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 OF CALIFORNIA 
 
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 BY TEE SAME AUTHOR. 
 
 A HISTORY OF SOCIALISM. 
 
 SeconO EDftion, "RevteeD an& Bnlargefc. 
 
 Crown 8 do., cloth, price 7s. 6d. 
 
 SOME PRESS OPINIONS. 
 
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 Daily News. 
 
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 "Writing recently in the New York Outlook, Dr. Washington 
 Gladden remarked upon Mr. Kirkup's insight into the economic 
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 published in 1887 : ' Whether or not Mr. Kirkup is alive to-day I 
 do not know ; if he is, the rapidity with which the movement so 
 clearly outlined by him has been advancing to its issue must be 
 observed by him with curious interest.' Happily Mr. Kirkup is 
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 to utter fresh oracles. His latest estimate of social development 
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 abundantly confirmed. . . . Altogether, the book is at once a 
 concise, luminous and philosophical statement of the underlying 
 principles of the Socialist movement." 
 
 Manchester Guardian. 
 
 " Every intelligent student of Socialism will gladly welcome this 
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 the utmost value." 
 
 PUBLISHED BY 
 
 ADAM & CHARLES BLACK, SOHO SQUARE, LONDON.
 
 
 PROGRESS AND THE 
 FISCAL PROBLEM 
 
 BY 
 
 THOMAS KIRKUP 
 
 AUTHOR OF "A HISTORY OF SOCIALISM," "SOOTH AFRICA, 
 OLD AND NEW," ETC. 
 
 LONDON 
 ADAM AND CHARLES BLACK 
 
 1905
 
 -. 7 ' ' 
 
 o 
 
 25 NOV.tl»
 
 
 
 PREFACE 
 
 The writer of another book on the Fiscal 
 Problem may well be asked why he should 
 add to a pile which is already overgrown. 
 To such an inquiry one might reasonably 
 reply that most of the books already published 
 on the subject bear obvious marks of haste 
 and of bias ; but I would rather give as my 
 main reason for offering such a book to the 
 public my belief that some important points 
 have hitherto been overlooked, and many have 
 not received due attention. These I have 
 tried to bring out, while I have laid special 
 stress on wider aspects of progress which seem 
 to me vitally, if not inseparably, connected 
 with the Fiscal Problem. As the title of my 
 book indicates, it is concerned not only with 
 the Fiscal Problem, but with allied questions 
 of progress. 
 
 iii 
 
 4-' ,8
 
 iv PREFACE 
 
 I have not treated the subject merely as a 
 technical question of economics, nor have I 
 written in any party interest. As it is more 
 than probable that certain limitations of the 
 insular mind may have a serious influence on 
 the question, I may add that I had the 
 advantage of studying at Gottingen, Berlin, 
 and Tubingen, at Geneva and Paris, and have 
 long been familiar with the best German and 
 French works on history and economics. 
 
 For the encouragement of prospective 
 readers, I have as far as possible confined 
 statistics to a special chapter, which they can 
 leave alone if they see fit. 
 
 In conclusion, I wish to express special 
 obligations on several points connected with 
 commercial geography to the standard work, 
 ' Handbook of Commercial Geography ' (Long- 
 mans and Co.), of my friend Mr. G. G. 
 Chisholm, who has also kindly revised the 
 proofs. Such revision should be the more 
 valuable because he differs from me entirely 
 on the main question. 
 
 T. KIRK UP.
 
 CONTENTS 
 CHAPTER I. 
 
 PAGE 
 
 INTRODUCTION - - - - - 1 
 
 CHAPTEE II. 
 
 INDUSTRIAL DEVELOPMENT OF GREAT BRITAIN - 16 
 
 CHAPTER III. 
 
 INDUSTRIAL POSITION OF GERMANY - - 32 
 
 CHAPTER IV. 
 
 INDUSTRIAL POSITION OF AMERICA - - 42 
 
 CHAPTER V. 
 
 SUCCESS IN INDUSTRIAL COMPETITION - - 50 
 
 CHAPTER VI. 
 
 FREEDOM AND PROGRESS- - - - 58 
 
 CHAPTER VII. 
 
 FREE TRADE IN THE LIGHT OF HISTORY- - 89 
 
 V
 
 vi CONTENTS 
 
 CHAPTER VIII. 
 
 PAGE 
 
 A CHANGE OF OUTLOOK - - - - 99 
 
 CHAPTER IX. 
 
 DUMPING- ... - 112 
 
 CHAPTER X. 
 
 SIFTED STATISTICS - - - - 137 
 
 CHAPTER XL 
 
 TARIFF REFORM AND INDUSTRIAL PROGRESS - 162 
 
 CHAPTER XII. 
 
 THE STATE AND PROGRESS - - - 183
 
 
 PROGRESS AND THE FISCAL 
 PROBLEM 
 
 CHAPTER I 
 
 INTRODUCTION 
 
 The unexpected has happened again. If any- 
 one at the beginning of 1903 had ventured to 
 predict that the all-absorbing topic of the 
 country would soon be a proposal to reverse, 
 or at least seriously to modify, the system of 
 Free Trade which we so long have followed, 
 he would have been refused a hearing. Yet 
 proposals to that effect of the most far- 
 reaching character have been made, and by a 
 statesman of the highest eminence. Everyone 
 has been considering and discussing them, 
 and we may be assured that the subject is not 
 
 1
 
 2 THE FISCAL PROBLEM 
 
 one of passing interest, but is likely to be a 
 supreme concern for a long time to come. 
 
 In the agitation which preceded the repeal ot 
 the Corn Laws we may see a notable means 
 of economic and political education. It was, 
 indeed, the first attempt in English history to 
 instruct the mass of the people in economic 
 problems. The present discussion will be a far 
 more effectual training in national and Imperial 
 business. The question put before the country 
 by Cobden sixty years ago was a simple one 
 compared with those we now have to face. 
 To use the common phrase, Britain was then 
 the workshop of the world. In industry, 
 commerce, and finance she had no rivals. 
 Our colonies were wide in area, but in popula- 
 tion were insignificant. We had only our- 
 selves to think of, and our industrial and 
 commercial position was unchallenged. The 
 proposal of Cobden was merely to remove old 
 restrictions and let things take a free course 
 — for the Government a very easy proceeding. 
 
 At present we need not stop to contrast this 
 simple problem with the proposals now made 
 by Mr, Chamberlain. We can all see how
 
 NTRODUCTION 3 
 
 difficult and complicated they are, and that if 
 adopted they place upon the Government and 
 country responsibilities which are very serious, 
 and likely to be permanent. If we must take 
 up the burden, we shall have to bear it with 
 courage and resolution, as becomes an Imperial 
 race. But there can be no doubt that the 
 complexity of our economic position is one of 
 the strongest arguments against any departure 
 from our present system. Wise men will 
 pause to count the cost before venturing 
 upon it. 
 
 For example, let us take the cotton trade 
 of this country. It exists on a very small 
 margin of profit, and it has most delicate and 
 complicated relations with every nation in the 
 world. How could Government presume to 
 do anything that would hamper such a trade ? 
 May we not rather regard it as the first duty 
 of rulers to leave it alone, to be guided by the 
 experienced men who devote their whole time 
 to it ? It will only be the pressure of hard 
 facts or the prospect of very solid advantages 
 that will move the country to adopt a new 
 course. My own opinion is that it may be 
 
 1—2
 
 4 THE FISCAL PROBLEM 
 
 several years before we again have anything 
 like a settled fiscal policy. 
 
 As a means of education in the widest 
 sense the fiscal problem may certainly be 
 expected to do lasting good. We have all 
 been incited to study the elements of national 
 well-being in a way we never did before. 
 The business of the country in its various 
 departments — coal - mining, iron, cotton, 
 woollens, and shipping — has been brought 
 home to us with a vividness and in a detail 
 which to most of us have been as informing- 
 as they have been surprising. We have 
 learned, too, to take a wider and more 
 familiar interest in the questions of Empire 
 and of the future of the English-speaking 
 race, which we hope will bear good fruit. If 
 we come to realize how necessary education 
 in the ordinary sense is now for the healthy 
 progress of industry, the agitation caused by 
 Mr. Chamberlain will not have been in vain. 
 
 I need not say that the fiscal problem, as 
 now put, should be above party and above 
 class. It is a national and Imperial question 
 of the first magnitude. One may, therefore,
 
 INTRODUCTION 5 
 
 be permitted to express the deepest regret 
 that from the beginning the main points of 
 the question have been obscured by the dust 
 of party controversy. In view of its supreme 
 importance for the nation and the Empire, 
 might we not have expected a wiser abstin- 
 ence from the ordinary party warfare ? 
 
 At the same time it is a problem which is 
 concerned with the daily life of every man in 
 the country. It has to do with the daily 
 bread of himself and family, and with the 
 employment by which he earns the money to 
 buy it. While it is a national question, 
 therefore, it is a personal matter also of a 
 most serious kind. In this respect the fiscal 
 question is unequalled as a means of economic 
 and political education. 
 
 We may go further, and say that every 
 man is not only permitted, he is in duty 
 bound, to think of the well-being of the 
 special industry to which he belongs. But a 
 comprehensive and rational discussion of the 
 question demands that we have a due regard 
 to the staple industries on which the well- 
 being of the country chiefly depends. After
 
 6 THE FISCAL PROBLEM 
 
 a period of unexampled prosperity, a change 
 came over these great industries about the 
 year 1875. Agriculture was the first to 
 show symptoms that a new time had come. 
 The present writer remembers very well how 
 in the autumn of 1876 the pressure of 
 American competition portended a hard future 
 for the British farmer. The opening up in 
 America of immense areas of land of surpass- 
 ing fertility, formerly untouched by the 
 plough, and the great development of trans- 
 port thence to our shores, brought into our 
 market enormous supplies of grain, which 
 permanently lowered prices. Since that time 
 things have not gone well for the farmer. 
 But we may be justified in believing that the 
 tide will now flow the other way. The large 
 increase of population in America is so 
 widening the home market there that it will 
 be less able to send us cheap corn. The 
 virgin soil will in time lose its wonderful 
 fertility. 
 
 So far recent symptoms may be regarded 
 as encouraging. On the other hand, America 
 has also enormous supplies of coal, iron, and
 
 INTRODUCTION 7 
 
 copper, which enable her to enter into com- 
 petition with European industries. She can 
 produce coal far more cheaply than we can. 
 Thus she is becoming a formidable competitor, 
 not only in agriculture, but in industry 
 generally. For general industry she has 
 many special advantages not unlike those she 
 has had for agriculture. 
 
 And now the proposals of Mr. Chamberlain, 
 whatever the precise consequences they may 
 have in the near future, will in all probability 
 make a permanent change in the attitude of 
 people and Government to our industries. In 
 these circumstances we may reasonably expect 
 more favourable consideration for the industry 
 which is in every way the most important — 
 namely, agriculture. Many are beginning to 
 see that it is not a wise policy that the national 
 character and physique should be allowed to 
 suffer permanent deterioration through the 
 decline of rural interests, pursuits, and indus- 
 tries. " Back to the land !" may need to be the 
 social and political watchward of the coming 
 generation. We may require to reconsider 
 most thoroughly what life and industry on
 
 8 THE FISCAL PROBLEM 
 
 the land mean for national well-being in its 
 widest and deepest sense. The further dis- 
 cussion of the fiscal problem may show that 
 agriculture and the other industries of the 
 country, instead of being opposed, must stand 
 or fall together. 
 
 It will do no harm to our statesmen if they 
 are obliged in the future to spend less time in 
 the game of parties, and more time in under- 
 standing and promoting industry. In any 
 case we voters are the Csesar to whom they 
 are now appealing. On us falls the hard task, 
 first of enlightening ourselves, and then of 
 deciding what they must do in our interests. 
 
 Since the fiscal question was raised in the 
 summer of 1903 the country has been over- 
 whelmed with statistics. Side issues, with 
 irrelevant matter of every kind, have been 
 introduced into the discussion. It would be 
 well, therefore, to fix our attention at the out- 
 set on the central and vital points of the 
 controversy. 
 
 When we decided on a Free Trade policy 
 about sixty years ago our supremacy in industry
 
 INTRODUCTION 9 
 
 and commerce was beyond challenge. During 
 the last generation formidable rivals have 
 arisen in Germany and America. The people 
 of both those countries belong mainly to the 
 same shrewd, energetic, and enterprising races 
 as ourselves. Both countries are in the 
 temperate zone, and both, especially America, 
 have large natural resources. 
 
 For various reasons they were late in getting 
 started in their industrial development, but 
 once started they have rapidly come to the 
 front. They excel in all, or nearly all, the 
 staple branches in which we have won our 
 success. What is perhaps even more important, 
 they have carried to a further stage certain 
 forms of industrial organization, variously 
 called trusts, syndicates, or combines, which, 
 in the meantime at least, give them, or seem 
 to give them, great advantages in competition 
 with this country. I say they have carried 
 these forms of organization to a further stage, 
 because we have these forms of organization 
 in this country too, but in a less developed 
 shape. 
 
 It may be a debatable point whether trusts
 
 10 THE FISCAL PROBLEM 
 
 could be thoroughly developed in a Free Trade 
 country like ours, nor need we debate it at 
 present. A point on which all will agree is that 
 they have come to the fullest development in 
 two protected countries, America and Germany, 
 and that their growth is certainly favoured by 
 Protection. 
 
 But the vital matter with regard to the 
 fiscal problem which we are now discussing is 
 as follows : Let us take Germany, with its 
 population of nearly 60,000,000. In Germany 
 the great syndicates control production in the 
 staple industries, and they control this home 
 market of 60,000,000. With regard to wages, 
 they have, of course, to reckon with the work- 
 men, but as the syndicated firms are practically 
 the sole employers, the strength of their 
 position is obvious. As regards the prices in 
 the market, they have to reckon with the 
 consumers ; but as the syndicates command 
 the only sources of supply, I need not point 
 out that they are quite able to charge very 
 good and profitable prices. Thus the German 
 trusts have a most commanding position at 
 home, in a market, be it remembered, of
 
 INTRODUCTION 1 1 
 
 60,000,000. Germany has other advantages 
 of a special kind, on which I shall not dwell 
 at present. 
 
 Our home market of 42,000,000 is as open 
 to Germany as it is to us, as is also the entire 
 British Empire, except in so far as our self- 
 governing colonies have given us a preference. 
 Our home market and the Imperial market 
 are in a similiar way open to America, which 
 has a protected home market of 80,000,000. 
 
 With such a large, secure, and very profit- 
 able home market, the German manufacturers 
 feel encouraged to lay down an enormous 
 plant of the most efficient kind, and to 
 produce goods in vast quantities. As they 
 receive very good prices at home, they can 
 afford to sell at very low prices abroad. The 
 trusts, moreover, have influence enough with 
 the Government to obtain favourable rates for 
 transport on the railways. In this way, 
 naturally enough, the process so well known 
 as "dumping" takes place in this country. 
 It is alleged that they can sell at prices 
 against which our manufacturers cannot 
 compete.
 
 12 THE FISCAL PROBLEM 
 
 It is obvious that some of our trades benefit 
 by this dumping. Our makers of confectionery 
 have been glad to have very cheap sugar. Our 
 shipbuilders are also very glad to have very 
 cheap steel plates. But the dumping may 
 become a general process. Let us suppose that 
 our iron and steel industries should go the same 
 way as our agriculture and our sugar trade, 
 and suppose, further, that the cotton and 
 woollen manufactures followed our iron and 
 steel industries on the down grade. Let us 
 avoid exaggeration of every kind. I do 
 not say that our agriculture or our sugar 
 trade has gone entirely to ruin ; but no one 
 will deny that they have been on the down 
 grade for a long time. Now, if our staple 
 industries — cotton, iron, and woollens — decline 
 to the same degree, what will become of the 
 economic position of England, and how will 
 employment be found for the millions of 
 workmen in Lancashire, Yorkshire, and on 
 the Tyne and Wear ? I have dealt specially 
 with German competition because it appears 
 at present to be most pronounced and active. 
 But America has natural advantages which
 
 INTRODUCTION 13 
 
 may in time make it a far more formidable 
 rival than Germany. 
 
