 
 
 Hunting licences 
 
 Drink licences 
 
 Military tax . 
 
 Verification of weights, 
 measures, etc. . 
 
 Sundry excise dues and 
 licences . 
 
 I'R.VNCK. UNITED KINC!DOM.(') 
 
 £3,200,000 
 4,800,000 
 
 370,000 
 
 0,000,000 
 2,630,000 
 5,000,000 
 5,700,000 
 2,400,000 
 
 (2) I £7,500,000 
 
 11,800,000 
 
 4,500,000 
 900,000 
 
 7,750,000 
 
 . 4,200,000 
 
 [ 2,500,000 C^) 
 [ 11,200,0000 
 
 6,750,000 
 
 2,650,000 
 
 350,000 
 
 150,000 
 
 500,000 
 
 500,000 
 
 
 500,000 
 
 200,000 
 
 
 300,000 
 
 300,000 
 
 550,000 
 
 2,000,000 
 
 200,000 
 
 ... 
 
 200,000 
 
 
 1,475,000 
 
 550,000 
 
 £53,775,000 £43,850,000
 
 so UR CES OF FRENCH AND BRITISH RE VENUE 263 
 
 INDIRECT TAXES. FRANCE. UNITED KINGDOM. 
 
 Customs, statistical, and navi- \ 
 
 gation dues . £16,400,000 - £21,750,000 
 
 Proceeds of tobacco monopoly 15,250,000 (")j 
 
 Sugar tax (after deducting 
 
 bounties) . . 7,750,000 
 
 Match and gunpowder mon- 
 opolies . . . 1,600,000 
 
 Salt, oils, candles, and vinegar 900,000 
 
 Alcoholic liquors and 
 
 beverages . . 18,600,000 28,400,000 
 
 Taxes on locomotion . 2,275,000 250,000 
 
 Playing cards . . 150,000 20,000 
 
 £62,925,000 £50,420 ,000 
 
 Postal and telegraph service . £8,600,000 £15,180,000 
 
 Telephone . . . 400,000 
 
 Ptailway receipts . . 440,000 
 
 Domains and forests . 2,030,000 420,000 
 
 Miscellaneous . . 2,400,000 2,500,000 
 
 Eeimbursement of expenditure 2,700,000 
 
 £16,570,000 £18,100,000 
 
 Total Ptevenue £133,270,000 £112,370,000 
 
 Grants in aid of local taxation . . . 9,000,000 
 
 Net estimated national 
 
 revenue . £13 3,270,00 £103,370,000 
 
 (') Based on Budget estimates 1897-98. (2) These are the State 
 proportions only. The gross produce is nearly twice the amount, the 
 difference, together with the octroi duties, constituting the main part 
 of local taxation. ("') Land Tax, Inhabited House Duty and Income 
 Tax, schedules A and B. (•*) Income Tax, schedules C, I), and E, 
 (investments, trades, professions, and employments). (■'") lieal estate. 
 ('') Personal estate. (') Cost of material and labour must be deducted 
 to arrive at net taxation ; upon a similar gross return in IHOr) the 
 actual profit of the rajir. was £12,500,000. («) Inclusive of £7r.(),()0(» 
 interest Sue/ Canal shares and advances to Egyi)tian (Jovernment.
 
 264 TARIFF AND TAXATION 
 
 As tills is not primarily a work on taxation, 
 the figures for the United Kingdom require no 
 comment at all, and those for France very little. 
 In its licences to traders, the French Government 
 endeavours to carry out its policy of protection for 
 the small as well as the great, and does not, like 
 that of the United States, favour the huge mon- 
 opolies, A separate tax is charged on every group 
 of articles dealt in, rental and number of em- 
 ployees are likewise taken into account, so that the 
 universal provider gets in this resj^ect no advantage 
 over the small draper or grocer who confines him- 
 self to his own trade. The two great retail 
 establishments in Paris, known to every frequenter 
 of the city, contribute between them something 
 like £70,000 per annum to this fund. 
 
 In the raising of fresh revenue, increased 
 protective duties are out of the question, as they 
 would tend to diminish imports and reduce the 
 taxation already derived from them. Of late years 
 therefore French Ministers of Finance have paid 
 increased attention to securities dealt in on the 
 Bourse, and a great outcry has been raised in 
 consequence. Bourse operators complain that in 
 one way and another they now contribute at 
 least £6,000,000 per annum to the National Ex- 
 chequer, though probably this is not excessive 
 when compared with the United Kingdom. It is 
 largely a tax, equal to about 4 per cent., on profits 
 as well as dividends, — for instance, when railway
 
 SOME FRENCH TAXES 265 
 
 obligations or shares are drawn for payment, the 
 Treasury claims its percentage on the difference 
 between the original price of issue and the par 
 value. It is probably the constant increase of 
 these taxes rather than their aggregate amount 
 which causes friction and annoyance. 
 
 Though the manufacture and sale of tobacco 
 is a government monopoly, the tax per pound is 
 somewhat less than on the other side of the 
 Channel. But the quality is so inferior, that 
 foreigners accustomed to smoke the product of 
 other countries rebel against using it. It is like- 
 wise retailed under State regulations and super- 
 vision, and the vendors are practically civil servants, 
 who retain during good behaviour a position 
 regarded by those fortunate enough to secure it as 
 a pension for life. 
 
 The tax on locomotion is a levy on fast 
 trains and other conveyances, whether for goods or 
 passengers. Those content to travel or to send their 
 merchandise by pe^f^e vitesse esca})e it, — it is the 
 express, or grancle vitesse, that provides this revenue. 
 
 To those acquainted with the political history 
 of France, the smalhiess of the revenue derived 
 from State domains must be a surprise, wlicii it is 
 borne in mind that at one time and another, nearly 
 the whole of tlie landc^d estate of the country lias 
 been confiscated. Yet it is nearly all back again 
 in private hands, and in no country in the world are 
 the rights of private property held more sacred.
 
 266 TARIFF AND TAXATION 
 
 The comnmnes also possess some landed estate, but 
 it consists principally of forests. 
 
 The other side of the account does not really 
 fall within our province, but having discovered how 
 the revenue is raised, it will be interesting to gain 
 some idea of its expenditure in the various depart- 
 ments of government to which it is allotted. 
 We can do this in two ways, first by applying it 
 to its actual purposes, and second, to the various 
 ministries responsible for it. 
 
 I. 
 
 (1) Ministry of Finance, 
 
 for Public Debt, 
 
 pensions, etc. . Fes. 1,250,.331,061 say £50,000,000 
 
 (2) Ministry of Finance, 
 
 for maintenance of 
 Service of President, 
 Senate, and Cham- 
 ber of Deputies . 13,183,720 „ 525,000 
 
 (3) Departmental Ser- 
 
 vices . . 1,635,756.820 „ 65,430,000 
 
 (4) Cost of administra- 
 
 tion of taxes and 
 other public rev- 
 enues . . 374,017,993 „ 15,000,000 
 
 (5) Eeimbursements, re- 
 
 stitutions & bounties 41,069,162 „ 1,600,000 
 
 Fes. 3,314,358,756 £132,555,000 
 
 II. 
 
 (1) Ministry of Finance Fes. 1,508,047,807 say £60,350,000 
 
 (2) „ Justice 
 
 and Public Worship 78,055,086 „ 3,120,000 
 
 (3) Ministry of Foreign 
 
 Affairs . . 15,049,800 „ 600,000
 
 FRENCH NATJONAL EXPENDITURE 267 
 
 (4) Ministry of Interior Fes. 76,629,262 „ £3,060,000 
 
 (5) „ War . 622,551,397 „ 24,900,000 
 
 (6) „ Marine. 258,167,273 „ 10,330,000 
 
 (7) „ Public 
 Instruction and 
 
 Fine Arts . . 211,675,532 „ 8,450,000 
 
 (8) Ministry of Com- 
 
 merce and Industry 26,624,244 „ 1,060,000 
 
 Posts and Telegraphs 175,950,347 „ 7,050,000 
 
 (9) Ministry of Colonies 83,874,840 „ 3,350,000 
 
 (10) „ Agriculture 28,822,173 „ 1,150,000 
 Domains and Forests 13,778,745 „ 550,000 
 
 (11) Ministry of Public 
 
 Works . . 214,532,250 „ 8,580,000 
 
 F es. 3,314,358,756 £132,550,000 
 
 Neither of these divisions afford us a very 
 clear idea of how this vast sum of money is ex- 
 pended, as comparisons with similar departments 
 of the British Government would be altogether 
 misleading, because both the duties and the expen- 
 diture involved are different. The pension list, for 
 instance, amounting to over £9,000,000 in France, 
 is under the Ministry of Finance, in England most 
 of it is accounted for in the separate services. 
 In the army and navy this is quite proper, because 
 most of those receivinof allowances constitute a 
 reserve force, which would become active if needed. 
 On the other hand, in the revenue departments and 
 civil service, pensioners are not likely to be called 
 upon for furtlier dutv, and the inclusion of tlicii' 
 allowances makes the cost of working tlie depart- 
 ments in one sense appear greater than it really is.
 
 26S TARIFF AND TAXATION. 
 
 Again, the Minister of Public Works in France 
 is concerned almost entirely with the management 
 of roads, bridges, rivers, canals, and harbours, work 
 undertaken and paid for in England by local author- 
 ities. Half the expenditure of the department, 
 moreover, is for payment of guaranteed interest and 
 annuities to railway companies. The function of the 
 corresponding minister in England is the care of all 
 I'oyal and government buildings, the cost of which 
 in France is borne by the separate departments 
 instead of being lumped together. The same 
 remark applies to all stationery used. 
 
 The administration of justice in the two coun- 
 tries is totally dissimilar, though curiously enough 
 the cost is almost the same. The Minister of the 
 Interior is a more important official, and has 
 much more far-reachinof duties than even the Home 
 Secretary and President of the Local Government 
 Board combined, as the Government of France is 
 essentially beaurocratic. Most of the expenditure 
 for prisons is charged to this department, but some 
 fcs. 10,000,000 is debited to the Ministry of the 
 Colonies for the penal settlements there. There is 
 no poor law in France as in England, and charitable 
 relief has consequently to be controlled by the 
 Minister of the Interior. Bounties and technical 
 education are provided at the cost of the Ministries 
 of Industry and Commerce, and of Agriculture. 
 
 Though the total revenue of France is only 
 some 20 per cent, greater than that of the
 
 COST OF FRENCH COLONIES 269 
 
 United King-dom, the cost of collection is about 
 double, due principally to the multitude of indirect 
 taxes, which are always expensive to work. The 
 administration of the French custom house alone, 
 with its army of officials, and laboratories so indis- 
 pensible where the tariff is so far-reaching, costs 
 just twice as much, though the duties paid amount 
 to 25 per cent. less. The benefit of direct taxation 
 can hardly be better illustrated than by the low 
 figure for which it is worked. 
 
 There is no greater contrast between the two 
 countries, than in their methods of Colonial admini- 
 stration. France has no self-governing colonies, 
 and her foreign possessions are exploited for the 
 benefit of home manufacturers and traders. They 
 are, it is true, represented in the Chambers like 
 any Department of the Republic, and rejoice 
 further in separate budgets, — that of Algeria, for 
 instance, is for the current year estimated to 
 yield a revenue of fcs. 53,802,194 against an 
 expenditure of fcs. 71,008,728, a deficit of nearly 
 £700,000, which wipes out the apparent surplus at 
 home. This is a fair illustration of the price paid 
 by France for her colonies, more than compensated 
 for however in the eyes of the jjeople, by the trade 
 actually done, or in prospect at some future time. 
 
 The military expenditure directly iiicurrcil in 
 this department is £2,350,000, and every reader 
 must decide for liimself the equivalent paid by 
 Great Britain. An ;i])p<'ndix to tlic P)ritish Army
 
 -70 TARIFF AND TAXATION 
 
 Estimates calculates the cost of the Colonial and 
 Egyptian services at £2,545,415, hut then large 
 repayments are made, and there are many involved 
 accounts to take into consideration. One thing 
 however is practically certain, that but for the 
 possession of India and the colonies, the military 
 and naval expenditure of Great Britain would be but 
 a very moderate percentage of what it actually is. 
 
 Assistance to primary education in France is 
 only given largely in country districts and the 
 smaller towns. The limit is fixed at a population 
 of 150,000, and all places having a greater one 
 than this receive only a small grant in aid, amount- 
 ing in the aggregate to £175,000, a very different 
 state of affairs to that prevailing in England, where 
 the great centres of population absorb the bulk of 
 the money. France, on the other hand, spends 
 much more on higher grade education, and in the 
 promotion of the fine arts, not excluding the drama. 
 
 The real difference between the expenditures of 
 the two countries is to be found in the cost of the 
 national debt, and the acquisition and control of the 
 railways, as the following figures will show at a 
 glance : — 
 
 Consolidated Debt £27,750,000 
 
 Eedeemable and Floating Debt . . 10,250,000 
 
 Eailway Annuities and Guaranteed Interest 7,000,000 
 
 £45,000,000 
 Interest and Sinking Fund, British Debt . 25,000,000 
 
 £20,000,000
 
 INCIDENCE OF FRENCH TAXATION 271 
 
 This is amply sufficient in itself to account for 
 the much heavier taxation necessary in France, 
 compared with the United Kingdom. 
 
 Would any other nation in the world submit so 
 patiently to so permanent as well as tremendous 
 a burden of taxation ? Yet the people thrive 
 under it, and no Panama collapse can affect them 
 for any length of time, and we have lately seen 
 them busily occupied in putting Russia on her 
 financial legs. Whatever general discontent may 
 exist, there is little cause for specialising it. No 
 one industry in France can say it is being ruined 
 in the attempt to make another prosperous, and no 
 individual can complain of being heavily over-taxed, 
 while his neighbour goes scot free. If protection 
 imposes a burden on industry, all suffer from it, 
 if it really does stimulate home trade, all benefit 
 by it. If the economic law of not imposing any 
 restraint on production is broken, the other one 
 of levying revenue on acquired wealth is rigidly 
 put into operation. The entire fiscal arrangements 
 of France are made up of apparent contradictions, 
 and still from so many negatives, a positive is 
 evolved. 
 
 The incidence of taxation in France is in fact 
 much more analogous to Great J^ritain thnii the 
 United States, and despite protection, the wealtliy 
 bear a fair, if not a full share of it. Civilisation 
 is supposed to travel westward, so ;i])j)ar('ntly 
 do political and economical revolutions, for it is
 
 2 7-^ TARIFF AND TAXATION 
 
 democratic America that, finding itself in the 
 grip of a new tyranny unknown to past ages, 
 is making desperate efforts to regain the control 
 of its affairs in the interests of the great mass of 
 the population. 
 
 There is a lesson to be learned from all this, 
 and it is that tariff, and trade, and taxation are 
 not everything. Civil and religious liberty have 
 always counted for much, and are likely to count 
 for more as the world grows older. France rests 
 content, because her people control their own 
 destinies. They can abolish protection tomorrow 
 if they like, and whenever they choose to do so, the 
 tens of millions of dollars or francs of industrial 
 magnates will not divert them from their purpose. 
 They are a liberty-loving, and law-abiding, though 
 much official-ridden people, l)ut the officials are 
 their own, and not a tyrant's. They have con- 
 sequently relinquished the overturning of dynastic 
 and political systems, and indulge only in the 
 milder and more innocent dissipation of over- 
 throwing ministries. Their steadfast adherence 
 to their jDresent form of Government has astonished 
 their friends and confounded their enemies. 
 Socialism does exist, but it has not permeated the 
 body jDolitic, and few deputies professing the 
 creed find their way to the people's Chamber. 
 Yet across their frontier, where taxation is lighter, 
 trade expansion more rapid, and industrial pros- 
 perity apparently at high-water mark, political
 
 GERMAN TAXATION 273 
 
 and social discontent is eating into the vitals of the 
 nation. The moral is obvious. 
 
 With a debt of but slightly over £100,000,000, 
 and an Imperial revenue of about £60,000,000, 
 Germany appears to be more highly favoured than 
 any other country in Europe. But the German 
 Empire is but a congeries of states, kingdoms, 
 grand duchies, and duchies, each with its own 
 budget, and most of them with separate national 
 debts. Any specific allocation of taxation is 
 therefore an utter impossibility, as while the 
 Empire presents an appearance of unity to the 
 outer world, it is internally administered in its 
 component parts, and in their financial arrange- 
 ments many curious anomalies are presented. 
 There is one settled principle however underlying 
 all, and that is, the exclusion of indirect taxation 
 on commodities. Within the Zollverein, which now 
 embraces all the States and Free Towns alike, — the 
 city of Hamburg having been the last to succumb 
 so recently as the year 1888, — there is absolute 
 free trade, the Imperial Government being the 
 sole authority, and maintaining entire control in all 
 questions relating to tariff. Whatever indirect 
 taxation there is, it is responsible for, and 
 the moment any commodity has passed the 
 frontiers of the Empire and paid the toll 
 demanded, it may l)e conveyed without let or 
 hindrance through the lengtli and l)roadth of tlu; 
 land.
 
 2 74 TARIFF AND TAXATION 
 
 The event wliich caused an innnense increase 
 In the national debt of France, enabled the German 
 EnijHre to commence its financial operations with 
 practically a clean sheet, and without in any 
 way burdening the States. We find that the 
 debts of the latter are very moderate, Prussia 
 as might be expected leads the way with about 
 £320,000,000 ; Bavaria follows a long way behind 
 with £70,000,000; then Saxony with £36,000,000; 
 Wiirtemburg with £23,000,000; Baden with 
 £17,000,000, and the others Avith gradually 
 decreasing sums, often less than a million sterling. 
 The entire indebtedness of Germany is not greatly 
 in excess of £600,000,000, and even this is more 
 apparent than real, for it is largely a railway debt, 
 and the interest upon it is met out of the net 
 earnings of the State system. We can appreciate 
 therefore what an immense advantage Germany 
 has in taxation, and consequently in trade, by 
 having little or no debt charge to provide for. 
 
 Despite her protective tariff, Germany draws 
 in reality considerably less from indirect taxation 
 than any of the other three countries. Her customs 
 revenue was expected, according to the budget 
 estimate for 1896-97, to yield £17,800,000. The 
 percentage of duty on the total imports we can 
 best see by going back a little. In 1894 the duties 
 actually collected amounted to £18,400,000, and 
 imports to £198,165,000, so that the rate was 
 under 10 per cent. Of course there was a large
 
 REVENUE FROM CUSTOMS DUTIES 275 
 
 amount of raw material included in this, about 
 £84,500,000, little of which paid any duty at all, 
 but food and live animals represented £71,850,000, 
 and manufactured and partly manufactured goods 
 the remaining £41,815,000. If we apportion the 
 duty to the two last items, it is still barely 15 
 per cent., and as commodities like tea and coffee 
 are rated heavily, the comparison, if these are 
 deducted, would be still more favourable. We 
 see again how comparatively slight protection in 
 Germany really is. 
 
 The fact is, as I have previously stated, German 
 protection is almost non-effective, except in special 
 and retaliatory instances. Agriculture is more 
 favoured in this way than any other industry, l)ut 
 that bone having been flung to it, it is left to take 
 care of itself All the choice pickings of railway 
 privileges and reduced rates fall to the share of 
 the manufacturing industries, and the agrarian 
 party is furious in consequence. But hitherto it 
 has howled in vain, and the German Government 
 has refused to make food dear in the Industrial 
 districts of North Germany. True, the £70,000,000 
 worth is increased in price by the duty imposed on 
 it. But one may travel a whole day through North 
 Germany, and outside the towns see little else 
 than wastes and sandheaps. We must go to Soutli 
 Germany and the Rhine provinces for tlic smiling 
 cornfields and terraced vineyards, .11 id the convey- 
 ance of their produce to the territories adjoining
 
 2 76 TARIFF AND TAXATION 
 
 the Baltic and the North Sea would add consider- 
 ably to its cost. Food therefore, after paying 
 the duty, is not much dearer than if it had to pay 
 inland carriage, and the imports through Hamburg 
 and Bremen, and across the Eussian frontier, go- 
 merrily on. 
 
 Of the excise taxes on internal production those 
 on tobacco and beer are merely nominal — the latter 
 pertains more to the individual states — and except 
 spirits, sugar is the only commodity rendered dear 
 by them. This is due more to the vicious bounty 
 system than anything else, and must sooner or 
 later come to an end. 
 
 Of the remaining Imperial taxes, stamps con- 
 tribute about £3,000,000, a very moderate sum 
 compared with either England or France. Posts 
 and telegraphs yield a profit of £1,700,000, which 
 is not taxation ; neither is the £800,000 net rail- 
 way revenue, nor the £75,000 profit on State 
 printing, nor in the real sense of the word the 
 charge of £280,000 on the State banks. The 
 balance of slightly over £20,000,000 is made up by 
 what are called matriculatory contributions from 
 the States. 
 
 To consider these would plunge us in the deep 
 water of what is really local taxation, which lies 
 quite beyond our inquiry. Local taxation, whether 
 heavy or light, devolves in almost every country on 
 real and personal property, and is direct ; even 
 wealthy protectionists in the United States have
 
 THE PRUSSIAN BUDGET 277 
 
 not yet been able to devise means of getting out of 
 that, and are compelled to pay it like their poorer 
 neiofhbours. So that we see at once the taxation of 
 Germany is, with the exception of a small amount, 
 direct, and must fall on acquired wealth rather 
 than upon industry in its incipient stages. Par- 
 ticular communities may be heavily burdened, but 
 the burdens must be paid in cash by those who 
 have it, and cannot be deducted from wages, or 
 added directly to the price of commodities, though 
 of course taxation, whatever form it takes, must 
 eventually increase the cost of living. 
 
 It may be interesting to glance for a moment 
 at the Prussian budget, which is the most 
 important of the subsidiary ones. Its total 
 in fact reaches £97,000,000, or fully 50 per cent, 
 more than that of the Empire. But this is in- 
 clusive of upwards of £51,000,000 raised from rail- 
 ways and other public works, and after deducting 
 £29,000,000 for working expenses, there is a 
 balance to the good of £22,000,000, while the total 
 charge for the debt, including sinking fund, is 
 under £14,000,000. State domains and forests 
 yield £4,000,000, and lotteries another £4,000,000, 
 but in each instance the net revenue is only 
 moderate. Direct taxation produces £8,000,000, 
 and indirect £3,500,000 only, wliilc the depart- 
 ment of commerce and industry draws upwards of 
 £6,000,000 from mines and salt works, but parts 
 with most of it again in working expenses. The
 
 2 78 TARIFF AND TAXATION. 
 
 net l)iu'(l(Mi of taxation is extremely moderate, and 
 in this respect Prussia is but an example of the 
 sister States. 
 
 Apfain we see the immense advantag-e en- 
 joyed by Germany over her competitors, and the 
 wonder is, not tliat she forges ahead so rapidly, 
 but that she has not long ago left all her livals in 
 the rear. Great Britain got a long start and owns 
 the capital, and above all, the Almighty has placed 
 her in a geographical position, and provided her 
 with natural resources unequalled in all the world. 
 But these will not avail if energy and intelligence 
 are not brought to bear in every occupation and 
 almost every pleasure, for if the latter is allow^ed to 
 undermine the physical or mental constitution, 
 activity is an impossibility. Germany is still a 
 long way behind' in the race, and is handicapped 
 by that most terrible and exacting of all taxes, the 
 conscription, which withdraws her youth from 
 active industrial and business life for the three 
 years when they should be learning most. And 
 she is honeycombed with discontent, created by 
 her repressive political system. With these 
 shackles struck oif, Germany might surprise the 
 world far more than she has ever done yet. 
 
 Tariff is the most potent of all influences in 
 taxation, and probes to the quick the industrial life 
 of a nation. Where it lies heavily on the poor, 
 whether directly or indirectly, the struggle may be 
 of long duration, but exhaustion is certain in the
 
 INFLUENCE OF TARIFF REVENUE 279 
 
 end. When it falls on the rich, or the surplus 
 revenues and pleasures of the poor, it will be of less 
 hindrance, and progress need not be impeded. But 
 beyond the taxation necessary to secure the moral 
 welfare of the people, the pith and marrow of true 
 economy is to draw on abundance and reverence 
 penury.
 
 CHAPTER IX. 
 Imperial Customs Uxion. 
 
 Discovery of America — Spanish Colonies — Portugal and her 
 Possessions — Germany in Africa and Oceana — French Colonies — 
 Extent of Trade — Algeria and Tunis — Madagascar — The 
 Egyptian Question — Relationship between France and her 
 Colonies. Great Britain : — Cro-mi Colonies — Colonial Tariffs 
 — Colonial Trade — The Basis of Union — Schemes Propounded^ 
 Proportion of Colonial to Foreign Food Supplies — The Canadian 
 Preferential Tariff — Distribution of Canadian Trade — Origin of 
 Dutiable Imports — Analysis of Canadian Exports — Possibilities 
 of Canadian Expansion — The Belgian and German Treaties — 
 What their Denunciation may mean — Constitutional Aspect of 
 the Question — Australasian Trade — Australian Federation — Free 
 Trade in Agricultural Products — Australasian Loans and the 
 British Trustee Act — The True Basis of Imperial Federation — 
 Phoenicia and Greece. 
 
 It is customary to draw the dividing line between 
 the Middle Ages and modern times at the year ever 
 famous for the discovery of America by Columbus, 
 and in truth, 1492 did witness a new force intro- 
 duced into human affairs which has altered and 
 shaped the destinies of many nations. For nearly 
 three centuries the Spaniards monopolised the 
 American continent south of Virginia, with the excep- 
 tion of the Brazils, occupied and administered by 
 Portugal, upon the double claim of prior discovery — 
 accidental though it was — and the papal bull which
 
 SPANISH COLONIES 281 
 
 granted her all territories east of a line drawn from 
 north to south 370 leagues west of the Azores, 
 within which part of the Brazilian coast actually 
 falls. 
 
 From the first moment of the dissemination of 
 the startling news that a new world had been dis- 
 covered, or rather, as was then believed, that a new 
 way had been opened to the uttermost parts of 
 the old, which was in a sense true, the Spanish 
 monarchy and the Spanish people alike regarded 
 the territories they were so prompt in annexing as 
 the special gift of Providence for their exclusive 
 joint and individual benefit. And it was upon this 
 basis that the administration was conducted, for 
 while Government claimed a heavy royalty on 
 the production of the colonies which proved so rich 
 in gold and silver, it transferred to the merchants 
 and manufacturers of the Peninsula the sole rig-hts 
 of trading — rights which after a while the rest 
 of Europe challenged, but for a long time only 
 defeated by surreptitious and contraband inter- 
 course with the colonists. 
 
 We need not here go into the story of how 
 Spain lost her colonies, or even how she manages to 
 retain a fitful grasp over the one or two remaining. 
 She has learnt little by experience, and iliat httlc 
 grudgingly, and to-day does her utmost to nMidci- 
 trade with the outside world as difficult as possible. 
 In Cuba, Porto llico, and the Phihppine Islands, 
 she imposes a heavy tariff on all foreign imports,
 
 282 IMPERIAL CUSTOMS UNION 
 
 Avliile permitting almost all goods of Spanisli origin 
 to enter free, so that the cotton spinners and iron- 
 founders at home are still able to keep some control 
 over the markets. The duty on steel rails, for 
 instance, is !?1() in the Philippines, and §17.50 in 
 Cuba ; but then who ever . dreams of railway 
 enterprise under present conditions ? Cotton 
 fabrics are rated almost as elaborately as in the 
 United States, and at almost prohibitive rates as 
 far as the outside w^orld is concerned. And if the 
 Spanish crown no longer draws vast net revenues, 
 it is because rebellion after rebellion has loaded the 
 colonies with debt, for which Spain is ultimately 
 responsible, and they have to be unmercifully bled 
 to provide the interest. 
 
 Going back to 1894, previous to the outbreak of 
 the recent troubles, and while trade was still in its 
 normal channels, we get an idea of how the colonies 
 discharge this indebtedness. It is not by sending 
 their produce to Spain, -because their exports 
 thither were only 11 million pesetas, ^ while their 
 imports amounted to 175 millions, a diiference of 
 nearly £4,000,000 due to the mother country on 
 trading account alone. But these same colonies 
 shipped to the United States, produce worth 
 $86,000,000, and only took in return $23,000,000, 
 though there was then a special convention with 
 Cuba under which many United States productions 
 
 ^ The Spanisli peseta is the same value as the franc, though the 
 paper currency is now somevhat depreciated.
 
 PORTUGUESE COLONIES 283 
 
 were accorded free entry, and others privileged to 
 the extent of 25 to 50 per cent, below the minimum 
 tariff rates. ^ From this source consequently 
 there was £12,500,000 to pay the £4,000,000, and 
 leave a very large sum for interest. The United 
 States paid Spain £2,000,000 or £3,000,000 ' of this 
 direct, by sending more goods than received, and 
 the balance formed a credit for Spain to draw 
 on in any way she pleased. Cuba is responsible 
 for the greater part of this sum, her balance due to 
 the mother country being only some fifteen million 
 pesetas less than the total, while the balance due 
 to Cuba by the United States, principally for sugar 
 and tobacco, was £11,000,000. 
 
 Portugal likewise retains a fragment of her once 
 glorious colonial empire, as a reminiscence of the 
 days when Lisbon was by far the wealthiest capital 
 in Europe. Her hold on Eastern Africa, we know, is 
 retained merely because the cession of the little 
 strip of territory to any other power \\t)u1(1 be the 
 signal of a conflagration, such perhaps as the A\'orld 
 has never yet seen, and Lorenzo Marques owes its 
 fame and vitality to rivalry and jealousy among 
 other nations. But she still owns two little islands 
 ofl*the West African coast, St. Thoiiias and Princes 
 
 1 These valuatioDs are according to United States returns for 
 1893-94, and do not therefore quite correspond with the yi)aiiish 
 year. But the trade of 1894-9.5 was already alft'cted by the 
 revolution. 
 
 - Spanish returns say 79,089,000 pesetas, those of the United 
 States .*;8,858,000. There is the same overlapping of years, but even 
 allowing for that, the figures do not tally.
 
 284 nrPERIAL CUSTOMS UNION 
 
 Island, and the taritt' applicable to them is, in one 
 sense, a curiosity. Nations, as a rule, like to retain 
 the colonial markets for their home producers, but 
 are less particular as to how colonial produce is 
 distributed. An export tax of 16 reis j^er kilo, 
 upon coffee, and of 12 reis on cocoa, equal to 
 rather less than a halfpenny per pound, is increased 
 to 30 and 25 reis respectively, if exported to foreign 
 countries in Portuguese ships, and to 45 and 40 
 reis if in foreign ships. Other governments are 
 satisfied to encourage colonial industry by opening 
 the home markets, either free of duty, or at reduced 
 rates ; it has been left to the pioneer of modern 
 colonial enterprise, to restrict as far as possible 
 dealings of every description with foreigners. 
 
 Spain and Portugal, like the Netherlands, which 
 also have important colonies in the east, fall 
 beyond the range of our enquuy, and their systems 
 have been introduced merely to provide us with 
 the key necessary to unlock doors of more modern 
 construction. For if some of the Powers which are 
 to-day anxiously seeking to extend their foreign 
 possessions and influence, have not entirely appro- 
 priated the antiquated ideas of these two monarchies, 
 they have at least borrowed a good deal from them. 
 
 Of the two countries which now vie with Great 
 Britain for colonial empire, France has been by 
 far the longest in the field. Germany indeed 
 only entered the lists so recently as the year 1884, 
 and her exploits are soon enumerated.
 
 GERMAN COLONIES 285 
 
 She has acquired plenty of territory, but 
 that is about all. If square miles counted for 
 anything, then would Germany be an African 
 as well as a European power. But at the end 
 of 1895 there were fewer than 3000 Germans 
 and all other Europeans combined, out of a total 
 population of over ten millions, to be found in 
 the German possessions, or spheres of influence 
 as they are sometimes designated, throughout 
 Africa. The latest estimated revenue from all 
 sources is M 11,000,000, or a little more than 
 half a million sterling, and of this sum M 8, 000, 000 
 is contributed by the Imperial Government. The 
 imports into the West African settlements reached 
 in the year 1894, the latest for which returns 
 are available, M 9,500,000, and the exports 
 M 7,500,000, about £475,000 and £375,000 
 respectively. East Africa falls within the ivory 
 region, and this valuable commodity constitutes the 
 bulk of the export trade, rubber occupying the 
 second place. The Asiatic element is strong among 
 the native traders, and the currency of the country 
 is the rupee. Imports in 1895 were valued at 
 Es. 6,750,000, and exjDorts at not quite Rs. 3,000,000 ; 
 but the value of the coin differs so materially in 
 the various continents, and fluctuates so widely in 
 its exchange value as well, that it is dillicult t<> 
 express these figures in the European ('([uivnlciit.' 
 
 1 Tlie German returns give them as M 7,G00,4fJ7 and M 3,247,485 
 respectively.
 
 2 86 IMPERIAL CUSTOMS UNION 
 
 Om> thiiii;- is clearly evident, that a large portion 
 of the import into these colonies is paid for by- 
 subventions from the Government. 
 
 The story of German settlement at the Anti- 
 podes is sorrier still, and notwithstanding the high- 
 sounding designation of important territories, as 
 Kaiser Wilhelm's Land, and Bismarck Archipelago, 
 only some 280 Europeans have so far been attracted 
 thither. 
 
 Whatever the German colonial system is going 
 to produce therefore, it has accomplished little 
 yet, and as an economic force may be dismissed. 
 With its political aspect we have here nothing 
 to do. 
 
 France has done much more than found a 
 territorial empire beyond the seas, and it would 
 be astonishing were it not so, considering that 
 she began to build it up long before England 
 became merged into Great Britain, and was her 
 keenest rival. 
 
 She is impartial in her favours as far as locality 
 is concerned. Algeria and Tunis on the Mediter- 
 ranean coast of Africa, Senegal and Dahomey on 
 the west, Madagascar and Reunion on the east, 
 Pondicherry in India, and the great territories 
 known as Indo-China beyond, Tahiti in the Pacific, 
 Guadeloupe and Martinique in the West Indies, and 
 French Guiana on the mainland of South America, 
 are fairly distributed. Her hold on North America 
 is lost, French Canadians are loyal to the British
 
 FRENCH COLONIES 287 
 
 crown, and Newfoundland is only useful as an 
 occasional bone of contention when a French 
 statesman wishes to make himself particularly 
 disagreeable, and takes as a basis the little islands 
 of St. Pierre and Miquelon, 
 
 Self government is about the last thing France 
 thinks of conceding to her colonies. They are 
 supposed to exist solely for the benefit of the 
 mother country, and to afford that outlet for the 
 productions of French industry, which, as we have 
 already seen, is denied them elsewhere. The 
 colonies therefore, are not run for the advantage 
 ■of the Government as such, as in the case of Spain. 
 They are indeed costly luxuries, the Algerian 
 budget alone having last shown a deficit of nearly 
 twenty millions of francs, which had to be defrayed 
 by the taxpayers at home. The vote for the 
 Ministry of the Colonies, other than Algeria, is 
 fcs. 84,000,000, although of that upwards of 
 fcs. 9,000,000 is expended on the penal settlements, 
 and must hardly be regarded as colonial expenditure. 
 But, as I have remarked elsewhere, all this is 
 supposed to be amply compensated by the com- 
 mercial and industrial activity which it pro- 
 duceSc 
 
 And what does this amount to ? Leaving out 
 the semi-Eurojiean j)ossessions of Algeria and Tunis, 
 the imports of all the French colonies generally for 
 1894, the latest year I Jiave been able to obtain 
 them, were £9,000,000, while exports were
 
 2 88 IMPERIAL CUSTOMS UNION 
 
 £10,000,000. But of these France provided only 
 about £4,000,000 and took £5,000,000 respectively, 
 tlie rest of the trade being done with foreign 
 countries. That does not mean Enofliind or other 
 European rivals, as in many places there is 
 considerable local trade. Especially is this the 
 case with Indo-China, for of the fcs. 77,000,000 
 of imports, France shipped but fcs. 17,000,000, and 
 took only fcs. 28,000,000 out of total exports of 
 fcs. 104,000,000, most of the remainder having been 
 with China, Siam, and other surrounding territories, 
 and consisted largely of rice, the staple product 
 and diet of that part of the world. The commerce, 
 as far as France is concerned, was consequently 
 under £2,000,000, or less than 25 per cent, of 
 the total. 
 