 Germany and America are our most 
 serious competitors. Belgium is a very small 
 country, "with limited possibilities. France 
 competes with us in woollens and silks. She 
 sends us butter from her fine pastures in 
 Normandy and Brittany, and also wine, which 
 we cannot produce. But her stores of coal 
 and iron are not large enough to make her a 
 formidable rival in general industry. 
 
 With regard to Germany and America the 
 most serious part of the problem is this : 
 During the last twenty years, in the trusts 
 and their international action, forces have 
 come into existence which may affect the 
 industrial and commercial condition of the 
 world in a manner and to a degree which defy 
 human forecast. These forces have come into 
 existence ; but they have not yet come — they 
 are only now coming — into full operation in the 
 national and international spheres. It is this 
 fact, that they are in existence, but have not 
 yet come into anything like full action, that 
 in my opinion constitutes the difficulty with
 
 14 THE FISCAL PROBLEM 
 
 regard to the present fiscal problem. And we 
 must not forget that even after great forces 
 have come into operation many years may 
 elapse before their full effect is felt or can be 
 calculated. No sifting of statistics, valuable 
 as that may be, will enable us clearly to 
 understand our position. But they can render 
 one very important service : they can reveal 
 tendencies. Through them we can, if we 
 examine them carefully and wisely, discover 
 symptoms which will enable us to see how 
 things are moving, or beginning to move. It 
 is the duty of the wise statesman to study 
 such symptoms, and to take timely action in 
 accordance with them. 
 
 If we must take action to safeguard our 
 staple industries, it should be clear that 
 agriculture, the greatest of our industries, 
 must receive favourable consideration. Such 
 measures could be carried only by a combina- 
 tion of the manufacturing and agricultural 
 interests. Favourable consideration for agri- 
 culture means reasonable duties on foreign 
 corn and meat, in which is involved pre- 
 ferential treatment of the colonies. Thus the
 
 INTRODUCTION 1 5 
 
 protection of our staple industries and of 
 agriculture and preferential treatment of the 
 colonies form an organic whole. But the 
 pivot of the entire question is this : Shall we 
 need to safeguard the staple industries in 
 cotton, wool, iron, etc., on which our economic 
 and national well-being depends ? 
 
 Such is the problem which we must face 
 under the conditions that now prevail, or tend 
 to prevail. We have to consider the com- 
 peting capacity of Germany and America as 
 compared with our own. We must, therefore, 
 contrast the whole industrial position of these 
 countries with our own, remembering that the 
 present industrial position of each is the result 
 of circumstances which are partly natural and 
 partly historical.
 
 CHAPTER II 
 
 INDUSTEIAL DEVELOPMENT OF GREAT BRITAIN 
 
 In the present controversy it is frequently 
 stated that our industrial prosperity has been 
 due to Free Trade. Speakers and writers on 
 the other side suggest, if they do not assert, 
 that the industrial prosperity of our rivals is 
 owing to Protection. I shall try briefly to 
 explain the real conditions on which our 
 industrial supremacy was based. 
 
 For many centuries we have not seen an 
 invading army in England, and our national 
 development in all its departments has gone 
 on untrammelled by foreign interference. 
 From early times we have been strong at sea : 
 we have long been supreme on that element ; 
 our geographical position has been most 
 favourable. It was therefore in our power to 
 
 16
 
 GREAT BRITAIN 17 
 
 establish colonies and trading-stations, and to 
 find access to all the available markets o£ the 
 world. 
 
 At home Great Britain continued to be 
 mainly an agricultural country till far on into 
 the eighteenth century. But early in that 
 century a series of mechanical inventions and 
 improvements began, which in time made a 
 complete change. Mechanical spinning was 
 the first of the great industrial innovations to 
 be gradually developed. Then followed the 
 effective steam - engine, the first working 
 engine being turned out of the Soho Works 
 of Boulton and Watt at Birmingham in 1776. 
 The power-loom, invented about 1785, did 
 not come into practical use till 1801. 
 
 Steam navigation was made a success in the 
 early years of the nineteenth century. The 
 steam locomotive and the railway train took 
 working shape with the opening of the 
 Stockton and Darlington Railway in 1825. 
 The electric telegraph dates from 1837, and 
 crossed the Straits of Dover in 1850, only 
 about fifty years ago. 
 
 These wonderful changes, and others which 
 
 2
 
 1 8 THE FISCAL PROBLEM 
 
 we need not mention, constituted an indus- 
 trial revolution, in which, to use the common 
 phrase, we were first, and the other nations 
 nowhere. In more precise language, we 
 took the lead in a great industrial change, 
 and kept it for more than a hundred 
 years. The details of the revolution are more 
 or less familiar to everyone, and we have 
 here given this brief summary of it merely 
 because its real bearing on our economic 
 position has been so much overlooked in the 
 fiscal controversy. That is to say, we held 
 for a long period a unique position, which we 
 have now lost — a fact of incalculable impor- 
 tance, which we should constantly bear in mind. 
 Our industrial supremacy was established 
 before we adopted Free Trade in 1846. It 
 was won whilst our fiscal system was Protec- 
 tive. There can be no reasonable doubt that 
 in their early stages our industries owed 
 much to the protecting hand of the State. 
 At all times the development of political and 
 of industrial power is closely connected, and 
 it was specially so in former days, when wars 
 were so frequent. For ourselves a strong
 
 GREAT BRITAIN 19 
 
 fleet was needed, not only for national security, 
 but for commercial and colonial expansion. 
 This was recognised in the Navigation Laws, 
 of which Adam Smith, the expounder of Free 
 Trade, says that they were "as wise as if they 
 had all been dictated by the most deliberate 
 wisdom. National animosity at that particular 
 time aimed at the very same object which the 
 most deliberate wisdom would have recom- 
 mended : the diminution of the naval power 
 of Holland, the only naval power which could 
 endanger the security of England." 
 
 But it would be a mistake to overestimate 
 the influence of the Protective measures of 
 past times. We took the lead in the industrial 
 revolution, and secured the first-fruits of it, 
 because we were beyond all others at that 
 time a free, progressive, and enterprising 
 people. And we lived under favourable 
 conditions. We had coalfields and iron-ores 
 in close proximity to each other, and a 
 splendid geographical position. 
 
 It would likewise be a mistake to over- 
 estimate the influence of Free Trade in the 
 period after 1846. As we all know, the 
 
 2—2
 
 20 THE FISCAL PROBLEM 
 
 repeal of the Corn Laws was accomplished by 
 the new industrial class, led by Richard 
 Cobden. For some years before repeal the 
 country suffered the direst misery, but it was 
 only in part owing to the Corn Laws. A 
 long period passed away before the country 
 recovered from the exhaustion caused by the 
 Xapoleonic wars, and from the disturbances 
 in industry and the labour market consequent 
 on the cessation of those wars. 
 
 There had been a succession of bad seasons 
 from 1839 to 1841. The hand-loom weavers, 
 whose numbers had a few years before been 
 estimated at 250,000, with 800,000 people 
 dependent on them, were dying out by slow 
 starvation, one of the most painful tragedies 
 in the history of industry, and, indeed, in 
 the history of the world. A period of 
 booming prosperity, accompanied with the 
 usual overspeculation and inflation, which had 
 culminated about 1837, had been followed by 
 the usual stagnation and depression in the 
 subsequent years. Moreover, the old Poor 
 Law, which supplemented very low wages by 
 doles out of the rates, had been repealed in
 
 GREAT BRITAIN 21 
 
 1834, a measure which for a time greatly 
 aggravated the sufferings of the poor. Thus 
 a conjunction of causes produced widespread 
 and long-continued misery. 
 
 In 1842, out of a population of 16,000,000 
 in England and Wales, 1,429,000 were on 
 the pauper roll. " In Rochdale five-sixths of 
 the population had scarcely a blanket among 
 them ; eighty-five families had no blanket, and 
 forty-six families had chaff beds, with no 
 covering at all. In Paisley 15,000 persons 
 were in a state of starvation, with little or no 
 clothing, and no bedding on which to lie."* 
 
 The wretched and insanitary overcrowding 
 was not confined to the towns. " In one 
 parish in Dorsetshire thirty-six persons dwelt 
 on an average in each house, "f These are 
 samples of the awful misery that then pre- 
 vailed in town and country. 
 
 It will be seen, then, that the Corn Laws 
 were only one important item in a com- 
 plex group of causes which produced the 
 
 * Spencer Walpole's "History of England," vol. iv., 
 p. 25. 
 
 t Ibid., p. 25.
 
 22 THE FISCAL PROBLEM 
 
 misery of the period of which we have been 
 speaking. No one now, I presume, would 
 defend the Corn Laws as they then existed. 
 They were as short-sighted as they were 
 selfish and oppressive, and even to-day the 
 agricultural interest suffers from the associa- 
 tion which was then established in the minds 
 of the people between dear bread and Pro- 
 tection. 
 
 Trade was reviving, and the agitation for 
 repeal had become much less active, when the 
 very wet autumn of 1845, and, above all, the 
 prospect of famine in Ireland owing to the 
 failure of the potato crop, completed the over- 
 throw of a system which was already under- 
 mined in the minds of our leading statesmen. 
 The repeal of the Corn Laws, it should be 
 remembered, was only the most striking 
 event in a long movement for freer trade 
 which began in 1822, and reached its con- 
 summation in 1860. 
 
 In truth, our trade was now in such a 
 powerful position that it did not need Protec- 
 tion. We were in all, or nearly all, depart- 
 ments an easy first, and a match for the
 
 GREAT BRITAIN 23 
 
 world. Agriculture, too, after the wonderful 
 improvements made in it during* the eighteenth 
 century, had no real need of Protection. The 
 landed interests had no right to claim or to 
 expect a continuance of the abnormal prices 
 obtained during the wars against the French. 
 The increase of population and of wealth 
 caused by the enormous development of our 
 trade afforded it a sufficiently wide and secure 
 and profitable market for grain and meat, 
 wool and forage. 
 
 The adoption of Free Trade was followed 
 by a period of marvellous expansion — the 
 opening up of the goldfields of California and 
 Australia about 1850 ; the vast development 
 of railway construction in every civilized 
 country, and the growth of shipping, especially 
 steam shipping ; the initiating of water and 
 gas works in towns, and many other similar 
 movements. In all these we took the lead, 
 while the progress of our future rivals was 
 hindered by war. But with regard to them 
 all, the reasonable point of view is that Free 
 Trade was merely an important condition of 
 our industrial expansion. The real and
 
 24 THE FISCAL PROBLEM 
 
 substantial causes of our prosperity were to 
 be found in the skill and energy of the 
 British people, working under most favour- 
 able circumstances, natural and historical. 
 This prosperity culminated, relatively to other 
 countries, about the year 1872. 
 
 With regard to the industrial development 
 of Great Britian some general reflections 
 occur to us as requiring special attention. In 
 fiscal matters, where regulation was unneces- 
 sary, we pursued a policy of restriction, whilst 
 in relation to labour in factories and mines, 
 where regulation was our imperative duty, 
 we permitted a wild, immoral, and baneful 
 freedom. The physique, the intelligence, and 
 the morale of our working population have 
 not yet recovered from this twofold error. In 
 fact, the system of restraints which culminated 
 in the Corn Laws and the freedom which held 
 sway in our factories and mines were national 
 crimes, from the effects of which our people 
 will suffer for many generations to come. 
 
 It was just as well that in the triumphant 
 stage of our industrial and commercial 
 development foreign nations did not adopt
 
 GREAT BRITAIN 25 
 
 Free Trade. Their adoption of Free Trade 
 would have given a great stimulus to our 
 trade, which would have meant a further large 
 increase of a population demoralized by the 
 evils of our factory system and by our policy 
 of laissez /aire, if such a course of selfish 
 indifference and neglect can be dignified with 
 the name of a policy. The circumstances 
 under which such a class came into existence 
 are the greatest blot in English history, 
 and its continued existence and increase 
 are the most serious difficulty which the 
 country has now to face. The further increase 
 of the class which would have been caused 
 by the general adoption of Free Trade about 
 the middle of the century would have been 
 nothing short of a calamity. We need not 
 point out that such a rapid development of 
 trade would also have hastened the exhaus- 
 tion of our coal-fields. 
 
 In the generation which followed our 
 adoption of Free Trade we sent our new 
 machinery to foreign nations. We also 
 sent them skilled men, who taught them 
 our methods. Our policy of Free Trade was
 
 26 THE FISCAL PKOBLEM 
 
 thus a real boon to the world, which came 
 into possession of the methods and appliances 
 of the new industry at an earlier date than 
 would have been possible if we had followed a 
 narrower and more selfish policy. We can 
 hardly claim the praise of philanthropy in so 
 doing, as we believed we were simply follow- 
 ing the course and obeying the principles 
 which were best for our own interests. We 
 can, however, reasonably claim that in this 
 very important matter our policy of Free 
 Trade promoted the progress of the world to 
 a very remarkable degree. We are j ustified in 
 maintaining that the more rapid progress was 
 due to the fact that we took an enlightened 
 view of our interests. 
 
 The net result of these reflections seems to 
 be that we cannot very well form a correct 
 estimate of the value of Free Trade by 
 considering it merely in the abstract. We 
 must try to view it in the light of many 
 circumstances and conditions, physical and 
 social, rational and moral. We must, above 
 all, apply to it the moral test. If we apply 
 this test without prejudice, restraint and
 
 GREAT BRITAIN 27 
 
 restriction may prove to be not only good, 
 but imperatively necessary, and freedom, 
 instead of being a panacea, may simply be an 
 abuse and a crime. 
 
 With special regard to the period after 
 1846, the course of events appeared to afford 
 brilliant justification for the new policy of 
 Free Trade. It was a period in which the 
 twin sisters, Freedom and Opportunity, moved 
 together step by step, scattering blessings of 
 every kind from the capacious horn of plenty. 
 Such a period of commercial and industrial 
 expansion had never before occurred on such 
 a scale in the history of the world. Such a 
 plenitude of opportunities as was then 
 given to England may possibly never again 
 occur to any single nation of the world. 
 
 We have already briefly referred to some of 
 the features of this industrial expansion ; it 
 will be well now to speak of them more 
 particularly. In 1848 the gold-mines of 
 California were discovered ; in 1851 the gold- 
 mines of New South Wales and Victoria were 
 first opened up. The thirst for gold thus 
 awakened drew adventurers from all the old
 
 28 THE FISCAL PROBLEM 
 
 seats of civilization, but especially from the 
 British Isles. In America there was a period 
 of unexampled expansion after 1846, when the 
 vast plains of the West and of the North- West, 
 and particularly the valley of the Red River of 
 the North, with a soil of surpassing fertility 
 and suitability for wheat-growing attracted a 
 steadier class of settlers. In Australia the 
 wide pasture-lands were more extensively 
 occupied than they had hitherto been, and 
 such occupation was now supplemented by 
 the spread of arable farming. 
 
 But the grandest opportunities were found 
 in connection with the industrial revolution, 
 which, after being till this time centred in 
 Great Britain, began to embrace every country 
 of the world. In this, as we have said, we 
 had for a time at least the immense advantage 
 of being pioneers and teachers. Beyond the 
 British Isles we built railways and con- 
 structed telegraph-lines. Gas-works, water- 
 works, and the new eystem of drainage in 
 cities were in many lands established by 
 British enterprise and with British capital. 
 The machinery for the new industry, with
 
 GREAT BRITAIN 29 
 
 skilled managers, and workmen to set them 
 jxoing', were at the same time sent abroad. 
 Richly-laden merchant fleets, in which steam 
 more and more served as the motive power, 
 brought to our ports in growing abundance 
 the products of every clime. 
 
 All this, be it remembered, was an addition 
 and a stimulus to trade at home, which 
 went forward at an unprecedented pace. 
 The expansion abroad meant a continually 
 increasing demand for British goods. Lanca- 
 shire, Yorkshire and the Midlands, the Tyne 
 and the Clyde, prospered exceedingly. At 
 home and abroad men grew rich. It was 
 said of the private soldiers who served in the 
 armies of the first Napoleon that every one 
 carried a marshal's baton in his knapsack. 
 In the armies of the industrial revolution, 
 whether serving at home or abroad, every 
 enterprising worker carried in his bag the 
 means of acquiring a modest fortune, if he did 
 not dream of being a millionaire. It was 
 indeed a time of triumphant individualism, and 
 may well be reckoned a new era in history. 
 