 British exports to these countries amounted to 
 £195,000 or fcs. 5,000,000, principally cotton goods, 
 but as the wall of protection is built higher, the 
 trade steadily diminishes, and for 1896 was valued 
 at £110,000 only, or little over fcs. 2,500,000. 
 
 From a French point of view nothing else 
 is quite so bad as the foregoing. Nearly the 
 whole export of Martinique and Guadaloupe, for 
 instance, is shipped to France, and in the year 
 1896, for which unofficial returns are available, 
 only fcs. 1,000,000 out of a total of fcs. 21,000,000 
 for the former, and a merely nominal amount out 
 of fcs. 19,000,000 for the latter island, were shipped 
 to foreign countries. But even here the import
 
 ALGERIA AND TUNIS 289 
 
 trade is only supplied by the mother country 
 to the extent of about 50 per cent, of a total of 
 some fcs. 45,000,000. Of the other half Great 
 Britain has to be content with a beggarly 
 fcs. 4,500,000, and the United States Avalk off 
 with most of the rest. It consists principally of 
 phosphates and other manures, and complaints 
 are made that British shippers think anything 
 a'ood enouo-h, while their United States rivals 
 don't. Lancashire at anyrate maintains her 
 share of the trade with the French West 
 Indies. 
 
 All this is materially altered when we come to 
 Algeria and Tunis, the former practically French 
 territory, the latter controlled by France much in 
 the same way as Great Britain controls Egypt. 
 We have the complete figures in these instances for 
 1895 ; the imports into Algeria were valued at just 
 over £10,000,000, of which £8,000,000 were of 
 French origin. The exports were £11,500,000, and 
 France took nearly £10,000,000 of them. Tunis is 
 not quite so favourable, but then there are commer- 
 cial treaties which prevent the exclusion of other 
 countries from trading. Some of these have been 
 got rid of, and the only serious rival France now 
 has is Great Britain, and she is very anxious to 
 induce tlie latter to relin(|uisli licr I'ights, so that 
 Tunis may be as close a preserve as Algeria. Of 
 l'1,700,000 of imports, France ship})ed little more 
 than half, and of nearly £2,000,000 of exports, took 
 19
 
 290 IMPERIAL CUSTOMS UNION 
 
 £1,250,000, HO that the influence or protectorate^ 
 \vas worth soniethini;'. 
 
 What 1 may have to say regardino- the French 
 possessions in West Africa will be more appro- 
 priate in a later chapter. I pass on therefore 
 to Madagascar, and the principal business so far 
 effected by the latest possession, seems to have 
 been to borrow a considerable sum from the Comp- 
 toir National d'Escompte de Paris, with which tO' 
 pay her conquerors part of the cost of subvert- 
 ing her liberties. Up to now there have been 
 no returns from Madagascar as such, because the 
 island has only quite recently been formally in- 
 cluded among French possessions, and trade with 
 the principal port, Tamatave, would be classed as 
 foreiefn. Die^fo Suarez in the extreme north, and 
 the little island of Nossi Be, off the north-west 
 coast, have however been classed as French for 
 some years, and their trade in 1893 amounted to 
 fcs. 9,000,000 of imports, and about fcs. 3,000,000 
 exports. These figures may form no criterion of 
 the volume when the country becomes settled, 
 and in course of time France no doubt hopes 
 the trade of Madagascar wdll become worth a 
 few millions sterling per annum ; but has not the 
 price paid — we will not say for the goodwill— been 
 somewhat excessive ? 
 
 The sum total of the whole is, that France 
 exports to all her foreign possessions about 
 £13,000,000 worth of goods per annum, and re-
 
 FRENCH COLONIAL POLICY 291 
 
 ceives in return about £16,000,000 of colonial and 
 other produce. Not very large amounts, but a fair 
 percentage of the foreign trade of the country. 
 We can understand what wistful glances she turns 
 towards Egypt, of which she would like to make 
 another Algeria. The imports and exports of 
 that country for 1895 were £8,600,000, and over 
 £13,000,000 respectively, but of these France only 
 benefited to the extent of £1,000,000 in each 
 instance, the United Kingdom of course absorb- 
 ing the lion's share. But the present difterence 
 between Egypt and Algeria is, that France is as 
 free to trade in the former under British protec- 
 tion as in the latter under her own. How long 
 the British would enjoy the same freedom were 
 the protection transferred, is not very difficult to 
 predict. 
 
 There is no such thino- as customs union be- 
 
 o 
 
 tween France and her colonies, the only phrase 
 applicable is customs subjection. Every possession, 
 whether near or distant, is under the French tarift', 
 with often enough a special one of its own for the 
 purpose of providing revenue for carrying on the 
 Government. This however is generally light, and 
 is frequently an export, not an import tax. French 
 mainifiicturers want the full prices obtainable for 
 their goods, and object to duties on tlicni within 
 their (jwn territories. Thus in Madagascar there 
 was a duty of 1 per cent, ad valorem imposed on 
 all imports, but in August 1896 this was declared
 
 292 IMPERIAL CUSTOMS UNION 
 
 ap})llcable oiilv to foreign goods, those of French 
 origin to l)e achnitted free. All exports are like- 
 wise subjected to a tax of 10 per cent., except such 
 as are specially scheduled to pay fixed rates, — 
 Avax, for instance, fcs. 20 per 100 kilos., and coffee 
 fcs. 16, whatever their destination, this being sup- 
 posed, as it undoubtedly is, a tax on the native 
 producer, who receives so much less for M'hat he 
 sells. Similarly in Tunis, the revenue, raised prin- 
 cipally from the monopolies of tobacco and salt, is 
 augmented by duties of fcs. 12 per 100 kilos, on 
 unwashed, and fcs. 20 on washed w^ool, of 2 to 6 
 francs on dates, and of fcs. ]2.37 on olive oil. The 
 import tariff is light, 8 per cent, on nearly every- 
 thing, and 10 per cent, on wines and spirits. 
 France in short tries to run two tariffs, and recog- 
 nising that protection and revenue are strange 
 bedfellows, keeps them separate. 
 
 Totally different is the system adopted by Great 
 Britain towards her colonies. When dependent 
 directly upon the Crown, a tariff is fixed to provide 
 revenue, and is enforced against all countries alike. 
 When self-governing, they may do as they please. 
 In many of the Crown colonies the tariff is far- 
 reaching, and few imported goods escape it, but it 
 is light, and certainly not protective. Most of them 
 are plantation colonies, yielding but one or two 
 products, which it would be foolish for any other 
 country to ship thither, and most of what they 
 w^ant beyond the natural foods must be imported.
 
 SELF-GOVERNING COLONIES 293 
 
 A customs duty is therefore an easy way of raising 
 the revenue, and not an unfair one. The number 
 of people upon whom direct taxation would fall is 
 generally extremely limited, and were it possible 
 to collect it from the natives, the expense would 
 often be greater than the income derived. Not 
 even Great Britain runs her colonies as philan- 
 thropic institutions, and she wants her subjects of 
 whatever creed or colour to contribute something 
 towards the cost of the civil protection they enjoy. 
 Many of them expend part of their savings on 
 imported articles, and are therefore readily reached 
 in this way. As a rule nothing is materially en- 
 hanced in cost except alcoholic drinks, which is as 
 it should be. 
 
 But the great colonies of English-speaking 
 communities frame their own tariffs to suit their 
 own purposes, whether protective or otherwise. 
 Foremost among them is the Dominion of Canada, 
 and the pernicious influence of its great neighbour 
 had until quite recently a most demoralising effect. 
 Whether or not there is anything in the atmos- 
 phere of North America which disseminates the 
 contagion of ])rotection, all the peo])le inhal)iting 
 it fall at one time or other victims to the disease. 
 A cursory study of the old Canadian tariff is 
 sufficient to show that it was a more or less 
 faithful copy of the worst enforced across the 
 frontier. True, there is notliiug so utterly extra- 
 vagant as 100 to .')00 ])<'!• cent, on woollens, and
 
 294 IMPERIAL CUSTOMS UNION 
 
 100 per cent, on tin plates, not to mention 
 other thintrs. The su})reme height to ^^■hic'h the 
 Canadian protectionist attained was 35 per cent., 
 Avith now and again a higher rate concealed under 
 mixed specific and ad valorem duties. The average 
 on all dutiable goods imported in 1895-96, was just 
 30 per cent., but this is somewhat i-educed if allow- 
 ance be made for alcoholic liquors, tobacco, and 
 other luxuries. The average upon woollens how- 
 ever was 32 per cent., while on silks it was only 
 30, and on linens 22. Cotton goods averaged 28, 
 and iron and steel 25 per cent. No doubt the 
 patriotic Canadian frequently gazed up with 
 admiration and lonoino- at the ^rreater flip'hts 
 possible across the border, but with clipped wings 
 these have now passed beyond his reach. 
 
 Moreover, the most obnoxious features of the 
 United States tariff were reproduced in the Canadian, 
 and the result was a childish battle, which grown-iqi 
 men ought to have had too much dignity to play at. 
 It is absurd enougfh for the United States to 
 impose a tariff on Canadian cheese, but it attains 
 the sublimely ridiculous for Canada to mulct the 
 United States j^roduct at 3 cents j^er pound. If 
 there is anything in which the Canadian agri- 
 culturist excels, it is cheese, and the exj^ort, steadily 
 increasing year by year in quantity, though not in 
 value, reached upwards of $14,000,000, occupying 
 second place only to timber and its products, which 
 must, as civilisation advances and population in-
 
 THE CANADIAN TARIFF 295 
 
 ureases, become a decaying industry. In the same 
 •category we find apples at 40 cents per barrel, 
 another production in which a little interchange 
 would do no harm to either side, while the cHmax 
 is reached in strawberries, raspberries, gooseberries, 
 and blackberries at 2 cents per pound. As the 
 last-named fruit is ffenerallv gathered in no-man's 
 land, one wonders if it pays two duties when picked 
 from the bushes growing just on the frontier ; or is 
 one side of them supposed to be Canadian and the 
 other American % On the other hand, if tliere be 
 anything in which United States craftsmen excel, 
 it is in the production of bank notes, and forms for 
 bonds, bills of exchange, and similar instruments ; 
 and well they may, for no nation has ever created 
 more of the finished article. Yet they are taxed 
 on entering Canada to the extent of 35 2)er cent. 
 But if wanted in moderate] quantities, surely it will 
 be less expensive to have them mailed in small 
 parcels under the ordinary postal arrangements. 
 
 Protection to manufactured articles was aimed 
 against Great Britain quite as much as the United 
 States, f(3r it is veiy difficult for the latter to 
 compete, when the cost of ])roduction has already 
 been so greatly increased by their own tariff laws. 
 Still Canada takes payment for the produce she 
 ships to the mother country in manufactures, aug- 
 mented in })rice though tliey are by 25 to 30 
 ])er cent. Woollen goods, and ii-oii and steel, are 
 the largest items in her iin])ort list, cotton and
 
 296 IMPERIAL CUSTOMS UNION 
 
 otluT iiiisccllaueoiis ^-uods follow, and made up a 
 total vahu' in tlie year 1896 of $110,000,000 from 
 all sources, against an ex])ort of $121,000,000. 
 (iinada is not ereatlv indebted either to Great 
 Britain or the United States, hence the fairly equal 
 balance of her trade account. When the Grand 
 Trunk Railway Company considers the time ripe to 
 resume dividends to its shareholders, the farmers 
 of the Dominion will have some new customers, 
 and that should be an inducement for them to 
 hasten it on. 
 
 Canada maintains a strict customs federation 
 between all its separate provinces, and in that 
 respect is at total variance with the great territories 
 of Australasia. On the Continent itself, there are 
 five separate Governments, and each goes its own 
 way, totally independent of, and indifferent to its 
 neighbours. Western Australia, as the most pro- 
 gressive just at present, owing to the recent dis- 
 coveries of gold, has many wants to be supplied, 
 and raises the means by a very general application 
 of a stiff tariff. Butter pays 2d. per pound, cheese^ 
 bacon, and hams 3d., hay 30s. per ton, wheat 6d, 
 per bushel, tobacco 2s. to 3s. per pound, cigars 6s. ^ 
 wines 6s. 6d. to 10s. per gallon, and spirits 16s. 
 The rougher manufactured goods are admitted at 
 5 per cent, ad valorem, gradually mounting ta 
 20 per cent, as they approach or become luxuries. 
 But most kinds of iron and steel, and imj^lements- 
 and machinery, are wisely admitted free, and the
 
 FREE TRADE IN NEW SOUTH WALES 297 
 
 moment the Government of the colony can see its 
 way to mitigate the full force of taxation, there are- 
 a number of other things which should be trans- 
 ferred to the same list. It is a tariff for revenue 
 rather than protection, and a financial equilibrium 
 is difficult to establish while a country is being- 
 rushed. 
 
 But to know what free trade really is, one must 
 turn to the tariff of New South Wales. It contains 
 just five items — spirits, wine, beer, tobacco and cigars, 
 and opium — and few peojjle would suggest that 
 one of them should be eliminated. The duties on 
 alcohol are high, but not excessively so, on 
 unmanufactured tobacco Is. per pound, and on 
 cigars and cigarettes 6s., an example which 
 the mother country might well follow. There 
 are one or two other items the duties on which 
 are not yet totally abolished, but on candles, 
 oils, sugar, biscuits, and various other confections, 
 are gradually reduced, until the last fraction 
 disappears on the 1st July 1900. The only other 
 instance of such simplicity within the British 
 Empire, if not indeed in the whole civilised world, 
 is the Straits Settlements, where duties are 
 imposed on nothing but alcoholic liquors, and the 
 bulk of the very moderate revenue required is 
 raised from licences of various kinds. Singapore is 
 the great clearing house between East and West, 
 and its })rosperity is bound up in the clieaj) facilities 
 it can afford to its transit trade.
 
 -qS imperial customs union 
 
 Queensland has lately followed in the footsteps 
 of New South Wales, but still at a very respectfid 
 ilistance. By an Act passed as lately as the 5tli 
 October 189C), a great sweep has been made from 
 the dutiable to the free list, which now includes 
 agricultural implements and machines, as well as 
 machinery of almost every description, iron and 
 steel manufactures, drugs and chemicals, and raw 
 materials of various kinds. There does not remain 
 a great deal after this, and the rates do not 
 in many instances go beyond 15 per cent. Alco- 
 holic liquors are an excejDtion, and unmanu- 
 ftictured tobacco pays 2s. per pound, but 6s. 
 for cigars. The least satisfactory feature is 
 sugar at 5s. per cwt. on raw, and 6s. 8d. on 
 refined, and this is protective, because Queens- 
 land is a sugar-producing country. Tea and 
 coffee at 4d. to 8d. per pound are less 
 objectionable, but there are other comestibles 
 which should receive the attention of the Colonial 
 Legislature the moment there is a budget surplus 
 to dispose of. 
 
 After Canada, Victoria is the most persistently 
 protective of the British colonies, for while New 
 South Wales does not consider the items of its 
 tariff worth numbering, the dutiable ones in that of 
 its neighbour run up to 321. Nor are they by any 
 means light. If free trade between the colonies 
 should exist in anything, it surely ought to be in 
 live animals, for which the market should be made
 
 THE TARIFF OF VICTORIA 299 
 
 <is wide as possible. Yet cattle pay 30s, per head, 
 pigs 10s., and the great backbone of the industry of 
 the continent, sheep, 2s. Breadstuffs fare no better, 
 wheat, maize, beans, and peas are rated at 2s. lid. 
 per cental, oats and barley at 3s. — quite prohibitive. 
 Dead meat pays nearly a penny per pound in a 
 country where it is an important article of 
 export ; pork is Ijd. There seems to be quite 
 an Hebraic animositv aofainst the unclean animal. 
 Sugar is charged 6s. per cwt,, but if it has 
 had the misfortune to be brought up in a beet- 
 root instead of a cane, it pays 12s. 
 
 Nor do maimfactures escape any more easily. 
 Boots and shoes run up as high as 5s. per 
 pair ; the carriage builder is particularly cared 
 for, broughams, landaus, and, of all things, 
 victorias, pay £40 each. Hats, caps, and 
 gloves are all more or less heavily rated, glass 
 and earthenware share the same fate as iron and 
 steel, much of the latter being charged £3 })er 
 ton, or 25 to 30 per cent, ad valorcjn. The line is 
 drawn however at machinery, most of whicli 
 is admitted free. Wearing apparel of all kinds 
 naturally suffers, materials being rated at 1 5 per 
 cent., and made up and finished goods from 25 to 35 
 j)er cent, ad valorem. Truly, the schoolmaster lias 
 not been much abroad in Victoria, or if lie has, it 
 has been to little p\n-pose. 
 
 Though New Zealand is nominally included in 
 Australasia or Oceana, the great distance separating!;
 
 300 L^r FERIAL CUSTOMS UNION 
 
 it from tlie continent, renders it practically indepen- 
 dent of the fiscal and economic conditions prevailing 
 tliere. It is perhaps sufficient to say that it 
 maintains a tariff more akin to that of Victoria 
 than any of the other Australian colonies. 
 
 Questions relating to their own tariffs do not 
 greatly trouble British possessions in South 
 Africa at the present moment. The colonists 
 there mav have much to say about that of the South 
 African Republic, and some of the serious problems 
 now pressing for solution have undoubtedly been 
 intensified, if not originally created, by hostile fiscal 
 laws and regulations. But where political excitement 
 runs high, economic principles are cast to the winds, 
 and there is little use discussing them while it lasts. 
 It will be time enoucrh to consider the fiscal union or 
 otherwise, of South Africa, w^ien the smoke has been 
 cleared away, and race animosities allayed. A 
 tariff war is bad enouo^h, but one in which shot and 
 shell play the most important part will be infinitely 
 worse. Let every effort be made to avert that, and 
 the other will some day right itself. 
 
 The same policy of free trade prevails in British 
 India as in the United Kingdom, but opium and 
 salt take the place of tobacco, and tea and coffee. 
 The necessity arose a short time ago, to increase 
 the revenue by other means than the sources 
 usually appealed to, and at the end of 1894 an 
 almost universal duty of 5 per cent, ad valorem 
 was imposed on imports. The agitation among
 
 BRITISH TRADE WITH THE COZONIES 301 
 
 British cotton spinners was so great, that at first 
 cotton textiles were excluded, but soon after treated 
 in the same manner. Ahiiost the only exceptions are 
 living animals, admitted free, machinery the same, 
 and most descriptions of iron and steel manufactures 
 at 1 per cent. Gold bullion is likewise free, silver 
 pays 5 per cent., Imt to discuss this would lead us 
 into an immense question. As a temporary'- 
 expedient, nothing could be nuich wiser than to 
 place a small tax upon everything, and there can 
 be no pretence to any protection, though cotton 
 spinners and manufacturers, believing their interests 
 im23erilled, succeeded in getting an excise duty 
 imposed on the native production of certain qualities. 
 But the classes of goods made are on the whole so 
 totally different, that competition between them can 
 hardly be said to exist. 
 
 Such, then, is a brief summary of the various 
 British colonial tariffs as they are now, or have been 
 until lately, and they present a cliaos, out of which 
 it appears utterly impossible to evolve order, or 
 perhaps we ought rather to say uniformity. Never- 
 theless there is a strong sentiment in favour of 
 federation, to be preceded and based upon a customs 
 union, in which all the colonies, great and small alike, 
 shall l)e linked together, and ai'oiind tlic iiiollicr 
 country. The importance of the trade^ l)etweeu 
 them cannot well indeed l^e urged too strongly, 
 but after all it comprises but a fourth of the total 
 foreign trade of the United Kingdom, and the last
 
 302 IMPERIAL CUSTOMS UNION 
 
 tliliiir in tlu' world likelv to l)enefit either the colonies 
 or the nu)ther country is to place that in jeopardy. 
 
 The trade returns for 1896, combined with 
 more recent events, nuiy afibrd stimulus to those 
 Avho favour such a scheme, without knowing- 
 exactly how it is to be brought about. Elxports to 
 British possessions increased from £76,070,000 in 
 1895 to £90,650,000 in 1896, the difference repre- 
 senting more than the total augmentation of Britisli 
 exports in the latter year, so that trade with foreign 
 countries was actually less. On the other hand, 
 imports decreased from £95,530,000 to £93,210,000, 
 a percentage ratio in the one case of very nearly 
 twenty, and in the other of barely two and a half. 
 The whole of the increased imports, and some 
 £2,000,000 in addition, were therefore drawn from 
 foreign sources. 
 
 These figures are on the face of them extra- 
 ordinary, and demand some explanation. That 
 however is easily forthcoming, and w^hen we find 
 that the imports from Australia alone fell off by 
 £3,960,000, while exports thither increased by just 
 £5,000,000, the balance is at once largely redressed. 
 The Australian continent has lately passed through 
 the unfortunate experience of a severe and 
 protracted drought, which not only prevented the 
 grain crops from growing, much less maturing, but 
 destroyed sheep literally by the million. Instead 
 of exporting wheat, Australia was compelled to 
 import it from the United States to feed her own
 
 INDIAN TRADE 303; 
 
 people, while there was at the same time aii> 
 enormous falling off in the shipments of wool and 
 tallow, the two most important commodities of the 
 country. These three products account for about 
 £1,000,000 each, the remaining million being dis- 
 tvibuted over the various commodities more or less 
 dependent on the same climatic conditions. 
 
 On the other hand, mining activity in Western 
 Australia has made large demands upon British 
 manufacturers for machinery, apparel, and the 
 thousand other articles required by an almost 
 entirely new country, and a few of the many 
 millions sterling invested in this enterprise have 
 been spent in this manner. And then, despite the 
 unfavourable climatic influences, Australia is slowly 
 recovering from the financial collapse of a few 
 years ago, and filling ujj the gaps which are so 
 apparent. Possibly she may go on increasing her 
 imports from the United Kingdom, she will certainly 
 at no distant date swell her exports thither. 
 
 From Canada and British North America, 
 imports increased by £3,040,000, and exports by 
 only £100,000, Canada participating to the full 
 in the active demand experienced for wheat, 
 owing to the drought in Australia and the 
 terrible visitation of famine in India, while she 
 likewise increased her exports of dairy produce and 
 timber. British India goes a long way towards 
 making up the balance of enlarged exports, cotton 
 yarns and piece goods alone being accountal)le for
 
 304 IMPERIAL CUSTOMS UNION 
 
 £4,000,000 over 1895, thouo-h still £1,500,000 below 
 1894. Here again special circumstances were at 
 work, and they were of a political nature. A 
 British Government, in order to provide funds for 
 the Indian exchequer, had, as we have seen, to 
 impose a 5 per cent, duty, first on all commodities 
 imported into India excludino- cotton goods, and 
 finallv on cotton goods as well. But an important 
 section of the Opposition stoutly resisted this, and 
 when it was lifted into ofiice, and the leader of this 
 particular movement appointed Secretary of State 
 for India, Lancashire confidently anticipated the 
 repeal of the duties, and held back shipments. 
 But she soon found, that having by her votes 
 helped to place the party of her special choice in 
 power, it meant in its security to do little or 
 nothing for her, and the retarded shipments of 
 1895 helped to swell the figures of 1896. 
 
 And finally, despite the political unrest in 
 South Africa, British possessions there absorbed 
 goods to the value of £3,500,000 in excess of 1895, 
 and paid for them in gold, the net import of the 
 precious metal being £4,500,000 in excess of the 
 previous year, owing to the demand for currency 
 purposes having been satisfied. 
 
 Some knowledge of the actual state of afiairs is 
 necessary to enable us to appreciate the difficulties 
 of the situation, and I have endeavoured thus 
 briefly to supply it. These difficulties are 
 enormously increased, the moment an attempt
 
 SCHEMES FOR CUSTOMS UNION 305 
 
 is made to mould so many discordant elements into 
 a uniform system. The German Zollverein, or the 
 Federated States of the United States Republic, 
 have been frequently referred to as affording a basis 
 for a similar union among the countries and 
 territories constituting the British Empire, but 
 these examples may be dismissed. The separate 
 interests of the States may be no more identical 
 than those of many of the British colonies, but 
 they are at least geographically homogeneous, and 
 there would be something inconsistent in adjoining- 
 territories, living under the same political institu- 
 tions and governed by the same laws, levying 
 discriminating duties one against the other. Some- 
 thing of the sort does exist, it is true, on the 
 Australian continent, though for all practical 
 purposes the different colonies are totally 
 independent of one another, and only subject to a 
 common sovereign rule. And there is even now a 
 determined effort being put forth, which sooner or 
 later is certain to lead to something practical, to 
 draw more closely together, both in their political 
 and economical relationships. 
 
 Still, schemes have been propounded with the 
 object of stimulating Imperial at the expense of what 
 may be termed foreign trade. A few years ago a 
 London financial journal made the very tempting offer 
 of a thousand guineas for the best ])laii of a work- 
 able customs union, and something like a hundrt^l 
 and fifty were submitted for competition. Two 
 20
 
 3o6 nf FERIAL CUSTOMS UNION 
 
 eminent economists and politicians were appointed 
 adjudicators, and eveiything possible was done to 
 attract the attention of the commercial community, 
 as well as all others interested in the question. It 
 is not doint^ the proprietors of the journal any 
 injustice, to say that the offer was made from a 
 business not a philanthropic point of view, and was 
 looked upon as an excellent advertisement. It 
 would have proved so had any really practical 
 suggestions been forthcoming, but the value set 
 upon the actual result by the proprietors them- 
 selves may be judged by the fact that no reference 
 is ever made in the column of their paper to the 
 selected essays or their writers, and the thousand 
 guineas have no doubt long since been written off 
 as an unrealisable asset. 
 
 Still, journal, essayists, and adjudicators com- 
 bined, did render a public service in demonstrating 
 the utter impracticability of the idea. The pre- 
 mium was divided, and the two successful com- 
 petitors represented the opposing schools of thought 
 — one being a colonial protectionist, the other 
 an English free trader. The idea of the former 
 was, of course, that Great Britain should impose 
 duties on all foreign produce which could be raised 
 in British possessions, and admit the colonial free ; 
 the other that every colony should adopt free 
 trade, and model its Budget on precisely the same 
 lines as the mother country. Both arrived at some 
 very extraordinary results. One, for instance, pro-
 
 PREFERENTIAL TREATMENT 307 
 
 posed to levy a tax on foreign wool which on the 
 statistics used showed an import of £2,750,000, out 
 of a total of £23,000,000, and w^ould have produced 
 a revenue of £80,000, or about one- third of one 
 per cent, ad valorem, for which all the costly 
 machinery of custom houses and certificates of 
 origin would have had to be introduced. Besides, 
 London is the world's wool market, and fully half 
 the import is re-exported to foreign countries after 
 leaving substantial commissions to English mer- 
 chants and brokers, and employing a considerable 
 amount of labour. And this was to be imperilled, 
 if not destroyed, ibr what ? — £80,000, minus the 
 cost of collection, plus a grain of sentiment. 
 
 The other would have compelled West Australia 
 to raise its revenues from beer, spirits, tobacco, and 
 a few comestibles, and make up any deficiency by a 
 land aud income tax. Now" all the statesmanship of 
 AVest Australian officials is at present being directed 
 to encourage agriculture in the colony, as the popula- 
 tion flocking in such numbers to the mining centres 
 is constantly threatened with something approach- 
 ing famine. Industry is not yet sufficiently 
 developed to have created any desire for protection 
 among the colonists themselves, even if eventually 
 they lean in that direction, but responsible 
 ministers do express a hope that the moderate 
 duties levied on food, principally to obtain revenue, 
 will stimulate home production as well, ;ind nndcr 
 the circumstances even free traders ni.iv com-
 
 3o8 IMPERIAL CUSTOMS UNION 
 
 placently wink the other eye. There is no question 
 al)oiit tlie West Australian ao^riculturist being- 
 able to make a living without any protection at all, 
 only at present fortune tempts in other directions. 
 To impose a tax on agriculture would be economical 
 if not physical suicide. 
 
 Any scheme of Customs Union in which Great 
 Britain is expected to accord preferential treatment 
 to the colonies, must necessarily include almost 
 every food product now imported into the kingdom 
 free. The total value of these in 1896 was 
 £157,000,000, of which only some £23,000,000 
 came from British possessions, so that over 80 per 
 cent, would have to be taxed, meaning a corre- 
 sponding increase in price on all consumed, includ- 
 ing what was produced at home. We might be 
 inclined to lend a more willing ear to such a pro- 
 posal, were the colonies able in case of need to 
 supply the whole. Leaving out India, the produc- 
 tion of w^hich we know is not capable of any sudden 
 expansion, while we have just had the most 
 lamentable evidence of the possibilities of con- 
 traction, we find that the colonies contain a 
 population of a little over twenty millions, of which 
 between eleven and twelve are of European origin 
 or descent. Is it conceivable that these twenty 
 millions of people, allowing for natural increase and 
 liberal immigration, will be able within any reason- 
 able period to supply the 157 millions worth 
 instead of the 23 as at present, without taking into-
 
 COLONIAL AND BRITISH AGRICULTURE 309 
 
 account the probable increasing requirements of the 
 kingdom ? There is room for enormous expansion, 
 but then Australia, where there is most, may, like 
 India, fail us, as it has done for two successive 
 years. And while the attempt w^as being made, 
 w^e should gfive mortal offence to those countries 
 which now supply us with the 134 millions, which 
 in turn would forge every possible weapon of 
 retaliation against our other industries. Possibly 
 by the time our colonies were able to supply 
 us with 157 millions worth of food products, 
 they would find we did not require the half of 
 them. 
 
 Besides, if anyone is to be protected, surely the 
 British agfriculturist has the first claim. He 
 frequently pays a high rent, and has suffered 
 grievously from the heavy fall in prices of recent 
 years. True, the shilling duty on wheat asked for 
 by the colonist would do him no good, but if 
 granted he would hope later on to screw it up to 
 five, ten, or even fifteen shillings, and what is more 
 lie w^ould demand its imposition on Canadian as 
 well as United States produce. If the day should 
 ever unfortunately arrive when the fiscal policy so 
 steadily pursued by Great Britain, and under 
 which it has prospered so immensely, is reversed, it 
 will l)e the landlords and the lioinc producei's who 
 will fill their pockets first, tliongh tlicv may ])e 
 knockiiit'' for adniissioii at the woi-klioiisc dooi- a 
 few vears later.
 
 3IO IMPERIAL CUSTOMS UNION 
 
 Tho kaleidoscope, true to its nature, has how- 
 ever recently presented us with an entirely 
 changed aspect of the question. The Dominion of 
 CVmada, from demanding concessions, has suddenly 
 and voluntarily granted them. A Government 
 steeped to the lips in protectionist doctrine has 
 been swept away by a mighty wave of public 
 opinion, and replaced by one pledged to free trade. 
 Its advent to office was accompanied by circum- 
 stances which made the pledges extremely difficult 
 of fulfilment, inasmuch as Canada's great neighbour 
 was on the eve of adding to the stringenc}^ of its 
 tariff iri general, and of that portion of it applicable 
 to the Dominion in particular. Suggestions that 
 the time had arrived for freer commercial inter- 
 course were roughly received, and almost rudely 
 repulsed at Washington, and made concessions in 
 that direction an impossibility. The Canadian 
 Government conceived a way out of the difficulty, 
 and executed it with a brilliancy that startled the 
 world, creating at the same time a fresh supply of 
 economic problems. 
 
 Nothing leads to such prolonged and bitter 
 wrangling as tariff reform, and heavily defeated 
 though Canadian protectionists were, they might 
 have been safely reckoned upon to give an 
 excellent account of themselves on every separate 
 proposal for reduction of duties. With the excep- 
 tion of iron and steel, nothing of any importance in 
 that direction was attempted, and even then
 
 THE CANADIAN PREFERENTIAL TARIFF 2>ii 
 
 opposition was averted by an increase in the 
 bounties on home production. But a far-reaching- 
 change was effected by a single resolution, which 
 affirmed — 
 
 " That when the customs tariff of any country admits 
 the products of Canada in terms which, on the whole, are 
 as favourable to Canada as the terms of the reciprocal tariff' 
 herein referred to are to the countries to which it may 
 apply, articles which are the growth, produce, or manufac- 
 ture of such country, when imported direct therefrom, may 
 tlien be imported direct into Canada or taken out of ware- 
 house for consumption therein, at the reduced rate of duty 
 provided in the reciprocal tariff set forth in Schedule 1) : 
 
 {a) " That any question that may arise as to the 
 countries entitled to the benefits of the reciprocal tariff 
 shall be decided by the Controller of Customs subject to 
 the authority of the Governor in Council ; 
 
 (6) " That the Controller of Customs may make such 
 regulations as are necessary for carrying out the intention 
 of the two preceding sections." 
 
 Schedule D referred to, provides that from the 
 23rd April 1897 to 30th June 1898 a rebate of 
 one-eighth, or 12|- per centum ad valorem, shall be 
 allowed off ordinary tariff rates, and on and after 
 1st July 1898 one-fourth, or 25 per centum ad 
 valoretjh, on all goods except ales, beers, wines and 
 liquors, sugar, tobacco, cigars, and cigarettes. 
 
 Thus a decided movement was made in the 
 direction of free trade in the only way in whicli 
 such a ste}) should l)e taken, iiamelv, moderate, 
 gradual, and equal reduction in protective duties, 
 which afford ample time to the protected industries 
 to order their arraiiixements and avoid disaster.
 
 312 IMPERIAL CUSTOMS UNION 
 
 Had this reduction lieen unconditional, every free 
 trader A\ould have had occasion to throw his cap in 
 the air, and rejoice over a great and bloodless 
 victory. 
 
 But conditions are attached which make it 
 necessary to pause and consider. Canadian pro- 
 tectionists may, and do, detest the measure, but 
 dare not declaim too strono-lv ao-ainst it, lest by 
 objecting to concessions to the mother country — for 
 such this resolution really amounts to — their loyalty 
 should be called in question. English protectionists 
 welcome it, because, though no equivalent has been 
 asked, or is at present expected, they foresee the 
 day when hints will arrive that something of the 
 kind will be appreciated, and if not promptly taken, 
 unpleasantness if not estrangement may ensue. 
 To avoid this some concessions may be made, and 
 the jDrinciple of protection, disguised under a fair 
 sounding title, established. There are consequently 
 many pitfalls for free trade to avoid, all the more 
 dangerous because dug by itself 
 
 What then are the possible, not to say the 
 likely consequences of this step ? Great Britain has 
 everything to gain and nothing to lose, inasmuch 
 as the reduction of \\L\ and eventually of 25 per 
 cent, cannot operate against her trade and indus- 
 tries. But on the other hand, no British free 
 trader desires concessions from Canada which will 
 tend to her financial or material disadvantag-e. 
 Nothing is more calculated to loosen the ties of
 
 ANALYSIS OF CANADIAN TRADE 313 
 
 kinship or of friendship than a business arrange- 
 ment in which one side gets the kernel and lets 
 the other take the husk, and it is of much more 
 interest to know how the arrangement will affect 
 Canada, than what it will do for the United King- 
 dom. 
 
 The geographical situation of the Dominion 
 favoin^s trade relationships with the United States. 
 For the fiscal year ending 30th June 189G, the 
 statistics were : — • 
 
 Total. United Kingdom. United States. 
 
 Imports for con- 
 sumption, . $110,587,480 $32,979,742 .$58,574,024 
 Exports, . . 121,013,852 66,690 288 44,448,410 
 
 $231,601,332 $99,670,030 $103,022,434 
 
 The total trade with the two countries was 
 thus apparently almost equal in volume, but 
 statistics in this instance are more than usually 
 unreliable. For several months of every year, St. 
 Lawrence ports are closed to ocean traffic ; all the 
 year round some of the most thickly-populated 
 districts are more accessible to New York than 
 Montreal. As a consequence, much Canadian trade 
 with Europe i)asses in transit through the United 
 States, and it is more than probable that ship- 
 ments entered for them find their ultimate desti- 
 nation in the United Kingdom, while goods entered 
 fioiii them are of l>ritisli origin. No official care 
 can well obviate mistakes of this sort, and as they 
 all tell in the same direction we may fiiirly con-
 
 314 IMPERIAL CUSTOMS UNION 
 
 chidt^ that the total trade with Great Britain is 
 already in excess of that with the United States. 
 
 But its distribution is most unequal. Canada 
 imports much more than she exports across the 
 border, and redresses the balance by reversing- 
 the operation with the United Kingdom. What 
 Canada and Great Britain alike aim at, is to 
 transfer as much as possible of these imports from 
 the United States to the mother country. 
 
 The moment we begin to consider the question 
 of competition, the figures must be cut down 
 very materially, because of the $110,000,000 of 
 imports — $43,000,000 were free goods, and would 
 not be affected by any tariff arrangements, prefer- 
 ential or otherwise. It is upon the $67,000,000 of 
 dutiable goods only that Great Britain can hope to 
 make an impression, while even from this, consider- 
 able deductions must be made for suo-ar and other 
 colonial produce, which she can never hope to 
 supply. It is in fact only in the great realms of 
 textiles and iron and steel, where a preferential 
 tariff can exert any great influence. 
 
 Again, we examine the returns for 1896, and 
 analyse the origin of the textile imports : — 
 
 Woollen Manufactures, 
 Cotton Manufactures, 
 Silk Manufactures, . 
 Flax, Hemp, and Jute 
 Manufactures, 
 
 Total. 
 
 From Great 
 Britain. 
 
 From all other 
 Countries. 
 
 . §8,670,691 
 . 4,631,960 
 . 2,557,318 
 
 §6,930,350 
 3,357,293 
 1,896,893 
 
 $1,740,341 
 
 1.274,667 
 
 660,425 
 
 1,523,576 
 
 1,414,221 
 
 109,355 
 
 .$17,383,545 
 
 §13,598,757 
 
 §3.784,788
 
 PROSPECTS OF TRANSFER 315 
 
 This class therefore constitutes more than one- 
 fourth of the entire dutiable import, and Great 
 Britain already monopolises 80 per cent, of it. 
 Only in cotton goods do the United States claim 
 any important share, and under this heading about 
 $1,000,000 fall to them. Of the foreign Avoollens, 
 about $600,000 were of French manufacture. 
 Canada is particularly anxious to encourage 
 friendly commercial relations with France, and 
 can hardly desire therefore to eliminate this par- 
 ticular item. It is not in textiles that any great 
 advantage can accrue to British trade. 
 
 Iron and steel however have a totally different 
 story to tell, and of imports valued at $8,463,747 
 Great Britain only supplied $2,352,581, most of 
 the remaining $6,111,166 falling to the United 
 States. Undoubtedly a preferential rate of 25, 
 if not of 12|- per cent., will transfer much of this 
 trade to the United Kingdom, to the loss of 
 American manufacturers. 
 
 Of the more important of the minor articles, 
 foreign countries, again principally the United 
 States, supplied leather to the value of $1,150,000, 
 out of a total of $1,250,000, but this is a trade 
 England can hardly expect to win. Foreign drugs 
 and chemicals were responsible for $1,000,000 out 
 of $1,250,000; glass, $900,000 out of $1 ,1()0,0()() ; 
 paper, $750,000 out of $1,000,000; and gloves 
 $380,000 out of $650,000. On the other hnnd. 
 Great Britain supplied $800,000 out of a total uf
 
 3i6 IMPERIAL CUSTOMS UNION 
 
 81,250,000 for hats, caps, and l)()iiiiets ; and nearly 
 $400,000 out of $550,000 earthenware and pottery. 
 
 Iron and steel therefore remains the one 
 imjjortant item which can be transferred to British 
 trade returns, and another £1,000,000 might be 
 added to the existing exports of nearly £50,000,000. 
 Were we to increase this to the extent of another 
 £1,500,000 for other goods, Ave should still have 
 but £2,500,000 additional, as the direct result of 
 the preferential tariff — a w^elcome, but of a total of 
 £240,000,000 by no means an extravagant, con- 
 tribution to the export business of the country. 
 
 Canada will in one respect benefit even more 
 than Great Britain, inasmuch as she will obtain 
 some twenty-five million dollars worth of goods first 
 \1\ and then 25 per cent, cheaper than formerly, but 
 then the benefit would have been still greater had 
 the reduction been extended to all countries alike. 
 The Dominion has now an opportunity such as 
 has never before been offered it, and may never 
 occur again. For four years at least the cost of 
 production in the United States will be enormously 
 increased, and one of the first, as well as the 
 principal industry to suffer will be agriculture. It 
 Canada will reduce the cost of livino- within its 
 
 o 
 
 borders to a minimum, no preferential tariff will 
 be needed to ensure its produce a profitable 
 market in the United Kingdom, for that of its 
 neighbour will be unable to compete against it. 
 
 We have only to glance for a moment at the
 
 16 
 
 
 24 
 
 
 10 
 
 
 rr 
 
 
 / 
 
 
 10 
 
 
 100 
 
 
 CANADIAN EXPANSION 317 
 
 nature of the exports, to convince us as to what 
 the Dominion is best fitted for. In 1895-96 — 
 
 Animals and Dairy Products constituted 33 per cent, of the exports. 
 
 Agricultural products „ 
 
 Timber and other Forest products ,, 
 
 Fisheries „ 
 
 Coal and other Minerals „ 
 
 ^lanufactures and Miscellaneous ,, 
 
 It is the land and the water, of which Canada 
 possesses a boundless supply, whe'rein lies her 
 w^ealth, and it is to the industries connected with 
 them that every energy should be devoted. 
 
 The possibilities of expansion can hardly be 
 exaggerated. The provinces of Ontario and Quebec 
 contain 450,000 square miles, and the population, 
 according to the census of 1891, was under 3,300,000. 
 Eight States bordering on these two provinces, 
 enjoying very similar climatic and other natural 
 conditions, contain 330,000 square miles. Their 
 only city of first-class importance is New York ; 
 and eliminating its population entirely, they had in 
 1890 over 14,500,000 inhabitants. Pennsylvania 
 with its 45,000 square miles and 5,250,000 in- 
 habitants might be added, were we only certain 
 that any part of the Dominion provinces contained 
 its mineral wealth. What an attraction cheap 
 markets would be to these twenty or twenty-five 
 millions of })eople, many of whom would find it 
 animally wortli their while to cross the frontier, in 
 order to avail themselves of the privilege of the free
 
 3iS IMPERIAL CUSTOMS UNION 
 
 import of 8100 worth of personal effects, were con- 
 venient stores provided for their sale. Nor w^ould 
 it stop there, for United States citizens, experiencing 
 the advantages, and witnessing the prosperity of 
 their neighbours, would migrate permanently, and 
 within a decade the populations, now as four or five 
 to one, might be fairly equalised. 
 
 Why therefore should Canada not avail herself 
 of the cheapest instruments of production obtain- 
 able ? If the United States can go on supplying 
 agricultural implements and tools at lower prices 
 than any other country, why refuse them ? With a 
 population advancing by leaps and bounds. Great 
 Britain will increase her trade with the Dominion 
 by thousands, where, under a merely preferential 
 tariif, she will experience difiiculty in adding 
 hundreds. The prosperity of the colony is the first 
 and should be the sole desire of the mother country, 
 if from no hio-her motive than that she will herself 
 participate in it. 
 
 We have seen that of the total foreig-n trade of 
 Canada in 1895-96, amounting to a little over 
 $230,000,000, less than the odd 830,000,000 was 
 with countries other than the United Kino^dom and 
 the United States. Nevertheless, with two of 
 these countries serious difliculties threatened to 
 arise, owing to the existence of certain commercial 
 treaties. Germany and Belgium were each accorded 
 the same trading privileges with British colonies as 
 were enjoyed by Great Britain herself, and their
 
 THE CONTINENTAL TREATIES 319 
 
 nature is best explained by the clause of the 
 Belgian treaty. 
 
 " Articles, the produce or manufacture of Belgium, shall 
 not be subject in the Britisli colonies to other or higher 
 duties than those which are or may be imposed upon similar 
 articles of British origin." 
 
 The clause in the German treaty, though some- 
 what differently worded, has precisely the same 
 meaning and effect. 
 
 When these treaties were concluded more than 
 thirty years ago, it was not foreseen that British 
 colonies would ever desire to discriminate in their 
 tariffs ; it was indeed rather hoped that they would 
 adopt those free trade principles, which would 
 render discrimination obsolete, if not ridiculous. 
 That we know has not happened, and in so far as 
 they are incomjjatible with the full freedom of 
 colonial legislatures, they are utterly indefensible, 
 and not to be longer tolerated when a serious 
 demand was made for their abrogation. Whether 
 British trade with these two countries is one half, 
 or five times as great as with the colonies, is of no 
 consequence ; if the principle be wrong, they cannot 
 be maintained. 
 
 But whether the method adopted of abrogating 
 or "denouncing" them was the right one, is alto- 
 gether another question. The conferences between 
 the Colonial Office and the Colonial Premiers, at 
 which this course was unanimously decided upon, 
 only came to a conclusion early in July, and notice
 
 320 IMPERIAL CUSTOMS UNION 
 
 to terminate the treaties had to be given on the 
 30th of that month. It is obvious that there 
 could be no time for serious negotiation with the 
 governments concerned, unless another twelve 
 months were allowed to lapse. To have secured 
 the elimination of the objectionable clauses, while 
 allowinof the rest of the treaties to stand, would 
 have been a real diplomatic triumph, which would 
 possibly have been denied to Great Britain by Ger- 
 many at least, though her own statesmen would be 
 the last to tolerate them, if not the first to admit 
 their inconsistency. But the British Government 
 apparently preferred a display of fireworks to the 
 exercise of a little statesmanship, and if any sparks 
 fall into the powder magazine, the consequences 
 may be serious. 
 
 On the other hand, a delay of twelve months 
 would have been of small consequence. As far as 
 Canada is concerned, the trade with Germany is 
 but small, and with Belgium utterly insignificant. 
 The imports from the former country in 1895-96 
 were a little under 86,000,000, and the exports but 
 8750,000, a balance on the wrong side of the 
 account, as far as Canada is concerned, of over 
 $5,000,000. From Belgium the imports were 
 $920,000, more than double those of the previous 
 year however, and the exports 8100,000, or less 
 than half. 
 
 Canada consequently has nothing to lose by the 
 denunciation, but with the entire British possessions
 
 COLONIAL TRADE WITH GERMANY 321 
 
 it is different. German returns for 1895 show 
 exports to them of £5,000,000, but imports from 
 them of £16,000,000, so that while Canada stands 
 to gain £1,000,000. her partners in the empire 
 stand to lose £12,000,000. True, a great deal of 
 the import is raw material — cotton and jute from 
 India, wool and tallow from Australia, which 
 Germany wishes to buy in the cheapest market. 
 I have shown in a previous chapter that Germany 
 does not hesitate to retaliate and strike hard, 
 even though it be to her own injury, so that 
 including the £34,000,000 of direct exports from 
 the United Kingdom, £50,000,000 of British trade 
 is imperilled. German manufacturers and German 
 merchants may cry aloud against a tariff war, but 
 they may also cry in vain, if German agrarians, 
 who hate them quite as much as their British 
 rivals, have any say in the matter. 
 
 Had every persuasive effort failed, had Germany 
 turned a deaf ear to all argument, and insisted on 
 the whole treaty or none at all, then the course 
 would have been clear. But that all this sliould 
 have taken place within a fortnight or three weeks 
 is scarcely credible. 
 
 This is hardly the place to raise an important 
 constitutional question, but as it so closely affects 
 the commercial and inchistriai welfare of the kint>- 
 (loiii, I cannot forbear. 
 
 Up to tlie very eve of the denunciation of these 
 treaties, it was generally believed tliat no action 
 21
 
 322 IMPERIAL CUSTOMS UNION 
 
 would be taken for another twelve months, and the 
 first intimation that anything had occurred came 
 from Berlin. No doubt the denunciation of a treaty 
 forms part of the royal prerogative, and may 
 be exercised at the discretion of the responsible 
 advisers of the Crown. But with Parliament in 
 full session, and every facility for discussing pro- 
 posals submitted to it, should a decision of such 
 moment be arrived at without consulting it, 
 especially on a point not of high politics, but affecting 
 the bread and butter of every constituent of every 
 elected representative ? Party ties may be strong 
 enough to confirm an unwise action when challenged 
 by the Opposition, where they would have been 
 proof against all cajolery to take a false step. We 
 may well mourn the decadence of Parliamentary 
 institutions, when the British House of Commons is 
 not considered worthy of consultation on a matter 
 of such supreme interest to its members. 
 
 The position of the Australian continent does 
 not unduly favour trade with one country more 
 than another, and the consequence is, that by far 
 the largest part of its over-sea commerce is with 
 Great Britain. But the continent Is parcelled out into 
 five separate divisions or colonies, and each includes 
 the dealings with the others in the returns of foreign 
 trade. Out of total imports In 1895 of £43,000,000 ' 
 this local movement was responsible for no less 
 
 1 These figures include gold and silver bullion, which is as much a 
 part of the industry of Australasia as of South Africa.
 
 AUSTRALASIAN FOREIGN TRADE 323 
 
 than £21,000,000, and of the total export of 
 £54,000,000 for about the same figure, as it was 
 naturally only an interchange, and any difference 
 would be one of valuation merely. Of actual 
 foreign commerce, the figures were — 
 
 United Kingdom. British Possessions. Foreign Countries. 
 
 Imports, £16,300,000 £1,700,000 £4,000,000 
 Exports, 2:5,500,000 2,000,000 7,000,000 
 
 The total trade of Tasmania, generally included 
 in the Australian continent, thouo-h not an inteo-ral 
 part of it, is some £2,500,000, but most of it is 
 with Victoria and New South Wales, only about 
 £500,000 being done direct with the United King- 
 dom. On the other hand, the distance of New 
 Zealand from the mainland draws its relationships 
 closer to the mother country. Of the total 
 imports of £6,400,000,' £4,000,000 w^ere from the 
 United Kingdom, and only £1,280,000 from Aus- 
 tralia, the remainder being divided between British 
 possessions and the United States. Of the exports 
 of £8,500,000, £7,000,000 were directed to the 
 United Kingdom, and £1,000,000 to Australia. 
 
 We see at a glance therefore how comparatively 
 little Great Britain stands to gain by preferential 
 trading with tlie Australasian colonies, ;m(l liow 
 much Australasia stands to lose, inasmuch as while 
 its imports from foreign countries amount to 
 £4,000,000, exports tliitlier are £7,000,000, much 
 
 ^ Most of tlio trade of tlic Fijian Ihlaiid.s i.s done with New 
 Zealand.
 
 324 IMPERIAL CUSTOMS UNION 
 
 of which would certainly be jeopardised, and most 
 probably destroyed, under a tariff war, while in 
 addition Australasian })roduce in Great Britain 
 would suffer equally from the boycott of British. 
 Especially is this the case with New South Wales, 
 whose foreign imports were £1,650,000, against 
 exports £4,600,000. Germany and Belgium shij^ped 
 £425,000 and £150,000 of the imports, and took 
 £1,150,000 and £780,000 of the exports. We are 
 thus able to appreciate the magnanimity of the 
 Premier of that colony in joining the others in their 
 demand for the abroofation of the continental treaties. 
 Yet a great deal can be done to stimulate 
 Australasian trade, both internal and external, and 
 if the former assumes such large proportions under 
 the existing restrictions, what possibilities there 
 are were they removed. It is too much to expect 
 that while the colonies remain separate they will 
 adopt the liberal tariff of New South Wales ; for one 
 or two of them it would perhaps be false economy. 
 But at least a step in the right direction would be 
 to abolish all duties on agricultural products raised 
 in any part of the continent, and leave its move- 
 ment free from one end to the other. Victoria 
 would be better, not worse off, were her farmers 
 enabled to purchase their cattle and sheep in New 
 South Wales or South Australia, if they so desired, 
 without having to pay the obnoxious duty of 30s. 
 and 2s. per head respectively, and her people would 
 often be better and more cheaply fed were there no
 
 AUSTRALASIAN INDEBTEDNESS 325 
 
 duty of 3s. per cental on breadstuffs. Let her, if 
 she pleases, j-etain the tariff on manufactures for 
 the present ; increased prosperity for agriculture will 
 eventually prove the best weapon with which to 
 strike off the remaining shackles. 
 
 This can be accomplished without absolute 
 federation, indeed one of the obstacles to this 
 desirable end is the antagonism of fiscal policy. 
 There are political difficulties, I am well aware, but 
 with these I have nothing to do here, though I do 
 not for a moment believe they would be allowed to 
 stand in the ^vay were the question ripe for settle- 
 ment. Several unsuccessful attempts have already 
 been made, and it does not at present appear as 
 though the conference held in Adelaide in March 
 and April 1897, and adjourned to meet in Sydney 
 in September, will end in much better result. 
 Possibly too much is being attempted at once, and 
 were the journey made by slow and easy stages 
 the goal would be reached much quicker. 
 
 I have suggested one stage of that journey, 
 there is another for wliich the road is clear. 
 
 It has long been a sore point with colonial 
 statesmen and economists, that tlie loans of their 
 respective colonies should be excluded from the 
 advantages conferred ])y tlie Trustee Acts of the 
 United Kingdom. No Bi-itisli financier has hitherto 
 seen liis way to adinil iliciii witliiii tlu; sacred pale, 
 and there have been good reasons for it. Not even 
 the Australian colonics all stand on tlio same foot-
 
 326 IMPERIAL CUSTOMS UNION 
 
 ing, yet it would be impossible to accord one the 
 privilege, and ignore the others. One or two 
 have been somewhat reckless in their borrowing, 
 and though they surmounted the crisis of a few 
 years ago, and are all the stronger for it, their 
 financial position still excites some little amount 
 of distrust. The present state of Australasian finances 
 we will best gather from the following statistics ^ : — 
 
 Public Debt, Debt per Spent on pro- Revenue from pv,„_™p 
 31st December head of ductive productive f n >>i- 
 
 1895. Population. Works. Works. '""^ "^"^' 
 
 New South Wales, £62,263,473 £48.5/6 £48,525,410 £1,522,063 £2,318,392 
 Victoria, . . 46,939,328 39.15/6 43,860,479 1,229,620 1,884,812 
 Queensland, . . 31,873,934 69.4/2 19,982,863 506,673 1,222,509 
 South Australia, . 21,770,456 62.18/5 17,303,184 484,354 883,981 
 West Australia, . 4,736,572 38.17/1' 3,860,537 ^'o particulars. 194,623 
 
 £167,583,763 £133,532,473 £3,742,710 £6,504,317 
 
 Tasmania, . . 7,779,145 49.8/- 3.807,413 18,127 332,197 
 
 New Zealand, . 42,271,888 60.2/4 >'o particulars. Xoparticulars.1,738,056 
 
 £217,634,796 £137,339,886 £3,760,837 £8,574.570 
 
 There is thus apparently a wide difference 
 between the financial position of Victoria, and Bay 
 Queensland or New Zealand, but the indebtedness 
 per head is not always the exact measure of it. 
 There are local as well as national loans, and local 
 and national interests in the various colonies are 
 not always upon identical lines. Queensland, for 
 instance, has borrowed for the purpose of lending 
 to municipalities, which have thus secured better 
 terms, while making the finances of the colony 
 appear more adverse than any of the others. New 
 Zealand has admittedly played in the past the part 
 of the prodigal son, but even she has stood the 
 
 ^ Extracted from Burdett's OflBcial Intelligence for 1897.
 
 DEBT CONSOLIDATION 
 
 327 
 
 strain. Much of her debt has likewise been spent 
 on remunerative pubHc works, so that the total 
 revenue from this source may be set down as at 
 least £4,500,000 per annum. 
 
 Whatever credit the separate loans may enjoy, 
 there can be little doubt that were they con- 
 solidated and guaranteed, jointly and severally, by 
 the seven colonies concerned, the £220,000,000 
 would rank with the hio-hest securities in the 
 
 o 
 
 British Empire, and therefore in the world. Their 
 combined revenues, apart from the return on public 
 works, are much more than equal to the £4,000,000 
 required, but then under present circumstances 
 such joint guarantee would entail greater risks on 
 one colony than another, which it is by no means 
 called upon to incur. 
 
 No British Government, or Chancellor of the 
 Exchequer, would need to hesitate for a moment 
 abgut conferring the advantages of a trustee stock 
 upon such a consolidated security. Again let us 
 see what such advantages would amount to. 
 
 The market prices and interest yield of some 
 of the principal colonial stocks are as follows : — 
 
 New Soutli "Wales, 
 Do. 
 
 
 per 
 
 cent. 
 
 > 
 
 Market 
 Price. 
 
 ni 
 
 KIL' 
 
 Yield. 
 
 3J^ per cent 
 
 Victoria, 
 
 H 
 
 
 » 
 
 los 
 
 ■'4 " 
 
 Queensland, . 
 
 H 
 
 
 > 
 
 I ox 
 
 ■>k .. 
 
 South Australia, . 
 
 ■ H 
 
 
 >y 
 
 i 1 1 
 
 H „ 
 
 West Australia, . 
 
 4 
 
 
 J 
 
 111 
 
 '' H " 
 
 New Zealand, 
 
 :U 
 
 
 ^ 
 
 U)Hh 
 
 ■>\ „ 
 
 Do. . 
 
 •> 
 .» 
 
 
 J 
 
 looS 
 

 
 328 IMPERIAL CUSTO.}rS UNION 
 
 The hitrher yield of the 3|- per cent, stocks is 
 chie, it must be remembered, to the fact that they 
 are redeemable at par at various times, ranging 
 from ten to thirty years hence, and the market 
 premium will consequently gradually disappear at 
 the cost of the investor. An Australian 3 per cent, 
 stock is valued in the market at about par, con- 
 sequently the yield expected Iw the investor is just 
 3 per cent. 
 
 Let us turn now for a moment to the values and 
 yields of securities recognised by the Trustee Act. 
 
 Market 
 
 
 
 Price. 
 
 Yield. 
 
 
 Consols 
 
 2f per cent. 
 
 11;^. 
 
 1^ per 
 
 cent' 
 
 Do 
 
 21 
 
 105| 
 
 9 3 
 
 -8 
 
 » 
 
 Lancashire and Yorkshire 
 
 
 
 
 
 Eailway Debentures . 
 
 .) „ 
 
 118 
 
 01 
 
 — 2 
 
 ,, 
 
 London and North-Western 
 
 
 
 
 
 Kailway Debentures . 
 
 b „ 
 
 119 
 
 91 
 
 „ 
 
 Midland Do. 
 
 .1 
 
 119 
 
 21 
 
 „ 
 
 Do. Preference 
 
 4 
 
 150 
 
 9 5 
 
 -8 
 
 )>• 
 
 Great Northern Do. 
 
 4 
 
 150 
 
 9 5 
 
 -8 
 
 )> 
 
 Xortli-Eastern Do. 
 
 ^ 
 
 150 
 
 9 5 
 
 -8 
 
 )' 
 
 There is no reason whatever why a colonial trust 
 security should not rank at least as high as a British 
 Railway preference stock, that is, a 3 per cent. 
 loan should be worth 113 to 115, instead of as at 
 present par. 
 
 To grant £220,000,000 of colonial loans this 
 privilege, would mean presenting a bonus of some 
 £30,000,000 to the present holders, which they 
 have certainly done nothing to merit. The benefit.
 
 ACCRUING ADVANTAGES 329 
 
 or at least the greater part of it, should accrue to 
 the colonies themselves, and this is quite practicable. 
 
 The first step necessary is the inclusion of such 
 a consolidated loan under the Trustee Act. The 
 next is for the Commission appointed by the 
 colonies for the purpose, to offer to inscribe all 
 existing loans upon the consolidated fund, on pay- 
 ment of say 10 per cent., leaving 5 per cent, to the 
 holder, of which he would naturally desire to avail 
 himself^ A reserve fund of upwards of £20,000,000 
 would thus be formed, which might be invested in 
 approved British securities — not colonial ones — and 
 the interest applied towards that of the consoli- 
 dated debt, while the principal of the fund would 
 become available in the unlikely event of any of 
 the colonies defaulting. 
 
 Nor would the advantages be limited only to 
 the present, as all future issues of stock would be 
 on so much better terms. No such issue could 
 take place without the unanimous consent of tlie 
 seven colonies, and no such consent would be likely, 
 unless the proposed application of the money com- 
 mended itself to them. On the other hand, there 
 would be no captious refusals, because the weapon 
 of retaliation would stare the objector in the face. 
 Joint control of the finances would necessitate some 
 joint coiiti'ol of tln^ railways ;iii(l oilier |>iil)lic 
 works, frr>m wliicli so much of the reveiuie is 
 
 ' Some allo\van«!S iiiiglit be necessary on stocks approaching 
 maturity. Though the scheme may not be quite so simple as I have 
 made it appear for tlie sake of clearness, it is quite practicable.
 
 330 IMPERIAL CUSTOMS UNION 
 
 derived, and all l)etty jealousies and attempts to 
 favour one at the expense of another would 
 naturally if not necessarily cease. Drawn to- 
 gether by such common interests, the advantages of 
 still closer union would become more and more 
 obvious, and the day hastened when Australasia 
 will present as united a front to the world as the 
 Dominion of Canada. 
 
 India loans enjoying the virtual, if not the 
 actual guarantee of the British Government, are 
 already under the Act. Canada with her in- 
 debtedness of little over £10 per head, but with of 
 course smaller assets to show for it, would be 
 entitled to full and free admission, and might like- 
 wise make terms with her creditors for the con- 
 cession. South Africa would need to consolidate 
 on similar lines to Australasia, while the case of the 
 Crown colonies would demand separate considera- 
 tion, and possibly more liberal treatment by the 
 mother country. 
 
 But after all is said and done, and every plan 
 for the future threshed out, are not the forces still 
 at work which have made the colonies so prosper- 
 ous, and drawn them so closely to the mother 
 country ? There are advantag-es in trade between 
 them not enjoyed by foreign nations, and worth 
 infinitely more than a shilling a quarter on wheat, 
 or half-a-crown a hundredweight on butter and 
 cheese. The fact that the g-reatest commercial 
 houses engaged in the business are identical at both
 
 TRUE IMPERIAL FEDERATION 331 
 
 ends, is one the value of which cannot M-ell be 
 overestimated. Everybody knows that in these 
 days when profits on large transactions are often 
 cut to the barest commission, an order carelessly 
 executed means loss. A foreign house of the very 
 highest standing will often strain a point to put 
 one through, and if the market should happen 
 subsequently to go against tlie buyer, there are 
 endless complaints and reclamations which the 
 seller will not entertain, because they involve more 
 than his entire profit on the transaction. Such 
 disputes are almost impossible between great 
 colonial or Anglo-Indian firms, though there must 
 frequently be mistakes and severe criticism. But 
 the interests of the traders are identical, or vary 
 very slightly ; what is loss to the one is loss to the 
 other, doubtful engagements are avoided, and a 
 more scrupulous care taken in those that are 
 entered into. What does it matter if a profit is 
 made in Bombay, or Montreal, or Melbourne, if it 
 is to be dropped again in London or Liverpool, or 
 Glasgow ? But a profit in New York or Buenos 
 Ay res is a profit, however the venture may turn 
 out at its port of destination. 
 
 No more striking instance of this can be afforded 
 than by the tea trade. The present generation 
 has witnessed its transfer from China to Lidia, and 
 various are the conjectures put forward to account 
 for this revolution. The quality is more suited to 
 the English taste, the markets are nearer, and
 
 S^2 IMPERIAL CUSTOMS UNION 
 
 many others. — but is not the principal one, that 
 Chinese traders are notoriously dishonest, and that 
 no Englishman has ever yet fathomed all then* 
 tricks, while an importer of the Indian growth 
 receives it from his own firm or agent abroad whom 
 he can absolutely trust ? What is the use of 
 seeing 10 per cent, profit on paper, and finding 
 20 per cent, of rubbish at the bottom of each 
 chest, when there is a certain 2^ per cent, to 
 be made elsewhere ? And while the average 
 American or European trader is not to be mentioned 
 in the same breath as a Chinese, there are plenty 
 of rogues among them, while even the most honest 
 have to study their own interests first. The 
 instances could be multiplied indefinitely, but so 
 long as the close relationshijD referred to continues, 
 so long will colonial produce enjoy an important 
 advantage over that shipped from foreign countries. 
 The best imperial federation that we can have 
 for the present is an unwritten one. Common 
 race, common speech, common religion, are the 
 strongest ties ever created, provided they remain 
 elas'tic. Once destroy that elasticity, and they are 
 as useless as the common band of everyday use 
 would be under similar circumstances. It will be 
 an evil day for the colonies when Great Britain 
 ceases to be the greatest and cheapest producer in 
 the world, and that position can only be maintained 
 by keeping the cost of living down to the lowest 
 point experienced in any civilised country. The
 
 PHCENICIAN AND GREEK COLONIES m 
 
 moment that advantage is lost, she parts with the 
 whip handle, and gets the lash about her shoulders 
 instead. The same free trade policy which suits 
 Great Britain so admirably, would equally suit the 
 genius of her colonial subjects, but she has no 
 intention of forcing it down their throats. When 
 they adopt it, it must be by persuasion, not by 
 menace, and because they are convinced it will be 
 for their own best interests. But so long as they 
 attempt to exclude British manufactures, they must 
 not be surprised at British manufacturers seeking 
 markets elsewhere ; and as trade is after all only 
 barter, with money as counters, some sort of 
 produce will be sent in payment which may com- 
 pete with that of colonial growth. The real way to 
 encouraere trade is to remove existino- obstacles, not 
 to erect new ones, and in that respect the initiative 
 lies with the colonies and not Great Britain, 
 
 Classical allusions are not always particularly 
 appropriate to modern conditions. But it so 
 happens that 2500 to 3000 years ago, two nations 
 were busy colonising. Phoenicia sent fortli mer- 
 chants and ships to ti'ade with the uttennost parts 
 of the then known world, and true to the Semitic 
 instincts of the people, established settlements only 
 where profitable bargains were to be coiichidcd. 
 The colonies were mere outposts, until political 
 revolution led to the foundation of Cartliatre, 
 destined in time to utterly eclipse the mother 
 country, for which it never showed any sympathy.
 
 334 IMPERIAL CUSTOMS UNION 
 
 Trade and comnierce, with their attendant money- 
 makino- and hixiiry, were the sole objects of 
 existence, and neither Phoenicia nor Carthage have 
 earned any gratitude from posterity, nor erected 
 any permanent landmarks of civilisation. 
 
 Greece at the same time was bursting the 
 bounds of her confined area, and seeking breathing 
 space across the sea. The greater Greece in Italy 
 and Sicily grew up and prospered, free from all 
 political dependence, until Sybaris and Croton, 
 Syracuse and Agrigentum, completely overshadowed 
 Athens and Sparta, Thebes and Chalcis. The 
 western cities were Greek in origin, Greek in 
 language, Greek in religion, and Greek in sentiment, 
 and the very factions which rent the ^Egean 
 peninsula were faithfully reproduced in the Italian. 
 
 Two confederations stand out prominently in 
 Greek history. The Amphictyonic Council pledged 
 the several states to mutual defence and mutual 
 assistance. Yet what did it ever accomplish ? 
 During its existence, the Persian army under 
 Xerxes invaded Greece and laid Athens in ruins. 
 Even the glorious day of Marathon was won while 
 Sparta celebrated religious festivities, and would 
 move neither hand nor foot to assist her neighbour. 
 The final triumph of Salamis was achieved, mainly 
 because the Spartan ships w^ere so hemmed in by 
 the enemy, that they could not escape without 
 fighting beside their Athenian allies. 
 
 The confederation of Delos placed Athens at its
 
 THE INVISIBLE BOXD OF UNION 335 
 
 head. Under it that city rose to the supreme 
 height of her grandeur, and but for it the Golden 
 Age of Pericles might never have been experienced. 
 But internal jealousies within, and active hostility 
 without, eventually brought about its destruction, 
 and with it, the final overthrow of the Athenian 
 democracy, and the almost total disappearance of 
 liberty for well nigh two thousand years. 
 
 The colonies were never drawn into either, and 
 consequently took no part in the strife of the 
 mother country. Then it was martial, to-day it is 
 political and economical. Yet when Greece was 
 hard pressed by the Persians, or Sicily by the 
 Carthagenians, each was ready to fly to the other's 
 aid, without written or verbal compact, and the 
 bond of sympathy was never wholly broken until 
 the all-pervading power of Rome absorbed both into 
 its system. Which stood the strain the best, the 
 Amphictyonic Council, the Confederation of Delos, 
 or the invisible thread which bound Greece to her 
 colonies ?
 
 CHAPTER X. 
 The Balance of Trade. 
 
 Mistaken Notions concerning it — The United Kingdom Balance of 
 Trade — How it is made up — Influences affecting it — Its Fluctua- 
 tions — The Meaning of them — Remedies when unfavourable — 
 The United States Balance of Trade — Wild Fluctuations — Their 
 Principal Cause — The French Balance of Trade — Its Dependence 
 on the Wheat Crop — The German Balance of Trade — Influences 
 affecting it same as in United Kingdom — Trade Fluctuations in 
 the Argentine Republic — Trade Movements in Japan — Unrelia- 
 bility of some Trade Statistics — How Balances are Settled — Gold 
 Movements — The Balance of Trade in South Africa — Why Great 
 Britain imports so largely from France — The Importance of the 
 Question. 
 
 There is no more favourite method in the popular 
 mind of gauging the prosperity or otherwise of any 
 particular country, than by striking a balance 
 between its imports and exports, and there are 
 few more fallacious ones. The contradictory results 
 sometimes arrived at stagger thinking jDeople, 
 who are unable at the moment to assign any 
 sufficient cause for what may look extraordinary, 
 and possibly even appalling figures. There 
 is a party in the United Kingdom always 
 pointing to the enormous excess in the value 
 of imports over exports, and claiming that 
 the country is being ruined, because it is every 
 year spending so much more than it receives.
 
 TRADE OF THE UNITED KINGDOM 337 
 
 On the other hand there is another party, equally 
 emphatic about the immense advantage this affords, 
 and the proof it gives of the great wealth 
 of the nation, which has so large an annual 
 tribute to draw from foreign sources. Again, we 
 hear of much national rejoicing in the United 
 States when exports greatly exceed imports, and 
 because 1896 was in this respect a record year the 
 utmost confidence was expressed that the economic 
 crisis was past, and that trade and industry were 
 (m the eve, if indeed the morning had not already 
 arrived, of a great revival. Some explanation is 
 necessary why one country waxes enthusiastic over 
 an enormous balance of trade in one direction, and 
 another over a similar balance in quite the opposite 
 one. The fact is, the figures themselves prove 
 nothing, unless taken in conjunction with the 
 circumstances which o-ive rise to them. 
 