 Thus fortunate was Free Trade, and, to a
 
 30 THE FISCAL PROBLEM 
 
 large degree, deserved ly so, though without 
 such ample opportunity its fruits would have 
 been much less marvellous. In other respects 
 it was equally happy. As its expounder it 
 had Adam Smith, most eminent in the 
 combination of philosophical and historical 
 knowledge and insight, humanity, moderation, 
 and breadth of mind. Its foremost advocate 
 in 1846 was Richard Cobden, a self-trained 
 thinker of rare integrity and sagacity, lucidity 
 and persuasiveness. In John Bright it had 
 a champion of fervid eloquence and singular 
 nobility of character. Sir Robert Peel, who 
 carried the abolition of the Corn Laws, was in 
 some important respects the best English 
 statesman of the nineteenth century. During 
 the period after 1846 J. S. Mill, an enthusiast 
 in the cause of humanity and an enlightened 
 and progressive thinker, was the accepted 
 teacher of economics in Great Britain. And 
 the movement was specially happy in W. E. 
 Gladstone, who brought to the service of the 
 State a genius, energy, and passionate devotion 
 which have seldom been equalled in the 
 history of any country.
 
 GREAT BRITAIN 31 
 
 We may be assured that a cause which 
 attracted and was promoted by so many men 
 of the highest worth and capacity had in it 
 elements of enduring value. If it be the duty 
 of each successive generation, not to undo the 
 work of the generation preceding, but to 
 continue and extend it so far as it can stand 
 the test of reason and experience, then it 
 behoves us to hold fast and to incorporate 
 into our thought and action all that is 
 valuable in freedom of trade. How to con- 
 tinue this free development and to reconcile 
 it with other great causes and ideals, human 
 and national, is one of the supreme problems 
 of the twentieth century. 
 
 eHw
 
 CHAPTER III 
 
 INDUSTRIAL POSITION OF GERMANY 
 
 In the fiscal controversy many mistakes are 
 being made, I believe, owing to a want of 
 recognition of important facts in the industrial 
 history and position of Germany. Compared 
 with Great Britain, and even with France, 
 Germany was very late in its industrial 
 development. 
 
 For the reasons of this we must go as far 
 back, at least, as the seventeenth century. In 
 the early half of that century the political and 
 religious divisions of Germany resulted in the 
 Thirty Years' War, which reduced the country 
 to a desolation. Before the war Germany 
 had many cities with promising industries 
 and a progressive life. All was changed 
 by the ruffianly, devastating armies which 
 
 32
 
 GERMANY 33 
 
 repeatedly traversed the country from end to 
 end. Some estimate that the population was 
 diminished to one-third of what it formerly 
 had been. Whole regions were laid waste 
 again and again. Towns were sacked and 
 depopulated. Germany did not recover from 
 the economic effects of the Thirty Years' War 
 till the middle of the nineteenth century. 
 
 The moral and political effects of the war 
 were incalculably serious. The German Princes 
 ruled as independent Sovereigns, and were 
 brutal and oppressive to a degree which we 
 happily cannot realize. Peasantry and town 
 workers sank into an almost hopeless poverty 
 and degradation, which lasted for many 
 generations. As the opportunities for colonial 
 expansion enjoyed by other European Powers 
 were then lost to her, Germany thus 
 suffered detriment which cannot possibly be 
 retrieved by any exertions that she can now 
 or henceforward make. The divisions of 
 Germany exposed her to continual interfer- 
 ence and to repeated invasion from France. 
 In the course of the eighteenth century the 
 country began to recover, only to be crushed 
 
 3
 
 34 THE FISCAL PROBLEM 
 
 again under the heel of the first Napoleon. 
 During the nineteenth century Germany pain- 
 fully gathered up the broken threads of her 
 historical development, this time successfully, 
 and the present empire was established in 1871. 
 Thus, while England has had a free and 
 progressive development for centuries, the 
 industrial and political progress of Germany 
 really dates from a period which is well 
 within the memory of persons who can hardly 
 be called old. The power-loom, for instance, 
 was little used in the Rhine country, the 
 most progressive part of Germany, till the 
 middle of last century. Less than twenty 
 years ago about 90 per cent, of the fine 
 silk and kindred fabrics at Krefeld was still 
 made on hand looms ! So late as 1848, 
 when Alfred Krupp took control of the 
 iron business at Essen, which he made so 
 celebrated, it consisted of an establishment of 
 three workmen, and more debts than fortune. 
 Coke for iron-smelting was coming into use 
 about the same time. The annual output of 
 pig-iron did not reach one million tons till 
 1866.
 
 GERMANY 35 
 
 We may roughly date the active progress 
 of German}' as an industrial State in the 
 modern sense from 1850, her active competi- 
 tion in the world's markets from 1875. 
 Industrial and commercial progress has 
 naturally gone hand in hand with political 
 progress. In the early part of the nineteenth 
 century a bewildering and hampering maze of 
 diverse tariffs and coinages rendered industrial 
 movement difficult, just as the political condi- 
 tions seemed to be an insuperable obstacle to 
 the realization of national aspirations. 
 
 Prussia led the way in solving both sets 
 of difficulties. By 1834 substantial progress 
 had been made in establishing a Zollverein, 
 or Customs Union of German States. Between 
 1864 and 1871 Bismarck, in three wars — with 
 Denmark, with Austria, and with France — 
 made the political unity of Germany an 
 accomplished fact. Recent progress has been 
 rapid. One of its most notable features is 
 that it has been based on knowledge and 
 research in the widest sense. The present 
 writer studied at three German universities — 
 GiJttingen, Berlin, and Tubingen — and he 
 
 3—2
 
 36 THE FISCAL PROBLEM 
 
 came to the conclusion that the German 
 universities were organized and equipped for 
 the acquisition and imparting of knowledge as 
 thoroughly as the German army was organized 
 and equipped for war. The high position 
 that Germany has now attained is due to 
 enlightened, laborious, and persevering in- 
 dustry. 
 
 She has, besides, many great natural advan- 
 tages. It is true that she has neither the soil 
 nor climate of France. Much of her land is 
 light and sandy, but her people make good 
 use of it by patient labour. Her rivers, 
 supplemented by canals, afford excellent 
 waterways. She has a large railway system, 
 with easy gradients, and she has great mineral 
 wealth in coal, iron, zinc, lead, copper, 
 salt, etc. 
 
 All these points are, I dare say, known to 
 my readers. A point that is less understood 
 or appreciated is the very favourable geo- 
 graphical position, which gives Germany 
 special advantages for commercial competition. 
 Her position in Central Europe places her in 
 the very midst of about three hundred millions
 
 GERMANY 37 
 
 of Europeans who are advanced enough to 
 value the benefits of commerce, but are for 
 the most part unable to compete with her on 
 equal terms. With most of those neighbour- 
 ing countries Germany has a system of 
 commercial treaties. 
 
 The railways by which the Alps have been 
 tunnelled bring her into direct communication 
 with Italy and the Italian ports. A railway 
 system controlled by Germany now extends 
 beyond Konieh (the ancient Iconium), and is 
 intended in due time to run on to Baghdad 
 and the Persian Gulf. It is on the same 
 gauge as that of Germany and Central Europe 
 generally. Train-ferries convey the trains 
 from Europe across the Bosporus to Haidar 
 Pasha, near Skutari, the starting-point of the 
 Asiatic lines. 
 
 The opening of the Suez Canal has already 
 to a large degree brought back European 
 trade with the East to its ancient routes. 
 The construction of the Baghdad Eailway will 
 complete the process — an event of world- 
 historic importance, which will give Germany 
 an exceptionally advantageous position, as
 
 38 THE FISCAL PROBLEM 
 
 mainly controlling what will probably be the 
 chief commercial route between the hundreds 
 of millions of Europe and the vast populations 
 of India and China. This great railway is a 
 notable example of the use which Germany 
 makes of her position as the head of the 
 Central European Powers to promote her 
 industrial and commercial aims. 
 
 The main features of the industrial history 
 and position of Germany, as they bear on the 
 present controversy, may be summed up in a 
 few salient points : 
 
 1. In Germany industry had begun to 
 flourish before the present protective system 
 was inaugurated in 1879. It has grown even 
 more rapidly since 1879. Till 1879 the 
 German States generally had a light tariff, 
 approximating to Free Trade. 
 
 Three great factors may be adduced as, at 
 that date, determining the change towards 
 Protection. The landed interest was menaced 
 by the competition of American farm products. 
 The rising industrial and commercial class in 
 Germany felt themselves quite competent to 
 supply the home market with industrial
 
 GERMANY 39 
 
 products, and wished to engross it for their 
 own and their country's benefit. The Imperial 
 Government wished to widen the basis of 
 taxation, in order to provide the necessary 
 armaments to wage a possible war on two 
 fronts — on the east against Russia, on the west 
 against France. Thus the powerful landed 
 and commercial classes found themselves in 
 accord with each other and with the Govern- 
 ment, and all three could, with good show 
 of reason, claim that they were speaking and 
 acting as the champions of the highest and 
 most urgent national interests. 
 
 2. As compared with this country Germany 
 was very late in starting on her industrial 
 development. She has been very rapidly 
 gaining what we may call her natural position 
 as an industrial nation. It is therefore quite 
 misleading to contrast her rapid advance with 
 our naturally slower rate of progress. 
 
 3. The German working class also started 
 from a very low position fifty or sixty years 
 ago. A day's work of fifteen hours, the 
 lowest pay and the poorest diet — such was the 
 lot of the German working man on the Rhine,
 
 40 THE FISCAL PROBLEM 
 
 in Saxony, and worst of all in Silesia. It was 
 this labour — miserably fed and clothed and 
 housed, and cheap in proportion to its effici- 
 ency — which enabled German manufacturers 
 even then to compete successfully in some 
 departments of the world's market. 
 
 The German workman had no leaders whom 
 he could trust, and no political training. He 
 had not the right of combination or of free 
 speech in a free meeting. It is therefore 
 totally misleading to contrast the present 
 position of the British workman with that of 
 the German. In point of fact, the German 
 working class was making rapid progress in 
 the years before 1879, and it has been making 
 rapid progress since that year. 
 
 4. To industry Germany has applied in- 
 telligence, trained, equipped, and organized 
 in her universities and schools, higher and 
 elementary, with remarkable results, especially 
 in chemistry and electricity. We have con- 
 tinued too long to confide in the qualities of 
 energy and natural sagacity by which we won 
 our early success. Brindley, the founder of 
 our canal system, could barely read and write.
 
 GERMANY 4 1 
 
 James Watt had only the ordinary education 
 of a Scottish boy of the lower middle class. 
 George Stephenson could not read till the age 
 of eighteen. The Germans have an energy 
 and natural sagacity equal to our own, trained 
 by methods far superior in thoroughness to 
 ours. The moral is obvious. 
 
 5. German statesmen do not regard it as 
 the quintessence of wisdom to stand apart from 
 national industries and let things take their 
 course ; but by using the whole influence of 
 the State for the promotion of industry they 
 seek to make things take the course that is 
 best for their country.
 
 CHAPTER IV 
 
 INDUSTRIAL POSITION OF AMERICA 
 
 If we wish to understand the Fiscal Problem 
 we must be able in some measure to appreciate 
 the industrial position of our two great rivals, 
 Germany and America. In my last chapter I 
 gave a brief sketch of the position of Germany 
 in its bearings on this country. I propose in 
 the present chapter to give a similar survey 
 of the United States. 
 
 We all vaguely know a good deal about the 
 great republic beyond the Atlantic. Let us 
 try to refresh our view of it with some definite 
 statements. In the first place, we should 
 realize that it is not a country like those we 
 have in Europe, but a self-contained and self- 
 sufficing continent, almost equal in size to 
 Europe itself. Including Alaska, it is just a 
 
 42
 
 AMERICA 43 
 
 little less than Europe ; excluding Alaska, 
 which is a cold and bleak region, valuable only 
 for its minerals, furs, and fisheries, it is four- 
 fifths the size of Europe. It consists of fifty 
 States and territories, each of which on an 
 average has an area greater than that of 
 England and Wales. The single State of 
 Texas has an area five times that of England 
 and Wales. California is three times the size 
 of England. 
 
 We should further realize that in climate 
 and in almost every variety of natural wealth 
 the Western republic has advantages that we 
 find nowhere else on the same scale in an} 7 
 country, with the possible exception of China. 
 With the exception of Alaska, it lies entirely 
 within the temperate zone. The waterways 
 are magnificent. Hardly anywhere else on the 
 globe is there so vast an extent of fertile soil 
 with a sufficient rainfall. Its mineral wealth 
 is enormous, and widely diffused. Besides 
 the motive power derived from coal, it has a 
 gigantic water-power, which may be converted 
 into electric power. 
 
 Let us take the single State of Alabama,
 
 44 THE FISCAL PROBLEM 
 
 which seems destined to play a very important 
 part in the industrial development of America. 
 The area of Alabama is about equal to that of 
 England. It has enormous coal and iron 
 mines, with vast quantities of the limestone 
 used in the smelting of iron. Its forests yield 
 valuable timber. Sugar, rice, and cotton, 
 wheat and maize, and a great variety of fruits, 
 are grown within its area. Its rivers afford 
 water-power, which can be utilized for electric 
 power. Thus we see that within the boundaries 
 of a single State, which covers only one-sixtieth 
 of the area of the republic, we have all the 
 elements of an industrial progress which is 
 simply gigantic. 
 
 I have selected Alabama for special con- 
 sideration for two reasons : it is already the 
 seat of a vigorous iron industry ; and, above 
 all, it is the seat of a rapidly-growing cotton 
 manufacture, which is favoured by the very 
 important facts that it has the raw materials, 
 the motive power, and the cognate industries 
 on the spot. The bearing of all this on the 
 future of our Lancashire cotton industries is 
 obvious.
 
 AMERICA 45 
 
 Little did the gentlemen adventurers who 
 founded the first English colony in Virginia 
 in 1607 dream of the enormous natural 
 wealth contained in the land where they were 
 settling. For several generations the new 
 colonies continued to be agricultural, with the 
 trades and industries that are subsidiary to 
 agriculture. There was no great change for a 
 long period after the Declaration of Inde- 
 pendence. We may, indeed, date the rise 
 of America as an industrial Power in the 
 modern sense from 1850. Till that year coke 
 had not been much used for iron-smelting. 
 The annual production of pig-iron rose to one 
 million tons for the first time in 1864. 
 
 When she did begin to move ahead, it was 
 with seven-league boots. The process of 
 transformation from a system of hand and 
 domestic industry to a mechanical industry 
 organized in great factories was completed 
 in less than a generation, let us say about 
 1878. We may now sum up in a few salient 
 points the features of the industrial develop- 
 ment of America, in special relation to the 
 position of our own country.
 
 46 THE FISCAL PROBLEM 
 
 1. America contains within her own 
 borders nearly all the raw materials and appli- 
 ances of industry on an enormous scale, and 
 they are, generally speaking, more accessible, 
 and therefore more easily worked, than in this 
 country. This is one of the results of her 
 more recent industrial developments. The 
 more accessible seams of coal are the more 
 easily worked ; access is obtained in some cases 
 by an adit ; it is unnecessary to sink shafts. 
 The same principle obtains with obvious 
 modifications in other spheres. In agri- 
 culture, for instance, no high-class farming is 
 needed, for a time at least, to profit by the 
 natural fertility of the prairie. 
 
 2. Owing to the comparative scarcity 
 of labour, the Americans were obliged to have 
 recourse to all manner of labour-saving 
 devices. This was, however, in accordance 
 with both the natural and acquired genius of 
 the people. From the first the conditions 
 under which the colonists lived in America 
 made them laborious, enterprising, and 
 resourceful. 
 