 The foreign trade of the United Kingdom is the 
 greatest of any in the world, and the balance of it, 
 adverse or favourable, from whichever ])oint it is 
 regarded, is likewise the largest, except possibly 
 in some altogether exceptional year. We cannot do 
 better therefore than enquire into tiie origin of 
 this, and detail the items which go to make it u]). 
 
 Witli those who favour a bis: rather than a 
 little balance, it is a general argument that it 
 shows the extent of foreio^n indebtedness foi- 
 interest and freights, and tliat the larger thi; 
 balance is, the greater must this indebtedness be. 
 
 22
 
 338 THE BALANCE OF TRADE 
 
 But thoiigh the Avoild does owe Great Britain a 
 very important sum every year on these two 
 accounts, it is certainly nothing Hke what the 
 excess of imports over exports has been of late, 
 and we must go further afield for an explanation. 
 
 Appealing once more to the income tax returns, 
 we get an idea of the amomit due for interest by 
 foreign countries. Under various headings, this 
 reaches about £55,000,000, and has not greatly 
 varied for some years in amount, though it has in 
 distribution. But as the balance of trade for 1896 
 was £145,500,000, this £55,000,000 goes a very 
 little way towards accounting for it. We may 
 concede that the sum is too small, and does 
 not represent actual foreign indebtedness in this 
 respect. There is a fair amount of domestic income 
 which escapes the net of the Income Tax Com- 
 missioners, fine though its meshes are, and it must 
 be much more easy to evade it when income is 
 derived from foreign sources. True, most of it is 
 received in coupons, or in the dividend warrants 
 of corporations domiciled or banked in Great 
 Britain, and the tax is secured at first hand, but 
 a good deal comes into the country by remittance 
 in drafts or commodities, and payment on these 
 is not so readily assured. But if we make a very 
 considerable allowance, and say that one-half 
 the recent balances of trade are accounted for 
 in this way, we have still a formidable sum left 
 to deal with.
 
 FREIGHTS 
 
 339 
 
 The amount due for freight is not of so much 
 importance as is often supposed, and it is utterly 
 impossible to ascertain what it really is. The 
 largest freights earned by British shipowners are 
 on homeward cargoes, and these must be considered 
 as paid by the British consumer, except in the 
 important item of foreign goods re-exported, the 
 value of which in 1896 was £56,500,000, and the 
 year previous had been £60,000,000. But then 
 not all the imports are in British ships. Twenty- 
 five per cent, of the trade is done by foreign 
 vessels, and the net freights they earn must 
 usually be remitted to their owners abroad. Not 
 always though, because there are many vessels 
 sailing under foreign flags which are British owned. 
 Trade with Sj)ain, for instance, can only be carried 
 on, except under great disadvantages, by Spanish 
 vessels, but much if not most of the capital sunk 
 in them is owned in England, and the freights 
 consequently remain in the country. 
 
 But if inward freights are paid by home con- 
 sumers, outward ones are of course equally paid 
 by foreigners, and three-fourths of them will have 
 to be remitted to this country, the remaining 
 fourth, or whatever it amounts to, remaining in 
 foreign hands. Outward freights however are 
 of very much less magnitude. We liave seen 
 in a previous chapter, that of some 52,000,000 
 tons cleared from the ports of the United 
 Kingdom, 45,000,000 consisted of coal, .ind
 
 340 THE BALANCE OF TRADE 
 
 tills will not bear a very liii-h freisfht, indeed it 
 is often carried for little more than ballast rates, 
 and the 35,000,000 tons destined for foreign ports 
 earn probably not more than live to ten shillings 
 per ton on an average. The remaining seven 
 or eight million tons cannot represent a very high 
 fiofure, even when rates are satisfactory. A con- 
 siderable j^i'oportion is line case and bale goods, 
 and does pay stiff freights on regular routes, where 
 competition is guarded against by combinations 
 of "liners," but when we have taken credit for 
 everything, we are still a far cry from the 
 £70,000,000 or £80,000,000 M^e want. 
 
 There is another source of freight -reA'enue, 
 namelv that from British vessels tradino^ 
 exclusively between foreign ports. That cannot 
 be very gi'eat, because all expenses connected 
 with loading and discharge are incurred and paid 
 at foreign ports ; the seamen's wages are often 
 spent in them, and there is little more to remit 
 home than the net profit of the voyage, not a 
 very killing sum in these days. As freights are 
 so constantly varying in all parts of the world, 
 the difliculty of making even an intelligent gTiess 
 at the result we are aimino- at must be evident. 
 
 There is one important item of indebtedness 
 to Great Britain which is invariabh' overlooked, 
 probably because the aggregate is made up of 
 small sums. The city of London is the banking 
 house of the w^orld, and few people realise what
 
 BANKERS' PROFITS 341 
 
 that means. We know bankers' profits are con- 
 siderable, and joint stock institutions throughout 
 the country earn and divide substantial dividends 
 among their shareholders. But there are large 
 concerns in London, both public and private, some 
 of the latter among the wealthiest firms in the 
 world, which confine their attention almost ex- 
 clusively to foreign customers, who, needless to 
 say, have to pay, and sometimes stiffly, for the 
 accommodation afforded. Now and again a big profit 
 is earned in this way, but as a rule they are made 
 in comparatively trifling amounts. A foreign banking 
 or mercantile firm may desire credit in London, 
 or in some part of the world where London can 
 easily grant it, for say £50,000. The security is 
 unexceptionable, and the request is granted for a 
 remuneration of perhaps no more than a quarter of 
 one per cent. That is only £125, and counts for 
 little. But the bills of exchange fall due, and 
 require renewal. That means another £125, and 
 this may be repeated several times before the 
 transaction Is finally liquidated. We can form 
 some little idea of tlie maofnitude of the financial 
 business of London from the returns made by its 
 clearing house. In 1896, the turnover reached the 
 gigantic sum of £7,574,833,000. Li tlie same 
 year the Manchester clearing house dealt witli 
 £193,573,500, and Liverpool will. £i2(),40G,0()(), or 
 about two and a half and one and a half per cent, 
 respectively. As purely connnercial cities, Man-
 
 :,42 THE BALANCE OF TRADE 
 
 Chester and LiverjxH)! laiik little if anything behind 
 London, so that upwards of ninety-five per cent, of 
 the London business must be financial. Of course 
 there is much " clearing " done for the provinces, 
 but that is every year becoming less, as provincial 
 systems are inaugurated and perfected. Part of it 
 again is Stock Exchange business, but some of that 
 is for foreign account. A small fraction of one 
 per cent, on this turnover represents many millions 
 sterling, and some of them have to be paid by 
 remittances from foreign countries, which usually 
 come in the end in produce or commodities. 
 
 And lastly, there exists a strong tendency to 
 undervalue British exports, due principally to 
 protection abroad, particularly when it is on an 
 ad valorem basis. Foreign customs authorities 
 frequently require a consular invoice, certified by 
 shippers, of the value of goods on which they may 
 base the duties, and consignees, it may be sure, 
 demand that they shall be made out at the lowest 
 possible prices. The value of British exports to 
 Great Britain is the sum charged for them up to 
 the moment they are stowed in the ship's hold, 
 but declarations often a'o no further than their 
 value at the works, possibly without either j^rofit 
 or commission. In order that no questions may 
 subsequently be raised, exporters make their 
 declarations of value which go before the Board of 
 Trade tally with those they have made in consular 
 documents, whereas the cost may be increased by
 
 FOREIGN INDEBTEDNESS TO GT. BRITAIN 343 
 
 railway carriages and handling expenses, by live or 
 ten per cent., before they have left port. The 
 Board of Trade exercises an independent and 
 intelligent judgment in dealing with exporters' 
 declarations, but how are they to know whether a 
 a case of goods is worth £15 or £20, when the 
 value of such goods varies from a few pence to a 
 few shillings per pound or per yard? Some, perhaps 
 many millions sterling, must undoubtedly be added 
 to the value of British exports on this ground 
 alone. 
 
 We see therefore that in the natural order of 
 events, foreign countries have each year to pay 
 Oreat Britain for interest on money they have 
 borrowed, for freights on goods they receive, and 
 for commissions on financial accommodation they 
 avail themselves of There are other claims of a 
 more or less indefinite and fluctuating character. 
 For instance foreigners, especially United States 
 citizens, spend large sums of money on ]ioliday 
 jaunts in Europe, and particularly in England, but 
 against this must l)e set the amount spent by 
 Englishmen abroad, though not largely in the 
 United States. Addino^ these to tlie under- 
 valuation of exports, we shall arrive at a figure, 
 certainly exceeding £100,000,000, but how luuch 
 there is no menus of estimating. Excii now we 
 have not by any means exhausted the influences at 
 work in bm'lding u]) the United Kingdom ]).Ml;nice 
 of trade.
 
 344 THE BALANCE OF TRADE 
 
 A iiati(Hi wliicli lias siicli an imniense stake in 
 foi'eiiiii countries does not allow it to remain 
 stationary. It is always addino- here and diminish- 
 ing there, either by lending, withdrawing, or 
 transferring, and the movement at some period or 
 other reflects itself in the trade returns of the 
 kingdom. If money is being freely lent abroad, 
 it is not usually sent out in gold or silver, but 
 generally in some sort of manufactured or other 
 commodities, of which the borrowing country stands 
 in need. Similarly when loans are repaid or 
 called in, they are not remitted in bullion, but 
 in joroduce, and not necessarily in the produce of, or 
 direct from the country principally concerned in 
 the transaction. The balance of trade therefore is 
 made up quite as much by movements of capital, 
 as by receipt or expenditure of income. 
 
 At one time we find British investors placing 
 their money in foreign loans and undertakings of 
 all kinds, and exports are in consequence materially 
 swollen. Then defaults are made, and there is a 
 suspension of a portion or perhaps the whole of the 
 interest. That would tend to reduce imports, but 
 confidence has been lost, and determined efforts 
 are made to get hold of whatever j)ortion of the 
 capital is left. Instead of drawing five per cent, 
 of the amount invested in any one year as in- 
 terest, 25 or even 50 per cent, of the capital may 
 be withdrawn instead, and require remittance, and 
 temporarily swell imports instead of reducing them.
 
 ADVERSE BALANCES 345 
 
 There has been a conspicuous example of this 
 during the last few years in the great realisation of 
 United States securities in consequence of the 
 gloomy financial and economical outlook in that 
 country, and thougfh much P'old has had to be 
 sent, by far the greater part of the liquidation 
 has been effected in produce, stimulating the 
 exports of one country, and increasing the imports 
 of others. 
 
 While it is absurd on the one hand to contend 
 that Great Britain is being ruined by her excessive 
 imjDorts, it is false logic on the other to regard with 
 equanimity the continued growth of the balance 
 between imports and exports. It does not 
 represent increased income, but rather diminished 
 interest in foreign enterprise, and consequently the 
 limitation of industrial expansion. That may be 
 wise or it may be foolish according to circumstances, 
 but there is always a tendency to go to extremes 
 in either direction. Because some foreign invest- 
 ments have turned oiit badly, is no reason to 
 regard all of whatever nature with suspicion, and 
 because others are doing particularly well, is equally 
 no reason why capital should be blindly and 
 recklessly invested in all directions. There is a 
 tendency just now to ignore foreign outlets, and to 
 favour what are called home industries, 'i'lie 
 consequence is that there is a want of expansion in 
 the export trade of the country, l)ut nevertlieless 
 great industrial activity in supplying the demands
 
 ;,46 TJIE BALANCE OF TRADE 
 
 created 1)V this advent of capital into domestic 
 ventures. The result in the end will be the same 
 as in foreign enterjn'ise, the movement will be 
 overdone, and a great deal of the money lost. But 
 the adjustment will not affect the balance of trade. 
 Those who dispose of their interest in doubtful or 
 rotten concerns, will liave what is left paid them 
 within the country, and the transfer of capital will 
 simply be from one internal bank to another, with- 
 out the real exchange of anything more than a few 
 slips of paper, whereas had the same adjustment 
 been effected with a foreign country, it would 
 have meant the handlincr of somethino- of tano-ible 
 value. 
 
 A glance at the figures of the last quarter of a 
 century will show exactly how this operates. 
 Prior to the Franco-German war, the balance of 
 trade against the United Kingdom liad not varied 
 greatly for a good many years from £50,000,000, 
 and this w^as on a total foreign trade of about 
 £500,000,000. Then there was enormous activity, 
 and the total advanced by leaps and bounds from 
 £500,000,000 in 1867, to £682,000,-000 in 1873. 
 But still the balance scarcely varied, exports gi-ew 
 as rapidly as imports. It was a time of foreign 
 loans, and though each year the amount of interest 
 indebtedness was growing larger, and necessitated 
 greater imj^orts to discharge it, new loans carried 
 off British manufactures ni sufficient quantities 
 to compensate for it. Tlien followed a sudden
 
 FLUCTUATIONS AND THEIR CAUSES 347 
 
 collapse, "when it was found that parting with much 
 of the money was like pouring water into a sieve. 
 Exports fell away rapidly because it was no 
 longer possible to borrow to pay for them. 
 Investors, on the other hand, tried hard to get 
 some of their money back, and all sorts of foreign 
 produce was imported, so that the £371,000,000 of 
 1873, had steadily increased to £411,000,000 by 
 1880. Instead of a normal balance of trade of 
 £50,000,000, plus perhaps twenty or thirty millions 
 more for interest on the new loans, it rose to 
 £118,000,000 in 1876, £142,000,000 in 1877, and 
 £125,000,000 in 1878, and these figures undoubtedly 
 meant considerable withdrawals of foreign capital. 
 Then the panic subsided, and as investors have 
 proverbially short memories, the decade of the 
 eighties proved a time of outpouring of British 
 capital all the world over, and particularly into 
 South America. The adverse balance steadily fell, 
 and that of 1880 was the largest during th«^ entire 
 period. In 1886 and 1887, it was down to 
 £81,000,000, and it will be in the recollection of 
 many that these years witnessed something like a 
 climax in South American finance, and tlie immense 
 schemes inaugurated in connection witli it. 
 
 This culmination however was not for a little 
 time apparent. Immense contracts had been 
 entered into, requiring years to fulfil, and the 
 value of exports went on steadily growing, until in 
 1890 they reached the unprecedented figure of
 
 34S THE BALAXCE OF TRADE 
 
 £328,000,000. But imports had grown still 
 more rapidly, and the adverse balance had risen 
 to £113,000,000 in 1889, only to Ml again by 
 £20,000,000 the year following. They were years 
 of feverish excitement, the commercial atmos- 
 phere was laden Avith some strange force which 
 nobody could quite measure. Then followed an 
 event which will render the year 1890 ever memor- 
 able in conuiiercial annals, the Baring collapse, and 
 the fall of the gigantic structure which had been 
 erected on the foundations of the credit of that 
 great house. Once more the object was, not to 
 lend further sums to foreign countries, but to 
 recover all that was possible from the wreck, and 
 the balance of £93,000,000 in 1890 sprang with 
 one bound to £126,000,000 in 1891. 
 
 There perhaps it might have stopped, but the 
 crisis was quicklv transferred from South to North 
 America. No sooner had British investors decided 
 to await a return of prosperity in the Argentine 
 Republic, than they became alarmed at the outlook 
 in the United States. The M'Kinley Tariff, in 
 conjunction with the Sherman Act thrown in to 
 secure its passage, was leading to an inevitable 
 crisis, and a scramble ensued to realise Ameri- 
 can securities, which intensified the crisis by the 
 immense withdrawal of the gold bullion on which 
 the stability of the currency depended. The result, 
 as far as Great Britain was concerned, was not only 
 the piling up of gold in the Bank of England until
 
 HOW TO REMEDY ADVERSE BALANCES ^49 
 
 the vaults had to be enlarged to hold it, but a 
 steady growth in the adverse balance of trade as 
 well, which reached £131,000,000 in 1895, broke 
 the record with £145,500,000 in 1896, and, so far 
 as the returns of the year are published, threatens 
 to go one better in 1897.^ 
 
 These great balances are distinctly unsatis- 
 factory, and there is hardly a redeeming feature in 
 their favour. They mean that a small proportion 
 of the population, probably less than 4 per cent., 
 as we saw in a j)receding chapter, have such 
 immense interests abroad, that in order to receive 
 the income from them, much less transfer them 
 home intact, they have to import £100,000,000 to 
 £150,000,000 worth of commodities every year, a 
 little, if not a large portion, of which would other- 
 wise be produced by the remaining 96 per cent. 
 But the remedy does not lie in protection. The 
 hundred or hundred and fifty millions would have 
 to be imported all the same, and would only be 
 rendered dearer to the consumer by the amount of 
 the duty levied on it. Nor is it to be found In the 
 withdrawal and concentration at home of ca})ital in- 
 vested in foreign countries. That would oidy make 
 matters worse. Nor again do any of the socialist 
 nostrums of the present day meet the case. The 
 difficulty would be there just the same, if tliese 
 
 ' At tlio cikI of .hily 1897 tlie adverse balance is £y,0()(>,00() worse 
 than for the same period of 1896, and circumstances point to its 
 growing,' larger as the year advances.
 
 350 rilE BALANCE OF TRADE 
 
 imports were brouobt over by tbe 9G Instead of tbe 
 4 per cent. The one and only antidote, is tbe con- 
 tinued investment of capital abroad. If tbe in- 
 terest received be reinvested, either directly or 
 indirectly, in the country which pays it, that 
 obviates the remittance of produce, or if the pro- 
 duce is exported, as will likely be the case, some- 
 thing else will be taken in exchange for it. Failing 
 such reinvestment, other outlets must be found, in 
 order that it may not be dumped down without an 
 equivalent in labour being exported elsewhere. 
 
 This is by no means as impracticable as it may 
 appear. The world is not yet played out ; it is in 
 fact only just beginning to rub its tiny fists into 
 its half-opened eyes. The United States have a 
 population of seventy millions of j^eople ; there is 
 room for seven hundred, and then there need be 
 no crowding-. Canada has an area as larg-e as the 
 United States, and five millions of souls distributed 
 over it. The climatic conditions of a great portion 
 of the territory are unfavourable for settlement, but 
 fifty millions of people can lose themselves in one 
 of the finest and most bracing climates in the 
 world, every breath of Avhich infuses energy. 
 The capabilities of Australia, and Africa, and 
 South America, nobody yet knows. British India 
 has two hundred and seventy millions of people, 
 and a shorter railway system than the United 
 Kingdom with barely forty. Need we go farther, 
 or draw the moral ?
 
 THE EFFECT OF CHEAP PRICES 351 
 
 The United States, France, and Germany, may 
 thrive upon a trade on which Great Britain would 
 starve. The first has no foreign income to receive ; 
 it has to pay a very considerable sum instead. 
 France and Germany have some, but not a great 
 deal, and the competition of foreign products is not 
 on so large a scale. The British industrial popula- 
 tion may to a considerable extent be fed and clothed 
 Avith imports from abroad, but they must have 
 money to buy both the food and the clothing. 
 That must be largely earned by supplying foreign 
 countries with British productions, and money is 
 wanted to pay for them. Four per cent, of the 
 British po23ulation have it, and must lend it, not 
 recklessly and under compulsion, but judiciously 
 with the hope of gain. To encourage purely 
 domestic industry at the expense of foreign exports 
 is to commit industrial suicide. The one is p'ood 
 and should be promoted, the other is the nation's 
 life blood. Protection may be good enough for the 
 United States, for France, or for Germany. Cheap 
 production is the first of all essentials for Great 
 Britain, and Great Britain must not touch the 
 unclean thing. 
 
 The day will come when a balance of 
 £150,000,000 against the United Kingdom will 
 be a normal and a satisfactory one. But it will 
 have to be on a total trade some huiuh'eds of 
 millions greater than at present. Besides, it ma}- 
 mean in quantity considerably less than it does
 
 35:; THE BALANCE OF TRADE 
 
 now, as comiiKKlitit's inav ai]:;ain one day be on a 
 much higher basis of value. The abiHty of Great 
 Britain to purchase big and cheap Hues from the 
 foreigner is by no means an unmixed blessing. 
 Suppose, for example, the balance of trade in favour 
 of the country to be £100,000,000, and that it 
 must be taken in wlieat, of which we will sav, 
 likewise simply for argument, that the consumptive 
 demand is 100,000,000 quarters. Were the price 
 twenty shillings per quarter, the wdiole hundred 
 million quarters would have to be imported, but if 
 forty shillings, then only fifty million quarters, and 
 the other fifty millions w^ould either have to be pro- 
 duced at home, or purchased in exchange for home 
 manufactures ^vhich w^ould employ an equivalent 
 amount of labour. A country like England there- 
 fore, w^hich has annually to import so many pro- 
 ducts whicli enter into comj^etition with her own, 
 should do everything possible to encourage a 
 moderately high level of jDrices, rather than a very 
 low^ one. 
 
 The United States being a debtor, not a creditor 
 country, we naturally look for the balance of trade 
 on the opposite side of the ledger, nor do we look 
 in vain. We might only be misled by going too 
 far back into the figures of United States imports 
 and exports, because until 1879 they w^ere compli- 
 cated by the greenback currency, wdiich fluctuated 
 in value until specie payments w^ere resumed. 
 Since that year however, w^e find the movements
 
 UNITED STATES TRADE 353 
 
 very much more erratic than any in the United 
 Kingdom, nor is the explanation always quite so 
 jjatent. It is considered a matter for congratulation 
 when exports greatly exceed im23orts in value, and 
 the balance of trade is supposed to be favourable. 
 That by no means follows, and it may be no 
 more satisfactory than a large balance the other 
 way in the United Kingdom. It may simply mean 
 draining the country to pay its debts. 
 
 Were the trade returns compiled for the 
 calendar year, they would often be more erratic 
 still, because seasons would overlap. United States 
 exports are principally of agricultural produce, and 
 there is little harvesting done before July 1st, and 
 the product of what there is scarcely falls hito the 
 returns. By making the fiscal year to end on 
 June 30th therefore, the comparisons are fairer, 
 because they represent entire seasons. 
 
 In 1880-81 the l)alance in favour of the United 
 States was $260,000,000, while the year following it 
 sank to $26,000,000. The reason of the former was 
 however eminently satisfactory. Europe had sutl^'cred 
 from a partial failui'e of grain crops, the United 
 States in that, as in the year previous, had rea])ed a 
 bountiful harvest, and the value of the ('xj)()rts of 
 breadstuffs during the two years touched the highest 
 figures ever up to then recorded, $288,000,000 
 and $270, 000. ()()() r('S])ectively. This has never 
 l)een exceeded, except in 1 H'.J2, when European 
 crops again proved disastrous, and the figure rose to 
 23
 
 354 THf: BALANCE OF TRADE 
 
 $300,000,000. Tlu' United States in fact sold 
 their breadstiiti's for hard cash, and the net import 
 of crold reached nearly si 00,000.000, the country 
 being fully that nuich to the good, lu 1882, when 
 matters had assumed a more normal aspect, very 
 little gold was required to redress the balance one 
 wav or the other. 
 
 The chmatic conditions of 1881 were repeated 
 in 1892, and as far as the United States were 
 concerned, resulted in a favourable balance of 
 8203,000,000, while the year previous it had been 
 under $40,000,000, and the year later was trans- 
 ferred to the other side of the account to the extent 
 of $18,000,000. But there was no import of 
 $100,000,000 in gold this time to redress it. The 
 unsound economic leerislation was even then beufin- 
 ning to tell, and though the very heavens had 
 fought for the United States, they were throwing 
 the result of the battle away. European investors 
 were growling fidgety, and took the $203,000,000 
 in repayment of capital, thus staving off by a year 
 the crisis which was preparing. 1894 saw this 
 favourable balance run up to $237,000,000, yet 
 despite it, the net movement of gold bullion 
 resulted in an export of 85,000,000. The with- 
 drawal of capital was going on apace, and when the 
 following year the United States could only 
 persuade their foreign creditors to take $75,000,000 
 excess in commodities, they had to supplement it 
 with $30,000,000 in gold.
 
 INFLUENCE OF TARIFF LEGISLATION 355 
 
 Here then we see the difference between con- 
 iidence and distrust. A certain amount has to be 
 paid every year to Europe for interest and other 
 matters, only on ordinary occasions much of it is 
 reinvested. But recent years have l:)een extraor- 
 dinary, and a tremendous strain has been placed 
 on the United States, not only to pay up the 
 interest, but to repay capital as well. Never 
 was so large a favourable balance piled up in so 
 short a time as during the last three months 
 of 1896. It saved the country from the worst 
 financial crash it has ever had to go through, and 
 had not Great Britain been prepared to purchase 
 and pay promptly for the great blocks of wheat and 
 cotton literally flung at her, there woiild have been 
 a catastrophe. Surely there can be no great cause 
 for conoTatulation that an altosrether a])iiormal 
 balance of , trade was the means of securing salvation 
 by the skin of the teeth. 
 
 The magnitude of the British balance of trade, 
 we ha\'e seen, is dependent more or less on foreign 
 investment, and is not in any way influenced by 
 legislation. In the United States however, 
 •economic conditions play by far tlie leading ])art in 
 makiiiiT it. Let us take in illustration of this tln-ee 
 recent years, and compare im})()rts witli exports :— 
 
 l.S;i2-93. 1S!I3-!M. ISOMIS. 
 
 Imports, . $8G(;,000,000 $055,000,000 ii>7:'.2,000,000 
 Exports, . <S48,000,000 892,000,000 808,000,000 
 
 JWuncc, . .'^ispnopon^ <^i':;7,oon,nno S7n,oon,ooo 
 
 ' AdveiHo, under Llie M'Kiiilcy 'Juiill'.
 
 35^' THE BALANCE OF TRADE 
 
 Now, accordiiii;' to the American theory, 1893-94 
 must have heeii by far the most favourable of these 
 three. If we examine the figures carefully, we 
 will tint! that the great difference in those of that 
 year is due princi})ally to the large falling off in the 
 value of the imports, and this is partly accounted for 
 by the goods dealt with in the following table. 
 
 Imports of : — 
 
 1892-93. 1893-94. 1894-95. 
 
 Wool, . . . $21,000,000 S 6,100,000 $25,500,000 
 
 Woollen Goods, . ;^8,000,000 19,500,000 :36,500,000 
 
 Cotton Goods, . :5;3,500,000 22,;'.00,000 :'.;l,200,000 
 
 Flax & Hemp Goods, 28,400,000 19,400,000 26,:;00,000 
 
 Silk Goods, . . ::;9,000,000 24,800,000 31,200,000 
 
 Total of 5 Classes, . $159,900,000 .$92,100,000 $152,700,000 
 
 The import of these goods in the middle year 
 was little more than half the others, due entirely 
 to the fact that the tariff was undergoing revision, 
 and that great reductions in the duties were 
 anticipated. But there is another important fact 
 to be noticed, the trade was absolutely lost, and 
 the recovery in 1894-95 was only to the figures of 
 1892-93. The American people knew that clothes 
 would be cheaper in 1895 than in 1894, so instead 
 of purchasing new supplies as they would have done 
 under ordinary circumstances, they turned over 
 their wardrobes, and made much of their contents 
 last another twelve months. When they did 
 eventually replace them, they did not lay in a
 
 VIOLENT FLUCTUATIONS 357 
 
 double stock, because prices were so mucb lower, but 
 just took their ordinary requirements. Will anyone 
 say the United States were better off because they 
 saved S60,000,000 in imported clothing, and 
 perhaps three or four times the amount in that of 
 domestic production ? The individual wearers may 
 have been, but what about those engaged in the 
 trade, from the sj)iniier to the seamstress ? 
 
 An American protectionist would at once reply 
 that this might have been obviated by leaving the 
 tariff alone. But it was not due so much to 
 the reduction of the duties, as to the fixing of 
 them at so high a level, that the whole nation 
 revolted. And this will occur again and lead to 
 the same evil results, should another extravagant 
 tariff be adopted. Meanwhile, the balance of trade 
 will be affected in the opposite direction by a great 
 rush of goods seeking entrance into the United 
 States before the imposition of the higher rates.^ 
 
 Violent fluctuations in trade are always to be 
 deprecated. When deliberately brought about 
 they are disastrous, and the see-saw legislation of 
 the United States Govermnent and CJongress will, 
 if contiiuied, end in ruin. We experience wide 
 fluctuations in l>ritisli trade, and ;in increase 
 in tin; l)alance from £81,000,000 in 188G to 
 £145,000,000 in 181)G is i-emarkable enough. But 
 what would be tliought, if some year the value of 
 exports exceeded that of imports ? The reverse \\\ 
 1 This has actually taken place since these remarks were written.
 
 35 S THE BALANCE OF TRADE 
 
 the United States seems quite as extraordinary, 
 yet it actually occurred as lately as 1893. In 
 1889 imports also exceeded exports by $300,000, 
 and tlie year before, tlie excess actually ran up to 
 $28,000,000. Wliat stability can there be in a 
 commerce which shows a balance of £6,000,000 on 
 one side of the account at one time, and only a feAv 
 years later transfers it to nearly £50,000,000 on the 
 other ? It is certainl}^ ruled by no fixed laws, and 
 must depend largel}^ on wild speculation. 
 
 A country which conducts its commerce on such 
 conservative lines as France, might be expected to 
 maintain a very steady balance of trade, and such 
 is actually the case. If to be without a history 
 really mean happiness, then is French trade in 
 that enviable state. For many years there has 
 been an excess of imports over exports, because 
 France is a lending, not a l:)orrowing country, 
 though she confines her operations almost exclu- 
 sively to Europe. From Spain, from Russia, and 
 from Turkey, her investors have every year to 
 receive considerable sums by way of interest, and 
 this is reflected in the movements of commodities. 
 The balance has never yet reached £50,000,000, 
 and only once in recent years, until 1895, had 
 fallen as low as £25,000,000, so that it is plainly 
 seen how narrow these fluctuations are. A few 
 figures which include the largest as well as the 
 smallest difference, will l)oth illustrate this, and 
 show how uninteresting a discussion on French
 
 FRENCH AND GERMAN TRADE 359 
 
 balance of trade usually is, compared with that of 
 more enterprising rivals and neighbours. 
 
 
 Imports. 
 
 Exports. 
 
 Balance. 
 
 
 1884, 
 
 fcs. 4,343,500,000 
 
 fcs. 3,232,500,000 fcs. 1,111,000,000 
 
 £44,440,000 
 
 1889, 
 
 4,316,700,000 
 
 3,704,000,000 
 
 612,700,000 
 
 24,508,000 
 
 1892, 
 
 4,767,800,000 
 
 3,569,700,000 
 
 1,198,100,000 
 
 47,924,000 
 
 1894, 
 
 3,850,400,000 
 
 3,078,100,000 
 
 772,300,000 
 
 30,892,000 
 
 1895, 
 
 3,719,900,000 
 
 3,387,800,000 
 
 332,100,000 
 
 13,284,000 
 
 1896, 
 
 3,837,100,000 
 
 3,404,700,000 
 
 432,400,000 
 
 17,296,000 
 
 1891 was the year of the crop failure, and the 
 import of wheat and wheat flour the year following 
 w^as the highest on record, — fcs. 2,035,000,000, or 
 over £80,000,000. 1895, on the other hand, was a 
 year of exceptionally small imports of this com- 
 modity fcs. 485,000,000, and for 1896 somewhat less 
 still. This at least proves of what immense con- 
 sequence a bountiful harvest is to France, and raises 
 the question, w^h ether from an economical point of 
 view it is wise to artificially stimulate a particular 
 branch of industry which is so erratic in its yield. 
 If we concede that France was prosperous in 1895 
 and 1896 because its adverse balance of trade was 
 so small, we must equally admit that 1891 was 
 disastrous, and that 1897 jjromises to follow in its 
 footsteps, France, in short, wagers too heavil}- on 
 her wheat crop to be })rudent. 
 
 The great industrial expansion of Germany li.is 
 materially affected her balance of ti'adc. Xuw 
 some years subseqiK^it to the war, she was 
 busily engag(Hl putting her own house in 
 order. She did not require to borrow money,
 
 36o THE BALANCE OF TRADE 
 
 licit her had slu' imich to lend, and the l)alance 
 hetween hnports and ex})Oi'ts remained remarkably 
 even. In 1884 ^ there was an excess of the former 
 of barely £3,000,000. In 188G there was a balance 
 on the other side of nearly £5,000,000, a year later 
 there ^^■as nothing to choose between them, and in 
 1888 im})orts were again £4,000,000 in excess of 
 exports. But German traders had been (piietly 
 making money, and looking about them for new 
 investments, instead of putting all their foreign 
 eggs in the Russian basket. United States and 
 South American securities were freely bought, and 
 Italy transferred her financial affections from France 
 to Germany. The result of the outflow of capital is 
 apparent, and may again be illustrated by figures : — 
 
 Imports. Exports. Balance. 
 
 1889, . M 4,015,100,000 M 3,166,700,000 M 848,400,000 £42,420,000 
 1890-93, Exhibit no great variation. 
 
 1894, . 3,9.38,300,000 2.961,500,000 976.800,000 48,840,000 
 
 1895, . 4,120,700,000 3,317,900,000 802,800.000 40,140,000 
 
 1896, . 4,-324,000,000 3,403,800,000 920,200,000 46,000,000 
 
 Yet people who claim that Great Britain is on 
 the brink of ruin, because her adverse balance 
 of trade has increased from £81,000,000 to 
 £145,000,000, and point to Germany as the sup- 
 planter, entirely ignore the fact that the adverse 
 balance of the latter has within the same period 
 also grown, and now^ reaches nearly fifty millions 
 
 1 German trade returns prior to 1889 are apt to be misleading, as 
 it was only in that year that Hamburg and Bremen entered the 
 Imperial Zollverein. The chances are that in the years mentioned the 
 net balances were really against Germany as a whole.
 
 ARGENTINE TRADE 
 
 561 
 
 sterling. Nor can there be any doubt that in strict 
 proportion to the foreign financial interests of both 
 countries, the German is relatively the greater of 
 the two. It would be larger still were Germany to 
 cease lending abroad, because some of her exports 
 certainly represent capital. 
 
 The most violent reverses are naturally ex- 
 perienced in new and partially settled, or rapidly 
 progressive countries, which every now and again 
 receive a set back. We noticed in the preceding 
 chapter how Australian trade in 1896 underwent 
 quite a revolution — though of a temporary character 
 — for amply sufficient reasons. There is a more 
 striking instance still, and no bulky volume could 
 record the modern financial history of the Argentine 
 Republic in more eloquent terms than the following 
 table of its trade statistics : — 
 
 
 Imports. 
 
 Exports. 
 
 Balance Imports over 
 Exports. 
 
 1886, 
 
 ^S9.5,409,000 
 
 .S69,8;',.-'),000 
 
 S25,.574,000 
 
 1887, 
 
 117,::5r)2,000 
 
 84,422,000 
 
 ;!2,9:30,000 
 
 1888, 
 
 128,412,000 
 
 100,112,000 
 
 28,.S00,000 
 
 1889, 
 
 1 64,.~)T0,000 
 
 122,81. -.,000 
 
 41,7.".'.,000 
 
 1890, 
 
 142,241,000 
 
 100,819,000 
 
 41,422,000 
 
 lialance Exports over 
 Iinjiorts. 
 
 1891, 
 
 67,208,000 
 
 l(i:!,2 19,000 
 
 :'.6,0I 1,000 
 
 1892, 
 
 91,481,000 
 
 ii;;,:;70,ooo 
 
 21,889,000 
 
 189;!, 
 
 96,224,000 
 
 94,090,000 
 
 .>,L!4,000 - 
 
 1894, 
 
 92,789,000 
 
 1 1 ,688,000 
 
 8,899,000 
 
 189.",, 
 
 9.".,09(;,000 
 
 1 20,068,000 
 
 24,972,000 
 
 ' The Argentine gold dollar 
 
 is ill tout the same 
 
 value as thai of the 
 
 United States 
 
 
 
 
 '^ Imports over exi)orts. 
 