 The colonist had to be equally handy with
 
 AMERICA 47 
 
 the rifle, the axe, and the plough ; with the 
 saw, the hammer, and the plane. He had to 
 make his own house and furniture, and many 
 of his own tools and implements. His wife 
 required to be no less handy. She took the 
 wool as it came from the sheep, dyed, carded, 
 and spun it, finally making it into clothing 
 for her household. This need to master so 
 many trades developed an individuality, 
 ingenuity, readiness, and resource which have 
 probably never been surpassed .since the world 
 began. They had left the ruts and grooves and 
 routine of Europe behind them. We need not 
 wonder, therefore, that the Americans have 
 shown such a marvellous shrewdness, initia- 
 tive, and energy, and have carried inventive 
 skill to a pitch unknown in this or any other 
 country. 
 
 3. America is specially favoured with 
 regard to motive power. Besides her enormous 
 coal-fields, she has petroleum and natural gas. 
 Above all, in her splendid rivers she has a 
 water-power of almost incalculable vastness, 
 convertible into electricity. With Canada 
 and China, she stands in the very first rank
 
 48 THE FISCAL PROBLEM 
 
 amono- the countries of the world in this 
 matter. The industrial and, with it, the 
 political future of the world will largely 
 depend on the possession of such water- 
 power, the water-power being permanent, 
 whereas the coal-fields may be exhausted, or 
 at least not so easily worked. 
 
 4. The chiefs of American industry have 
 carried organization to a degree unknown as 
 yet in Europe, though in this respect they are 
 finding excellent imitators or rivals in Ger- 
 many. As she contains within herself nearly 
 all that is needful for the canning on of the 
 most diversified forms of industry, they can 
 be organized from the very rawest of raw 
 materials to the highest of finished products. 
 
 5. One of the greatest difficulties in organ- 
 izing American industry, the lack of labour 
 on a scale commensurate with the require- 
 ments of such a vast country, is being gradu- 
 ally overcome. Every year she receives some 
 hundreds of thousands of immigrants from 
 Europe, mostly young people in the prime of 
 life — an economic power of vast importance. 
 
 6. As a result of the great size and
 
 AMERICA 49 
 
 enormous resources of America, all her indus- 
 tries can be conducted on a gigantic scale. 
 In modern mechanical industry this is a vital 
 point, quantity or size being of the very 
 essence of success.
 
 CHAPTER V 
 
 SUCCESS IN INDUSTRIAL COMPETITION 
 
 It should be clear that in Germany, and 
 especially in the United States of America, we 
 have competitors of a very formidable kind. 
 But we shall be better able to judge how far 
 there is a need for a change in our fiscal 
 policy if we form a definite conception of the 
 conditions which make for success in modern 
 industry. In this chapter I propose to give a 
 summary of these conditions, with reference 
 to the three countries which are now the chief 
 competitors in the world's markets — Great 
 Britain, Germany, and America. 
 
 The first set of conditions making for 
 success are to be found in the natural advan- 
 tages which each country possesses. These 
 natural advantages consist in good geo- 
 
 50
 
 INDUSTRIAL COMPETITION 51 
 
 graphical position, in a favourable soil and 
 climate, in natural waterways which facilitate 
 communication, in mineral wealth, and in 
 forests. No country in the world, with the 
 possible exception of China, as I have already 
 said, possesses such a superb combination of 
 natural advantages on such an enormous scale 
 as the United States. It can raise all its own 
 food in almost exhaustless abundance and 
 variety within its own borders. The variety 
 and vastness of its raw materials are equally 
 great. Besides the power derivable from coal, 
 it has in its rivers an inexhaustible supply 
 of motive power, which is convertible into 
 electric power. I have already touched on 
 these points in the chapter on the industrial 
 position of America, and now say no more 
 here ; but we cannot lay too great emphasis 
 on this side of the question, and it is hardly 
 possible to exaggerate its importance. Great 
 Britain and Germany are very far behind 
 America in this respect. 
 
 A second set of conditions making for 
 success are to be found in the character of 
 the peoples of these three countries, in the 
 
 4—2
 
 52 THE FISCAL PROBLEM 
 
 skill, energy, and general efficiency of the 
 workmen, and in the skill, insight, 
 and initiative shown in management and 
 organization by the industrial chiefs. With 
 regard to those matters it is not easy to 
 make comparisons. Few who know Germany 
 well will, however, deny that the workmen of 
 that country are more frugal and temperate, 
 more law-abiding and better disciplined, than 
 British workmen. The American workman 
 also is more temperate than the British, and 
 he has a higher nervous organization, partly, 
 at least, due to the clearer and more stimulat- 
 ing air in which he lives. On the other hand, 
 neither the American nor the German work- 
 man has to a like degree that special combina- 
 tion of energy and of staying-power which 
 characterizes the Briton. But in too many 
 respects things are not as they should be with 
 us. In regard to the whole subject, we 
 should recognise that we are now suffering 
 for the sins of our fathers. How many of 
 our defects in England are summed up in the 
 single statement that we had no national 
 system of education till 1870!
 
 INDUSTRIAL COMPETITION 53 
 
 The founders of the great American 
 Commonwealth were wiser men. The school- 
 house rose side by side with the church in 
 every New England village from the begin- 
 ning of the settlements over there. From the 
 outset the wits of the people were sharpened by 
 a sound school education, by the management 
 of their own local affairs, and by theological 
 controversy, as well as by the struggle with 
 the uncleared and untilled wilderness, and 
 with the savage Indians. We need not 
 wonder, then, that the Yankee became the 
 cutest and toughest of mankind, and that he 
 and such as he in America are now making 
 their mark in the business of the world. 
 
 But the Americans had the good sense not 
 to trust entirely in their own schools and in 
 the natural intelligence with which they had 
 been endowed. From an early period of the 
 nineteenth century many of their best men 
 have studied at German Universities. In all 
 branches of knowledge, from philology to 
 chemistry, the Americans have thus learned 
 from the best teachers in the world. Here, 
 again, they have had a great advantage over
 
 54 THE FISCAL PROBLEM 
 
 England. While a medieval obscurity still 
 reigned at our Universities the Americans were 
 lighting theirs with the newest German 
 lamps. 
 
 A third set of conditions on which success 
 in modern industry depends are inherent in 
 the very nature of that industry. As we said 
 in a previous chapter, modern industry began 
 in the eighteenth century with a great series 
 of mechanical inventions, by which machinery 
 was made to do the work of the human hand. 
 Such machinery could be made and procured 
 only by men who possessed a considerable 
 capital, and it could be utilized only in 
 factories where a considerable number of 
 workmen were employed, with a suitable 
 division of labour. These factories, again, 
 turned out a large quantity of goods, which 
 could be cheaply sold in a large market. 
 
 We see, therefore, that mechanical industry 
 means a large production in comparison with 
 the hand industry which it displaced. With 
 a large production you can sell at a low price, 
 which is suited to a large market. Thus 
 machinery, with an adequate motive power,
 
 INDUSTRIAL COMPETITION 55 
 
 a large capital, organization of labour on 
 a large scale in a factory, cheap goods, and 
 a large market form parts of an organic 
 whole — that is to say, each element in 
 this system implies all the rest, just as the 
 organs of the human body imply and depend 
 on each other. Such large production also 
 implies a large improvement and growth in 
 the means of communication ; otherwise the 
 raw material could not be brought to the 
 factory, or the finished product carried from 
 the factory to the consumers in sufficient 
 quantities. 
 
 But the large industry which began to 
 supersede hand industry during the eighteenth 
 century would now be regarded as very small. 
 The first cotton factories, for example, used 
 water-power, and were therefore small. Since 
 that time we have seen a long process by 
 which one stage in the large industry has 
 incessantly been leading on towards a stage 
 still larger. Size and quantity have been 
 deciding factors at every step, for the very 
 simple reason that cheapness goes with size. 
 The large production is cheap production, and
 
 56 THE FISCAL PROBLEM 
 
 the larger the cheaper. Size, therefore, is of 
 the very essence of success in modern industrial 
 competition. 
 
 These statements may to some readers seem 
 rather abstract, and to many they may appear 
 elementary. I have laid emphasis upon them 
 because they form the key, not only to success 
 in modern industry, but to the fiscal problem. 
 Their force and cogency rest on the fundamental 
 principle in human nature that men will not 
 go on giving sixpence for an article if they 
 can get one equally satisfactory for three- 
 pence. 
 
 If the Germans and Americans, with their 
 immense output, and the very profitable prices 
 they obtain in their protected home markets, 
 can sell at lower prices in our markets than 
 our manufacturers can, the staple industries on 
 which the prosperity of this country depends 
 must go down. This dumping, we shall see, 
 is only another phase of the triumph of cheap- 
 ness, based on the larger production, which 
 has marked the whole course of industrial 
 evolution since the middle of the eighteenth 
 century.
 
 INDUSTRIAL COMPETITION 57 
 
 But some may say size is not everything*. 
 Neither it is. Skill in organizing and 
 managing counts for a great deal. But in 
 modern industry there is no contradiction 
 between the two factors, skill and size. Skill 
 shows itself most of all in understanding the 
 conditions of the market and in adapting to 
 them the whole mechanism of business. The 
 skilled employer or manager utilizes all the 
 conditions under which he works to produce 
 the most satisfactory article at the cheapest 
 profitable price, and he can do so only by 
 producing on a very large scale. 
 
 Skill and size, instead of being opposed, 
 are really complements of each other. The 
 greatest skill and the largest size are combined 
 to produce the highest efficiency and the 
 utmost possible cheapness. The large scale 
 cheapness and success go together in modern 
 industry. 
 
 But in comparing the three countries we 
 must take into account all the three sets of 
 conditions on which success depends : natural 
 resources, skill and efficiency of labour and of 
 management, and scale.
 
 CHAPTER VI 
 
 FREEDOM AND PROGRESS 
 
 In order to understand Free Trade, it will 
 be well to consider the wider meanings and 
 relations of freedom, especially in the light of 
 history. 
 
 In the historical development of the world 
 the first interests which men aimed at have 
 been security against foreign invasion and 
 order at home, with some approximation 
 to justice. Personal and individual freedom 
 has in past times been sacrificed to this prime 
 need for national independence and security 
 and for internal order. 
 
 After order and security had been estab- 
 lished came the desire for freedom in the 
 widest sense, and for progress. Valuable in 
 themselves, we need not say that freedom and 
 
 58
 
 FREEDOM 59 
 
 progress are much more valuable in their 
 combination. 
 
 Freedom was the supreme ideal of the 
 ancient Greeks. We may regard it also as, 
 on the whole, the supreme ideal of modern 
 times. For several generations it has been 
 the watchword of enlightened and progressive 
 men in religious, political, and social life. It 
 has undoubtedly been a principle of sovereign 
 value and efficacy, and we must all ardently 
 wish for its widest application and extension, 
 in so far as it is consistent with other great 
 human interests and ideals. 
 
 We may regard freedom, including freedom 
 of trade, as the goal of the human race. But 
 for the present this very desirable consumma- 
 tion cannot be attained as we could wish, 
 because of the imperfections in our moral, 
 social, and national development. 
 
 Even in our present stage, however, we 
 may safely go the length of maintaining that 
 there should always be a presumption in 
 favour of freedom; that is to say, unless we 
 see some cogent and valid argument, based 
 on morality, order, or reason, for limiting
 
 60 THE FISCAL PROBLEM 
 
 freedom, we may assume that its claims should 
 prevail. 
 
 While this is so, we must recognise that 
 the sacred cause of freedom has been the 
 excuse for every kind of disorder, unwisdom, 
 and cruelty. Even yet there are many who 
 seem to believe that the mere name has a 
 magical potency to decide the most important 
 and difficult questions in religion, politics, 
 and social life. The harm thus done is 
 incalculable. A great name and cause have 
 thereby been too often discredited. Human 
 progress has been arrested and turned back. 
 Our want of moral and intellectual prepara- 
 tion for the high calling which the life of 
 freedom means is the chief explanation of our 
 failures. 
 
 In these circumstances we need not be 
 surprised that the progress of freedom has in 
 many respects been grievously disappointing. 
 Progress has probably been greater during 
 the last hundred years than at any other 
 period of the world's history. Yet we may 
 safely say that everyone of the recent 
 movements for freedom has left behind it
 
 FKEEDOM G 1 
 
 profound regrets and a painful sense of 
 failure. The French Revolution, the move- 
 ment for negro emancipation, Parliamentary 
 reform in England, Free Trade, the struggles 
 for national freedom in Greece, Hungary, 
 Italy, and Germany, the more recent efforts 
 after economic freedom — these and many others 
 were ushered in and accompanied with great 
 waves of enthusiasm, raised the highest hopes, 
 and have resulted in a considerable measure 
 of success, but have also caused the bitterest 
 disappointment even to those who have 
 learned to be moderate in their expectations. 
 
 There is no doubt that enthusiasm and 
 idealism will always find reality rather cold 
 and disenchanting. The sense of novelty 
 wears off, and the new thing which we have 
 achieved by so much sacrifice soon begins to 
 have a prosaic and commonplace look. Every 
 change, however successful, must therefore be 
 more or less disappointing, especially to the 
 idealist and enthusiast. The world and 
 human nature have been so made, and we 
 must accept the consequences with what 
 resignation we can command.
 
 62 THE FISCAL PROBLEM 
 
 Many of the disappointments connected 
 with the development of freedom are un- 
 doubtedly due to the fact that we have not 
 sufficiently recognised the conditions under 
 which freedom can be realized. A slight study 
 of the principles which govern the life of 
 nations in their relation to each other might 
 have prevented the disappointment which has 
 been associated with the history of Free Trade, 
 and perhaps might have materially modified 
 English policy in carrying it out. A little 
 knowledge of the laws of heredity which 
 control the development of races might 
 likewise have prevented the disappointments 
 which have attended the emancipation of the 
 negroes, and possibly might have led to the 
 adoption of more educative methods of 
 treating them. If observers of the French 
 Revolution had given more attention to the 
 laws of history and heredity, it would have 
 saved the world from unutterable trouble at 
 the time and from much labour of unnecessary 
 disquisition since. And we may add that an 
 elementary knowledge of geography would 
 have delivered mankind from many illusions
 
 FREEDOM 63 
 
 and mistakes regarding the probable develop- 
 ment of freedom in Greece, Italy, and 
 Germany. 
 
 It may be said, indeed, that enthusiasm and 
 the judicial faculty are in their nature not com- 
 patible. This is to a large extent true. There 
 is, we are sorry to say, a real contradiction 
 between the insight which is the true guid- 
 ing star of progress and the enthusiasm 
 which is its needful motive power. Some 
 might even go on to maintain that as 
 knowledge extends enthusiasm tends to wane. 
 This is only partially correct, but experience 
 no doubt shows that it is difficult to associate 
 enthusiasm with real insight into facts and 
 principles. 
 
 Enthusiasm is invaluable and indispensable 
 for the achieving of anything great. The 
 progressive movements of the world have 
 generally, if not always, been carried forward 
 on great waves of enthusiasm ; but, unfortu- 
 nately, this great motive power has often been 
 miserably wasted because it has not been 
 guided by knowledge. It would appear to be 
 the persuasion of many that a good cause and
 
 64 THE FISCAL PROBLEM 
 
 unlimited devotion to it are a sufficient equip- 
 ment in the great warfare of reform. History 
 has proved over and over again the falsity of 
 such a belief. In the history of the world 
 nothing is more melancholy than to contem- 
 plate how the fervid enthusiasms which 
 seemed strong enough to sweep away every 
 abuse and to make all things new have been 
 rendered of little or no avail owing to the 
 want of a wise perception of the route to 
 follow, of ends that were attainable, and of 
 means that were available and applicable under 
 the circumstances that then prevailed. We 
 may take it for granted that the world will 
 again see many an example of this lamentable 
 waste of precious force, but it behoves every 
 true friend of progress to contribute his mite 
 towards averting the too frequent recurrence 
 of such disasters. 
 
 Men have often been helped out of the 
 difficulty by the fact that you may have 
 enthusiasm in the rank and file, while the 
 insight is supplied by the leaders. This 
 solution is a good one, truly ; but in order to 
 reach it we must fulfil two hard conditions —
 
 FREEDOM 65 
 
 we must discover the requisite leaders, and 
 the rank and file must be willing to obey — 
 which bring us back pretty nearly to our 
 original difficulty. 
 
 In truth, if we consider the matter rightly, 
 zeal and enthusiasm are really only neutral 
 qualities, which cannot be pronounced either 
 good or bad until we find how they are 
 directed, what ends they aim at, and by what 
 means. While, therefore, progress cannot be 
 accomplished without the motive power, en- 
 thusiasm, it depends still more essentially on 
 the adoption of worthy and practical aims, 
 on real insight into the principles which 
 control human life generally, and the facts 
 which condition any particular movement. 
 In social politics, as in other spheres, the last 
 word is that of the Hebrew sage : ' Wisdom 
 is the principal thing ; therefore get wisdom ; 
 yea, with all thou hast gotten get understand- 
 ing.' The great aim of wise reform must be to 
 end the sad divorce of insight and enthusiasm 
 which has occurred so frequently and has 
 continued so long. 
 
 It is, therefore, of the first importance that 
 
 5
 
 66 THE FISCAL PROBLEM 
 
 we should study the conditions under which 
 progress and that freedom which is one of 
 its most precious elements can be realized. 
 Reformers should learn to recognise that it is 
 a dead waste of time to contend against the 
 inevitable, and that it is a first part of wisdom 
 to distinguish between the attainable and 
 unattainable. On every hand we are sur- 
 rounded by facts, either natural or historical, 
 some of which can be modified in varying 
 degrees, but others can hardly be modified at 
 all by human agency. To learn how to deal 
 with them, how to adapt ourselves to them, 
 and how to adapt them to us, is an imperious 
 task, if our efforts after freedom are to have 
 the success which we would desire. 
 
 The great masters in teaching the world 
 the theory and practice of freedom have been 
 the Greeks. A brief glance at their history 
 brings out in a striking way some of the 
 conditions by which the development of 
 freedom is controlled, and throws considerable 
 light on the difficulties of the greatest 
 political question of the present day — the 
 Eastern Question. Broken up as it was
 
 FREEDOM 67 
 
 by mountain and sea, ancient Greece was 
 singularly adapted for the growth of free 
 life in the city States which then prevailed. 
 But it was also very badly adapted for the 
 development of the centralized State in the 
 wider form which has been necessary for the 
 permanent preservation of national life. 
 Ancient Greece failed to pass though this 
 process of consolidation. The result was that 
 she had to bow before the supremacy of 
 Macedonia, directed by the energy and ability 
 of Philip and Alexander, and both were 
 obliged to submit to Rome. 
 
 On the division of the Roman Empire, 
 the Eastern half, in which the Greek 
 language and influence prevailed, was for 
 many centuries entrusted with a task of the 
 highest historical import. In this phase 
 of Greek history there was centralization on 
 the largest scale, but it was centralization 
 at the cost of all free and healthy life. 
 Throughout this period, nevertheless, the 
 Greek race continued to fulfil its great mis- 
 sion as the bulwark of European freedom and 
 civilization against the semi-barbarism of the 
 
 5—2
 
 68 THE FISCAL PROBLEM 
 
 East and the barbarism of the North, till at 
 last, after a changeful career of a thousand 
 years, and after transmitting culture and 
 Christianity to the barbarians of the North, it 
 fell before the unspeakable Turk. 
 
 During this awful process the Greeks have 
 been crushed, broken, and dispersed to a 
 degree which hardly any other nation has 
 experienced. As they have been the teachers 
 of freedom to the human race, so also have 
 they been its heroes and its martyrs. It 
 must surely be the ardent wish of all who 
 understand the historic deserts of the nations, 
 and who desire to see a reasonable measure of 
 justice obtain among them, that the Greek 
 race should again play a worthy role in the 
 world. If it now had been strong enough in 
 some form to restore the Byzantine Empire, 
 to supplant the Turk in Europe and push 
 him eastwards in Asia, the Eastern Question 
 would be solved. But the Greeks as they now 
 survive are only a remnant of what they might 
 have been. And besides the disadvantage 
 arising from their small numbers, they bear 
 what is, perhaps, equally fatal — the moral
 
 FEEEDOM 69 
 
 wounds inflicted during ages of degradation 
 under the heel of the oppressor. Let us all 
 hope that Greece may recover from her old 
 wounds, and be enabled to re-enter on her old 
 inheritance. 
 
 Greece, it is evident, never solved the hard 
 but elementary problem which all great 
 peoples must face — how to reconcile free and 
 healthy local and individual life with the 
 strength derived from consolidation over 
 a wide area. It is equally clear how greatly 
 the development of Greek freedom at the 
 Eastern outposts of civilization has been 
 influenced by geographical facts which are too 
 obvious to need explanation here. In truth, 
 no nation can escape the influence of the 
 geographical conditions under which it lives. 
 Thus the fact that the modern German 
 Empire is geographically situated between 
 two such Powers as France and Russia gives 
 an inevitable form and colouring to the whole 
 national life. The imperative requirements of 
 self-preservation make Germany above all 
 things a military State, with institutions which 
 are all more or less modified in accordance
 
 70 THE FISCAL PROBLEM 
 
 with the military type. This is unfortunate, 
 but inevitable ; and all aspirations after 
 German freedom, economic, social, and 
 political, must take account of this funda- 
 mental fact. 
 
 The career of modern Italy also as a free 
 and united nation of the first rank is sadly 
 obstructed by certain elementary considera- 
 tions of a geographical, or, if we go further 
 back, of a geological, nature which are too 
 stubborn to be overcome. Italy has a limited 
 area which is deficient in the minerals required 
 for modern industrial uses, and a large part 
 of her soil is not particularly productive. 
 Under these circumstances the development 
 of a free life for her overcrowded population 
 cannot be easy or happy. Nations live not 
 by freedom alone ; they must have bread. 
 In two important points recent changes are 
 operating in her favour. The opening of the 
 Suez Canal restored to her her advantageous 
 position for trade with the East, and her 
 mountain streams are useful for providing 
 electric power. But these are hardly sufficient 
 to compensate for her other defects.
 
 FREEDOM 7 1 
 
 Geological forces, which have dealt thus 
 unkindly with modern Italy, have also materi- 
 ally controlled for good or evil the destinies 
 of Ireland. Those forces have fixed her im- 
 movably where she is, not near enough fully 
 to share in the corporate life of England, and 
 not far enough away to enjoy a life inde- 
 pendent of the larger island. As the sug- 
 gestion made by John Bright about unmoor- 
 ing her and refixing her two thousand miles 
 out in the Atlantic is not a practical one. 
 Ireland and England must remain in close 
 partnership ; and any scheme of self-govern- 
 ment which is likely to succeed must corre- 
 spond with the facts of Nature. 
 
 Perhaps one ought to apologize for making 
 reference to matters so elementary, but it may 
 be necessary to be elementary when even 
 statesmen in Italy and elsewhere imagine that 
 nations can safely act in defiance of facts 
 unchangeably established by geological forces 
 untold ages before the puny race of man 
 made its mark on this planet. Let us now 
 glance at a set of facts which are not so 
 immovable as geology, but which certainly
 
 72 THE FISCAL PROBLEM 
 
 originated long ago. These are the facts con- 
 veyed in the modern conception of heredity, 
 which are undoubtedly capable of large modi- 
 fication — how far capable is uncertain. 
 
 Nations and races have their heredity, and 
 it will probably affect their history for all 
 time, so far as our interest in time extends. 
 On the great question whether all the races 
 of mankind have proceeded from a single 
 centre we need not enter now. We know 
 that since they emerged into the light of 
 history the different races have shown heredi- 
 tary differences of temperament which are 
 much more deeply seated than the colour of 
 their skin. It is a fallacy largely due to the 
 influence of Rousseau and his school that 
 there was an original, simple, and unadulter- 
 ated human nature, which you could easily 
 restore by clearing away the evil effects of a 
 corrupt civilization. This fallacy still lives, 
 and vitiates some of our theories of progress. 
 Modern research has entirely disproved the 
 idea, and it should now be dead. But such 
 ideas die hard. 
 
 This theory of the Rousseau school assumed
 
 FREEDOM 73 
 
 that the common people were good. We know 
 that they are of like passions as the aristoc- 
 racy. It drew pictures of the free and noble 
 savage. Research proves beyond a doubt 
 that the savage is neither free nor noble. 
 Races like the native Australians and North 
 American Indians had no real freedom of 
 their own, and it is doubtful whether they 
 would be able to acquire ours, even if they 
 should survive in any numbers to make the 
 attempt. Children in impulse and in mental 
 organization generally, they seem by their 
 natural and hereditary temperament unable to 
 assimilate our civilization, or even really to 
 understand it. 
 
 By many of the good people who assisted 
 in the freeing 1 of the negro it was believed 
 that on the morrow of his emancipation he 
 would come forth in all the virtues of a 
 Christian gentleman. To those who know 
 anything of the heredity and history of the 
 poor blacks such expectations appear utterly 
 groundless. Not the defects owing to slavery 
 alone, but deep-seated characteristics, dating 
 from the life of their ancestors in Africa,
 
 74 THE FISCAL PROBLEM 
 
 stood in the way of the realization of such a 
 dream. The coloured races in Hayti, Jamaica, 
 and the Southern States of America have 
 turned out as their antecedents and sur- 
 roundings might have led us to anticipate. 
 The freedom they have obtained is of a suffi- 
 ciently mixed and doubtful sort. There, as 
 elsewhere, facts move in their sadly realistic 
 way, and the ideal is ignored or kept waiting. 
 The whole problem of the relation of the 
 nearo races of Africa to our ideals of freedom 
 is a hard and complex one, on which no dis- 
 creet man would care to dogmatize. For the 
 Bantu race, which, however, seems to have a 
 mixture of Semitic blood, the courage, disci- 
 pline, and self-sacrifice shown by the Zulus 
 justify us in anticipating no mean future. 
 
 As regards the yellow races of the Far East, 
 which stand on a higher plane, the question is 
 different. In the present war the yellow race 
 has won its spurs through its champions, the 
 Japanese. Whatever the final result of the 
 contest may be, it has already proved that 
 once they have mastered the weapons and the 
 methods of the West the men of the yellow
 
 FREEDOM 7 5 
 
 race are able to hold their own against Euro- 
 peans. Their past failures were not owing to 
 any inherent want of capacit} r , as some believed. 
 It is likely enough, however, that the races of 
 the East, after partially learning the lessons 
 of a free civilization under the guidance 
 or supremacy of Europeans, will, like the 
 Japanese, dispense with their masters, and 
 thereafter run a course of development better 
 suited to themselves. For our present pur- 
 pose it is clear enough that ideals of emanci- 
 pation, without distinction of class, or creed, 
 or colour, must, in view of long-established 
 differences in racial characteristics, receive the 
 most serious modification. 
 
 So much for the conception of heredity as 
 it may affect the races that lie beyond the 
 European circle of States. Let us now glance 
 at the conception in its relation to one of the 
 greatest efforts for freedom ever made in the 
 world, the French Revolution. After genera- 
 tions of discipline under Roman and Frank, 
 Valois and Bourbon, the groundwork of the 
 French character was substantially the same 
 at the Revolution as that which Caesar found
 
 76 THE FISCAL PROBLEM 
 
 in Gaul. Moreover, the structure of society 
 continued to be essentially the same down to 
 the eve of the Revolution ; the mass of the 
 people of no political account, and over them 
 the privileged classes, the nobles and the priest- 
 hood. An attentive reader of the " Gallic 
 War" will find in it the beginnings and ele- 
 ments of the " Feudal System." The Christian 
 clergy had indeed, displaced the ancient Druids 
 — a great change, but not one of structure. 
 There was only one material difference in the 
 social structure : that the country had been 
 consolidated into a monarchy, a process to- 
 wards which Gaul was ineffectually tending 
 when Ceesar came on the scene. 
 
 Till the time of the Revolution nothing 
 had been done to give the mass of the people 
 any political education, to train them in the 
 principles and the practice of self-government, 
 or to cultivate those habits of civic self-control 
 which are absolutely essential for the growth 
 of freedom. The old government and the old 
 social structure were inefficient and corrupt, 
 and therefore doomed. Underneath all this 
 was the old Celtic temperament, ingenious,
 
 FREEDOM 77 
 
 brilliant, and capable of tbe most fervid devo- 
 tion and enthusiasm, but mobile also and liable 
 to terrible fits of excitement and panic. When 
 such a people, thus goaded by feelings of 
 immemorial injustice and degradation, at 
 last find their opportunity, awful conse- 
 quences are likely to ensue. It was a soil 
 prepared for the theories of Rousseau and the 
 other men of the literary class who now 
 appeared as the spokesmen of a cause that had 
 so long been voiceless ; and under the circum- 
 stances it was natural, too, that the crudest 
 and most superficial ideas should find most 
 acceptance. 
 
 Historians have been much concerned with 
 the question, when the old regime fell with a 
 mighty crash, how far it might have been 
 possible, at some convenient point, to arrest 
 the rapidly-developing catastrophe. If the 
 able man had come forward, they say, at the 
 right moment he might have stopped the 
 headlong pace and produced a moderate 
 Revolution. 
 
 To this it is obvious to reply that the 
 forces of heredity and of history had been
 
 78 THE FISCAL PROBLEM 
 
 inevitably preparing, or been allowed to 
 prepare, for a change which was not 
 moderate. If we consider the state of things 
 for a while, we shall find that they were not 
 calculated to produce the wise and ex- 
 perienced man who might be able to deal 
 with such an unprecedented situation. 
 Where was he to come from ? The men 
 of the old regime were in general corrupt, 
 incapable, hide-bound by the prejudices and 
 traditions of their class. The men who were 
 accessible to the new ideas were unequal to 
 the task. Turgot was an austere doctrinaire ; 
 Necker, as Adam Smith said, was a man of 
 detail, and was totally unfit to cope with the 
 Revolution ; Mirabeau was at the outset 
 discredited by his wild early life, and was soon 
 prematurely exhausted by excess. 
 
 If the wise and able statesman had been 
 forthcoming when he was so urgently wanted, 
 how persuade the two great parties, the old 
 and the new, to listen to him ? The people of 
 the old regime wearied of Turgot in twenty 
 months, though affairs were still calm, and 
 their own salvation, if they had but known it,
 
 FREEDOM 79 
 
 depended on taking his advice. How could 
 the revolutionists, whose head and heart were 
 charged with the wild and seductive theories 
 of Rousseau, be induced to follow the voice of 
 wisdom ? If anything can be considered 
 certain in such a season of national hurricane, 
 it is that neither of the conflicting parties will 
 lend an ear to moderate counsels. 
 
 On the whole, with regard to the progress of 
 the French Revolution, it is an idle specula- 
 tion what might or might not have happened 
 if such and such a contingency inconsistent 
 with the facts had occurred. Evils and 
 ineptitudes that have been accumulating for 
 generations cannot be got rid of with the same 
 facility as we fling aside an old coat. At the 
 French Revolution the laws of historic causa- 
 tion were not suspended that the way of 
 transgressors might be made easy for them. 
 That great event is a stern monition to all 
 rulers who have not a due regard for the 
 rights and the civic education of their 
 subjects that a day of reckoning may come. 
 It should also be clear that it is a gross 
 injustice to put down the excesses of the
 
 80 THE FISCAL PROBLEM 
 
 Revolution to the discredit of the demo- 
 cracy ; they were the natural outcome of 
 the old order, and the old order should be 
 held responsible for them. It is doubtful if 
 even yet France has succeeded in throwing 
 off the evil habits engendered by the old 
 regime. 
 
 Let us now briefly consider how the develop- 
 ment of freedom at the present day is affected 
 by the conditions of nationality which have 
 been so powerfully intensitied during the last 
 half-century. For some centuries the political 
 struggles of Europe were chiefly controlled by 
 considerations of dynasty connected with the 
 Hapsburg-Spanish and the Bourbon lines, 
 with the Houses of Tudor, Stuart, and 
 Brunswick. The dynasty is now for the 
 most part superseded by the nation. 
 
 Whether this intensifying of national forces 
 will eventually lead to the limitation of the 
 military power in society it would need a 
 bold man to prophesy. It is certainly a most 
 interesting field of inquiry. There can be no 
 doubt that as an existing stage in human 
 development it carries with it the most serious
 
 FREEDOM 8 1 
 
 consequences to human freedom. As a result 
 of the growth of the national idea the old 
 professional army has on the Continent been 
 superseded by the armed nation, a phenome- 
 non which made its entry in world-history 
 at the French Revolution, to the astonish- 
 ment and dismay of European statesmen, and 
 w r hich, inspired by the enthusiasm of the 
 Revolution, made France so long victorious 
 against united Europe. After Jena France 
 was followed by Prussia, and now all over 
 Europe we have the spectacle of nations in 
 arms. 
 