 
 362 THE BALANCE OF TRADE 
 
 We see the i^iadually swelling iiiijjorts as the 
 loans increased, culminating in 1889, then we 
 picture the anxiety of the early part of 1800, 
 resulting in the first decrease for some years, and 
 finally the utter collapse of credit, and the falling 
 off by more than 50 per cent, in tlie imports of 
 1891. There were still some solvent individuals 
 and corporations left in the country however who 
 struggled to fulfil their engagements, and from a 
 great import of borrowed capital, the country 
 suddenly passed to an export of the interest on it, 
 as well as a return of whatever capital could be 
 liquidated. There is plenty of legitimate occupation 
 for millions more in Argentina, and the day may 
 come w4ien imports will again considerably exceed 
 exports without involving another financial crisis. 
 
 We get the reverse of this j^icture in another 
 country which is just beginning to claim a large 
 share of attention. The Japanese have long been 
 the most progressive nation in the East, and their 
 foreign trade has steadily grown. Prior to the 
 conflict with China, their financial interests abroad 
 were not great, though on balance they probably 
 had a small amount to pay. Their victory ended in 
 placing a large sum of money, received as indemnity, 
 at their credit in Europe, and they have made use 
 of it in adding to their naval jDOwer, and stimulat- 
 ing industry in various ways, meaning the import 
 of a great deal of all sorts of material. The trade 
 statistics best tell the story .of this : —
 
 THE SETTLEMENT OF BALANCES 363 
 
 
 Imports. 
 
 Exports. 
 
 Balance Exports 
 over Imports. 
 
 1891, 
 
 1 Yen 63,805,000 
 
 Yen 78,806,000 
 
 Yen 15,001,000 
 
 1892, 
 
 75,903,000 
 
 90,481,000 
 
 14,578,000 
 
 1893, 
 
 89,286,000 
 
 89,657,000 
 
 371,000 
 
 Imports over 
 Exports. 
 
 1894, 
 
 121,058,000 
 
 112,234,000 
 
 8,824,000 
 
 1895, 
 
 138,-498,000 
 
 135,065,000 
 
 3,433,000 
 
 1896, 
 
 171,674,000 
 
 117,843,000 
 
 53,831,000 
 
 Scarcely less important than the way in which 
 a balance of trade is created, is its method of 
 settlement. The figures of exports and imports 
 between any two countries may or may not afford 
 a clue to their financial relationship. Spain, for 
 example, is financed almost entirely by France, and 
 French investors hold enormous blocks of govern- 
 ment, railway, and other peninsular securities. 
 The fact that in 1896 France imported from 
 Spain £7,500,000 more than she exported thither, 
 explains itself at once, though the real balance 
 of indebtedness is probably more, and has to be 
 settled in some other way. 
 
 Spain partially recouped herself from the United 
 States through the medium of her colonies. 
 
 U.S. Imports from Cuba and rhilip])ines were $45,000,000 
 „ Exports to „ „ „ . 7,700,000 
 
 UalaiHc due S]kuii, . . . $37,300,000 
 
 „ Imports from Spitiii, . . . 4,100,000 
 
 $41,400,000 
 „ Exports to Spain, . . . 11,400,000 
 
 Actual l)a]aii('(! ^Xwi^. SiKiiii, . . 's.Ki nnnjKlO 
 
 ^ The silver yen is worth aV)out two sliillings. 
 
 2 A reference to page 283 will show to what e.xtcnt the nnoliitioii 
 has affected trade between Cuhu ami the United States.
 
 364 THR BALANCE OF TRADE 
 
 A soniewliat larg'er anuniiit still, accrues to 
 Spain from the balance of trade with the United 
 Kingdom, but only a j)ortion of this is available, as 
 there is a good deal of British capital sunk in the 
 country in industrial enterprise, upon which returns 
 have to be made. 
 
 The trade between Russia and France resulted 
 for many years in a balance of from one to three 
 millions sterling in favour of the fomier country, 
 but in 1895 and 1896 it rose to over six millions, 
 llussia has been borrowing French money in large 
 sums, and remits the interest in produce. This in 
 its turn has resulted in the displacement of trade 
 between France and the United States, for instead 
 of taking wheat and petroleum from the latter, 
 they are received from llussia, and American pro- 
 ducers are compelled to seek other customers. 
 The value of the French import of petroleum, for 
 instance, is about .£'1,500,000, and of this the 
 United States contributed in 1896 less than 
 £100,000. France likewise imported large 
 quantities of breadstuifs, of which the States 
 shipped only about £350,000. 
 
 On the other hand, the British trade returns 
 for 1896 exhibit an excess of no less than 
 £29,450,000 in imports from France. Now France 
 does not owe Great Britain such a sum, if indeed 
 she owes anything at all. And strange to say, 
 when w^e turn to the French returns of trade with 
 Great Britain, the excess of exports over imports
 
 GREA T BRITAIN AND THE UNITED ST A TES 365 
 
 is only £20,000,000, which shows, not how un- 
 reliable trade statistics are, but how judiciously 
 they must be handled. The British returns 
 record imports from France of £50,105,000, but 
 the French returned exports to Great Britain 
 at only £40,336,000. The difference of nearly 
 £10,000,000 was no doubt received in reality from 
 other countries, Switzerland particularly, through 
 French ports, which French trade statisticians 
 record separately. Similarly the exports of Great 
 Britain to France are given at £20,655,000, of 
 which £6,50*0,000 was foreign and colonial mer- 
 chandise, the principal item being wool, valued at 
 £3,550,000; but France valued imports from Great 
 Britain at £20,218,000 only. But even £20,000,000 
 was not owing by France, and must be accounted 
 for in some other way. We will see what it is 
 presently. 
 
 British imports from the United States are 
 always greatly in excess of exports. Tliis Is 
 natural, because there is so nuich owing l)y one 
 country to the other. But the excess of 
 £74,300,000 hi 1896, or even that of £42,500,000 
 in 1895, re({uires more explanation. Ca})ital with- 
 drawals accounted for part of it, hut tlie Uiiit«Ml 
 States have every year to hcniid.itc witli (Jrcat 
 Britain ;i much larger sum tliaii tlicv ;i('tii;ill\' owe 
 her. 
 
 The United States do not sliip moic tli.iii they 
 receive to everv counti'V with wliidi tlicv li.ide.
 
 366 THE BALANCE OF TRADE 
 
 We have alicadv noticed that flict in their relations 
 with C'liba. They want coffee from the Brazils, 
 tea and other Eastern ])rodiice from India, Chhia, 
 and Japan, and like everything else, they must 
 be paid for. These countries do not want American 
 ao-ricnltnral produce, but require enormous quan- 
 tities of niainifactured goods of the sort made in the 
 United States, yet do not buy them because they 
 are made so dear by protection, and can be ob- 
 tained cheaper elsewhere. United States exports 
 therefore are small, as we shall see from the 
 following figures for the year 1895-96 : — 
 
 . TT, ^ Adverse 
 
 Imports. Exports. Balance. 
 
 Brazil, . . . $71,100,000 $14,300,000 $56,800,000 
 
 India, . . . 20,400,000 3,200,000 17,200,000 
 
 China and Hong Kong, 23,500,000 11,600,000 11,900,000 
 
 Japan, . . . 25,500,000 7,700,000 17,800,000 
 
 $140,500,000 $36,800,000 $103,700,000 
 
 The greater portion of this balance, instead of 
 being paid direct, is remitted to Great Britain in 
 breadstuffs and meat and cotton, and helps to pay 
 for British exports to those countries. The rela- 
 tionship between India and the United Kingdom 
 puts it outside the ordinary current of foreign 
 trade, but it is somewhat remarkable that the 
 other three countries are among the few to which 
 we send more than we receive. Brazil especially 
 is considerably indebted to us, as Brazilian securities 
 are largely held by British investors. This has to 
 be paid by the United States, as well as the
 
 SPECIE MOVEMENTS 367 
 
 ordinary balances of trade, out of the $57,000,000 
 owing by them to Brazil. 
 
 British British Favourable 
 
 Imports. Exports. Balance. 
 
 India, . . . £25,300,000 £30,850,000 £5,550,000 
 
 Brazil, . . . £4,050,000 £7,000,000 £2,950,000 
 
 China and Hong Kong, 3,775,000 8,825,000 5,050,000 
 
 Japan . . . 1,250,000 6,150,000 4,900,000 
 
 £9,075,000 £21.975,000 £12,900,000 
 
 There is another way in which the United 
 States might have liquidated a large part of its 
 indebtedness to the East, namely, by shipments 
 of silver, the gross export of whicli for the year 
 was $60,000,000. As a matter of fact .$11,500,000 
 did go to China and Japan, but on the other 
 hand, $43,000,000 was shipped to Great Britain, 
 and most of it transmitted thence to India and 
 other Eastern countries. 
 
 We see therefore how terribly complicated the 
 settlement of trade balance may become, and how 
 the intervention of half a dozen countries may 
 Vje necessary before they are finally adjusted. Yet 
 the huge machine works without friction, and tlie 
 motive power is supplied by the exchange banks 
 and bankers, located in every important trading- 
 city in the world. How it operates is In-yond our 
 province to discuss. 
 
 Balances are not always settled in coinnioditieK, 
 gold and silver often ])lay a most ini|»ortant 
 part. Despite the heavy national in(lcl)tr<ln(ss ol
 
 368 THE BALANCE OF TRADE 
 
 India to Great Britain, tlic iioiinal trade balance 
 exliibits in tlie former country an excess of imports 
 over exports, and in addition, over a long series of 
 years the import of specie has averaged £10,000,000 
 per annum. It has been principally in silver, which, 
 though the money and treasure of India, is only 
 now regarded in Europe as a commodity. This 
 silver has been largely hoarded by the natives, 
 who are able to accumulate small savings, but had 
 it been spent in steel rails and locomotives, and 
 other enofines of industrv, India would be much 
 more prosperous than she is to-day. The habit of 
 hoardinof instead of investino^ is one of the strono-est 
 
 o o o 
 
 brakes that can be applied to the wheels of pro- 
 gress, and this is applicable to any country that 
 endeavours to accumulate useless supplies of the 
 precious metals. 
 
 London, as the banking centre of the world, is 
 naturally often called upon both to receive and 
 supply specie, and large movements of it frequently 
 take place with little regard to any question of 
 balance of trade. Now and again however a con- 
 siderable real balance has to be settled by this 
 means, as for instance in the last months of 1896, 
 when the enormous purchases of United States 
 produce had to be paid for partly in gold, — the 
 object of the United States indeed in selling was 
 principally to obtain gold, and few countries are 
 more frequently compelled to liquidate their balances 
 on both sides of the account in this metal. It is
 
 GOLD AND COMMODITIES IN SOUTH AFRICA 369 
 
 always an expensive process, and in most instances 
 it would be more profitable to everybody except 
 the bankers immediately concerned, were the debt 
 discharged in commodities. It would be extremely 
 interesting to know how many times certain 
 American eagles have made voyages across the 
 Atlantic and paid their passage-money, and yet 
 not one has added a cent to its value in consequence. 
 The United States gold movement for six con- 
 secutive years will show how expensive and really 
 wasteful this process may be : — 
 
 
 Excess Exports 
 
 Excess Imports 
 
 
 over Imports. 
 
 over Exports. 
 
 1883-84, . 
 
 . $18,200,000 
 
 
 1884-85, . 
 
 
 $18,200,000 
 
 1885-86, . 
 
 . 22,200,000 
 
 
 1886-87, . 
 
 
 33,260,000 
 
 1887-88, . 
 
 
 25,500,000 
 
 1888-89, . 
 
 . 49,700,000 
 
 
 
 $90,100,000 
 
 $70,900,000 
 
 That is, $167,000,000 were moved to liquidate 
 what proved to be a balance in the six years of ikj 
 more than $13,000,000. 
 
 Silver is as much a United States commodity as 
 wheat or cotton, and the annual export is steady 
 and sometimes considerable, especially since the 
 repeal of tlic Sli(;riiian Act. 
 
 The balance of trade between EnHaiid .11 id 
 
 South Africa is at first sight heavily against tlic 
 
 latter country. In 189G British exports thitlit-r 
 
 exceeded the imports by £9,000,000 ; in 1895 by 
 
 24
 
 370 THE BALANCE OF TRADE 
 
 £6,000,000. This is really reduced however to 
 the more moderate figures of £5,000,000 and 
 £1,250,000 respectively, by the value of diamonds, 
 which are not included in the British trade 
 returns. No attempt in fact is made to ascertain 
 the import of these valuable gems, and the figures 
 are obtained from the Cape Government, which 
 keeps a record of the export conducted through the 
 post office. 
 
 There is another item complicating this account 
 —namely, British trade with Portuguese posses- 
 sions, that is, Delagoa Bay. Exports thither 
 were nearly £1,000,000 and £600,000 respectively 
 in excess of imports, which must be added to 
 the balances, bringing them up to £6,000,000, 
 and £1,850,000. 
 
 But in this particular instance movements of 
 gold must be taken into account as well, because 
 gold is as much a commodity in South Africa as 
 wheat in the United States or Canada. When 
 the figures are combined, they tell a very different 
 tale. The net import of gold into Great Britain 
 in 1896 was £7,180,000, so that the real balance 
 of trade was upwards of £1,000,000 the other way. 
 In 1895, while the import of gold reached 
 £8,350,000, £5,620,000 was shipped back again in 
 coin, and the real balance of trade was in favour 
 of South Africa to the extent of £900,000. 
 
 When it is borne in mind what great amounts 
 of capital were being sunk in that country in
 
 IMPORTANCE OF SETTLEMENT 371 
 
 machinery and prospecting, a heavy net excess of 
 imports over exports would have been by no means 
 surprising, yet the profits reaUsed by active and 
 paying industries proved sufficient to enable a large 
 sum to be remitted home as interest on capital. 
 
 There is one important jooint which must be 
 borne in mind. Each country must regularly 
 settle its balance of trade, whether adverse or 
 otherwise, or go into bankruptcy. A nation that 
 does not pay its debts finds its way there quickly ; 
 with a nation that does not collect them, it is only 
 a matter of time. Whatever is due to Great 
 Britain on a year's trading and investing must be 
 remitted, and either received, or reinvested abroad. 
 That Great Britain does not want so much of the 
 various commodities sent her in payment is of no 
 consequence. She may be surfeited with bread- 
 stuffs, and meat, and dairy produce, and still be 
 compelled to go on buying them, and be much in the 
 jjosition of a child sent into a confectioner's sliop 
 with half-a-crown, and forbidden to leave until the 
 money is spent, and what is })urchased consumed. 
 Had half the sum been spent in penny rolls instead, 
 the child's digestion would have been none the 
 worse, and half a dozen liungiy urcliins would have 
 had full stoiuachs and lia-Jit hearts. As it is the 
 result is disagreeable, and Great Britain is 
 sometimes at a loss to know \vli;it to s|)cii(l lici- 
 money on, without diimnging lici' nitci-nnl 
 mechanism.
 
 372 
 
 THE BALANCE OF TRADE 
 
 It is just here where France steps in, and 
 obligingly relie^•es perfidious Albion of some of 
 her shekels. We have already seen how French 
 prosperity is largely dependent on the supply of 
 luxuries to wealthy foreigners, and England in this 
 respect is distinctly her best customer. Her 
 exports in both the years 1895 and 1896, according 
 to the French returns, which in this instance are 
 more reliable for the purpose than the British, 
 slightly exceeded £40,000,000, and the details for 
 1896 will reveal how it was largely made up. 
 
 Silk and Silk Goods 
 
 Wine 
 
 Spirits 
 
 Millinery and Flowers 
 
 Curios 
 
 Ornamental Feathers 
 
 Table Fruits 
 
 Oils, etc. 
 
 Ornaments and Fans 
 
 Pottery and Glass 
 
 Preserved Fish 
 
 Works of Art 
 
 Perfumery and Paris Articles 
 
 Preserves and Biscuits 
 
 Woollen Manufactures 
 Leather Goods (including Gloves) 
 Prepared Skins and Peltries 
 Musical Instruments 
 Clocks and Watches 
 
 £5,040,000 
 
 3,130,000 
 
 1,060,000 
 
 1,960,000 
 
 1,200,000 
 
 820,000 
 
 610,000 
 
 520,000 
 
 520,000 
 
 380,000 
 
 210,000 
 
 160,000 
 
 210,000 
 
 50,000 
 
 £15,870,000 
 
 5,430,000 
 
 1,450,000 
 
 1,550,000 
 
 230,000 
 
 180,000 
 
 £24,710,000
 
 EFFECTS OF TRADE ADJUSTMENTS 373 
 
 Many of these items differ materially from 
 the British returns for the same period, which 
 record for instance imports of silk goods from 
 France worth £12,125,000, and watches and clocks 
 £870,000, a large part in each case being of Swiss 
 origin. In others, the classification varies and 
 renders comparison difficult. Several important 
 items like woollens, leather goods, wines and spirits, 
 do not greatly differ, proving them to be almost 
 entirely of French production. 
 
 There can be no doubt that a large part of this 
 £25,000,000, as w^ell as most of the remaining 
 £15,000,000 of more commercial commodities, could 
 have been j^roduced at home, and afforded support 
 to British industry. But what would have been 
 taken instead ? More wheat, or butter, or dead 
 meat and cattle ? Then would the farmer have 
 been worse off than he actually w^as. Suppose 
 that a duty, on silk had thrown the manu- 
 facture into English hands, and tliat the 
 £5,000,000, to say nothing of the £12,000,000. liad 
 been entirely eliminated. It would simply have 
 meant so much greater value in other commodities 
 to be imported instead, not necessarily from France, 
 or even in the year 189G, but at soiiu^ time, 
 and in some wav, it would have liad l(» Ix' made 
 good. Yet it is a misfortune lliat it sliould be so. 
 The wealthy must import their incomes earned 
 abroad, and in doing it, tliey provide cheap food for 
 those who can pay, but, at the same time, often
 
 374 THE BALANCE OF TRADE 
 
 take the bread out of the mouths of those who 
 have to work for it. The remedy for this state of 
 things has ah-eady been pointed out. 
 
 The great importance of this question of the 
 balance of trade is sadly under-estimated by 
 economists and practical business men alike. The 
 object of the latter is to make profits and 
 increase their capital, but they often fail to set> 
 that a temporary gain may result in permanent loss. 
 They rejoice over a so-called favourable balance of 
 trade, and think their country is growing wealthy 
 because it exports so much more than it imports, 
 while all the time it is being beggared by a steady 
 drain on its resources, arising from too large a 
 payment for the accommodation it has received, or 
 the actual withdrawal of the capital with which it 
 has been worked. Or, there may be jubilation at 
 the contrary excess of imports over exports, set 
 down as a sign of increasing prosperity, while all 
 the time it is destroying it by reducing the 
 demand for domestic labour, which is the source of 
 it. The transactions of everyday life never have 
 been, and never will be conducted on strict 
 principles of political economy, but a knowledge 
 and recognition of them may nevertheless reveal 
 many a pitfall, and destroy many a false notion. 
 
 The Governments of nearly all civilised nations 
 go to considerable expense and trouble in collecting 
 and tabulating details and statistics regarding their 
 comrnerce and industry. Could not a few of them
 
 OFFICIAL RETURNS 375 
 
 go a little further, and append an intelligent 
 account of the why and wherefore, which in future 
 years would be of far greater value than the 
 statistics ? The English Board of Trade has 
 not only the materials, but competent officials 
 to deal with them. Each year it would be 
 possible, not only to publish the bare figures of the 
 balance of trade, and what coiuitries contributed to 
 each side of the account, but what particular forces 
 were at work which compelled or permitted them 
 to do so. Then there would no longer be the 
 mistake made of supposing that adversity spelt 
 prosperity, or that real prosperity meant the road 
 to ruin. A country which either imported or 
 exported too much, would have the reasons given 
 it in black and white, and the opportunity, not 
 now always afforded, of retracing its steps before 
 it was too late.
 
 CHAPTER XL 
 Home and Foreign Trade. 
 
 Relative Importance — Effects of Protection — Arbitrary Divisions of 
 Territory — Wasteful Labour — Incidence of Taxation on different 
 Industries — The Agricultural Rating Act — Light Dues — Railway 
 Preferential Rates — Reckless Foreign Trading — Education — In- 
 ternal Competition — Independent Traders — Capitalist Influences 
 — The Directions in which they are exerted — The True Aims of 
 Home Traders — The West African Trade — General Possibilities 
 of Foreign Development. 
 
 Though tariffs interfere directly with foreign com- 
 merce, they are ostensibly imposed, so far at least 
 as they are protective, with the object of benefit- 
 ing home trade. The latter is supposed to be, 
 and undoubtedly is, of preponderating importance, 
 and even in the United Kingdom, whose foreign 
 commerce is the largest in the world, and the value 
 of it per head of the population relatively greater 
 still, the home trade must be many times more. 
 Still, we must not lose sight of the fact that a 
 reduction of 10 per cent, in the foreign turnover 
 may, not necessarily must, mean a greater contrac- 
 tion internally. The foreign j)art of the machinery 
 is a big cogwheel, with many smaller ones fitting 
 into it. When the big one moves rapidly the little 
 ones whirl ; when it slows down to half-speed they
 
 THE DESIRE FOR FOREIGN TRADE 377 
 
 do not make anything like half the number of 
 revolutions. A large export order passes through 
 few hands, — the merchant who executes it, the 
 manufacturer who makes it, and the railway com- 
 pany and shipowner who eventually transport it. 
 The merchant indeed may be eliminated, and the 
 order passed direct to the maker. But when the 
 proceeds are distributed, how many hands does it 
 pass through ? The banker upon whom the bills of 
 exchange are drawn in payment, the sellers of the 
 raw material, the workmen who have to receive 
 their wages, the shopkeepers with whom they are 
 spent, the dealers who supply the shopkeepers, and 
 the merchants or manufacturers who stock the 
 dealers. So that tlie value of the export has been 
 tui'ned over three or four times at least in internal 
 trade, and each time ought to have secured a profit. 
 Thus we find that while nations jealously guard 
 their own markets, they are always anxious to edge 
 their way into other people's. The American ])ro- 
 tectionist is determined to capture the liomc trade, 
 say in woollens: or tinplates, but is equally keen 
 about selling sniplus })roducts abroad, which lie 
 often succeeds in doing at about half cost |)iic('. 
 He is fully aware of the value of foreign trade, and 
 would like to double, treble, (iuadru])le it. I)Ut 
 then he has to meet competition and cnt prices; 
 at liome a efenerous (•■oNcnnncnt i-nai'antci's Iniii a 
 hnndred per cent. |)rotit, so lir jjrcf'ci-s llic sniallci' 
 trade at the liiiz-licr icimnK-rai ion. I^'roiii liis nidi-
 
 378 HOME AND FOREIGN TRADE 
 
 vidua! standpoint he is quite right, and as long as 
 the people of the United States are satisfied to 
 legislate for the exclusive benefit of a few select 
 individuals or classes, that is their business and 
 nobody else's. 
 
 We saw in the last chapter how the United 
 States are compelled to pay for the South American 
 and East Indian produce they require, in agri- 
 cultural products shipped to Europe. The four 
 countries specially named are large buyers of cotton 
 goods in Great Britain, part of which under favour- 
 able circumstances the United States might supply. 
 They do supply a small quantity as it is, let us see 
 how much. 
 
 rp , , J , r United States British Export of 
 
 TT -i J Qi. i^ c Export of Cotton Cotton Goods to 
 United States from ^ r^ , ^ ic- ^ r-i\ 
 
 
 
 Goods to 
 
 (§5 to £1) 
 
 Brazil, . 
 
 . .S71,100,000 
 
 .81,000,000 
 
 .811,300,000 
 
 India, 
 
 20,-400,000 
 
 140,000 
 
 92,200,000 1 
 
 China, 
 
 22,000,000 
 
 4,100,000 
 
 29,500,000 
 
 Japan, 
 
 25,500,000 
 
 100,000 
 
 3 2,000,000 2 
 
 
 .8139,000,000 
 
 .S5,:U0,000 
 
 8145,000,000 
 
 China is used principally as a dumping ground 
 when the American home trade is depressed, as it 
 was in 1896, and the chances are that most of the 
 export to that country did not realise cost price. 
 The previous year, when the trade was less 
 depressed, its value was only 31,700,000. 
 
 1 Yarn §10,200,000, goods §82,000,000. 
 -' Yarn §5,500,000, goods §6,500,000,
 
 THE UNITED STATES COTTON INDUSTRY 379 
 
 The United States ouaht to be the m-eat 
 cotton manufacturing country of the world, and if 
 there are any countries in which they should be 
 able to compete against Europe, it is those of 
 South America, as from every one without excep- 
 tion they import more than they export, and 
 Brazil is the only one taking anything like a 
 million dollars' worth of cotton goods. They 
 should be able to supply that country with every 
 yard it needs, except perhaps of specialities ; and 
 were they to pay India, China, and Japan directly 
 in cotton goods, instead of indirectly in agricultural 
 products, they would capture some British trade, 
 but not on the whole affect it very seriously. 
 
 They prefer instead to make their own con- 
 sumers pay high prices for the profit of the manu- 
 facturer, and in doing so deliberately throw awa}^ 
 a foreign trade in a single speciality, M'hich would 
 be worth at least $50,000,000 instead of $5,000,000 
 in four countries alone, and probabl}^ another 
 $50,000,000 in others that might be named. 'V\\\\i 
 is, the total value of the export of American cotton 
 goods which now struggles hard to rcacli l''J, ()()(), 000 
 or £3,000,000 per annum, might be made to Idiirli 
 £20,000,000. Nor would it mean iinich if any in- 
 creased foreign competition in tlif'ii' (»\\ II niaikcls. for 
 when they can manufacture chea]) eiiongli lo do a 
 trade like that, they will need no protection at lioinc 
 
 Nor would the farmer \)v any worse oil" tlnon^li 
 not being able tf) export his })roduce, for the
 
 380 HOME AND FOREIGN TRADE 
 
 additional hands required in the cotton mills would 
 consume it. Either the dispossessed British 
 cotton mills would have to find new customers 
 elsewhere, from whom they would purchase food 
 in exchange, or some of the hands would have 
 to go back to the land, and produce more food at 
 home. 
 
 Could anything afibrd stronger evidence of the 
 false economy of protection than this ? By build- 
 ing a high wall round home markets, people shut 
 themselves in, as well as the foreigner out. They 
 increase the cost of production and destroy home 
 trade at the same time, for if instead of merely 
 selling surplus products abroad to get rid of them, 
 they cultivated a profitable foreign commerce, that 
 would lead to a much larger domestic turnover. 
 Besides, farmers as a rule get a better profit from a 
 home industrial population than from a foreign one, 
 and agriculture would be both stimulated and 
 rendered prosperous. 
 
 It has hitherto been impossible to make nations 
 see this, or to realise that the lines of demarcation 
 they draw are altogether despotic. Why should 
 they just be across the frontier of Mexico or 
 Canada, and the United States, and not likewise 
 between Wyoming or Nevada, and some point 
 between them and Pennsylvania or Massachusetts ? 
 These four states it is true are all within a federal 
 union, under one government, but in most respects 
 their interests are so diverse that two might be
 
 WASTEFUL LABOUR 381 
 
 at the j^oles, and the other two at the equator. 
 Massachusetts can manufacture cotton goods If 
 protected against Canada, and so could Wyoming 
 if protected against Massachusetts. Wyoming is 
 not allowed to do so because it is in the United 
 States instead of Canada, and the inhabitants of 
 the State are subjected to a real injustice. Its 
 farmers may supply Massachusetts with food, but 
 so they would Canada if they drew their cotton 
 goods thence, and possibly obtain better prices. 
 But Wyoming is not permitted to engage in foreign 
 trade, because Massachusetts a couple of thousand 
 miles away wants home trade. Where there are 
 distinctions of race, or even language, which often 
 produce national antipathies, one can understand 
 barriers springing up, but between peoples identical 
 in almost everything, they are wasteful and 
 nonsensical. 
 
 Wasteful, because they prevent a fair exchange 
 of labour, and often compel it to be employed on 
 unprofitable work. In many a well-to-do house- 
 hold there is sufficient food thrown away every day 
 to keep a needy family in comfort. It requires no 
 efPort of imagination to see that when it occurs. 
 But when labour is thrown away, it is not so easily 
 discernible. A mechanic in the United States is, 
 let us say, engaged in making tin pl.-itcs, and were 
 he engaged in fruit-growing instead, liis lal)onr 
 would be just twice as effective. The mechainc in 
 England or Wales would have made two tin jilates
 
 3S2 HOME AND FOREIGN TRADE 
 
 for the same price as one cost in the United States, 
 and when cans had been made out of them, there 
 would have been fruit to fill them. It is decreed 
 however that tinned plates shall be a home 
 industry, in order, so it is said, that two men may 
 be employed instead of one. But the second need 
 only work half time to keep up with the tinplate 
 maker. Were both employed in growing the 
 fruit instead, they would work full time, and keep 
 two foreign tinplate makers fully occupied. 
 
 Now let us turn this into wages. The American 
 tinplate maker receives, say, $10 for a week's work, 
 and the fruit grower $4 for half a week, so that 
 their joint production costs just $14 in wages. Had 
 both men worked full time at fruit-growing at $8 a 
 week, they would have produced four times the 
 quantity of fruit for $16, but no tinplates to can 
 them. The wages of the two foreign tinplate makers 
 would have amounted to perhaps 815, so that for 
 $31, four times the quantity of canned fruit would 
 have been produced than actually was for $14. 
 
 But could it have been consumed ? To begin 
 with, four men were earning full wages where 
 only one and a half were before, and they would 
 eat some of the fruit. And w^ere the same principle 
 acted upon in other trades, the additional wage- 
 earners would eat the rest. Over-production ! 
 There is no such thing while a man willing to work 
 wants it, and while there are hungry people to be 
 fed. Extravagant production there is, and that is
 
 INTERCOURSE BETWEEN NATIONS 383 
 
 why consumption lags behind. Had home and 
 foreign trade divided the work between them, there 
 would have been more food and more mouths to eat 
 it ; and the artificial monopoly by one branch was 
 exactly as if a loaf of bread had been cut in two, 
 and half thrown in the fire, while men, women and 
 children were clamourinof for it. 
 
 To remedy this, every obstacle to the free inter- 
 change both of labour and commodities must be 
 removed. Of course a nation which has many 
 saints' days, an occasional fast, and numerous feasts, 
 does want protection against a more energetic 
 neighbour, which rests only one day in seven, and 
 takes but an occasional holiday in between. But 
 in whatever latitude an active race is located, there 
 is always plenty of work for it ready at hand with- 
 out forcing any for which the natural conditions 
 are not ripe. Men of the same race are fairly e(|ual 
 in aptitude and intelligence wherever they ha})})en 
 to be, and the Creator in His wisdom has given no 
 country an advantage for which He has not ])ro- 
 vided another with some equivalent. A citi/cii of 
 the United States would be indignant were it 
 suggested to him that his country was less ))r()- 
 ductive than England, or that his ])eople were less 
 intellitrent or less ener<ifetic th;in tlic I'^iL-lish. 
 Why, then, is he so afraid of them ? They dUcf to 
 do certain things foi' liim wliidi he (•■•innot do so 
 well himself, and to take from liim otlicrs tli.il llicy 
 carmot do as well as he. The fair t-xchangc would
 
 384 HOME AND FOREIGN TRADE 
 
 save him lioiirs of labour, and leave him dollars in 
 pocket. But there is something wrong in his 
 dictionary. When he turns up the meaning of 
 foreign trade, it reads, " Selling your goods to the 
 foreigner," and when he goes on further to home 
 trade, it is, " Making what you want yourself" 
 Half the real meaning has in each case been left 
 out. In the first instance, it is, " And getting paid 
 for them," and in the other, " When you can do it 
 as well and cheaply as anyone else." 
 
 There is less wasteful labour in Great Britain 
 than in any other country in the world, and that is 
 why its foreign trade is so enormous, and at the 
 same time its home trade 'per capita also the 
 largest. No industry can long exist which is not 
 on an economic basis. If cost of production is 
 higher than elsewhere, it is soon discovered, and 
 successful competition results. That rarely happens 
 however, because men take care not to risk capital 
 in such a business. Changes often occur from 
 unforeseen causes, and what has been a profitable 
 becomes a losing concern from no internal fault. 
 That is a pity, but in the interests of the individual 
 and the nation alike, the sooner the capital and 
 energy are transferred to something more promising 
 the better, unless the cloud is likely to prove but 
 temporary. Occasionally the causes at work are 
 grossly unfair, as in the case of sugar bounties, and 
 then something may be done without placing any 
 other industry at an unnatural disadvantage. And
 
 UNEQUAL TAXATION 385 
 
 just so long as each trader, whether home or 
 foreign, receives fair play, and none is favoured at 
 the expense of another, will both share the same 
 prosperity, or wade hand in hand through the 
 deeper waters of adversity. 
 
 Protection as it exists in the United States and 
 other countries is not however the only obstacle 
 that may be thrown in the way of trade develop- 
 ment, and while England gains much by free trade 
 she parts with some of the advantage in other 
 directions. We have considered taxation in its 
 relation to tariffs, and found that as far as the 
 United Kino-dom is concerned the incidence is not 
 unfair. But when practically half the taxation of 
 the country is contributed by four per cent, of its 
 population, the incidence on that half may be very 
 unjust. The four per cent, represent almost every 
 national interest, and certainly include all engaged 
 in a large way in both home and foreign tivide. 
 The taxation therefore may be so divided, that 
 it falls with undue severity on one, and rests 
 lightly on another. A few hiiiidicd tlidusaiid 
 pounds levied on one interest may almost destroy 
 it, while upon another it would scarcely be felt. 
 
 There are two representative cases wliicli 
 illustrate this point. Agriculture is essLMili.illy a 
 home industry, in fact the greatest of all liome 
 industries. A Royal Commission dccidctl ii<>t vciy 
 long ago that it was in a most depressed coiKlit ion, 
 and that tlie best practicaijk; way of all'oidihL;- 
 25
 
 386 HOME AND FOREIGN TRADE 
 
 relief was by taking a large amount of taxation 
 off land, which was done to the extent of over 
 £1,500,000 per annum, and transferred to other 
 shoulders. Probably one-fourth of this amount 
 has afforded much wanted relief, and need not be 
 grudged ; the remaining three-fourths, if it has not 
 already gone, will in a very brief period go into 
 the pockets of landowners, w^ho are the wealthiest 
 class in the country — and do the least to promote 
 its industrial prosperity. The same Commission 
 subsequently found that agriculture was no longer 
 so depressed, that it was really only the landowners 
 with incomes ranging from a few hundreds up to 
 tens of thousands per annum who were suffering, and 
 that the ag-ricultural labourer with wag-es of fifteen 
 shillings a week ought to be the happiest and most 
 contented of men, because food w^as so cheap. To 
 put it in its most favourable asj^ect, a home industry 
 has benefited by a million and a half per annum. 
 