 The obstacles to human freedom offered by 
 this development of militarism are so familiar 
 to the English mind that we need not dwell 
 upon them here. It will be more profitable 
 to remark on the tendencies making for 
 freedom which are contained in the idea of 
 the armed nation. In the first place, it is 
 surely an important step in advance that the 
 dynasty has been displaced by the nation as 
 the pivot of political evolution. It must also 
 be regarded as a strongly progressive factor 
 that in the present system of scientific war- 
 
 6
 
 82 THE FISCAL PROBLEM 
 
 fare the most efficient soldier will be the free, 
 intelligent citizen who knows what he is 
 fighting for. 
 
 The adoption of the system of universal 
 military service has brought with it the 
 adoption of universal education. In the 
 armed nation, moreover, it will be a most 
 serious element of weakness if any consider- 
 able section of the population should be 
 discontented, or debilitated either in body or 
 mind, from economic causes. Thus, if we 
 regard the existing militarism as inevitable in 
 the present stage of social evolution, it has 
 also the compensating advantages that it is 
 bringing with it continual improvements in 
 education, the cultivation of a freer and more 
 intelligent civic life, and substantial instal- 
 ments of reform in the social-economic sphere. 
 
 When Free Trade was adopted by England 
 it was expected by many sanguine people 
 that other nations would soon follow her 
 example. They have not done so, and the 
 disappointment has been great. The explana- 
 tion of the failure is largely to be found in 
 the national evolution of the last fifty years.
 
 FREEDOM 83 
 
 To guard against even the remote possibility 
 of misapprehension, we need hardly say that 
 Free Trade was the right policy for England, 
 and the only one open to her. The point we 
 wish to bring out here is that the progress 
 of Free Trade on the Continent was limited 
 and obstructed by the interests and necessities 
 of national life. The life of nations is not 
 comprehended and summed up in the business 
 of buying and selling. If the promoters of 
 Free Trade in this country had possessed a 
 deeper insight into the development of Con- 
 tinental countries, they would not have been 
 so sanguine about the speedy triumph of 
 their cause. Cobden himself, w T ho knew the 
 Continent more thoroughly than most of his 
 contemporaries, should not have been so 
 sanguine. The fact that he was so over- 
 confident of the speedy success of Free Trade 
 is the strongest proof that he and his friends 
 failed to read the signs of the time in some 
 of its most important features. If a deeper 
 knowledge had prevailed, it perhaps might 
 have modified with advantage the manner of 
 our adopting Free Trade. 
 
 6—2
 
 84 THE FISCAL PROBLEM 
 
 The recent development of national life has, 
 therefore, many features, some favourable and 
 some unfavourable, to freedom, which may be 
 greatly modified, but which in the main may 
 be regarded as at present inevitable. Not the 
 least of its unhappy features is that the military 
 spirit by which it is attended leads to the 
 fostering of ideals which are opposed to a 
 healthy and genial freedom. Militarism con- 
 tinues to be a fetish, with too much of the 
 unreason of fetish worship. But, after all, it 
 is questionable whether the worship of the 
 cruel god Moloch is much more unfavourable 
 to true freedom than the worship of the base 
 god Mammon, which has its chief seat in 
 English-speaking countries. Mammon, as we 
 know, was the least erected spirit that fell 
 from heaven, and his service cannot be a good 
 training for a noble and enduring freedom. 
 
 However great may be the evils of the 
 military spirit, it has the advantage of 
 providing a kind of discipline which is 
 essential for the preservation of communities. 
 For we must remember that freedom cannot 
 continue to exist without discipline ; and
 
 FREEDOM 8 5 
 
 the higher the freedom the higher the 
 discipline that will be needed. As the 
 freedom which all progressive men desire 
 grows and is perfected, so will the discipline 
 which is required to correct and strengthen it 
 need to be perfected. A real and enduring 
 freedom must be based on and associated with 
 character, which must ever largely be the 
 result of discipline. 
 
 The deficiency in the element of discipline is 
 certainly one of the most doubtful things 
 regarding the future of freedom in the 
 English-speaking world. The discipline of 
 the family and o£ the school has grown weak. 
 The discipline of religion is growing weak. 
 The discipline of the military system is almost 
 wanting. The discipline provided by the 
 industrial system, whilst effectual enough in 
 many ways, would assuredly be more whole- 
 some if it were not so seriously vitiated by 
 the service of Mammon. 
 
 When we consider the history and present 
 condition of the two great races, the Anglo- 
 Saxon and the Slav, on which the future of the 
 world depends so much, we are struck by the
 
 86 THE FISCAL PROBLEM 
 
 contrast which they present in this respect. 
 The Slav has had discipline enough, both of 
 the army and of the police, and with it the 
 minimum of freedom. In the English-speak- 
 ing world freedom grows, but discipline is 
 declining. The old disciplines have been 
 disappearing. How are the new ones going 
 to take shape ? 
 
 From the foregoing we may, among other 
 things, see how little can be gained by con- 
 sidering freedom as an abstract conception. 
 It is, indeed, one of the worst of political 
 habits to bandy about the sacred name of 
 freedom, whether as abstraction or catchword. 
 We must view it in the light of history, and 
 history teaches us that a substantial and 
 enduring freedom can be realized only if we 
 have regard to the concrete circumstances 
 which go to constitute our environment. 
 
 We must consider the geographical facts, 
 on which the economic condition of a people 
 depends ; without some measure of economic 
 opportunities and advantages freedom may be 
 little better than an idle word. We must, 
 moreover, give due weight to all that is
 
 FREEDOM 87 
 
 contained in the idea of heredity. We must 
 have regard to character, for on character, 
 above all other things, depends the kind of 
 freedom of which a race or nation is capable. 
 And without the discipline of history, without 
 an adequate social discipline, true freedom 
 cannot be realized. 
 
 In other words, true freedom can be 
 attained only by conformity to reason, 
 morality, and order. We may therefore lose 
 much by undue insistence on the idea of free- 
 dom. If we use it thoughtlessly, as a mere 
 catchword or formula by which we can with- 
 out further trouble solve, as we imagine, the 
 most difficult questions, we shall simply bring 
 upon ourselves every kind of disappointment. 
 Indeed, we may find it the most ruinous and 
 fatal method of saving ourselves trouble that 
 could be devised. 
 
 Historical progress is a most complex 
 matter, which will be confused and retarded by 
 one-sided watchwords. Freedom, important 
 though it is, is only one factor in well-being. 
 No question can be solved by appealing to it 
 alone. The best social progress — we might
 
 88 THE FISCAL PROBLEM 
 
 say the only real and enduring social progress 
 — can be attained only through the balance 
 and harmony of many principles and forces. 
 
 Above all, we must insist on two cardinal 
 points. An enduring freedom for average 
 humanity must have a solid economic basis. 
 And we must remember that the moral forces 
 govern the world ; true freedom is possible 
 only for those who are loyal to moral law. 
 We may rest assured that in trade, as in all 
 other departments of human activity, freedom 
 can be realized only in so far as moral law is 
 wrought into our spiritual tissue and becomes 
 the daily and spontaneous ordering of our lives.
 
 CHAPTER VII 
 
 FREE TRADE IN THE LIGHT OF HISTORY 
 
 So much with regard to freedom generally. 
 Let us now briefly consider the question 
 of Free Trade in the light of history. In 
 previous chapters we have already made some 
 remarks on this aspect of our subject. But it 
 is so important that we need offer no apology 
 for returning to it. And here we may 
 begin by quoting the well-known passage 
 from Adam Smith : " All systems either 
 of preference or of restraint, therefore, being 
 thus completely taken away, the obvious 
 and simple system of natural liberty estab- 
 lishes itself of its own accord. Every 
 man, as long as he does not violate the laws 
 of justice, is left perfectly free to pursue 
 his own interest his own way, and to bring 
 both his industry and capital into competition 
 
 89
 
 90 THE FISCAL PROBLEM 
 
 with those of any other man, or order of men. 
 The Sovereign is completely discharged from 
 a duty, in the attempting to perform which 
 he must always be exposed to innumerable 
 delusions, and for the proper performance of 
 which no human wisdom or knowledge could 
 ever be sufficient— the duty of superintending 
 the industry of private people, and of directing 
 it towards the employments most suitable to 
 the interest of the society.""' 
 
 If we consider the above statement in the 
 light of history, a few observations naturally 
 occur to us. The " Wealth of Nations " was 
 published in 1776, when George III. had been 
 on the throne for sixteen years, and Louis XY. 
 had been dead for only two years. No one 
 will contend that such Sovereigns were com- 
 petent to direct the private industry of their 
 subjects. They were disposed only to main- 
 tain restraints which had become antiquated, 
 vexatious, and oppressive. We need not 
 wonder that Adam Smith entertained strong 
 ideas as to the incompetence of Governments. 
 
 * " Wealth of Nations," Book IV., chap. ix.
 
 FREE TRADE 91 
 
 In the same year (1776) the first working 
 steam-engine on Watt's model was turned out 
 of the Soho Works at Birmingham. This 
 event may be regarded as the beginning of an 
 industrial revolution, which meant the set- 
 ting aside of old methods and the break- 
 ing down of old barriers throughout the 
 world. It meant freedom, therefore, in the 
 sphere of industry in a very wide and real 
 sense. But this freedom was free competition, 
 and brought with it evils innumerable. 
 Children were drafted from charities and 
 workhouses to supply labour to the newly- 
 established factories, round which a working 
 population grew up which was of very poor 
 physique, uneducated, and demoralized by long 
 hours of drudgery. To remedy evils which 
 had become intolerable a Government more 
 enlightened and less incompetent than those 
 with which Adam Smith was familiar was 
 obliged to intervene with Factory Acts which 
 seriously limited the freedom of the manu- 
 facturers. Thus the free competition under 
 the "obvious and simple system of natural
 
 92 THE FISCAL PROBLEM 
 
 liberty " led to terrible evils, which required a 
 new system of restraints. 
 
 No one need now lose time in defending the 
 Factory Acts. They have been incorporated 
 more or less into the legislation and adminis- 
 tration of every civilized country. Nor need 
 one lose time in justifying the principle of 
 trade unions, which are necessary to maintain 
 the interests of adult male labour, as the 
 Factory Acts were directed towards promoting 
 the well-being of working women and children. 
 Trade unions involve a limitation of the free- 
 dom of individual workmen in order the 
 better to secure the collective good of their 
 class. Or we may put the matter in this way : 
 Individual freedom is in certain respects 
 limited so as to maintain a real and substantial 
 freedom for the whole class. With the 
 general question of trade unions we are 
 not concerned here : we may assume merely 
 that they have done good in the main. They 
 have certainly been to the workmen a neces- 
 sary instrument in the assertion of their 
 rights under the competitive system of 
 industry.
 
 FREE TRADE 93 
 
 Richard Cobden, who may be regarded as, 
 in England, the executor of the principles of 
 Adam Smith, was not favourable to the 
 Factory Acts, and he was bitterly hostile to 
 trade unions. " Depend upon it," he wrote to 
 his brother, "nothing can be got by fraterniz- 
 ing with trade unions. They are founded on 
 principles of brutal tyranny and monopoly. 
 I would rather live under a Dey of Algiers 
 than a trades committee." 
 
 Trade unions are still in many respects a 
 subject of dispute ; but there can be no doubt 
 that on the main question as to their necessity 
 and usefulness reason and history alike have 
 decided against Cobden and his friends. In a 
 matter which is far more important even than 
 trade unions, history has decided also against 
 the one-sided exponents of individual freedom. 
 The Corn Laws were repealed in 1846. Only 
 two years afterwards, in 1848, began a move- 
 ment for national development, which, more 
 than anything else, probably, has moulded the 
 history of the world since that time. At that 
 date Germany, Italy, and Hungary made 
 great efforts to secure a free life, undisturbed
 
 94 THE FISCAL PROBLEM 
 
 by external interference. In the case of 
 Germany and Italy the aim was also to 
 remove internal divisions, but in all these 
 cases the end was the same — a free and full 
 national life, which had been the ideal of 
 ardent patriots for generations. 
 
 For the time these efforts failed, only, 
 however, to be successfully renewed under 
 other circumstances in later years ; and 
 Germany, Italy, and Hungary have now for 
 over a generation had the free national 
 development which they claimed. Partly 
 owing to their example, but still more owing 
 to the operation of the same causes as 
 influenced them, the principle of nationality 
 has had a new power in Europe. The 
 consequences for Free Trade have been serious. 
 
 The principle of nationality has led to fresh 
 elements of conflict, or given additional force 
 to the old ones. In the struggle of nations, 
 economic factors play a leading part. The 
 existence of the nation depends on an efficient 
 army, and an efficient army depends on 
 sufficient finance ; and a sufficient finance can 
 be secured only through the development of
 
 FREE TRADE 95 
 
 the national resources, which, again, can be 
 attained only through an adequate develop- 
 ment of the national industries. Moreover, 
 the implements and the aptitudes needed for 
 success in the scientific warfare of the present 
 day depend directly on the state of industrial 
 development. Factories like those at Elswick 
 and Essen are the result and the expression of 
 a highly-developed industrial technique. As 
 the industries of the Continent could not 
 formerly compete against those of Great 
 Britain, Protection was a necessity for them — 
 at least, in the early stages of their develop- 
 ment. For the nations of the Continent, there- 
 fore, the question of a protective system or of 
 Free Trade has not been a matter of choice : 
 it has been a question of national existence. 
 
 At the present day, however, the struggle 
 among the leading European nations can 
 hardly be described as one for mere existence, 
 as it is with China, owing to her lack of 
 military efficiency. Among the nations 
 included in the European circle of States 
 it is a struggle for a privileged existence — 
 for an existence involving certain advantages,
 
 96 THE FISCAL PROBLEM 
 
 especially those o£ an economic character. 
 Germany, for instance, having asserted her 
 right to be a united nation, untrammelled by 
 external interference, desires to have " a place 
 in the sun." In other words, she wishes to 
 have colonies in Africa and elsewhere, spheres 
 of influence in China, influence through her 
 railways and her industrial undertakings in 
 Asia Minor, and along with all these a grow- 
 ing commerce, which will serve as an outlet 
 for her home industries. Such advantages she 
 believes can be best secured among other 
 measures by a well-devised tariff, which will 
 strengthen her home industries, and at the 
 same time protect her agrarian population, on 
 which the military power of the Empire so 
 largely depends. 
 
 Considerations of an analogous nature have 
 led our Canadian and Australian colonies also 
 to adopt protective tariffs. They are not, like 
 Germany, exposed on many sides to invasion 
 by powerful neighbours ; the shadowy fear of 
 war with the United States need have no 
 great influence on Canadian politics. But they 
 very naturally desire a more fully-developed
 
 FREE TRADE 97 
 
 national life than is possible by agriculture 
 or mining merely. These two interests, great 
 as they are, do not afford sufficient scope for 
 an enterprising people, conscious of a mighty 
 future. Besides, the development of manu- 
 factures on a wide scale can alone offer an 
 adequate market for the food and the raw 
 materials produced by agriculture and mining. 
 In other words, those great colonies, which 
 are only at the beginning of a career vast 
 beyond human forecast, are desirous of a more 
 complete and better-developed national exist- 
 ence than was possible for them as agricultural 
 provinces of the industrial Motherland. With 
 them Protection is not a matter of necessity, as 
 it is with Germany, but is based on the most 
 enlightened and honourable motives connected 
 with their national life. 
 
 Thus we see that the vast development of 
 the nation both in principle and practice has 
 had a dominating influence on tariff questions, 
 leading to most important limitations on indi- 
 vidual freedom in the spheres of industry and 
 trade. And it will be seen how closely a free 
 national life and a fully- developed national 
 
 7
 
 98 THE FISCAL PROBLEM 
 
 life are associated, being indeed essential the 
 one to the other. In Great Britain we have 
 been so long accustomed to both that we have 
 painfully to remind ourselves of the elementary 
 conditions on which they depend.
 