 Shipping is as representative of the foreign 
 trade as agriculture is of the home, and shipowners 
 have a' grievance. It is a very much smaller one 
 than that of the landowners, and would cost much 
 less to redress. Government undertakes, as it 
 should, to light the coasts of the United Kingdom, 
 at an expenditure of a few hundred thousand 
 pounds per annum. It is no doubt theoretically just 
 that shipowners whose vessels depend on the lights 
 for safety should pay for them, and they not only 
 do so, but contribute more than one hundred
 
 LIGHT DUES 387 
 
 thousand pounds profit per annum into the bargain. 
 Foreign vessels pay the same dues, but only when 
 they enter a British port, and may make all the 
 use they like of them, without charge, when on 
 foreign voyages. But other Governments, with a 
 far less important stake in shipping than the 
 British, regard it as their duty to light their coasts 
 at the national expense. They resent the charge 
 made on their vessels in the ports of the United 
 Kingdom, and show that resentment by imposing 
 an equivalent tax on British ships entering their 
 harbours, which their own escape. The consequence 
 is, that while British and foreign ships alike pay 
 dues in British ports, only British ships pay them 
 in foreign ones, and the tax laid upon them by 
 their own Government is doubled. 
 
 Here then is unfair discrimination between 
 home and foreign trade. Wealthy landowners 
 receive £1,500,000 per annum at the expense of 
 general taxpayers, including shipowners, who in turn 
 are refused remission of three or four hundred 
 thousand pounds, wliich would be increased l)y a 
 somewhat similar amount at the expense of foreign 
 governments and foreign taxpayers. Thougli land- 
 owners and shipowners both belong to tlic rich, 
 not the poor class, they are not by any means 
 treated with equal justice. 
 
 There is a reverse side to this picluic Ship- 
 owners have so expedited tlic Imii'Iling "f (heir 
 vessels, that the cargo of the largest steamer is
 
 388 HOME AND FOREIGN TRADE 
 
 now often discharged and sorted in less than forty- 
 eight hours. This is true economy, and must be 
 commended. The railway companies which have 
 subsequently to handle a portion of these cargoes 
 are also able to make such expedition, that they 
 carry the goods at special rates. This is right 
 and proper too, because the expense of handling a 
 great bulk at one time is relatively much less than 
 scattered quantities picked up here and there. 
 But there is a limit to it, and it is often 
 exceeded, so that produce brought many thousands 
 of miles by land and sea, and then shipped 
 over an English railway, sometimes pays less 
 freight than British produce carried one or two 
 hundred miles. Shipowners do not make railway 
 rates it is true, but it is their business to encourage 
 the companies to reduce their tariff to a minimum, 
 in order that they may obtain full cargoes in foreign 
 ports. 
 
 But all foreign trade is not favoured like this, 
 and when it comes to conveying British manufac- 
 tures to ports of shipment, much higher rates are 
 exacted, though bulk and expedition may be the 
 same. Imports are uncertain and must be attracted^ 
 exports are fairly secure and are bound to be moved, 
 but in either case the home producer or the home 
 manufacturer suffers by differential rates. It is a 
 difficult matter to adjust, but the agricultural interest 
 has a legitimate grievance against the railway 
 companies, and indirectly against shipowners.
 
 RECKLESS TRADING 389 
 
 It may be claimed that one is a fair set off 
 against the other, but no such happy-go-lucky 
 method can be relied on to secure fair play to the 
 multitudinous interests concerned in British trade, 
 which cannot afford to depend on the chance result 
 of a game at pitch and toss. These are questions 
 which must be grappled with and settled equitably, 
 not left to the arbitrament of the party which can 
 make the first and most successful swoop on the 
 spoils to be gathered in. 
 
 Similar problems are presented in Germany, and 
 perhaps in most other countries likewise. Agrarian 
 discontent throughout that Empire springs more 
 from preferential railway charges than from any 
 other cause, and hostility between the agrarian 
 and industrial sections of the community often 
 leads to open rupture. Though the latter is 
 invariably favoured by the Government, the former 
 occasionally gains a victory, as instanced by the 
 legislation declaring time bargains illegal, which 
 cannot but cri})})le legitimate as well as speculative 
 commerce. An inordinate desire to increase the 
 foreign trade of the country at almost any cost, 
 has produced a C(jnflict with those who believe 
 that the home industry with which their interests 
 are bound up is being ruined thereby. 
 
 It has done something more, aj^parent outside 
 rather than inside the Empire. 'I'his was illus- 
 trated a short time ago by the jxiliticil (roubles 
 in Crete, where the Greek insurgents, riglitly or
 
 390 HOME AND FOREIGN TRADE 
 
 wrongly, believed Germany to be the instigator 
 of the movement against them. They retaliated 
 by boycotting German goods, and telegrams, it is 
 said, were sent to German manufacturers counter- 
 manding orders. Most of the manufactures })ur- 
 chased in the island were of German origin, because 
 that country gave every facility in the way of 
 long credit and cheap articles, rendering it 
 impossible for England and France to compete. 
 If this went on in Crete, how much more is it 
 likely to be iii vogue elsewhere ? A father in 
 giving advice to a son who was about to start 
 upon his career in the world, is said to have provided 
 him with a motto, " Make money ; honestly if you 
 can, but make money." We can well imagine the 
 German manufacturer's instructions to his foreign 
 traveller or agent being " Book orders ; at a profit 
 if you can, but book orders." 
 
 And may not this explain why Germany 
 sometimes captures British trade ? The British 
 manufacturer would indeed be foolish to compete 
 against such instructions, and had much better let 
 the business pass him than accept it at a loss. 
 Much comment was at one time made on the 
 progress made by Germany in the Eastern princi- 
 palities of Europe, where Great Britain was rapidly 
 ousted. But British Consuls were persistently 
 warning their countrymen at home against extend- 
 ing their risks or giving protracted credits in these 
 countries, and the warning was accepted, and no
 
 TRADE MARK FORGERY 391 
 
 doubt many bad debts were avoided in consequence. 
 It is worth noticing that while British exports 
 to Egypt have been steadily growing in value, 
 those to European Turkey have just as persistently 
 fallen away. How much have German traders 
 had to w^rite off on this account ? Every one 
 interested in English Fire Insurance Companies 
 knows that many of the principal ones, years ago, 
 opened up numerous foreign branches. But a time 
 has invariably arrived in the history of each of them 
 when a balance-sheet has been published showing a 
 more or less serious falling off in revenue, and the 
 explanation has been, a wholesale relinquishment 
 of bad foreign business, which agents, in their 
 eagerness to increase premium income, had been 
 induced to accept. British traders have every now 
 and again to use the pruning-knife in the same 
 way, and are able to regard with indifference, if 
 not with amusement, the avidity with which their 
 foreign rivals swoop down on the rejections. 
 
 There is a method of grossly unfair competition 
 notoriously prevalent in Germany, and that is, 
 the use made of foreign trade marks, eitlier by 
 direct forgery or colourable imitations. IA)r lier 
 own credit, her Government should \isi( with 
 severe penalties, when brought to its notice and 
 convinced of the justice of the charge, sucli iV-iudu- 
 lent attempts, not to capture trade, l)ut generally to 
 ruin the reputations of rivals wlio Imvc spent Ijirge 
 sums of money botii to earn and to merit llieni.
 
 392 HOME AND FOREIGN TRADE 
 
 There is no more important or far-reaching 
 factor in trade economy than education, and unfor- 
 tunately for England, most nations realised it 
 before she did. The repugnance to a thorough and 
 efficient mental training is often but ill-concealed 
 
 o 
 
 where it is not openly expressed, and for what are 
 called " the masses," the barest rudiments are re- 
 garded as amply sufficient. But a child is no more 
 educated when it can read, write, and figure, than 
 a steamer is equipped when the space has been 
 made ready to receive the engines. It is only then 
 that education begins, because these are only the 
 rude implements with which it is forged. The 
 increase of subjects is decried, and complaints made 
 that the country is being over-educated. There 
 has been no over-education yet, as far as elementary 
 schools are concerned at anyrate, and the list of 
 subjects wants increasing rather than diminishing 
 in number. Three-fourths of them may never do 
 the child any good, but who knows whether if the 
 other fourth were omitted it might not contain the 
 very matter which appeals to the mind of the 
 dullest pupil, and excites an interest that develops 
 an unexpected intelligence. Botany deals with 
 trees and wood, but what practical use is it to a 
 joiner ? Similarly geology treats of earths and 
 stones, yet it is not a necessary adjunct to efficient 
 brick-setting. But the joiner who studies botany, 
 or the bricksetter who interests himself in geology, 
 is not likely to spend his leisure hours in the
 
 EDUCATION 393 
 
 public house, or loafing at the street corners ; he 
 will employ them profitably, and very likely save 
 his money, and will be a better joiner or brick- 
 setter, and certainly a better citizen for it. Yet 
 where is he to get a taste for such studies if not 
 at school ? 
 
 Much money is now being spent, and spent 
 wisely, on technical education, but the foundation for 
 it must be prepared beforehand. It is only when 
 tastes have already been cultivated, and knowledge 
 previously acquired, that such a course is likely to 
 prove of practical value. 
 
 But the most extraordinary of all recent 
 assertions is that the school curriculum of the 
 country need not be so exhaustive as that of the 
 town. It is exactly in the villages and sequestered 
 hamlets of the land where it is most needed. Tlie 
 quick-witted town child may educate himself by 
 observation even in the gutter, and witliout going 
 to school at all may some day pick \\\t a fortune, 
 honestly or otherwise. Communion with nature 
 may engender contentment, but it does not engraft 
 the practical experience gained in the haunts of 
 men, and, moreover, it is generally tlie town-l)red 
 population which most readily learns the lessons 
 that nature has to teach. If tlicrc is to be a 
 distinction between town and country, it is in llio 
 latter where school aiifc sliould be tlic liigliest and 
 the standard the most compreliciisive. Yet the 
 severest penalties of school managers are often
 
 394 HOME AND FOREIGN TRADE 
 
 visited on the villae'e schoolmaster and school- 
 
 o 
 
 mistress who have ventured to teach more than 
 they are paid for, which is often little enough. 
 
 England's trade competitors make no mistakes 
 of this sort. In the United States there is no 
 kicking; against a school-board rate, and the states- 
 man who ventured to suggest that threepence in 
 the pound should be the maximum, would stand 
 very little chance of having his term of office 
 renewed. There, national elementary education 
 costs nearly $3 per head of the population, against 
 very little more than 6s. in England, while the 
 redeeming feature of American millionaires is that 
 they found and equip some of the finest educational 
 institutions in the world. It is short-sighted policy 
 no doubt, for some day they wdll be the means of 
 rousing the nation to a sense of the rotten 
 economical system wdiich has allowed so many 
 millions of the dollars to be accumulated. And 
 what shall w^e say of Germany ? There, if any- 
 where, the process is carried to an extreme, and 
 in the construction of involved theories, practical 
 considerations are sometimes lost sight of. But the 
 Teutonic mind is eminently practical, and generally 
 knows where to stop, and how best to adapt the 
 knowledge it has absorbed. 
 
 Jealousies and rivalries are not always confined 
 to international questions, and frequently do much 
 to damage local interests. To all intents and 
 purposes Great Britain is a commercial entity to
 
 INTERNAL COMPETITION 395 
 
 the United States, and the United States to 
 Great Britain. But when we come to examine 
 these separate entities, we soon discover how 
 heterogeneous is their composition, and how the 
 different segments are w^arring against one another. 
 
 The desire of Manchester to become a seaport 
 has stirred up bickerings and hatred between 
 that city and Liverpool, such as would be discredit- 
 able between two rival nations. Fair competi- 
 tion is not only desirable but necessary, both to 
 economy and efficiency, but when subterfuges 
 have to be adopted, the result is demoralisation 
 without either being attained. For. Manchester 
 to endeavour to fill her own docks at the expense 
 of Liverpool is reasonable enough, but w4iat is to 
 be said of a system of attracting cargo to one port, 
 the final destination of which is the other, and by 
 taking advantage of a privilege specially conceded 
 to a private undertaking, securing the dues 
 legitimately accruing to one corporation for the 
 benefit of the other ? Or what is to be said of the 
 English railway company, which, serving a port from 
 which a foreign line of steamers regularly sails, 
 advertises broadcast that the foreign government 
 will gi-ant special facilities for the clearance of cargo 
 shipped by that route, as against a rival one served 
 Ijy a British fleet? Surely foreign governments 
 might be allowed to do their own advertising. 
 
 These tilings and many others, too numerous ;iiid 
 often too trivial to mention, rob Great Britain of a
 
 396 HOME AND FOREIGN TRADE 
 
 portion of the advantage she would otherwise derive 
 from her system of commercial economy. Possibly 
 it is well that it is so, otherwise the jealousy felt 
 towards her by other nations might be strained to 
 breaking point. But tliat is not what British 
 traders have to take into account, and if they are 
 to hold their own, they must consider what is 
 to their own interests, and not what is likely or 
 otherwise to provoke friction with the foreigner. 
 Nor is there any reason why trade should be 
 thrown deliberately in his way, as is only too 
 frequently done, from pride, or stupidity, or both. 
 
 There is a manufacturing firm in the south of 
 Engiand, wdiich is said never once to have altered 
 its price list during the century. It keeps about a 
 dozen customers on its books, and refuses to extend 
 its connection, compelling all buyers of its goods to 
 deal with those it supplies. Many attempts have 
 been made to compete with it, but it holds its ground, 
 and easily disposes of its entire production on its 
 own terms. Nobody has ever yet been able to 
 make anything quite equal to the goods it turns 
 out. But if this firm looks rather sleepy, it 
 apparently always keejDS one eye ojDen. It does 
 not summarily dismiss the complaints of customers, 
 even when received second or third hand, but 
 diligently enquires into, and if it be in the wrong, 
 promptly rectifies them. Besides, its special pro- 
 duction contains probably more labour than 
 material, so that the cost of making it may really
 
 TRADE CONSERVATISM 397 
 
 be little if any less than it was a hundred years 
 ago. Anomalous as such a position is, it is not 
 this kind of trading that drives business out of the 
 country. 
 
 But other firms and individuals have endeav- 
 oured to do the same thing without occupying so 
 impregnable a position. There is another manu- 
 facturing house, located in another part of the 
 kingdom, also of ancient lineage and high standing, 
 but, unfortunately for itself, unable to retain the 
 monopoly of its production. To my personal 
 knowledge, a young and enterprising firm of 
 traders, enjoying deservedly good credit, opened an 
 account with it some years ago, and bought several 
 small parcels of its goods. They turned out some- 
 what unsatisfactory, and a complaint was lodged, 
 not vaguely and indefinitely, but specifically, of a 
 certain defect which rendered them unsuitable for 
 the express purpose for which they were required. 
 The reply was that it was a piece of imper- 
 tinence for a small firm a year or two old to 
 criticise the business or manufactures of one that 
 had been making the same goods for over a century. 
 In due course the manufiicturer's representative 
 called on the traders, collected the account owing, 
 referred briefly to the correspondence, and " sup- 
 posed lie need not call again." His su])|)()siii()n 
 was correct, and now the offending but still 
 unrepentant firm remit several ImiKh-cd jjoiinds 
 per annum for goods made in Cicrmany, which
 
 398 JfOME AND FOREIGN TRADE 
 
 ouglit to ])e and could be supplied by British 
 manufacturers. 
 
 Though such gross folly may be avoided, cross 
 currents between home and foreign trade are bound 
 to run swiftly and strongly at times, and it becomes 
 extremely difficult for governments and legislatures 
 to avoid taking sides. They would naturally 
 mcline to that of greatest importance to the country 
 concerned. ThouMi the internal trade of Great 
 Britain is of greater volume than the external, still 
 the industrial element inherent in the latter, is the 
 prominent force in English life. Parliament and 
 the nation are much more likely therefore to be 
 engaged on industrial than on agricultural legisla- 
 tion, and the great principle of free trade was 
 undoubtedly designed, and is steadily maintained in 
 the interests of the former. But the friends of the 
 agricultural or home interest are powerful, if they 
 are fewer in number, and by almost entirely 
 monopolising one Chamber of the Legislature are 
 able to, and do, prevent legislation inimical to 
 them, or likely to promote the welfare of the oppos- 
 ing elements at their expense. The landed interest, 
 in consequence, still wields a power, and possesses 
 an influence, such as it enjoys in few other countries, 
 not even where it is by far and away the pre- 
 dominating factor in the national life ; and though 
 external commerce is of such vital importance, 
 internal considerations sometimes block its way. 
 
 The agricultural element is as predominant in
 
 OPPOSING INTERESTS 399 
 
 the United States as the industrial in Great 
 Britain, yet it is altogether over-ridden in the 
 National Congress. Not by what may be regarded 
 as foreign commerce, because that is of greater 
 necessity in this instance to the agricultural 
 than to the manufacturing element. But the 
 secondary interest holds sway in America, as it 
 often does in England, and for precisely the same 
 reason, because immense wealth has given it 
 immense power. Where land is so plentiful, the 
 desire to possess it is less accentuated, particularly 
 as it does not carry with it the social distinctions, 
 so noticeable a feature elsewhere. Wealth always 
 seeks to ally itself with patriotism, or to form a 
 pseudo-patriotism of its own, and in one instance the 
 watchword is. Home against foreign industry, while 
 in the other it is Home against foreign agriculture. 
 But both in France and Germany we find tlie 
 greater section exercising the greater influence. 
 In the former country, nearly half the population is 
 directly dependent on the land, only about one-third 
 is coiniected with the ramifications of industry and 
 commerce. The wealth of the country is divided on 
 fairly equal lines, the enormous proportion of ]:)easant 
 proprietors having lai'gely expatriated tlie old 
 nobility from the soil. That is the reason, no doubt, 
 why the scales of legislation are held so evenly, why 
 industry is so ready to accord protection to agi'icul- 
 ture, and agriculture; to indnstiy. At least it 
 is iinp()KSil)le to contend lli;it one is l)einL;' I'uiiied
 
 400 HOME AND FOREIGN TRADE 
 
 by the other, and if tliere is any undermming 
 inriuence at work, it is not created by internecine 
 warfare. If the agricultural interest slightly holds 
 the predominance, it is only as it should be. 
 
 Quite the opposite conditions prevail in Ger- 
 many, where it is the industrial and commercial 
 section ^\•llicll forms nearly half the community, 
 relegating the agricultural to the second place with 
 one-third only. Bearing this fact in mind, the 
 persistent endeavours of the Government to pro- 
 mote the former are more easily accounted for, 
 while if the latter shout the loudest, they cannot 
 bring up the brute force when it is wanted. Only, 
 the position there is complicated by the interven- 
 tion of a strong socialist element, drawn from both 
 sections, which, by throwing its weight first into 
 one scale and then into the other, tends to prolong 
 and render the conflict doubtful. 
 
 Whether a country is stimulating more its home 
 or its foreign trade, may generally be ascertained 
 by gauging the respective influence of the sections 
 of the community specially favouring them. The 
 actual forces at work may not always be the most 
 beneficial. If, for instance, they seek to destroy 
 foreign commerce in Great Britain with her 
 enormous income drawn from outside, they are 
 crippling her resources. If, on the other hand, 
 they endeavour unduly to restrict home industry, 
 or to give it a wrong direction in the United 
 States, which must develop their natural internal
 
 RESTRICTIVE LEGISIATION 401 
 
 resources to enable them to meet their external 
 liabilities, they are equally encouraging economic 
 waste. Both countries, to ensure permanent pro- 
 sperity, must lend their energies to the respective 
 interests which provide the basis of the cheapest 
 production compatible with a reasonable standard 
 of comfort and workmanlike efficiency. 
 
 We have thus far dealt with positive forces, but 
 there are others possessed of a negative tendency. 
 Such for instance are the restrictions placed on 
 the freedom of individuals, whether masters or 
 workmen, in the pursuit of their respective callings. 
 The British Parliament in particular has been long 
 occupied with legislation of this nature, and though 
 a great outcry is often raised against it, there is 
 very little of it which has so far been unwise. In 
 the interests of health, as well as life, it sometimes 
 imposes onerous obligations, but they are rarely 
 more stringent than a humane employer would vol- 
 untarily adopt were he unfettered. The competition 
 of others less scrupulous than himself, forbids him to 
 entertain conditions which are too costly, but when 
 his rival is forced to adopt them whether he likes 
 to or not, it is no hardship to institute them, 
 though sometimes they go further than he would 
 wish. The pressure of inspection or interference 
 may be arnioying, and men often ask what they 
 have ever done to be called upon to suffer what 
 they regard as an indignity. Nothing at all ; but 
 unfortunately there are others engaged in the same 
 26
 
 402 HOME AND FOREIGN TRADE 
 
 trade utterly reckless of life and limb of anyone 
 about them so long as they make money, and we 
 are taught that in this world the sheep and the 
 goats cannot be divided. The falsest of all economy 
 is waste of life or incapacitation of labour, and the 
 country which does not afford every possible pro- 
 tection against both, is adding a heavy load to 
 obligations which must be discharged, and the coin 
 in which they are paid, while not always traceable, 
 is never recoverable. 
 
 But the cost of such protection undertaken as a 
 national duty, should likewise be at the national 
 expense, and not imposed as a direct charge on 
 industry, except possibly in such instances where 
 interference proves to have been justified, and where 
 the defect is due to preventible causes. Whether 
 it be a mine, or a factory, or a ship, the main- 
 tenance of the machinery necessary to ensure their 
 moral, apart from their industrial efficiency, is no 
 just burden on those immediately concerned. 
 
 If trade prosperity is so dependent on the 
 wisdom and discretion of employers, how much 
 responsibility rests upon the employed ? They can, 
 and sometimes do, make or mar an industry. Their 
 settled policy no less than their occasional acts 
 would introduce us into a wide field, very germane to 
 the subject in general, but hardly to that particular 
 phase of it which it has been the object of this book 
 to discuss. It is better to leave it entirely alone, 
 than to deal with it in any fragmentary manner.
 
 BRITISH WEST AFRICA 403 
 
 The principal lesson to be derived is, that each 
 industry, whether attached more particularly to 
 home or foreign trade, should conduct its affairs and 
 arrange its economical organisation as though the 
 prosperity of the entire nation depended on it. In 
 a country like Great Britain, where the annual 
 import must always be enormous, each home pro- 
 ducer of a commodity which can be and is im- 
 ported, should strive as far as he is concerned, to 
 limit the necessity for the foreign product, and 
 when he has done that he has fulfilled his duty. 
 There are immense oj)portunities to be availed of at 
 home as well as abroad, and as social evils are 
 grappled with and eradicated, industrial activity 
 will fill the vacuum, and make greater demands on 
 home trade, without in any way curtailing the 
 foreign. 
 
 We have witnessed during the last few years a 
 striking illustration of how this same activity can 
 be extended to foreign trade. There is a small 
 group of West African merchants and shipowners 
 who are very much on the alert, and never lose an 
 opportunity of pushing their business and extending 
 their influence. They have to deal with a broad 
 area of country, capable no doubt of a good deal 
 of development, but which, owing to the unhealthy 
 nature of the climate, does not admit of the rapid 
 progress which can be infused by the settlement of 
 European or American peoples. Still, a glance at 
 the trade returns proves that even during years
 
 404 HOME AND FOREIGN TRADE 
 
 disastrous on the whole to British commerce, this 
 little group marched steadily onward. The figures 
 are for the four districts usually included in British 
 West Africa, namely, Gambia, Sierra Leone, The 
 Gold Coast, and Lagos. 
 
 British Imports. British Exports. 
 
 1892, . . £1,518,742 £990,343 
 
 1893, . . 1,866,578 1,213,263 
 
 1894, . . 1,577,790 1,298,856 
 
 1895, . . 1,685,541 1,197,221 
 
 1896, . . 1,909,709 1,445,948 
 
 I have not included the figures of the Niger 
 Chartered Territories, as they would altogether 
 change the relative proportions. With the excep- 
 tion of Sierra Leone, these colonies have no debt, 
 and consequently no interest to remit in produce or 
 otherwise. The excess of imports over exports is 
 therefore in some degree the measure of the profit 
 of the merchants engaged in the trade, but as it 
 may include movements of capital as well, too much 
 reliance must not be placed on it. With the 
 Niger Territories it is quite different, the exports 
 being nearly double the imports, and represent to 
 some extent at anyrate capital sunk in the 
 country. There may be interchanges between them 
 and the other British colonies, but the jealousies 
 existing tend to reduce anything of the sort to a 
 minimum. 
 
 Now these figures show that the imports and 
 exports have increased in five years by 25 per cent.
 
 FRENCH WEST AFRICA 405 
 
 and 45 per cent, respectively. Very satisfactory, 
 though perhaps taken by themselves nothing very 
 extraordinary. But there is more to follow. 
 
 The West Coast of Africa is peculiarly open to 
 competition, inasmuch as both France and Germany 
 are eagerly pushing their way there. These two 
 countries protect their colonies as they protect 
 themselves, and the protectionist, and especially 
 the Imperial Federationist, would say that they thus 
 secured their colonial trade and shut the foreigner 
 out. But do they ? 
 
 If France has expelled the foreigner, at least 
 she has not gained much by it. Her returns of 
 trade with her West African possessions are as 
 follows : — 
 
 
 Imports. 
 
 Exports. 
 
 1892, 
 
 . £990,000 
 
 £800,000 
 
 1893, 
 
 900,000 
 
 770,000 
 
 1894, 
 
 910,000 
 
 1,000,000 
 
 1895, 
 
 690,000 
 
 800,000 
 
 The figures for 189G I am unable to give. 
 
 The progress here is crab-like, for while the 
 exports have remained stationary, im})orts have 
 fVdlen away 30 per cent. 
 
 But France lias not expelled the foreigner, 
 certainly not the Britisher. For wliilf tlic latter 
 has gone on exploiting his own j)reserves, lie lias 
 been poaching most unmercifully on the French 
 ones, as the following figures will show : —
 
 4o6 HOME AND FOREIGN TRADE 
 
 British 
 
 Trade Returns with 
 
 French 
 
 
 West Africa. 
 
 
 
 Imports. 
 
 Exports. 
 
 1892, 
 
 . £44,328 
 
 £176,261 
 
 1893, 
 
 . 68,437 
 
 174,580 
 
 1894, 
 
 . 222,198 
 
 196,331 
 
 1895, 
 
 . 221,704 
 
 308,017 
 
 1896, 
 
 . 203,442 
 
 376,314 
 
 So that while we increased the import and 
 export trade with our own possessions by 25 per 
 cent, and 45 per cent., we actually added 340 per 
 cent, to our imports from the French ones, and 
 considerably more than doubled our export 
 thither. And these imports, it must be remembered, 
 do not compete with home products. 
 
 France might of course have returned the 
 compliment, but her import of fcs. 9,250,000 from 
 British West African possessions in 1892, had sunk 
 to fcs. 7,250,000 in 1895, and her exports from 
 fcs. 5,500,000 to fcs. 4,000,000. 
 
 The corresponding returns for Germany and 
 German West African possessions are not so com- 
 plete, either in length of time or detail, but what 
 there are of them are quite creditable to Great 
 Britain, 
 
 Had this enlarged British trade been due to the 
 drink traffic, I would be the first to deprecate it. 
 As a matter of fact, British traders do their utmost 
 
 1 The actual export was £477,096, but included £300,000 for 
 telegraph wire and apparatus, an altogether exceptional item.
 
 TRADE STIMULUS 407 
 
 to discountenance it, and many of them would 
 leave it entirely alone were it not that the demand 
 would otherwise be supplied by the vilest contin- 
 ental potato spirit. It is cotton goods that are 
 chiefly responsible for the increase in exports, and 
 though th(; volume of the trade may be smaller 
 than that, say, with India or China, the West 
 African shipper is proving himself to be Lanca- 
 shire's best friend. 
 
 Now this is something like activity in foreign 
 trade, and apparently no tariff wall can be built 
 high enough to prevent the British trader clamber- 
 ing over, while the cheap production in his own 
 country, due mainly to free trade, gives him practi- 
 cally a monopoly on his own side of it. 
 
 What can be done in West Africa is equally 
 possible elsewhere, both in countries under British 
 control and beyond it. All that is wanted is 
 energy and intelligence — the one is useless without 
 the other. Such an expedition as that sent 
 recently to China by the Blackburn Chamber of 
 Commerce, for instance, may be turned to enormous 
 advantage, for crowded into that one country is a 
 fifth of the world's population. Certain it is, 
 that between home and foreign trade there should 
 exist no jealousy, the latter cannot prosper without 
 diverting the stream to the former.
 
 CHAPTER XII. 
 Free Trade or Protection ? 
 
 Slow Growth of Free Trade Principles — National and Individual 
 Interests — General Growth of National Indebtedness — Decrease 
 of the British Debt — Military and Naval Exjjenditure — The 
 Commercial and Industrial Classes — Re-export Trade — Pro- 
 tection in its Relationship to Commercial Morality — The 
 Causes of Over-production — The Working Classes — Spread of 
 Protectionist Sentiment in Great Britain — Increasing Competi- 
 tion in Wholesale Trade— Great Prosperity of Retail Trade — 
 Bullion Movements — What Free Trade and Protection do for 
 the various Classes of the Communitv. 
 
 This is the question which naturally presents itself 
 as we draw near to our conclusion. When rather 
 more than half a century ago free trade was 
 adopted as the economic hasis of the commerce 
 and industry of Great Britain, it was confidently 
 predicted to be only a matter of a very brief period 
 before every other civilised nation would be won 
 over to support and adopt the principle. Yet so 
 far from this being the case, protectionist doctrines 
 are in many parts of the world becoming continually 
 more rampant, and when facts and statistics are 
 produced to show the favourable effects of free 
 trade in England, others are promptly forthcoming
 
 NATIONAL INTERESTS 409 
 
 which appear greatly to minimise them, or the 
 contention is urged that protection has done 
 more for the United States or some other countr}^ 
 than the opposite pohcy has accomphshed for 
 England. 
 
 There is evidently then abundant room for 
 difference of opinion, and personal opinion, as a 
 rule, is little more than the reflection of 
 personal interest. Opposing factions view things 
 from totally different standpoints. A man to 
 Avhom any particular system means prosperity, is 
 often utterly at a loss to understand why other 
 people can desire to subvert it, while a second to 
 whom a change might bring fortune, regards the 
 first as utterly selfish in his motives. In countries 
 therefore where the voice of the majority is the 
 final arbiter, the wishes of the majority will in the 
 end prevail, unless indeed there be a powerful and 
 wealthy minority constantly able to over-ride it. 
 What for example are working men to do when, 
 just before an important election, factories and 
 workshops are closed on a large scale, and an 
 intimation given that they will not be re-opened 
 unless a certain candidate prove victorious ? Or 
 the majority may be misled, and the worse made 
 to appear tlie better cause, but in that case it has 
 only itself to blame if its interests suffer. Educa- 
 tion is now sufficiently widespread to make it 
 impossiljle for any mass of civilised people to lu^ 
 long kept under a delusion.
 
 410 FREE TRADE OR PROTECTION 
 
 Still there are national as distinct from per- 
 sonal interests, which must be taken into account 
 in judging the efiects of economic policy. Indi- 
 viduals may make fortunes, but if in the process 
 they involve their country in bankruptcy, the 
 verdict will be that the system under which this 
 has happened must be a very rotten one. There 
 are only two methods of retaining wealth made in 
 such a way, either by removing it as rapidly as it 
 is made or by changing the system before irretriev- 
 able disaster overtakes it. As national indebtedness 
 is one of the measures of the general well-being, we 
 may first of all apply this test. 
 
 France, without any controversy, heads the 
 list with a debt, which in 1896 amounted all told 
 to over £1,200,000,000, and involved an annual 
 outlay for interest on the consolidated portion of 
 £28,000,000, and on the redeemable and floating 
 of £10,000,000 more. The capital, though not the 
 interest, has been steadily accumulating, for in 
 France as elsewhere the value of money has 
 undergone considerable depreciation, and refunding 
 schemes have resulted in continual reductions in 
 the charges; in 1890, for instance, on a smaller 
 consolidated debt the outlay was £29,500,000. 
 But it is very rarely a sound principle to continue 
 borrow^inof because it can be done without further 
 cost, and some day France will find this out. Her 
 finance ministers do not blind themselves to the 
 danger, and only go on piling up the debt because
 
 THE FRENCH NATIONAL DEBT 411 
 
 the resources of taxation are so severely strained, 
 and nearly every year results in a budget deficiency, 
 which has to be met by borrowing, at first on 
 Heating loan, and when this has so increased as to 
 become unwieldy, by a conversion into funded debt. 
 How this accumulation has taken place is very 
 simply related. In 1871 the funded debt was 
 under £500,000,000, and the charge upon it about 
 £15,500,000. By 1876 it had increased to 
 £800,000,000, but of course there was good reason 
 for it. France had to pay Germany a war 
 indemnity of £200,000,000, as well as make good 
 within her own territories the devastation which 
 the war had wrought. Borrowing under such 
 circumstances was not easy, and most of the new 
 loans had to be raised at 5 per cent., which 
 brought the charge up to nearly £30,000,000, or 
 almost double on a debt which had not been 
 increased by much over fifty per cent. By 1876 
 however it may be supposed that all urgent 
 necessities had been provided for, and tliis sup- 
 position is confirmed by the very moderate 
 increases which took place for several succeeding 
 years. But with the beginning of the next 
 decade it started a fresh advance, and went 
 forward by leaps and bounds, until in 1885, by 
 which time there was a large redeeinal)le ;is well 
 as irredeemable debt, it had reached £950,000,000. 
 All the five per cents, luid })y tlien l)eeii con- 
 verted, and nf) higher interest was paid than
 
 413 FREE TRADE OR PROTECTION 
 
 4J-, but the charge had risen to £33,000,000. 
 Since then the increase has gone on at a quin- 
 quennial rate of about £50,000,000, and shows no 
 sign of coming to an end, while the floating debt 
 and other liabilities swell it up to the total named. 
 
 It would of course be ridiculous to directly 
 associate the rapid accumulation of debt with a 
 policy of protection. But at least the two must be 
 considered together. France is supposed to have 
 increased, and to go on increasing her wealth by 
 means of it, yet either that or something else is 
 having a most disastrous effect on the national 
 finances. Were protection removed, the debt 
 charge would have to be met just the same ; but 
 would the capital go on increasing ? The augmen- 
 tation may be partly due to foreign expansion, and 
 the so-called opening up of new markets to French 
 industry. But it means a drain on revenue as well 
 as an addition to capital, and the question may 
 well be asked, whether the French people are 
 proportionately enabled to meet this drain upon 
 them as taxpayers, out of their increased profits 
 as producers ? 
 
 This would become a very serious matter were 
 France involved in another great war. On top of 
 liabilities of £1,200,000,000, she could not expect 
 to borrow much more on easy terms, and four, then 
 four and a half, and finally five per cent, or more, 
 would have to be paid for accommodation. That 
 would not necessarily increase the charge on
 
 THE UNITED STATES NATIONAL DEBT 413 
 
 existing debt, but it would enormously depreciate 
 its capital value, and French protectionists would 
 not only find that the burden of taxation upon 
 them was increased, but that the value of their 
 investments had at the same time undergone a 
 vast diminution. 
 
 At quite the bottom of the ladder in this 
 respect stands Germany, with its Imperial debt of 
 but £110,000,000. Still in 1875 it was nothing 
 at all, the entire liabilities of the Treasury being 
 represented by about £6,000,000 in Treasury Bills 
 bearing no interest. There may to some extent 
 be public works as an asset against the debt, 
 and in any case it is trivial, and the taxation it 
 involves hardly worth taking into consideration. 
 But the tendency to increase is there nevertheless. 
 Germany is an admittedly protectionist country, 
 and at the end of twenty years is liable for 
 £100.000,000 more than she was at the beginning. 
 