 CHAPTER VIII 
 
 A CHANGE OF OUTLOOK 
 
 In trying to understand the present industrial 
 and commercial position of Great Britain, we 
 were bound to give very special attention to 
 the position and resources of our chief rivals, 
 Germany and America. To the philosopher, 
 the economist, and the statesman questions of 
 social progress and well-being form a study of 
 forces. It is the special duty of the statesman, 
 from the study of these forces, to shape the 
 measures which are necessary to promote the 
 interests of the people committed to his charge. 
 But the voters of this country have a respon- 
 sibility which, though diffused over many mil- 
 lions, is, in every view of it, extremely serious. 
 They have to choose the statesmen and the 
 general policy which they judge most worthy. 
 
 99 7_2
 
 100 THE FISCAL PKOBLEM 
 
 If we are to come to a right decision on 
 questions of Fiscal policy, we must especially 
 endeavour to throw off as far as we can the 
 defects of the insular mind. Among the 
 prominent features of the insular mind was a 
 very robust confidence in ourselves, which per- 
 haps did little harm whilst we were beyond 
 dispute the leading industrial nation. Now, 
 when we are merely one of the leading indus- 
 trial nations, the self-confidence which is based 
 on ignorance may be not only hurtful, but 
 fatal. The mood of self-depreciation which 
 has recently become current amongst us in 
 certain quarters is also to be deprecated. Our 
 aim should be to attain to a clear, reasonable, 
 and accurate estimate of our position as com- 
 pared with that of our rivals. 
 
 I have, in my previous chapters, tried to 
 bring out some of the chief forces which relate 
 to our present industrial and commercial out- 
 look. In so doing I have sought to avoid 
 using mere catch-words, suppositions, and 
 abstractions, and to dwell on the concrete 
 facts of the actual international situation, 
 especially as regards Germany and the United
 
 A CHANGE OF OUTLOOK 101 
 
 States. We shall now see how far they sug- 
 gest the necessity for tariff reform. From our 
 brief survey, we may perceive how ample has 
 been the justification for the statement fre- 
 quently made by tariff reformers that circum- 
 stances have completely changed since 1846, 
 when the Corn Laws were repealed. At that 
 time Great Britain was the workshop of the 
 world, and it was generally assumed that she 
 would continue to be the workshop of the 
 world. Countries like Germany and America 
 were, as we have seen, still almost entirely 
 agricultural at that date. Free Trade advo- 
 cates of that period too frequently took for 
 granted that they would remain agricultural. 
 Germany, for instance, would send us grain 
 and timber, while it would be a market for our 
 manufactures. 
 
 All this is changed now. Germany and 
 America compete with us not only in the 
 markets o£ the world, but in our own markets. 
 All the leading countries aspire to have work- 
 shops of their own. The cotton-mills of 
 India, Japan, and China, as well as those of 
 America, are taking the trade from us in the
 
 102 THE FISCAL PROBLEM 
 
 markets of the East. These facts are for the 
 most part well known, but their real signifi- 
 cance is not so generally understood. Their 
 real significance is now only beginning to 
 unfold itself. They are the beginnings and 
 first symptoms in a mighty change, the exten- 
 sion to all parts of the world of the forces 
 contained in the industrial revolution, with 
 a corresponding alteration in our economic 
 environment. 
 
 On the other hand, in the development of 
 our colonies there has been a vast change, 
 which is to our advantage, and which we 
 should try to understand in all its surpassing 
 magnitude and significance. When the Corn 
 Laws were repealed the expansion of our 
 colonies had hardly begun. In 1846 Canada 
 had just become a self-governing colony. It 
 was then our only self-governing colony, and 
 its population and trade were insignificant. 
 At the same date the gold-fields of Australia 
 had not been discovered, and we had only a 
 few pastoral settlements there, still insignificant 
 in population, and, except in wool, insignificant 
 also in trade. Neither Victoria nor Queens-
 
 A CHANGE OF OUTLOOK 103 
 
 land had become a separate colony, being still 
 unconsidered portions of New South Wales. 
 New Zealand had been a British colony only 
 for six years in 184G. In South Africa we 
 had Cape Colony, extensive enough, but with 
 a small population and very little trade. We 
 had just annexed Natal. We need not stop 
 here to contrast what they were then with 
 what they are now, as everyone knows how 
 they have grown. We have mentioned these 
 matters thus briefly, as they serve to show 
 how totally changed the outlook now is com- 
 pared with what it was sixty years ago as 
 regards our colonies. 
 
 The alteration in the social and political 
 outlook at home, though different in many 
 ways, has the same character of democratic 
 expansion, and is hardly less momentous. 
 Though the Reform Act of 1832 had been the 
 beginning of a great change, the franchise was 
 still a very narrow one in 1846. The working 
 classes were excluded from it, and the middle 
 class was waging a hard struggle for political 
 power with the landed interest. Besides form- 
 ing one branch of the Legislature entirely, the
 
 104 THE FISCAL PROBLEM 
 
 land-holding class controlled four-fifths of the 
 House of Commons. Even on the eve of his 
 great triumph, Cobden thus wrote in the 
 spring of 1846 : " In fact, there are not a 
 hundred men in the Commons or twenty in 
 the Lords who are at heart anxious for total 
 repeal."* 
 
 Thus the Corn Laws, which had been 
 enacted by a landed class controlling Parlia- 
 ment in its own selfish interest, were repealed 
 only under the pressure of a powerful and 
 prolonged outside agitation, assisted by a wet 
 autumn and famine in Ireland. It is needless 
 to say that in such a struggle the strongest 
 antagonism of classes and the bitterest feelings 
 were called forth. We now, happily, live under 
 a better state of things. No one would call it 
 perfect or idyllic. Wealth, rank, and social 
 position still wield far too much influence in 
 the House of Commons. 
 
 But we can at least say that the political 
 
 forces which formerly had to act outside of 
 
 Parliament are now represented and heard in 
 
 the House of Commons. A long course of 
 
 * " Life," p. 370.
 
 A CHANGE OF OUTLOOK 105 
 
 concession to popular opinion has greatly 
 moderated the antagonism of classes, if it has 
 not removed it. Both sides in the present 
 Fiscal controversy appeal to the working 
 classes. The decision now rests with the very 
 people who were excluded from the franchise 
 in 1846. 
 
 If, therefore, formidable rivals have emerged 
 since 1846, we have magnificent compensa- 
 tion in the goodwill and sympathy of our self- 
 governing colonies, which have enormously 
 grown in industrial and commercial impor- 
 tance since that year, and will long continue 
 to grow. We are also a nation less divided 
 and weakened by the antagonism of classes, 
 and so readier to move as an organic whole 
 in the adoption of measures necessary to our 
 well-being than we were in 1846. 
 
 In many other respects Ave continue to hold 
 a very strong position. We have capital, 
 with business connections established all over 
 the world, and abundant labour, with the skill 
 acquired by long generations of training in 
 our factories, and we have more conciliatory 
 methods of arranging the disputes between
 
 10G THE FISCAL PROBLEM 
 
 labour and capital than they have in America. 
 Indeed, there is hardly a country in the 
 world where the conditions are so favourable 
 as in ours for the practical solution of the 
 great questions pending between organized 
 labour and organized capital. 
 
 We retain many of the advantages of our 
 geographical position, though it is evident 
 that the opening of the Suez Canal has restored 
 to Southern and Central Europe not a little of 
 their old favourable position for trade with 
 the East, and the construction of the Bagdad 
 Railway will mean a further tendency in the 
 same direction. Our manufacturing districts 
 in Lancashire, Yorkshire, and on the Clyde 
 have the advantage of near access to the sea, a 
 very important matter in international com- 
 petition. 
 
 Our enormous shipping is a most impor- 
 tant element in our international strength. 
 London is still the financial centre of the 
 world, a position which gives us obvious 
 advantages in trade. 
 
 But we labour under many disadvantages, 
 which have grown since 1846. An increasing
 
 A CHANGE OF OUTLOOK 107 
 
 proportion of our food and raw materials 
 comes from abroad, and very much of it 
 reaches us after a journey of thousands of 
 miles. Of food we need not speak here. It 
 is more urgent that we should realize that we 
 get a growing part of the timber, the wool and 
 hides, iron, copper, and tin, as well as the 
 whole of the cotton used in our industries, 
 from abroad. These facts may seem rather 
 elementary for mention here. Their signifi- 
 cance for the present controversy lies in the 
 fact that we have to compete with a powerful 
 rival, America, which possesses nearly all its 
 food and raw material in vast abundance 
 within its own borders. 
 
 Few of us, probably, realize that in the early 
 stages of the industrial revolution, when our 
 supremacy was being established, we produced 
 all, or nearly all, our own wheat. The iron 
 and copper and tin ores, the timber, wool, and 
 hides, produced at home formed a far larger 
 proportion of our total consumption than they 
 do now. It could be shown in detail that the 
 proportion is still declining. As regards tin, 
 for example, the production of ores in Corn-
 
 108 THE FISCAL PKOBLEM 
 
 wall fell from 10,000 tons in 1875 to 5,000 tons 
 in 1900. In 1875 Cornwall produced one- 
 fourth of the tin ore of the world ; in 1900 it 
 produced only one -fifteenth. 
 
 The statement that industry will now go to 
 the places where the raw material can best be 
 produced requires some qualification. Success 
 in industry, as we have seen, depends on a 
 combination of advantages. No doubt labour 
 and capital can be transferred to the centres 
 where the richest supply of raw materials can 
 be found. But in estimating the probability 
 of such transfers we must have regard also to 
 considerations of motive power, food, and 
 climate, as well as of market facilities for the 
 finished product. Thus in America it is 
 found most profitable to carry the iron ore from 
 the region about Lake Superior, where coal is 
 not found, to Pittsburg, which has the motive 
 power. And manufacturing energy is not likely 
 to be developed in the tropics so successfully 
 as in temperate climates. Yet, other things 
 being equal, or nearly equal, the tendency of 
 industry will be towards the regions with very 
 abundant raw material. This tendency will
 
 A CHANGE OF OUTLOOK 109 
 
 obviously in the future not be favourable to 
 Great Britain. 
 
 We are, in fact, in this by no means favour- 
 able position, that we must procure from 
 abroad an increasing proportion of the appli- 
 ances of all our staple industries, and even 
 as regards these supplies we are not so well 
 situated as we once were. The iron ores in 
 Northern Spain, which have been so useful in 
 our steel industries, are being depleted, and 
 we need to have recourse to Southern Spain 
 and even to low-grade ores in Norway. 
 According to Mr. Carnegie, who ought to 
 know, our own iron ores will be exhausted 
 in about twentj^-five years ; hence the impor- 
 tance of foreign supplies. Germany and 
 the United States, according to the same 
 authority, have known iron ores which will 
 probably last for about a century. 
 
 With regard to the raw cotton, on which 
 Lancashire depends, there can be no doubt 
 that the American crop, which is by no means 
 unlimited, will in the future be more and more 
 needed for consumption in the country where 
 it is grown. As things are drifting at present,
 
 110 THE FISCAL PRO BLFM 
 
 we are being heavily handicapped in com- 
 petition with America. 
 
 Of the appliances of industry, coal is our 
 only strong remaining natural asset. We are 
 using it up at an enormous rate at home, and 
 an increasing proportion of it goes abroad 
 every year to assist our present and future 
 competitors. It has not been pleasant lately to 
 read how large quantities of our South Wales 
 coal — so important to our industries and so 
 essential to our navy, and which may there- 
 fore be regarded as our industrial and national 
 life-blood — have been sold to equip the Russian 
 fleet in the war with Japan. Some day we 
 may succeed in harnessing the tides or focus- 
 sing the sun's rays, and so utilizing them 
 as industrial forces. But a wise national 
 industrial policy should not rest on possi- 
 bilities of that nature. We must build on 
 facts that we know. 
 
 The moral of this chapter seems abundantly 
 clear, that the time has come for us to reconsider 
 our entire industrial and commercial position, 
 and to revise our Fiscal policy. In the midst 
 of much that is grave, and even anxious, we
 
 A CHANGE OF OUTLOOK 1 1 1 
 
 have one exceptional point of strength, which, 
 moreover, grows stronger from year to year — 
 our colonies, which desire a system of recip- 
 rocal preference with us in trade. As to the 
 principle there should be no manner of doubt. 
 The only question should be how we can meet 
 this wish of theirs. 
 
 In fact, our economic principles in some 
 of their most important features have become 
 antiquated. They were suited to a state of 
 things which has passed away, to a time 
 when our commercial supremacy was unchal- 
 lenged, when we had no rivals and no very 
 important self-governing colonies. As com- 
 pared with the generation after 1846 we live 
 in a new economic and political environment, 
 and we shall need to adjust ourselves to it.
 
 CHAPTER IX 
 
 DUMPING 
 
 In this chapter I purpose to discuss the 
 " dumping " question, with special reference to 
 America. When we consider America as a 
 competitor, present and future, of Great Britain, 
 we must remember that the great country 
 beyond the Atlantic has not yet by any means 
 come to the full measure of its strength. Its 
 enormous resources are not yet completely 
 developed. The organization of its industries 
 and commerce is still imperfect, especially as 
 regards external trade. 
 
 But great advances are being made. For a 
 long time it was lacking in capital, and was 
 obliged to borrow very extensively in this 
 country. Now it has capital available for 
 foreign investment. The scarcity of labour 
 
 112
 
 DUMPING 113 
 
 has for a still longer period been a dis- 
 advantage. As we have seen, it receives 
 hundreds of thousands of immigrants annually, 
 most of whom go from Eastern and Southern 
 Europe, and are accustomed to low wages and 
 to a low standard of living. For the lower 
 grades of labour they are a most important 
 addition to the economic power of the 
 country. 
 
 Owing to the scarcity of labour the 
 Americans were specially impelled to cultivate 
 their natural genius for invention, and they 
 are still inventing to a degree unknown in 
 any other country. The genius for organizing 
 business on a colossal scale has also been 
 developed in America to a degree unknown 
 elsewhere. At present the Americans are 
 weak in shipbuilding and as regards their 
 merchant marine. The message to Congress 
 of President Roosevelt in 1903 is only another 
 proof of the deliberate and far-sighted resolu- 
 tion of the American people to have a merchant 
 marine suited to the great industrial and 
 commercial future of the country. With 
 a similar view the building of a navy is being 
 
 8
 
 114 THE FISCAL PROBLEM 
 
 steadily and energetically pursued. After 
 developing and organizing their home markets 
 and their vast railway system, the Americans 
 are preparing to take a fitting place in external 
 trade, and to some extent they have done so. 
 
 The interest shown by their statesmen in 
 maintaining the " open door " in China is not a 
 passing incident in diplomacy : it is part of a 
 deliberate policy. After the making of the 
 Panama Canal, which is a phase of the same 
 wider outlook in American policy, they will 
 have a far stronger position in international 
 trade and politics. In America, even more 
 than in Europe, trade and politics go together. 
 We may feel assured that they mean business 
 in the recent events, which constitute a new 
 feature in American history. 
 
 Other defects in the industrial and com- 
 mercial position of America can be remedied 
 by the development of labour and of transport. 
 Many of the centres of production are not 
 situated near the coal and iron mines ; most of 
 them are a considerable distance inland. The 
 transport of heavy commodities is facilitated 
 by 50-ton cars. The richest and largest iron-
 
 DUMPING 1 1 5 
 
 mines are in the Lake Superior region, where 
 there is no coal for smelting. Very efficient 
 steamers carry huge cargoes over the mag- 
 nificent water system of the Great Lakes to 
 convenient ports, from which the same 
 gigantic cars convey the ores to Pittsburg, 
 with its enormous stores of coal, petroleum, 
 and natural gas. 
 
 The United States import large quantities 
 of sugar, coffee, tea, wine, of the finer tex- 
 tiles including silks, and of fruits. Many of 
 these are the products of specially trained 
 labour, which she has not yet had time to 
 develop. The labour which every year is 
 arriving from Europe on such a large scale will 
 in time, we may feel sure, supply the deficiency. 
 Some are the products of the tropics. In the 
 regions which look towards the Gulf of Mexico 
 America raises cotton, sugar, rice, and other 
 subtropical produce. For distinctly tropical 
 products she can turn to Central and South 
 America which lie at her very door. 
 