 When we come to the United States, we can 
 weld debt and protection tightly together. In 
 1880, shortly after the resumption of specie 
 payments, the total liabilities were about 
 $1,950,000,000, of which only $1,725,000,000 was 
 interest bearing, Ijut oven under the inconvertible 
 currency previously in circulation, it had steadily 
 diminished every year since 18G7, that is, tlio civil 
 war was scarcely over before the liabilities incurred 
 by it began to be liquidated. The United States 
 remained moderately protective down to 1890,
 
 414 FREE TRADE OR PROTECTION 
 
 yet in spite of it, or rather we might say in this 
 particular instance, because of it, the debt continued 
 steadily to decline. It had to be redeemed with 
 the annual surplus of revenue over expenditure, 
 and the only other way of disposing of the surplus 
 being by reductions in taxation, that meant lower 
 protective duties, and less protection. With the 
 overflowing prosperity of the country, these duties 
 were not high enough to keep imported goods out, 
 the very fact of them being more or less luxuries 
 adding only to their popularity among the wealthy 
 classes. But few people would contend that the 
 prosperity of the United States up to 1890 w^as 
 due to a policy of protection. Indeed the cry 
 of the protectionists in the election of that year 
 was, that a much larger measure of j^rosperity 
 would be the outcome, if only real instead of what 
 they regarded as sham protection were adopted. 
 
 Its adoption and the cessation of debt redemption 
 were almost simultaneous. The capital amount of the 
 interest paying debt on the 30th June 1891, after pro- 
 tection had been in force barely a year, was about 
 $600,000,000, and it never after fell much below 
 this figure. The lowest point ever touched was in 
 September of that year, and the exact amount was 
 $585,024,720. The protection of commodities in 
 general, and of silver in particular, created deficit 
 after deficit in the national revenue, and led to 
 drain upon drain on the national treasury, which it 
 was only possible to meet by a succession of loans,
 
 THE BRITISH NATIONAL DEBT 415 
 
 beginning- in February 1894, and continuing steadily 
 until February 1896, until they amounted in the 
 aggregate to upwards of §260,000,000. Circum- 
 stances compelled the issue of bonds bearing a much 
 higher rate of interest than the credit of the country 
 necessitated, and the sales actually realised close 
 upon $300,000,000, the premium having practically 
 to be refunded before maturity by an annual pay- 
 ment of excessive interest. During a period of 
 nearly a quarter of a century therefore, under a 
 policy of what may be termed non-effective pro- 
 tection, the finances of the country flourished, the 
 debt was reduced to a very low level, and would in 
 time have been extinguished ; while the moment 
 protection became effective, the reverse tendency 
 asserted itself, and in two or three years debt was 
 increased by some £50,000,000 to £60,000,000. 
 There is no contention that the burden of debt in 
 the United States is even now oppressive, but it 
 soon would be, if added to at the rate of 
 £25,000,000, or even £10,000,000 per annum. 
 
 And now, what has happened in the United King- 
 dom, the only country of the four where free trade 
 has remained pure and undiluted ? Going back to 
 the earliest period with which we have dealt, namely 
 1875, we find that the national debt in that year, 
 funded, unfunded, and approximate value of termin- 
 able annuities all included, was £769,000,000. For 
 several years it exhibited a tendency to increase; it 
 was the period of the Tlusso-Turkisli war, when
 
 4i6 FREE TRADE OR PROTECTION 
 
 England was nnich involved in Eastern complica- 
 tions, and a great deal of money was spent on 
 warlike preparations. Yet the maximum reached 
 was only £773,000,000 in 1879, and since then it 
 has undergone rapid diminution, scarcely a year 
 with the movement in the opposite direction, until 
 in 1896 it had sunk to £648,000,000. But this is 
 not all, the redemption is automatic and increases 
 in velocity as it proceeds, because a fixed sum is set 
 apart every year for the debt, and as capital, and 
 consequently interest, decrease, there is a larger 
 amount available for sinking fund purposes. An 
 addition to the debt of any other country would 
 involve an immediate call on the pockets of the 
 taxpayers, but Great Britain could increase hers 
 by £200,000,000 without adding a penny to its 
 annual cost, until such time as was again considered 
 ripe to re-establish the sinking fund. 
 
 While France and Germany therefore have 
 been steadily increasing their national indebted- 
 ness, and the United States have been playing 
 hide-and-seek with theirs, free trade England has 
 reduced hers by £120,000,000. From a purely 
 national point of view which is the better policy ? 
 
 Nor is the contention admissible that the con- 
 tinental increase is any way due to their military 
 systems. If Great Britain maintains a small 
 army, she keeps afloat a huge navy, and the 
 respective charges under this heading, inclusive of 
 pensions, speak for themselves.
 
 MILITARY AND NAVAL EXPENDITURE 417 
 
 Great Britain, Budget Estimate 1897-98. 
 Army . . . £18,140,000^ 
 
 Navy . . . 21,890,000' 
 
 £40,030,000 
 
 France, Budget Estimate 1897. 
 
 Army . . . £28,800,000" 
 
 Navy . . . 11,750,000 
 
 £40,550,000 
 
 Germany, Budget Estimate 1897-98. 
 
 Army . . . £29,700,000' 
 
 Navy . . . 4,500,000- 
 
 £34,200,000 
 
 The expenditure of the United States on these 
 services has hitherto been comparatively trivial. 
 which would in itself account for the substantial 
 decrease in debt over so long a jjeriod. It 
 amounted for the year ending 30th June 1890 to 
 $56,000,000 for the army, and $31,000,000 for the 
 navy, about one-half the smallest item of the thrtH' 
 European Powers, though what it niav amount to if 
 the country ])lunges into a spirited foreign ])olicy, 
 is utterly impossible to |)ic(lict. The tcndcncv in 
 
 ' There is considerable extraordinary expenditur.- in uddiLion 
 under Special Defence Acts, but as the credits are not exliuusted dur- 
 ing the j^ear, the amount is uncertain. 
 
 2 Inclusive of extraordinary expt-nditure. 
 27
 
 4i8 FREE TRADE OR PROTECTION 
 
 Europe has been steadily to increase, and in Great 
 Britain perhaps more tlian elsewhere, but the 
 figures prove conclusively that it must have been 
 years since she enjoyed any financial advantage 
 in this respect over her neighbours. 
 
 Next to the nation as a whole, the commercial 
 and trading classes of it loom largest on the 
 horizon, as though they may not constitute 
 the majority of the population they keep the 
 Avhole machinery of industry moving. It will 
 not be a diflicult matter to prove that free trade 
 rather than protection afibrds the incentive 
 to their energy, and leads directly to increased 
 operations. 
 
 A country which seeks to retain its trade and 
 industry in its own hands, does not need many dis- 
 tributors. Between the manufacturer and the 
 consumer there are at most but two middlemen, 
 the dealer and the retailer ; often the first is 
 knocked out altogether, sometimes both. But the 
 moment a foreign commodity is dealt with, a small 
 army is employed. There is the shipowner with 
 his ofiice staff', or his agent, the harbour officials 
 and labourers, the draymen and warehouse keepers, 
 importers and brokers, and then dealers and shop- 
 keepers, and all exjoect to make something out of 
 it. A commodity that can afford to bear all these 
 charges must be more cheaply produced elsewhere 
 to be imported and disposed of on economical 
 principles. Similarly the goods purchased in
 
 EXPORTS OF FOREIGN COMMODITIES 419 
 
 exchange will go through much the same routine, 
 and while they have employed the same number of 
 hands in producing, they engage more in handling, 
 and yet arrive eventually at the consumer 
 cheaper than if made on the spot. A fair exchange 
 of manufacturing labour therefore means the 
 employment of a more or less important quantity of 
 intermediate labour as well. 
 
 We can again illustrate this from what are 
 known as foreign exports, that is re-exports of 
 imported goods. The figures for France and 
 Germany are quite unreliable, because they include 
 so much merely in transit from elsewhere. Switzer- 
 land, for instance, must conduct the whole of her 
 very extensive foreign trade through one or other 
 of the countries named. Austria-Hungary sends 
 and receives much through Germany. Some parts 
 of Germany make free use of Dutch ports, and 
 Northern France avails itself of Belman inlets and 
 
 o 
 
 outlets. But it is certain that neither France nor 
 Germany have any important markets for foreign 
 produce destined for distant lands, otlier than tlieir 
 own colonies. 
 
 Neither have the United States. The value of 
 this trade is more distinctly traceable, and in 
 1895-96 fell short of $20,000,000, wliicli is decidedly 
 above the average. Yet the United States are 
 situated most fa\'on)'al)l\' foi- connncrcc of lliis sort. 
 There are important consuming ccntics in ("cntial 
 and South America, which cannot alloid to kcci)
 
 420 FREE TRADE OR PROTECTION 
 
 larofe stocks of foreion commodities, and are tliere- 
 fore in constant need of replenishment. A port lik(^ 
 New Orleans should be a busy centre of such com- 
 merce, yet it is almost entirely absent. The total 
 value of foreign merchandise shipped from Gulf 
 ports was only $825,000, while the total shipments 
 from all United States ports to South America was 
 under $800,000. Two-thirds of the total went to 
 Great Britain or British possessions. The preval- 
 ence of protection enhances the cost of dutiable 
 articles, even where the full drawback is allowed, 
 and so handicaps if it does not entirely destroy the 
 business. 
 
 Great Britain on the other hand, as a free trade 
 country, has a large annual turnover in this respect. 
 In 1895 the value touched very nearly £60,000,000, 
 in 1896 it was £56,250,000. What does this 
 mean ? In the first place, shipping was employed 
 to convey over £100,000,000 worth of commodities. 
 Dock and harbour dues were charged on them, and 
 so helped to lighten the burden on those retained 
 for home consumption. Employment was given in 
 various directions, brokerages, commissions, and 
 profits, aggregating in all a considerable sum, were 
 earned, and helped to swell British incomes. And 
 all this occurred because there was absolutely no- 
 restriction on the trade. Anythnig that is wanted 
 hastily, from a drug at a guinea an ounce, to scrap 
 iron at twenty or thirty shillings a ton, is to be had 
 for the asking, and shijDped at twenty-four hours''
 
 COMMERCIAL MORALITY 421 
 
 notice. And because British ships are always ready 
 to go anywhere, and carry anything, the British 
 merchant navy, without subsidy or bounty, main- 
 tains its jjre-eminence on the ocean. 
 
 Protection not only restricts, if it does not 
 entirely prevent this trade, but throws all sorts of 
 obstacles in the way of that done for home con- 
 sumption. There are constant disputes as to the 
 meaning of clauses, and what they do or do not 
 include ; in the United States litigation has been 
 known over the placing or misplacing of a comma. 
 New and sometimes forced interpretations are given 
 to meet special cases, and the French tariff in partic- 
 ular is deluged in explanatory notes and amplifica- 
 tions, constantly being added to.^ ^i^ly those 
 subject to such interference can realise the worries, 
 resulting generally in more or less serious loss, 
 which are the direct outcome of continual friction. 
 I mentioned in a previous chapter tliat there were 
 43,420 undecided disputes pending in the United 
 States at the date of the last return. 
 
 Passing for a moment to an entirely different 
 aspect of the question, there is little doubt tlint 
 protection has a direct tendency to lower tlic moral 
 t(jne of the commercial classes. A determined 
 attempt is being made in tlie United States to 
 su])stitute wherever })ossible specific for ud vdloreni 
 duties, on the direct ground tbal iinporlcd goods 
 
 ' The French Customs Authorities in 189(1 ahjne, is.sucd iL'dspcciiil 
 circulars supphiincntary to various clauses of the tarill".
 
 42 2 FREE TRADE OR PROTECTION 
 
 are systematically iiiulervalued in the sworn declara- 
 tions of their owners, and that the protection 
 afforded to home manufacturers is in consequence 
 often more apparent than real. Laws which are 
 not only evaded, but broken without any cempunc- 
 tion of conscience, savour more of the relationship 
 of conqueror and conquered than of a free and self- 
 governing people. Commercial morality is not 
 assisted by a Government wdiich puts such 
 stringent regulations in force, that men otherwise 
 honest in their dealings are for ever seeking to 
 circumvent them. 
 
 Next we pass to the industrial community, and 
 the most noticeable feature is the wave of j^rosperitj 
 or depression which is always passing over it. At 
 one time these waves were of fairly equal force and 
 duration, but of late years the depression has been 
 severer and more prolonged than the prosperity, and 
 this may be directly ascribed to protection. 
 
 Under protection each country desires to supply 
 all its home requirements, and to be independent of 
 foreign producers. It seeks therefore to keep the 
 plant of its own production equal to the maximum 
 demands of consumers. In the United States, for 
 instance, the output of Bessemer steel rails in 
 1887 was nearly 2,050,000 tons. But hi 1894 it 
 fell to 900,000 tons. Presumably there was in the 
 latter year a plant equal to the production of 
 double what it was used for, indeed in the following 
 year the output rose again to 1,250,000 tons.
 
 O VER-PR ODUCTION 423 
 
 There was loss of interest and depreciation going 
 on on the idle plant, helping to add to the cost of 
 what was actually made. But that is not the 
 worst feature of it. Plant would not be thrown 
 idle until there was distinct over-production, and 
 the chances are that the 2,050,000 tons were far 
 more than were required in 1887, and that the 
 surplus had to be worked off gradually afterwards. 
 
 Extend this principle to France and Germany 
 and other protected countries, and we see the same 
 forces at work. Everywhere there is a maximum 
 plant capable of producing the maximum demands 
 of home consumption. That demand actually 
 springs up in two or three countries, and it is 
 filled at once. But under a free trade system 
 manufacturers would probably have been content, 
 even where they were able to compete successfully 
 against foreign rivals, to maintain a medium plant, 
 and any unusual demand would have been distri- 
 buted in all directions. It would have taken 
 time to fill, there would have been less disposition 
 to anticipate a continuance of briskness in a foreign 
 market than in a home one, and over-})roduction 
 would have been more promptly checked. The 
 period of prosperity would have been prolonged, 
 there would have been a smaller surplus to work 
 off during the subsequent depression, the jxTiod of 
 which would consequently have been shortened. 
 
 We have only to extend this to all the indns- 
 tries stimulated by jn-otection, and we soon airivc
 
 4-M FREE TRADE OR PROTECTION 
 
 at universal over-production. Labour is as much a 
 portion of the plant as the engine which drives the 
 machinery, and it too for a time is attracted in 
 unduly large quantities. Then it is suddenly 
 thrown idle, but instead of being- content with an 
 occasional turn and oiling, it starves, and those 
 dependent on its earnings with it. The farmer 
 goes on growing his corn and vegetables and 
 feeding his cattle, but there is not the money 
 to purchase them. They remain in his granary, or 
 rot in the fields, or eat their heads off, and their 
 owner complains of bad times and over-production, 
 whereas were everyone properly fed there would 
 be something approaching a famine in the land. 
 Free trade therefore not only opens many markets 
 to surplus products, but in three years out of four 
 stimulates the consumption of them at home. 
 
 And what of the ufreat mass of waoe-earners 
 and those dependent on small or moderate incomes 
 however received ? Where wages are proportionate 
 to prices, free trade or protection is of little con- 
 sequence. If bread and all the necessaries of life 
 are 50 per cent, dearer in one country than 
 another, and wages are likewise 50 per cent, higher, 
 the labourer miofht rest content. But how often is 
 this the case ? The skilled mechanic in the United 
 States may be quite as well off financially as his 
 brother in England. In any case he is not so 
 physically. The same precautions are not always 
 taken to ensure* his health and comfort while at
 
 THE BASIS OF PRICES 425 
 
 work, he has not the same redress if permanently 
 injured, or even temporarily disabled, and if he is 
 discontented and strikes, there may be judges who 
 will construe the laws ag;ainst him, and send him to 
 jail, though he may not have been guilty of any 
 violence. He really wants a higher proportionate 
 wage to compensate him for the disabilities he 
 is under. 
 
 But the moment he is idle, or his wages are 
 reduced, he begins to feel the pinch. The com- 
 modities he requires are not necessarily cheaper, 
 he has less money to buy them with, and must 
 either save less or reduce consumption. And it 
 must be remembered that in every country a very 
 laro-e number of wag-e-earners are not skilled 
 mechanics receiving high pay. They are the flotsam 
 and jetsam of humanity, cast hither and thither, 
 and earning a precarious livelihood. \.\\ average 
 of two, three, or if they are lucky, four days' work 
 per week is all tliey have to look forward to. If 
 food and clothing are plentiful and cliea}), they may 
 be able to eke out a fairly tolerable subsistence, but 
 increase the cost of these and life becomes one 
 continual fight against starvation. How essential 
 therefore that the barest necessaries should be ni.iiii- 
 tained at tlie lowest ]K)ssible level of value. lithe 
 well paid mecli.-inic in r]ngl;in(l .-ind tin- I nited 
 States are on fairly ecpial terms, llieic is no com- 
 })arison between the lot of tlie cjisii.il l.ibourers in 
 the two countries, for wiiile \\\ llie one ;i few
 
 426 FREE TRADE OR PROTECTION 
 
 coppers \\'\\\ always secure food and shelter, it is 
 only a silver piece will provide the equivalent in 
 the other. 
 
 Very low prices are of less consequence than tliat 
 they should be at the lowest practicable level. To 
 those who rarely if ever have any money at all, it 
 matters little whether the quartern loaf is at four- 
 pence or eightpence ; to those who are able to earn 
 something, however little, it may make all the 
 difference in the world. But when natural causes 
 keep the price at the higher level, they will also to 
 some extent raise the remuneration of even casual 
 labour. When these causes are, like protection, 
 purelv artificial, they may, and very likely will, 
 operate in one direction without exerting any corre- 
 sponding influence in the other. What each nation 
 must aim at, is not to reduce prices to the 
 lowest point in order that the most needy of the 
 community may benefit, but to take care that they 
 are kept as low as anywhere else. And only free 
 trade can accomplish this. 
 
 It is always difficult as well as dangerous to 
 attribute far-reaching consequences to narrow 
 causes. The contention that free trade has been 
 the sole, or even the principal reason of the past 
 industrial supremacy of Great Britain, is almost 
 impossible of proof. We do not know what would 
 have happened under protection ; other nations 
 have advanced under it, and one at least appears 
 now to be making more rapid industrial progress
 
 THE REDUCTION IN WHOLES A IE PROFITS 427 
 
 than Great Britain, though, as we have seen, it is 
 the least protective. But there are landmarks 
 which should at anyrate be noted. 
 
 Were the demands for protection in England 
 confined exclusively to agriculturists and land- 
 owners, it might be dismissed as a purely class 
 agitation. But it now finds considerable support 
 among manufacturers, who were at one time almost 
 to a man fervent adherents of free trade. They 
 feel the pressure of competition, particularly of what 
 we may term the " balance of trade " competition, 
 and though that must continue in one form or 
 another, each individual wishes to transfer it to 
 some other industry. Under it profits have been 
 grievously reduced, while they have been further 
 cut at the other end by a steady rise in wages. 
 Invested capital generally, being worth so much 
 less than it formerly was, it is but natural that 
 capital invested in industry should likewise yield a 
 smaller return, though this may be made good to 
 some extent Ijy increased personal energy. But 
 the fact remains, that only in exceptional years and 
 under very favourable circmnstances are industrial 
 magnates a])le to earn the profits to wliicli tliey had 
 grown accustomed by long usage, and because the}' 
 are growing poorer, or not increasing in wcaltli as 
 they tliink they ought, they imagine llic conntrv is 
 losinci" "-round. 
 
 Tlie favourite figures used to disprovi'; tliis 
 are not always very convincing; tlic value of
 
 4 28 tKEE TRADE OR PROTECTION 
 
 property assessed to the income tax does not 
 sliow any great increase in recent years, while 
 the larger deposits in the Post Office savings 
 lianks are known to be very largely on behalf of 
 well-to-do people, who use them as a safe invest- 
 ment while the rate of interest is everywhere else 
 so low. And truly, a system which has only 
 succeeded in placing a bare four per cent, of the 
 population within reach of an income of £400 per 
 annum and upwards, has nothing very great to 
 boast of. 
 
 Nevertheless the country has been and is 
 making steady progress, and increasing in wealth, 
 in ways w^hich are not perceptible to the statis- 
 tician. My own memory carries me little further 
 back than twenty or twenty-five years, yet in the 
 city with which I am best acquainted I have in 
 that time witnessed a transformation. In every 
 direction it has extended itself, and rows of goodly- 
 sized houses, semi-detached villas, and spacious 
 mansions have sjDrung up everywhere. I have 
 sometimes wondered where the people came from 
 who inhabit them, for the actual population has 
 not increased in anything like proportion to the 
 accommodation provided for it. The answer is 
 probably to be found in the wdiolesale migration of 
 shopkeepers moving their private residences from 
 their places of business to suburban districts. The 
 cheapness of nearly everything, undoubtedly due 
 in some measure to free trade, has not only stimu-
 
 WHAT FREE TRADE DOES FOR THE MASSES 429 
 
 lated the demand, but has increased retail profits ; 
 and while the great merchant or manufacturer 
 finds it difficult to make a fair percentage on an 
 annual turnover of hundreds of thousands of pounds, 
 the retailer makes his twenty, thirty, and even 
 fifty per cent, on his hundreds or few thousands. 
 The dwelling's which at one time would have been 
 regarded as at least the homes of large wholesale 
 dealers, are now inhabited by people who sell 
 sugar by the pound and calico by the yard. This 
 means not only enormous activity in the building 
 trades, and all in any way associated with them, 
 but growing receipts for the railway companies, 
 and new demands for omnibus and tramway routes, 
 with all the employment they necessarily afford. 
 
 In the same city there is a district notorious 
 as the centre of everything that is vicious and 
 criminal. Until recently I had not passed through 
 it for some years, and I was surprised to find 
 that the narrow streets, and still narrower and 
 more confined courts, liad been cleared of the 
 high and tuml)le-do\vn tenements witli wliieli they 
 had so aljouiided, and that rows of neat-looking 
 workmen's cottages had largely taken tlieir place. 
 How much wretcliedness, vice and crime tliere still 
 is in that district, God only knows, but at least an 
 attempt has been made to piox idc the |)e(t|)l<' with 
 decent surronndmgs. Not nnicli (•;iii he expected 
 \vliil<' there is ;i pnhjie-liouse at every street coi'ner, 
 and very often one or two in between ; but there is
 
 430 FREE TRADE OR PROTECTION 
 
 an evident tendency to ini])iovement even among 
 the most debased, assisted and expedited by the 
 very cheapness of all the necessaries of life. 
 
 And between these extremes there is an 
 enormous population dependent on one to three 
 pounds per week, living in comparative comfort, 
 where half a century ago they would have been 
 unable to make ends meet. Free trade may not 
 have lifted them into the class of the rich, but it 
 has at least handed down to them many of the 
 comforts, and some few even of the luxuries of that 
 class. 
 
 While these classes have been prospering, perhaps 
 to some extent at the expense of those above them, 
 the nation in the aggregate has certainly not been 
 growing poorer. We have noticed that already in 
 connection with the reduction of the national debt, 
 but there are other means of Pfaugfinof it as well. 
 
 o o o 
 
 All the new buildings, whether for residential or 
 business occupation, are a permanent addition to 
 the wealth of the country, and though some of 
 the old property may have greatly depreciated 
 in value, much of it on the other hand has steadily 
 risen, as it has become the centre of growing 
 business activity. And even w4ien we come to 
 that very popular test, the accumulation of the 
 precious metals, we find the same story told. 
 However else the excess of imports over exports 
 has been paid for, it certainly has not been in 
 gold. Every year from 1887 to 1895 inclusive,
 
 BULLION MOVEMENTS 431 
 
 more gold was received into the country than was 
 sent out of it. The aggregate excess of the years 
 1874 to 1896 inclusive amounted to upwards of 
 £60,000,000, and whatever else is wanted in the 
 land, there is plenty of the precious metal for all 
 needful requirements. 
 
 Silver renders a somewhat different account, as 
 during the same period the exports exceeded the 
 imports by upwards of £8,000,000. This is strange, 
 considering that nowhere in the United Kingdom are 
 there any silver mines ; but the explanation is that 
 some lead containing silver is produced, and that 
 a great deal of rich silver lead ore is imported from 
 Spain and other countries for treatment by English 
 smelters, and that the quantity so extracted has 
 been sufficient to provide all that was necessary 
 for coinage purposes, and for use in the various 
 arts, leaving a considerable surplus for ex})ort. 
 In British trade returns, silver should really 
 appear as a commodity, and that would slightly 
 rectify tlie adverse balance. In 1896, if so 
 included, it would have operated in this way to 
 the extent of £720,000, a figure ratlier Ih'Iow the 
 usual average. 
 
 The United States have on the otlier liaiid lost 
 much gold in recent years, again directly attril)ut- 
 able to fiscal mid cihtciicn' legislation. Tlio 
 countries of continental Eurttpc have gained I.hl^'i'Iw 
 but that has been of sot and deliberate |)nr|)o.se, 
 while in I^n^land it has taken plare in the nalural
 
 432 FREE TRADE OR PROTECTION 
 
 oourst' of events. Tlie banks of France, of 
 Germany, of Austria, and of Russia, accumulate 
 o-reat sup})lies of gold as a precaution against 
 militarv eventualities, and nothingf would induce 
 them to part with it. London is a free market, 
 and the gold is as much at liberty to go as it 
 is to come. 
 
 What free trade does for the many, protection 
 would undoubtedly accomplish in an accentuated 
 degree for the few. The increase in the price of 
 any commodity rarely passes intact into the hands 
 of the producer, but as one producer supplies many 
 consumers, a small portion of it soon enriches him. 
 Were protection afforded to agriculture in the 
 United Kingdom, the net result would be a rise 
 in the rent of land, which would come out of the 
 pockets of food consumers and pass into those 
 of the landowners. Were it extended to certain 
 manufactures, such as clothing, the woollen or 
 cotton spinner and weaver would profit ; the wearer 
 would pay. How it would operate in Great 
 Britain, is exactly how it does operate in countries 
 where it exists. Protection is the paradise of the 
 rich, Free Trade the salvation of the poor. 
 J
 
 APPENDIX. 
 
 THE NEW AMEKICAN TARIFF. 
 
 The " Sound Money " victory of November 1896 has already 
 borne its fruit in the United States, but it is distinctly of 
 the Dead Sea variety. Not the slightest attempt has been 
 made to reform the currency, the basis of which remains as 
 rotten as ever, while the assets held against it have been 
 further depreciated by at least .^50,000,000 through the 
 continued heavy fall in the price of silver. The hundreds 
 of thousands, if not the millions of United States electors 
 w^ho were deluded, cajoled, and forced into voting for Pre- 
 sident M'Kinley on the specious grounds of his transparent 
 " honesty " — save the mark — now discover to their cpst that 
 they are delivered over, bound hand and foot, to be merci- 
 lessly plundered by his friends. For the loud boast of these 
 latter is, that the new or Dingley tarifi" imposes an average 
 duty of 56 per cent, against the 40 per cent, of its imme- 
 diate predecessor, and the 50 per cent, which was all j\Ir. 
 M'Kinley as a jilain Congressman could screw it up to. 
 
 The first ol)ject of the M'Kinley Act was to reduce the 
 revenue ; the purpose of the Dingley tarifl' however is to 
 " provide revenue for the Government, and to encourage the 
 industries of the United States,"a curious combination it 
 must be admitted, for in the way in which it is here meant, 
 the one is nlLogetlicr uiilagoiiistic to tlie other. The fraincr 
 of the measure claimed lor it indeed Lliat it would sliut out 
 28
 
 434 THE NEW AMERICAN TARIFE 
 
 foreign imports, and enable home manufacturers to supply 
 the goods instead, and then in the same breath, and with an 
 audacity of which only an American protectionist could be 
 capable, proceeded to show that taking the previous year's 
 imports as a basis, the Treasury would gain to the extent of 
 8110,000,000. In the form in which the Bill has finally 
 become law, the duties payable on the goods imported during 
 the last year of the Wilson Act would be $276,000,000, 
 against the amount of 8156,000,000 actually collected under 
 that Act, that is, the additional levy would amount to 
 8120,000,000, or £24,000,000. As the quantities of these 
 imported goods constitute under many of the schedules but 
 a very moderate percentage of the total consumption, it is 
 quite safe to estimate that the cost of the new tariff to the 
 consumers of the United States will be somewhere between 
 £50,000,000 and £100,000,000 per annum. Just a little 
 instalment to be going on with of the price for " Sound 
 Money." 
 
 The Dingley Bill as it emerged from the "Ways and 
 Means Committee of the House of Eepresentatives was 
 almost a recast of the former M'Kinley Act, with one 
 important exception. That exception was sugar, which had 
 formerly enjoyed a bounty costing the Treasury some 
 812,500,000 annually, but now followed the lines of the 
 Wilson Act, and imposed instead a duty on the basis of 
 1| cent per pound for pure sugar, which was calculated to 
 yield 850,000,000, that is, on this one schedule alone the gain 
 to the Treasury was estimated at upwards of 860,000,000 
 per annum upon the M'Kinley Act. 
 
 The Bill was forced through the House of Eepresenta- 
 tives without amendment, and practically without debate, 
 the closure having been applied in an unusually drastic 
 manner. The measure however so greatly exceeded in 
 stringency what had generally been anticipated, that a
 
 MANIPULATING THE BILL 435 
 
 strong movement set in to import as much as possible of 
 every article affected, prior to its becoming law, and the 
 protectionists made a counter move to prevent this. They 
 tacked on to the Bill a retroactive clause, that is, althouoh it 
 might not become law for some time, the duties under it 
 were to become payable on the 1st May, and ample 
 security taken on goods which should be imported subse- 
 quently, and cleared from bond before the final enactment 
 of the new tariff. Unfortunately for these enthusiasts, they 
 had been engaged some years previous in defeating a clause 
 of a very similar character. 
 
 The Wilson Bill had been framed to come into operation 
 on the 1st August 1894, which would have allowed ample 
 time for its discussion, but owing to the obstructive tactics 
 of the Senate, its passage was delayed until the 28th of that 
 month. Protectionists, grasping at any straw, moved for 
 and obtained a decision from the Supreme Court that all 
 imports cleared from bond prior to that date fell under the- 
 old tariff, and consequently had to pay the old duties, though 
 they no doubt hoped that the judges of that court would 
 now reverse the decision for their special benefit. 
 
 But there was no need to appeal to the Supreme 
 •Court in this instance. The retroactive clause did not suit 
 the Senate, and was promptly banished to the limbo 
 of obscurity whence it sprang. Many of the members 
 of that body were busy in one way or another importing all 
 they could themselves, and otherwise making money out of 
 the new tariff, and they wanted delay, not speed, any loss to 
 the National Treasury being to them of utter insigniticance 
 when compared with their personal interests. It was conse- 
 quently not until the closing days of -luly that the J*)ill 
 actually l>ecame law. 
 
 Meanwhile it had passed llirongh iiiaii\' vicissitudes. 
 Despite the pharasai('al uttei'aiiccs of its ollicial sjjonsors
 
 436 THE NEW AMERICAN TARIFF 
 
 tlu'iv was less couci'ahiu'iiL lliau usual about the real 
 objects of the Bill, and the tight for the spoils was open and 
 flagrant. It was no longer a case of asking for a duty to 
 keep an industry on its legs, hut rather of demanding a 
 licence to pilfer the American public, and the man who 
 could steal the most became the hero of the hour. An 
 ardent supporter of the measure when asked if he was 
 aware that one of the clauses assured an annual profit of 
 So, 500,000 to one of the smaller trusts, blandly responded 
 that he " Didn't know and didn't care." 
 
 The House of Eepresentatives having looked carefully 
 after its own interests, it was but natural to expect that the 
 Senate would follow so excellent a precedent, one indeed 
 which in times gone by it had itself created. It became 
 therefore no longer a question of how much Congressman 
 Brown or Congressman Jones was going to make out of it, 
 
 O CO ^ 
 
 but whether it suited the pockets of Senator Smith and 
 •Senator Eobinson. 
 
 The result was very tersely put by a leading New York 
 journal on the day the Bill emerged from the Senate Tariff" 
 Committee, an event which was announced as " Dingley 
 Bill went in, Jones Bill comes out," Mr. Dingley being the 
 representative of the Eastern manufacturers as well as the 
 author of the measure, and Senator Jones of Nevada, the 
 champion of the interests strong in the Senate. 
 
 In one respect at least the Senate was honest. It 
 brushed aside the nonsense about the Bill providing ample 
 revenue for the Government, and sought to ensure that in 
 a practicable manner. Tea, previously on the free list, was 
 charged with a duty of 10 cents per pound, and the excise 
 tax on beer w^as raised from $1 to $1.44 per barrel. On 
 the basis of existing consumption these new taxes were 
 estimated to yield $30,000,000 per annum, and so help to 
 adjust the national balance-sheet. They were subsequently
 
 SENATE CHANGES 437 
 
 eliminated, as to the out-and-out protectionist an annual 
 addition to the national debt is far preferable to an 
 admission that protective duties do not provide sutticient 
 revenue. 
 
 But for all that, a very 'considerable number of changes 
 were made in the original measure, and as some of tlieni 
 were in the direction of reduced rates, credit is claimed for 
 the Senate for having somewhat modified the measure. 
 Little is due to it however, for the changes are more 
 apparent than real, and are principally conspicuous in the 
 schedule devoted to iron and steel, where the Wilson rates 
 are as a rule retained, and in one or two instances further 
 reduced. Here it has been lately demonstrated that the 
 interests principally concerned are unaljle to avail them- 
 selves of the protection already afforded, and that the 
 ordinary laws of supply and demand hold sway. To reduce 
 the duties $1 or $2 a ton, is consequently but to make a virtue 
 of necessity, for nobody is either the gainer or the loser. 
 
 Had the Senate really desired to demonstrate its ability, 
 as well as its desire to modify the metal tariff, there was 
 ample scope for it in the section devoted to cutlery. On 
 cheap penknives and pocket-knives for instance, tlie Wilson 
 rate was 2H per cent, ad valorem, the Dingley is 40 per cent, 
 on top of a graduated specific rate. A knife, the whole- 
 sale price of which is 5 cents, pays another 5 cents duty, 
 and then the 40 per cent., making tlie duty 140 jicr <'('nt. 
 against a former '17) per cent, Ifazors and razor blades are 
 very similarly treated, and instead of 40 per cent., pay, 
 if valued at say S3 per dozen, another $1.75, and 20 jn-r 
 cent, additional, nr aliout .SO jicr cent. Siniilaily all soils 
 of nails, paying mostly under the Wilson Act 2;") pm- cent., 
 are now cliarged at s])ecific rates varying from \ cent 
 to 2\ cents per pound, in sonic instances a very material 
 increase.
 
 43^ THE NEW AMERICAN TARIFF 
 
 Aif;iin, in the scheduk' (U'voted to cotton goods, many of 
 the AVilson rates are left. But they are solely in the 
 cheaper falirics in which foreign competition is altogether 
 out of the (juestion, and in which over-production at home 
 occasionally brings prices down to a lower level than the tariff 
 would warrant. Had American cotton manufacturers been 
 able to demonstrate that an extra 10 or 20 per cent, would 
 have enabled them to exact that much more from the con- 
 sumer, the Dingley Bill would undoubtedly have granted it 
 to them. 
 
 But the moment we pass to the more expensive goods, 
 in which there is foreign competition, there is a different 
 tale to tell. Here duties have been raised all round, and 
 sometimes raised heavily. Fine cotton cloths of over 200 
 threads to the square inch have been increased \ cent a 
 yard, and on the very finest 1 cent a yard, equivalent to 
 about 20 per cent. Stockings and hosiery have suffered 
 just as severely, and whereas the former rate was an 
 even 50 per cent. ad. valorem, it is now under mixed, 
 specific and ad valor etn duties raised to from 60 to 75 per 
 cent. 
 
 In one or two directions the Senate sought to introduce 
 decided improvements. Owing to the basis of the consti- 
 tution of that Assembly, it is much more representative of 
 the South and the West than the lower chamber. The 
 Wilson Act, it will be remembered, made important con- 
 cessions to agricultural industry by placing cotton bagging 
 and ties, and grain bags, on the free list. Tlie Dingley tariff' 
 sought to reintroduce these duties in nearly all their former 
 unblushing extravagance, and the Senate once more abol- 
 ished them. A compromise was eventually arrived at, under 
 which cotton ties now pay $11.20 per ton instead of the 
 $30 under the M'Kinley Act, and the bagging -fjj cent per 
 square yard, instead of ly^ to ly^^j- cents. Grain bags fare
 
 JiAW HIDES AND LEATHER 439 
 
 less favourably, and have to pay 15 per cent, on top of 
 specific duties of f to |- cent per pound. 
 
 But the Senate made ample atonement for this in other 
 directions, and particularly by the transfer of raw cotton 
 from the free to the dutiable list at 20 per cent, ad valorem, 
 aimed of course at the Egyptian staple, and by the imposi- 
 tion of li cents per pound on raw hides. These duties 
 were particularly obnoxious to Eastern manufacturers, and 
 the angriest protesters against them were the bitterest 
 protectionists. They were meant to afford an advantage to 
 western and southern producers, and hitherto American 
 protection has always meant that the western and southern 
 citizen was to pay, not receive. Logically the duties are 
 absurd, but not more so than the wool duty, and there is 
 no more reason why a flockmaster should be protected than 
 a cotton planter or a cattle breeder. The former duty was 
 got rid of, but that on hides the Senate insisted on retain- 
 ing, though it was compromised by a reduction to 20 per 
 cent, ad valorem. 
 
 This is a severe blow to the leathev-tannhig industry, 
 one of the very few in the United States which . has pros- 
 pered in late years, and likewise one of the very few which 
 has hitherto been conducted free from artificial restriction. 
 The value of tlie leather export has steadily mounted from 
 under $12,000,000 in ISO:; to upwards of .^20,000,000 in 
 1896, and despite the drawback to be allowed on exported 
 leather tanned from imported hides, the industry is certain 
 to receive a severe check. Moreover, it affects trade rela- 
 lioiishiiis will) South America, wlicucc fully lialf tlic raw 
 hides arc im])orte(l, and Uruguay and the. Argentine li('i)ul)lic, 
 who are constantly being invited to increase their takings 
 of United States manufactures, are already threatening 
 serious reprisals. One wnuld led some syiu]i;itliy I'nr tliosc 
 engaged in (be American leather trade, diil one iml feel
 
 440 THE NEW AMERICAN TARIFF 
 
 certain that had protection suited them they would have 
 demanded it for themselves long since. 
 
 Mexico is another country with which the United States 
 are anxious to extend their connections, at anyrate as far 
 as selling them manufactured goods is concerned, and there 
 is perhaps no country at the present moment whose friend- 
 ship is l:>etter worth cultivating. Mexico is likewise a 
 considerable exporter of hides as well as cattle, the duty 
 on which is also largely increased. But the great industry 
 of that republic is silver and lead mining, and once more 
 the Western Senator has intervened to destroy trade. The 
 natural source of supply for the deficiency in the United 
 States lead production is Mexico, so the duties on pig lead 
 and lead ore have been doubled, the former now standing 
 at $47.50, the latter at 833.50 per ton. Again however, 
 the Western Senator and those he represents are amply 
 justified from their own point of view. 
 
 The last serious difference between the two houses which 
 I shall notice for the moment, arose on the Wool Schedule. 
 The M'Kinley Act, it will be remembered, divided the 
 fieeces into three classes. The commonest is used princi- 
 pally by Eastern carpet manufacturers, and when not 
 imported is grown principally on the backs of sheep in the 
 Kocky Mountain districts. As they thus belonged to 
 AVestern owners, the measure of protection extended to 
 them was much less than to those of the Middle and 
 Eastern States. Against this Western Senators rebelled, 
 and while reducing the duties on first and second class 
 unwashed wools from 11 and 12 cents per pound to 8 and 
 9 cents respectively, they materially increased those on third- 
 class wools. Once more was heard the wail of pharasaic 
 hypocrisy as the sponsors of the Bill declaimed against 
 greed and selfishness, but nevertheless, to keep what they 
 had already secured for themselves, they agreed to give
 
 CHEMICALS AND TIMBER 441 
 
 what the West demanded with some slight nioditicatiou, 
 with the result that the old M'Kinley Woollen Schedule is 
 re-enacted in more than its old iniquity. 
 
 The new regulations regarding tourists' wearing apparel 
 and personal effects, naturally fall to be reviewed under this 
 schedule. I referred to a probaljle attempt to put an end 
 to this abuse, and it too has resulted in compromise. 
 Instead of everything of foreign production being made 
 dutiable, an import is permitted of $100 for each person ; 
 a slender margin for some, but a fairly wide one for those 
 who are not inclined to extravagance. Already endless dis- 
 putes have arisen regarding the interpretation of the clause, 
 and among other things a wrangle has occurred over the 
 value of the clothing on the corpse of an unfortunate 
 passenger who died while at sea. The customs landing 
 depots attached to the various ports promise to become 
 veritable houses of detention, and there will be no need 
 shortly for penitentiaries like the " Tombs." 
 
 . On the other schedules, with one important exception, 
 there appears to have been something like agreement. That 
 devoted to chemicals afforded perhaps the widest field f(U- 
 fresh pilfering, and it was fully availed of. Since the days 
 of the ^M'Kinley Act, a Drug Trust has come into existence, 
 which has sought to impose its terms on every retail 
 chemist in the Union, and failing, has delil)erately set to 
 work to ruin him. The ten per cent, duty hitherto im])Osed 
 on raw drugs was insufficient for its purpose, aiul as it no 
 doubt contributed handsomely to the Eepublican cani])aign 
 fund, its orders despatched to Washington to impose an 
 additional specific duty were jtromptly and inijilicitly 
 obeyed. Bleaching powder, which even under the .M'Kinley 
 Act had been left free, was transferred to the dutiable list, 
 and rated at \ cent jier jh.uihI, r(|iia] l<i S4.."(l ]ici- Ion. 
 Argols or crude tartar was ticatcd in tiir saiiir niaiiiicr, and
 
 442 THE NEW AMERICAN TARIFF 
 
 instead of being free, is uow charged at 1 cent to 1^ cents 
 per pound, ecpiivalent to 10 to 15 per cent, of its value. 
 The Wilson rates on the remainder, with scarcely an excep- 
 tion, were raised to, and sometimes beyond, the M'Kinley 
 ones, and American industry utters a deeper groan than ever. 
 
 Schedule B devoted to earthenware and glassware 
 shared a similar fate, though as absolutely nothing had 
 previously been left out, nothing could well be added. As 
 far as possible this was atoned for by raising some of the 
 items to an vmprecedented altitude, where the keen air may 
 be expected to nip any little foreign trade that was left. 
 
 The warfare against Canadian lumber was renewed in 
 all its intensity in Schedule D, and though the Senate 
 uttered a mild protest, it complacently voted the duties. 
 The genius who discovered toothpicks as the apex of the 
 "Wilson Act, has however again been exercising his nimble 
 wittedness, and this time lighted on firewood, which must 
 in future pay y%^ cent per quarter cubic foot. We can pity 
 the kitchen maid, who, living in the vicinity of the Canadian 
 frontier, has every morning to repair to the local custom 
 house to measure a cubic foot of chips, and pass entries for 
 them before she can kindle her fire and prepare her master's 
 breakfast. At the same time the opportunity has been 
 discovered for building up another great American industry, 
 and as a consequence foreign manufactured butchers' 
 skewers will henceforth have to pay 40 cents per 1000. 
 
 Agricultural products are generally restored to M'Kinley 
 rates, and once more fresh milk and cabbages have their 
 nakedness covered. Green fruits have been generally 
 advanced, but against this remains the fact that sage has 
 been permitted to halt at 1 cent per pound against 3 cents 
 formerly. 
 
 What the ]\rKinley Act endeavoured unsuccessfully to 
 accomplish for tinplates, the Dingley tariff' is bent on doing
 
 LINEN AND SILK MANUFACTURES 443 
 
 for flax and silk manufactures. Over and over again the 
 people most interested in the establishment of a flax and 
 hemp industry have maintained that climatic conditions are 
 unsuitable for the cultivation of the fibres, or for their sub- 
 sequent treatment. But the Dingley Bill decrees that the 
 American people shall be forced to use any rubbish that 
 can be produced in the United States, in preference to the 
 beautifully finished and bleached fabrics of the North of 
 Ireland and Yorkshire. A duty of S20 per ton (2000 pounds) 
 has been imposed on the raw materials, whicli under the 
 Wilson Act were free, and even under the M'Kinley just 
 half this rate. The tissues which were dutiable at oo per 
 cent, and 50 per cent, respectively, are now reduced to .''.0 
 per cent, acl valorem, but on top of a specific rate ranging 
 from If cents to 9 cents per square yard, with the added 
 proviso that in no case shall the combined duty amount to 
 less than 50 per cent. One of two things is likely to happen, 
 either Americans will pay utterly extravagant prices for 
 linen goods, or they will discard them in disgust, and fall 
 back on the cheaper and less serviceable cotton fal)rics. 
 
 With silk it is somewhat different. The raw material 
 has never yet been produced in the United States, while 
 there has long been a more or less important manufacture 
 of it. The former consequently remains on tlu' free list, 
 while the duties on the fabrics are heavily cidiaiicctl. Spun 
 silk is raised from 30 per cent., to equal to ;!.'» In l() per 
 cent., while the tissues themselves are based updii most 
 elaborate calculations of a very technical character, but also 
 with the proviso that in no instance shall tln'v be less than 
 50 per cent. Probably they will iimrc nltm tli.in not be in 
 the neighbourhood of 100 per cent. 
 
 A United States Tariff I'.ill willioiil tlir Sugar Schrdule. 
 would Ik; like a perf(»rmaiiee of Ilaiidet witlioul the i'linee 
 of Denmark. Tiie Sugar Trust ]»i(ibalily s]ienl niuiv
 
 444 THE NEW AMERICAN TARIFF 
 
 millions of dollars in securing the return of President 
 M'Xiuley than any other corporation or individual spent 
 thousands, and for every million it advanced, it has been 
 permitted to put its hands into the pockets of the American 
 people and take out at least ten. 
 
 The House Bill started well, and established a differen- 
 tial rate between raw and refined sugar, which, though 
 enigmatical to the uninitiated, afforded at least double the 
 protection attainable under the Wilson Act. This was not 
 good enough for the managers of the Trust however, who 
 despatched their agents to Washington — men, who in case 
 of anything some day going wrong, may have to do penal 
 servitude in place of their principals — not to negotiate with 
 the Government, but to dictate what the schedule should 
 be. As a consequence, when it appeared in the Senate it 
 had undergone a total transformation, and though more 
 complicated than ever, its framers frankly avowed that it 
 gave them \ cent per pound certain protection, and did not 
 deny that the real figure was probably \ cent. As the 
 annual consumption of sugar exceeds 4,000,000,000 pounds, 
 this meant over $20,000,000 per annum, fully three-fourths 
 of which would have been secured by the Trust. 
 
 The Senate forced the schedule through as it stood, and 
 individual Senators are known to have made moderate 
 fortunes by speculations in the stock. The Eepublican 
 leaders in the House of Eepresentatives professed much 
 righteous indignation, and vowed the Trust should not have 
 so much. The Trust knew 'better, and when the House 
 finally settled the matter, it juggled the text, and left the 
 result very much what it was. All this time sugar stock 
 had been steadily rising from about par, until it stood at 
 over loO. On the day the House practically conceded all 
 that had ever been demanded, the market value of the stock 
 appreciated a further $5,500,000.
 
 THE SUGAR TRUST AGAIN 445 
 
 The final basis of the duty is y-y^ cent per pound on 
 sugar testing 75 degrees by the polariscope — an unusually 
 low grade — increasing :3i/100 cent for every degree. 
 Absolutely pure sugar testing 100 degrees would con- 
 sequently work out at 1.825 cents, but there can be no 
 such thing as pure raw sugar, and to be in this state it must 
 be refined. \ cent, that is, .125 is added as a gratuity to 
 the Trust, bringing all refined sugars up to IffrV cent per 
 pound. 
 
 The enormous advantage accruing to the Trust may Ix- 
 seen at a glance, though without the possibility of cal- 
 culating it with exactitude. Nobody in fact can do that 
 without access to the books of the company. On the basis 
 of 1.825 cents for 100° sugar, each degree shoidd i)ay .01825 
 cent, but as a matter of fact an allowance is made of .0.'^>5 
 cent. That is, in addition to the \ cent out and out which 
 the Trust fought for and obtained under the Wilson Act, it 
 now gets .01675 cent per degree per pound. The lower the 
 sugar the Trust can buy for refining purposes theref(jre, the 
 greater will be its profit, consequently all the l<jw-grade 
 sugars produced throughout the world, togetlier with any 
 filth containing sugar, will henceforth l)e purchased for the 
 consum})tion of United States citizens. 
 
 The Trust has at least several years before it in which 
 to plunder, if it does not previously poison the pubHc : its 
 time for robbing the Treasury was limited. It was iu.kIc 
 the most of however, and the \\\\\ delayed until every avail- 
 able nook and cranny was filled with law sugar inijiorted at 
 the old duty. For many months to coinr the I'nilcd Slates 
 Treasury will draw no revenut- from sugar — it has gone into 
 the coffers of the Trust instead. The American consumer 
 will Kt;t none of it, it is certain, as the; moment the question 
 
 was settled, and before tln' I'.ill I'eea law, the retail price 
 
 was raised to the extreme limit of the new dut ies, and the
 
 446 THE NEW AMERICAN TARIFF 
 
 Trust's profits on the imported sugar alone are estimated to 
 exceed $10,000,000. 
 
 These plums all fall to the Trust, and the shareholders 
 participate in tlieni like the managers, though as the 
 latter were always aware of what was taking place at 
 AVashington, their opportunities for manipulation were 
 very great. But they wanted something for their own 
 exclusive benefit, and President M'Kinley almost stumbled 
 over his own shadow in his haste to procure it for them and 
 place it at their disposal. 
 
 The group of islands in the Pacific, known as the 
 Sandwich Islands, has Hawaii as its centre. The principal 
 industry is sugar growing, and ever since there has been a 
 duty on raw sugar in the United States, an American 
 syndicate has run the islands and secured the free 
 import of the produce of the cane into the States. The 
 intimate connection of the Sugar Trust with this syndicate 
 may be gathered from the fact that the chief sugar estates 
 in Hawaii are known as Spreckelsville, and the Spreckels 
 of California are the western managers of the Trust. 
 
 Under the stimulus of unlimited capital and gigantic 
 profits, the production of sugar in Hawaii has enormously 
 increased, and the 130,000 tons of 1895 rose to close upon 
 200,000 in 1896, and will no doubt be again exceeded in 
 1897. Now 90 per cent, raw sugar pays about \\ cent per 
 pound import duty, say 830 per ton of 2000 lbs. On the 
 latest production of Hawaii, this would mean $6,000,000 per 
 annum, which instead of going into the Treasury is hence- 
 forth to be divided among some half-dozen managers of the 
 American Sugar Trust as their perquisites. 
 
 That is the meaning of the annexation of Hawaii. A mere 
 treaty of commerce admitting the produce of the islands free 
 is not secure enough, so they must be incorporated as part 
 of the federal union. And what matters it if the annexation
 
 WHAT WILL IT END INI 447 
 
 does bring the Eepublic into deadly conflict with the rest of 
 the civilised world, so long as sugar kings All their pockets ? 
 
 The M'Kinley administration acts on the assumption 
 that the annexation is an accomplished fact, though it has 
 yet to be ratified by the Senate. Will the Senate again 
 succumb and cover itself with infamy, or will it for once 
 refuse to be dragged at the tail of the Sugar Trust, decline 
 to ratify the annexation, abrogate the treaty, and make 
 Hawaiian pay the duty like any other foreign sugars ? ^ 
 
 The unblushing effrontery and unalloyed success of this 
 Trust is already stirring up powerful imitators, ready at any 
 moment to raid the small amount of liberty the American 
 people still enjoy. A group of bankers and financiers is 
 even now planning its arrangements to secure entire control 
 of the national currency, first by compelling the public to 
 accept its promises to pay, or bank notes as they will be 
 called, and then forcing the Government to guarantee tliem 
 and keep some sort of metallic reserve against tlicni, tliougli 
 it may only be a cent in the dollar. The profits of such a 
 combine would put those of the Sugar Trust to shame, and 
 at the same time fetter the industries of the country to an 
 extent that would render the future of tlic IJcpuliHc almost 
 hopeless. 
 
 What the eventual outcome of all this will be, one 
 would have to venture too far into the realm ^\i y\-^\\\\\vv\ to 
 .say. A lioiiiitit'ul harvest, once more accompaiiicd hy hii^h 
 prices, may stave off the evil day, but no foreigner should 
 permit himself to be deluded into tiie idea that legitimate 
 prosperity is possible, while the ])resent state of thingH is 
 pcrniitied lo ((iiitimic, mid llmsc wlin ;irc linrd hy a gleam 
 of sunshine will only lia\e to id 111 11 somicr dc lali-r 
 drenched to the skin. Tiie lush to pay diiiics went far to 
 equalise revenue and exjx'iidiliiic in the tiscal year 
 just cndi'd. The jiayiiiciits in Apiil cNcccflcd anything
 
 448 THE NEW AMERICAN TARIFF 
 
 proviously recorded, and readied nearly $."50,000,000, those 
 in March having already been 817,500,000, or for the two 
 months combined, double, if not treble the average. The 
 delay in passing tlie Bill brought a renewed flood of 
 imports, and for the last month of the fiscal year the 
 duty payments rose once more to S21,.500,000. This must 
 have a most detrimental influence on the revenue of the 
 current year. The first month of it was again affected by 
 ^Bhcertainty, the second enjoyed the advantage of being 
 entirely under the new tarifi'. It resulted in an excess of 
 $15,000,000 of expenditure over income, and any schoolboy 
 wlio has advanced to the stage of multiplication by 12, will 
 be able to calculate that continued for a year this means a 
 deficit of 8180,000,000. It will not be quite as bad as this, 
 but the Treasury will have a lucky escape if the promised 
 surplus of 850,000,000 does not end in a shortage of a like 
 amount. 
 
 That the Dingley Tariff will sooner or later be interred 
 in a dishonoured grave is more than certain. The M'Kinley 
 administration has only to continue as it has begun, to 
 expire amid the execrations of the populace, and to pass 
 down to posterity as the most iniquitous Government that 
 ever presided over the destinies of the great American 
 people. 
 
 Here is protection, pure and unadulterated. Is there any 
 Englishman who would like to see it introduced into his 
 own country ?
 
 INDEX. 
 
 Abbreviations: — U.K.. United Kingdom ; U.S., United States ; Fee., France ; 
 Gray., Germany. 
 
 Adverse trade balances, 345, 349. 
 Africa. U.K., 304. 403 ; Fee., 286, 
 
 405 ; Gmy., 285, 406. 
 Agrarian agitation, Gmy., 275. 
 Agricultural implements, U.S., 149. 
 „ Rating Act, U.K., 385. 
 
 Agriculture — Basis of industry, 30. 
 ,, Protection, U.K.,. 39, 76, 
 
 309. 
 Tariffs, U.S., 127, 442 ; 
 Fee., 169; Gmy., 184. 
 Algerian trade, 289. 
 America, discovery of, 280. 
 American Line subvention, 215. 
 Argentine trade, 361. 
 Australasian finances, 325. 
 
 trade, 302, 323. 
 Australian federation, 325. 
 Austrian shipping subsidies. 212. 
 
 B 
 
 Balance of trade, U.K., 337; U.S., 
 352 ; Fee., 358 ; Gmy., 359 ; Ar- 
 gentine, .361 ; Japan, 362 ; S. 
 Africa, 369 ; Settlements of, 363. 
 Bankers' profits, 340. 
 Beer duties, U.K., 69 ; U.S., 252, 436. 
 Belgian treaty of commerije with 
 
 U.K., 319. 
 Blackburn Chamber of Commerce 
 
 mission, 407. 
 Board of Trade returns, 374. 
 Bounties, Canadian iron, 233. 
 ,, origin of, 193. 
 
 ,, from over-production, 233. 
 
 ,, miscellaneous. Foe., 232. 
 ,, sugar, U.S., 121 ; Fee., 
 
 197; Gmy., 196. 
 ,, sugar, cost to consumers, 
 198. 
 Brazilian trade, 366, 378. 
 I'reakfast table duties, U.K., 75. 
 J'rewing, sugar used in, 81. 
 Britisli national debt, 415. 
 
 British railway system, 222. 
 
 ,, shipping subsidies, 205. 
 
 ,, trade with U.S., 365 ; Fee., 
 364, 372. 
 Building materials, U.S., 111. 
 Bullion movements, 367, 430. 
 
 
 
 Canadian expansion, 316. 
 ,, fiscal policy. 293. 
 ,, iron bounties, 233. 
 ,, preferential tariff, 310. 
 ,, shipping subvention, 219. 
 trade. 29.5, 303, 313, 320. 
 Cement, U.S., 111. 
 Checks on consumption, 13. 
 Chemicals, U.S., 10.5, 441 ; Fee.. 168 : 
 
 Gmy., 178. 
 China, trade of, 366, 378, 407, 
 China and earthenware, IT.K., 95 ; 
 
 U.S., 112, 442; Gmy., 1S3. 
 Chips, U.S., 442. 
 Cigar industry, U.K., 71 ; l^.S., 252 ; 
 
 Gmy., 177. 
 Coal, U.K., 49, 339; U.S., 117; 
 
 Fee., 167 ; Gmy., 50. 
 Cocoa, U.K., 75; Fee., 151 ; Gmy.. 
 
 176. 
 Coffee, U.K., 75: Fee., 151 ; Gmy., 
 
 176. 
 Colonial policy and trade, U.K., 292, 
 
 301 ; Fee., 269, 286 ; (Jmy., 2.S5 ; 
 
 Spain, 281 ; Portugal, 283 ; (Jreecu 
 
 and Phu'nicia, 333. 
 Commercial morality, 421. 
 
 treaties, 191, 318. 
 Competition in trade, 391, 398, 427. 
 Conservatism ,, 395. 
 Construction bounticB, Fee., 209. 
 Contrabanil tradi;, 15. 
 Conventional tariffs. Fee, 174 ; Gmy.. 
 
 187. 
 Co]>]>rv, U.S., 122. 
 Corn Law League, 10. 
 Cotton, raw, U.S., 47, 439.
 
 45° 
 
 INDEX 
 
 Cotton, manufactured, U.K., 88;^ 
 
 1^8., 131,378,438; Fee., 
 
 ICG ; (Imy., 180. 
 
 ,, ties and bayging, U.S., 117, 
 
 118, -138. 
 
 Cost of collecting revenue, U.S., 255 ; 
 
 Fee. , 2t)9. 
 Cost of living, U.S., 255. 
 Cuba, 201, 282, 363. 
 Currants, reduction of duty, U.K., 
 
 63. 
 Customs Union Schemes, 305. 
 Cutlery, U.S., 121, 437 ; Gmy., 179. 
 
 D 
 
 Dangers of tariff legislation, 9. 
 Danish subsidies, 212. 
 Denunciation of commercial treaties, 
 
 319. 
 Diamond trade, U.K., 95; U.S., 148; 
 
 S. Africa, 370. 
 Disorganisation of mail service with 
 
 U.S., 218. 
 Disputes, tariff, 421. 
 Distribution of taxation, U.K., 244 ; 
 
 U.S., 252 ; Fee., 271 ; Gmy., 278. 
 Drawbacks, customs, 194. 
 Drink traffic and public opinion, 16, 
 
 18 ; West Coast Africa, 406. 
 Drugs, U.S., 106, 441. 
 Dutch subsidies, 212. 
 
 E 
 
 Earthenware and China, U.K., 95 ; 
 
 U.S., 112, 442 ; Gmy., 183. 
 Economic conditions, Fee., 153, 162. 
 Education, 270, 392. 
 Egyptian trade, 291. 
 Excise duties, 10, 65. 
 Export duties, 44. 
 Exports of foreign goods, 419. 
 
 ,, under- valuation of, 342, 421. 
 
 F 
 
 Failure of sugar bounties, 201. 
 False economic conditions, 41. 
 Feathers, Ornamental, 96, 158, 372. 
 Federation of Australia, -325. 
 Fiscal year, U.S., 353. 
 Fishery bounties. Fee., 232. 
 Flax „ „ 232. 
 
 „ industry, U.K., 95 ; U.S., 133, 
 145, 443 ; Gmy., 181. 
 Fluctuations in trade, U.S., 357. 
 Food imports, U.K.. 308. 
 Foreign exports, 419. 
 
 Foreign investments, 344. 
 
 ,, trade, nature of, 376, 384. 
 Forgery of trade marks, 391. 
 Freights, 339. 
 Free trade and Trusts, 60. 
 
 „ „ • the masses, 429. 
 
 Frenc|;i boiinties, sugar, 197. Other, 
 
 232. 
 French colonies, 162; 174, 269, 286. 
 
 ,, conventional tariff, 174. 
 
 ,, economic conditions, 153, 162. 
 
 ,, exports, nature of, 156. 
 
 „ industrial limitations, 161. 
 
 „ national debt, 270, 410. 
 
 ,. population, 162. 
 
 ,, railway subventions, 227. 
 
 ,, shipping subsidies, 209. 
 
 „ surtaxes, 172, 201. 
 
 trade with U.K., 364, 372. 
 Fruits, U.K., 75 ; Fee., 171 ; Gmy., 
 
 177 ; Canada, 295. 
 Furs and skins, U.K., 97. 
 
 a 
 
 German colonies, 285. 
 
 ,, conventional tariff, 187. 
 ,, industrial expansion, 192. 
 ,, national debt, 274, 413. 
 ,, shipping subsidies, 205. 
 ,, State railways, 222. 
 ,, sugar bounties, 196. 
 ,, tariff, moderation of, 175, 
 186, 274. 
 „ Wars, 187. 
 ,, trade with British colonies, 
 
 321. 
 ,, treaty of commerce with 
 
 U.K., 191, 319. 
 ,, Zollverein, 305, 360. 
 Glass, U.K., 90 ; U.S., 113 ; Gmy., 
 
 18.3. 
 Gloves, U.K., 93 ; U.S., 147 ; Gmy., 
 
 183. 
 Gold production, S. Africa, 370. 
 Grain bags, U.S., 145, 438. 
 Greek colonies, 333. 
 Growth of industry, 27. 
 Gunpowder, U.S., 148. 
 
 H 
 
 Hawaii and U.S., 446. 
 Hides, U.S., 439 ; Fee., 173. 
 Home trade, 384. 
 
 I and J 
 
 Imperial federation, 330. 
 Import duties, 53.
 
 INDEX 
 
 451 
 
 Incidence of protection, 53, 61, '253. 
 
 ,, revenue taxes, 62. 
 
 . ,, sugar bounties, 198. 
 
 „ wheat taxes, U.K., 56 ; 
 
 Fee., 55. 
 
 Income tax, U.K., 240, 245, 248 ; 
 
 U.S., 251. 
 Indian trade, 303, 366, 378. 
 Indo-China, 2SS. 
 Industrial Expansion, U.S., 35 ; 
 
 Gray., 37. 
 Industry, natural growth of, 27. 
 Insecurity of protection, 20. 
 Intercourse between nations, 383. 
 Internal competition. 394. 
 Iron and steel, U.K., 91 ; U.S., 115, 
 
 437 ; Fee., 167 ; Gmy., 179. 
 Italian shipping subsidies, 212. 
 Japanese trade, 362, 366, 378. 
 
 Labour, waste of, 381. 
 
 Lace, U.K., 96 ; U.S., 136; Gmy., 182. 
 
 Lead, U.S., 122. 440. 
 
 Leather, U.K., 89 ; U.S., 146, 439 ; 
 
 Gmy., 183. 
 Legislation and trade, 401. 
 Licensing systems, 17. 
 Light dues, 3S6. 
 Linens, U.K., 95 ; U.S., 14.'., 4-13 ; 
 
 Gmy., 181. 
 Local taxation, 53. 
 Luxuries and necessaries, 8. 
 
 M 
 
 Madagascar, 290. 
 Mail contracts, 208, 211, 213, 21 S. 
 Mexican dollars, 45. 
 Mexico and U.S., 440. 
 Military expenditure, 417. 
 Morocco, trade of, 46. 
 Musical instruments, U.K., 95 ; Fee., 
 164. 
 
 N 
 
 National Debt, U.K., 415 ; U.S., 413 ; 
 
 Fee., 270, 410 ; Gmy., 271, 413 ; 
 
 Australasia, 325. 
 National finances, U.S., 258, 447. 
 
 „ „ and protection, 20. 
 
 Naval expenditure, 417. 
 Navigation bounties, 210, 212. 
 Necessaries and Luxuries, 8. 
 New South Wales tariff, 297. 
 
 „ ., trade with Gmy., 
 
 324. 
 New Zealand tariff, 299. 
 Nitrate of soda duty, 44. 
 
 Over-production, 234, 382, 422. 
 
 ,, bounties arising from, 
 
 233. 
 
 Paper, U.K., 91 ; U.S., 14.'.. 
 Pension list, U.S., 258 ; Fee., 267. 
 Phd'nician Colonies, 333. 
 Political uses of protection, 25. 
 Poor, taxation of the, 12. 
 Portuguese Colonies, 283. 
 Postal revenues, 239. 
 Post office and rubber trade, 78. 
 Preferential railway rates, U.K., 388, 
 Gmy., 275. 
 ,, tariff, Canada, 310. 
 
 Prohibition, dangers of, 15. 
 Protection in U.K., 38. 
 
 ., France, nature of, 174. 
 
 Gmy., moderation of, 175, 
 
 274. 
 U.S., results of, 151. 
 incidence of. 53, 61, 253. 
 and revenue, 25. 
 ,, insecuritj' of, 21. 
 
 when legitimate, 10. 
 „ who resjionsible for it, 30. 
 Prussian budget, 277. 
 Public opinion and drink traffic. 1 6, 1 8. 
 
 Q 
 
 Queensland tariff, 298. 
 
 R 
 
 Railway .systems ;ind subventions, 
 
 U.K., 222 ; U.S., 231 ; Fee., 227 ; 
 
 Gmy., 222. 
 Railway j.refercntial rates, IT.Iv.. 3SS ; 
 
 (Jmy., 275. 
 Raw materials, U.K.. 77 ; U.S., 132 ; 
 
 Fee., 169 ; Gmy., 275. 
 Reckless trading, 389. 
 Re-exports, 419. 
 Restrictive legi.slatirm, 401. 
 Retail j.rofits^ 128. 
 iietroactive tarilf, l'!5. 
 Reveime, cost of collection, I '..S., 255 ; 
 
 Fee., 269. 
 Revenue from commodities, 23S. 
 ,, incidence' of taxation, 62. 
 ,, and ]iroti'ction, 21. 
 Royal Comniission on Agriculture, 
 
 :i85. 
 Russia and France. 301. 
 Russia, tariff war witli (u-rmany. 188.
 
 45^ 
 
 INDEX 
 
 S 
 
 Salt. II, 19. 
 
 Settlement of trade balances, 363. 
 Shipping competition, 213. 
 light dues, 386. 
 .subsidies, 20.'>-'221. 
 Silks. U.K., 93 ; U.S., 14-1, 143 ; 
 
 Fee., l.'.S ; Gmy., 182. 
 Silk bounties. Fee., 232, 
 Skins and furs, U.K., 97. 
 South African trade, 304, 369. 
 
 „ American finances. 347. 
 Spain, tariff war with Gmy., 190. 
 Spani-sh colonies, 281. 
 
 „ trade, 363. 
 Specie movements, 367, 430. 
 Specific and ad valorem duties, 421. 
 Spirit duties, U.K., 67 ; U.S., 127, 
 
 252 ; Gmy., 177. 
 •State railways, Gmy., 222. 
 Steel rails. U.S., 58, 117 ; Fee., 167 ; 
 
 Gmy.. 179. 
 Straits Settlements, 297. 
 Subsidies to shipping, 205-221. 
 Subventions to railways, 222-232. 
 Sugar consumed by brewers, 81. 
 
 ,, consumption, 202. 
 
 „ bounties, 195-204. 
 
 „ duties, U.K., 63, 79 ; U.S., 
 
 124, 434, 443 ; Fee., 154 ; Gmy., 
 
 176 ; various, 203. 
 Sugar tax in West Indies, 45. 
 
 „ Trust, U.S., 124, 443. 
 Surplus products, 6, 234. 
 Surtaxes, Fee., 172, 201. 
 
 Tariff for morality, 13. 
 protection, 19. 
 revenue, 4. 
 Tariff reforms, U.K., 98. 
 ,, revisions of, 13. 
 ,, wars in Gmy., 187. 
 Taxation, U.K., 240 ; U.S., 250 : 
 
 Fee., 261 ; Gmy., 273. 
 Taxation of necessarie.s, 6. 
 ,, indirect, 5. 
 „ of the poor, 12 
 „ unequal, 385. 
 Tea, U.K., 76, 80 ; U.S., 436, Fee.. 
 
 154 ; Gmy., 176. 
 Tea, sources of supply, 87. 
 Textile machinery, 51. 
 Timber, U.S., 123, 442 ; Fee., 171 : 
 
 Gmy., 184. 
 Tin. U.S., 115. ■ 
 
 Tinplates, U.S., 119, 382 ; Fee., 167 
 
 Gmy., 179 
 Tobacco. U.K.. 71 ; U.S., 126, 252 ; 
 
 Fee., 155; Gmy., 177. 
 Tobacco monopoly. Fee. , 265. 
 Trade fluctuations, U.S., 357. 
 
 ., legislation, 401. 
 
 ,, mark forgery, 391. 
 Trusts, U.S., 60. 
 Tunis, 289. 
 Turkey, fiscal policy, 203. 
 
 u 
 
 Under-valuation of exports, 342, 421. 
 Unefjual taxation, 385. 
 United States balance of trade, 352, 
 365. 
 „ coastwise service, 216. 
 
 ,, expansion, 35. 
 
 ,, finances, 258, 447. 
 
 „ mail service, 218. 
 
 ,, national del)t, 413. 
 
 „ natural advantages of, 
 
 31. 
 „ railroads, 231. 
 
 shipping subventions, 
 214. 
 ,, trade crises, 348. 
 
 ,. ,, fluctuations, 357. 
 
 Viticulture bounties. Fee., 232. 
 Victoria, tariff of, 298. 
 
 w 
 
 Wages, U.S., 32. 
 Wasteful labour, 381. 
 Watches and clocks, U.K., 92. 
 Wearing apparel, U.S., 149, 441 ; 
 
 Gmy.. 18V. 
 West Africa, U.K., 403 ; Fee., 405 ; 
 
 Gmy., 285, 406. 
 West Australia, tariff of, 296, 307. 
 West Indies, sugar tax, 45. 
 Wheat, U.K., 56. 309; U.S., 47. 
 
 127 ; Fee., 53, 170; Gmy., 184. 
 Wholesale profits, 427. 
 Wine, U.K., 71 ; U.S., 126 ; Fee., 
 
 154, 171 ; Gmy., 177. 
 Wool, raw, U.K., 2, 307 ; U.S., 133; 
 
 Fee., 169. 
 Woollen manufactures, U.K., 88 ; 
 
 U.S., 137, 440 ; Fee., 165 ; Gmy.! 
 
 181. 
 Working classes, 402, 424.
 
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 2046 — "^af^ ff aJ^ * ^ 
 R67t trade. 
 
 HF 
 
 2046 
 R67t 
 1897 
 
 UC SOUTHERN REGIONAL LIBRARY FACILI 
 
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