 Thus America finds, or can grow, within 
 her own borders almost every variety of raw 
 material peculiar to temperate and subtropical 
 
 8—2
 
 116 THE FISCAL PROBLEM 
 
 climates, and she has some of the richest 
 tropical regions close at hand. As a colossal 
 centre of industry and commerce her career 
 is just begun. She has nearly all the 
 advantages with which we won the fore- 
 most place in the industrial revolution ; she 
 has many which we never had, and she 
 possesses this superb combination of advantages 
 on the most stupendous scale. 
 
 Such is the country to whose dumping we 
 are exposed. If it were the " surplus " of 
 Belgium or Switzerland, or even of France 
 only, which was being sent to our shores, 
 there would be no special reason for reflection. 
 The dumping which we have to contemplate 
 is that of Germany, and particularly of America, 
 with the vast industrial power which it has 
 already attained, and the far vaster which it 
 will attain in the course of time. 
 
 There is little to be gained by trying to 
 define or discuss dumping in the abstract. 
 We have to study it in a form which is 
 concrete, actual, and most formidable, and for 
 our present purpose two phases of it should 
 be specially considered. One phase of it may
 
 DUMPING 117 
 
 be taken as systematic and regular. We may 
 regard it as part of the ordinary business 
 policy of an American corporation to produce 
 a surplus for a foreign market. Everyone 
 conversant with business knows that a second 
 50,000 of an article can be more cheaply 
 produced than the first 50,000. The organiza- 
 tion, the labour, the plant, are in existence. 
 To produce an additional number you have 
 only to add the necessary material and run 
 the machinery for the necessary time. A good 
 price is obtained for the first 50,000 in the 
 protected home market ; you can afford to 
 sell abroad at a very low price and } T et make 
 a larger profit over the whole transaction than 
 if you had contented yourself with the home 
 market. If at the same time you disturb, 
 depress, or even ruin your foreign rivals, that 
 is their concern ; you are only adapting your- 
 self to the conditions of the market, and if 
 you clear out of the way firms which are 
 troublesome competitors — not only in their 
 own, the British market, but in the world 
 market — so much the better. 
 
 In the second place, the dumping may be
 
 1 1 8 THE FISCAL PROBLEM 
 
 involuntary and irregular. That is to say, in 
 times of depression and stagnation there may 
 be a pressure or necessity to sell in varying 
 degrees, according to the position of the 
 seller. It may simply be the need to earn 
 dividends, or it may be the most urgent need 
 to earn cash in order to avert ruin. In the 
 latter extreme case the pressure to sell may 
 be irresistible, and the goods are thrown 
 on the foreign market, to go at any price 
 they can bring. 
 
 Here, again, let us remember that we are 
 not considering an abstraction. We are deal- 
 ing with the depressions and disturbances that 
 have occurred, that do occur, and may be 
 expected to recur in a country like America, 
 with a gigantic industry yielding a gigantic 
 surplus, which will appear in bewildering 
 forms to disturb and depress industries which 
 are vital to the existence and security of our 
 country. 
 
 Dumping is not by any means a new 
 phenomenon in trade. It is, we believe, as 
 old as commerce itself. The novelty about it 
 for us at present is that we are now being
 
 DUMPING 1 1 9 
 
 made the victims of it, whereas in our palmier 
 days we exercised it on other countries. 
 
 The following was written sixty years ago 
 by the celebrated German economist List : 
 
 " If the English very often find occasion to 
 offer presents to foreign nations, very different 
 are the forms in which this is done ; it is not 
 unfrequently done against their will. Always 
 does it behove foreign nations well to consider 
 whether or not the present should be accepted. 
 Through their position as the manufacturing 
 and commercial monopolists of the world, their 
 manufactories from time to time fall into the 
 state which they call ' glut,' and which arises 
 from what they call ' overtrading.' At such 
 periods everybody throws his stock of goods 
 into the steamers. After the lapse of eight 
 days the goods are offered for sale in Hamburg, 
 Berlin, or Frankfort, and, after three weeks, in 
 New York, at 50 per cent, under their real 
 value. The English manufacturers suffer for 
 the moment, but they are saved, and they 
 compensate themselves later on by better 
 prices. The German and American manu- 
 facturers receive the blows which were de-
 
 120 THE FISCAL PKOBLEM 
 
 served by the English : they are ruined. The 
 English nation merely sees the fire and hears 
 the report of the explosion ; the fragments fall 
 down in other countries, and if their inhabitants 
 complain of bloody heads, the intermediate 
 merchants and dealers say, ' The crisis has 
 done it all !' If we consider how often by 
 such crises the whole manufacturing power, 
 the system of credit — nay, the agriculture, 
 and generally the whole economical system — of 
 the nations who are placed in free competition 
 with England are shaken to their foundations, 
 and that these nations have afterwards, not- 
 withstanding, richly to recompense the English 
 manufacturers by higher prices, ought we 
 not, then, to become very sceptical as to the 
 propriety of the commercial conditions of 
 nations being- regulated according to the mere 
 
 Co o 
 
 theory of values and according to cosmopolitical 
 principles ? The prevailing economical school 
 has never deemed it expedient to elucidate 
 the causes and effects of such commercial 
 
 crises."* 
 
 * " National System of Political Economy," trans- 
 lated by Sampson S. Lloyd, p. 147.
 
 DUMPING 1 2 1 
 
 So wrote List of English dumping sixty years 
 ago. List may be taken as the representative 
 economist of Germany and the father of the 
 present protective system. His words have 
 no ordinary significance, therefore, as illus- 
 trating the feelings of the more thoughtful of 
 his countrymen towards English dumping. 
 In his speech in the Reichstag on May 2, 
 1879, Bismarck complained that Germany, 
 by reason of her low tariff, had been the 
 dumping-ground of foreign overproduction. 
 And here is what Mr. Carnegie* wrote about 
 dumping recently : 
 
 " At first European makers could ' dump 
 their surplus' upon the market and force 
 American makers to accept for their entire 
 output the extreme low rates which had only 
 to be taken by the invader for a small part of 
 his. The party in control of a profitable home 
 market can most successfully invade the foreign 
 markets. In recent years it is the American 
 manufacturer who is ' dumping his surplus ' 
 in foreign territory. First conquer your home 
 market and the foreign market will probably 
 * Carnegie, " Empire of Business," p. 230.
 
 122 THE FISCAL PROBLEM 
 
 be added to you, is the rule with manufactures 
 in international trade." 
 
 With regard to the dumping question, it is 
 essential to understand how important a part 
 fixed and permanent charges now play in 
 most large business organizations. A vast 
 capital is invested in a gigantic plant, which 
 must be of the most recent type. As inven- 
 tion is always at work, this plant is being 
 continually displaced by newer forms. This 
 large and costly plant has therefore in general 
 only a short life, and to be profitable its life 
 must of necessity be a full and active one. 
 
 If the business organization be a steel 
 corporation, it will own its own coal-fields 
 and iron-mines, railways and steamers. This 
 means an enormous capital, on which dividends 
 must, if possible, be earned. Slackness of 
 work may therefore involve a dead loss on an 
 enormous scale. We need not wonder, then, 
 that in the evidence quoted in the Fiscal Blue- 
 Book from the report of the U.S.A. Industrial 
 Commission considerable emphasis is laid on 
 the point of keeping the mills running 
 " steadily and full."
 
 DUMPING 123 
 
 When the home demand is very active, 
 there is little or no need for recourse to 
 foreign exportation ; but when demand 
 slackens at home, they naturally turn to the 
 foreign markets. In times of depression and 
 stagnation, such as Germany has recently 
 experienced, it is an immense advantage to 
 have open markets like ours, where they can 
 dispose of stocks that are lying heavily on the 
 hands of the manufacturers. If depression 
 results in bankruptcies, the dumping naturally 
 becomes still more importunate. In any case, 
 it is a great relief to have a free market like 
 ours on which to dump the glut of goods. 
 Germany has recovered from her late depres- 
 sion with surprising quickness. The open 
 markets of Great Britain and of the British 
 Empire must undoubtedly have helped in 
 this process of recovery. 
 
 Of course, particular trades in this country 
 benefit by these sales at very low prices. As 
 we said in a previous chapter, our confectioners 
 have profited by the low price of bounty-fed 
 sugar, and our shipbuilders are the better for 
 dumped steel-plates. In general, the makers
 
 124 THE FISCAL PROBLEM 
 
 of the finished article will benefit by the 
 cheapening of their raw material. 
 
 But if the dumping becomes general and 
 long-continued, the results may be very 
 unpleasant, even for the trades that profit by 
 it for a time. There is every prospect that 
 it will be general and long -continued, but 
 obviously varying inversely with the state of 
 trade in the home market of the country 
 carrying it on — i.e., lessening in times of 
 prosperity and increasing in times of depres- 
 sion. As business is conducted on such a 
 colossal and ever-growing scale in America, 
 the surplus of such an industry thus dumped 
 on our shores may very probably be quite 
 sufficient to disturb and depress our staple 
 trades along the whole line to a degree which 
 no lover of his country can contemplate with 
 equanimity. For example, if our shipbuilders 
 got into the habit of depending on dumped 
 steel -plates from America or Germany, they 
 would soon find themselves at the mercy of 
 the trusts and syndicates of those countries, 
 and our shipbuilding trade would be in the 
 position of a house with a fine superstruc-
 
 DUMPING 1 2 5 
 
 ture from which the foundation had been 
 removed. 
 
 The energy and ambition of the American 
 men of business are only equalled by their 
 confidence in the future of their country. 
 Here is a quotation from the evidence of 
 Mr. Guthrie, president of one of the com- 
 panies now merged in the United States Steel 
 Corporation, as given in the report already 
 referred to : ° The truth of the matter is, the 
 Creator of all things has been good to us. 
 We have the raw material, the coal, the coke, 
 the ability, the intelligence, and we are 
 pushing it for all it is worth ; and I think it 
 is only a question of time — and a very short 
 time — when we shall control the iron and steel 
 markets of the world." If the reader is not 
 duly impressed by the spread-eagle style of the 
 above quotation, he may be invited to ponder 
 the following reasoned statement of Mr. 
 Carnegie, which goes to the root of the matter 
 and reveals the causes of American success : 
 
 " Various contributory causes have made 
 steel billets at fifteen dollars a ton possible, 
 among which automatic machinery ranks first,
 
 126 THE FISCAL PROBLEM 
 
 and in this the American excels. Continuous 
 processes come second. Workshops 1,100 
 and 1,200 feet long are becoming common, in 
 which the raw material enters at one end and 
 emerges finished at the other without hand- 
 ling, and often without ever stopping, except 
 for reheating. The writer hears of plans 
 to-day for new works upon such a scale that 
 a mile and a quarter of land is required, one 
 shop alone being 3,000 feet in length. One 
 essential for cheap production is magnitude. 
 Concerns making one thousand tons of steel per 
 day have little chance against one making ten. 
 We see this law in all departments of industry. 
 It evolves the 20,000-ton steamship and the 
 50-ton railroad car. Improved engines and 
 the use of electricity as a motor, the new 
 loading and unloading machinery, are all con- 
 tributory causes to the cheapening of steel."* 
 The following passage will show that 
 Mr. Carnegie is quite as confident of the 
 triumph of American steel in the not distant 
 future as Mr. Guthrie was. Making some 
 allowance, perhaps, for the tone of elation in 
 * Carnegie, " Empire of Business," p. 233.
 
 DUMPING 127 
 
 which it is expressed, we must admit that the 
 anticipation seems to be perfectly justified. 
 
 " The influence of our steel-making capacity 
 upon development at home must be marvel- 
 lous, for the nation that makes the cheapest 
 steel has the other nations at its feet so far 
 as manufacturing in most of its branches is 
 concerned. The cheapest steel means the 
 cheapest ships, the cheapest machinery, the 
 cheapest thousand and one articles of which 
 steel is the base. We are on the eve of a 
 development of the manufacturing powers of 
 the Republic such as the world has never 
 seen. 
 
 " The Republic's progress and commanding 
 position as a steel-producer are told in a few 
 words : In 1873, only twenty-seven years 
 ago, the United States produced 198,796 tons 
 of steel, and Great Britain, her chief com- 
 petitor, 653,500 tons — more than three times 
 as much. Twenty-six years later, in 1899, 
 the Republic made more than twice as much 
 as the Monarchy, the figures being 10,639,857 
 and 5,000,000 tons respectively — an eight- 
 fold increase for Great Britain and fifty-three-
 
 128 THE FISCAL PROBLEM 
 
 fold for the Republic ; and it made almost 
 40 per cent, of all the steel made in the 
 world, which was 27,000,000 tons. Industrial 
 history has nothing to show comparable to 
 this. 
 
 " So much for the past. As for the future, 
 ere the present century runs one-third its 
 course, perchance only one-fourth, the United 
 States is to make more steel than all the rest 
 of the world combined, and supply the wants 
 of many lands besides our own."* 
 
 In connection with the Fiscal question, it 
 will be necessary to say something about 
 trusts ; but we shall try to avoid the contro- 
 versial aspects of the subject, except so far as 
 is necessary towards the clearing up of the 
 proper theme of this book. Trusts and 
 syndicates are simply recent phases of the 
 growth and consolidation of capital. This 
 process of growth and consolidation has been 
 proceeding ever since the beginning of the 
 industrial revolution. The novel point about 
 the trusts is that they have attained to a 
 monopoly in so many of the chief articles of 
 * Carnegie, " Empire of Business," p. 241.
 
 DUMPING 129 
 
 consumption. And even this is hardly novel, 
 as simple firms, as well as companies, have 
 sometimes gained a monopoly in important 
 articles of consumption. 
 
 In fact, trusts and syndicates are only 
 carrying to a further stage of development 
 tendencies which have been in action for 
 generations ; for it must be understood that 
 it is the aim of business men, not to illustrate 
 the beauties of free competition, which are 
 often ruinous, but to make the greatest 
 possible profit. This they can best obtain, 
 as they believe, by a well-devised monopoly, 
 which, moreover, gives them security against 
 the risks of a competition that is often fatal. 
 Mr. Carnegie, for example, tells us that ninety- 
 five out of a hundred who start business on 
 their own account in America become 
 bankrupt. There is indeed, hardly a firm or 
 company which at one period or another has 
 not been on the brink of ruin. 
 
 Trusts, then, are largely due to the natural 
 desire to make profits and to avert risk of 
 ruin by the limitation of competition. But 
 this is not the whole account of the matter. 
 
 9
 
 130 THE FISCAL PROBLEM 
 
 Connected with or included in the desire to 
 make profits is the very legitimate wish to 
 secure greater efficiency and economy by 
 operating on a larger scale. This is done by 
 means which are too well known to require 
 statement here — such as lessening of office 
 expenses and expenses of plant by closing 
 superfluous offices and plants, saving of 
 expense on advertising and travellers, etc. 
 
 Exceptional skill and energy are required 
 for the control of such a gigantic establish- 
 ment as thus grows up, and success is not 
 always gained at the first trial. But we 
 must remember that in America greater 
 energy and brain are put into business 
 than in any other leading country. The 
 opportunities are colossal ; the rewards of 
 success are on a corresponding scale ; and 
 the competing interests of art, literature, and 
 science, of politics and society, are not yet so 
 attractive as in other countries. The success- 
 ful founder or manager of a great trust must 
 be an exceptional man. In fact, it is an 
 important feature of the trusts that they 
 give scope for and stimulus to the energy,
 
 DUMPING 1 3 1 
 
 ambition, and capacity of the ablest men in 
 America. 
 
 Thus we have a gigantic business organiza- 
 tion, in which the division of labour and 
 specialization of skill are carried to the highest 
 pitch and on the widest scale, under the control 
 of the ablest men. From the point of view of 
 the national well-beino-, such organizations 
 have serious defects, as well as merits. They 
 are the product of mixed forces and motives. 
 But we are not discussing the general problem 
 at present ; we are considering the relation of 
 trusts to the question of dumping. 
 
 Have trusts come to stay ? We believe 
 that they have come to stay, like other 
 human institutions, for a time — that is to 
 say, till something more suitable rises up to 
 take their place. How long it will be no 
 mortal man can tell. But this question also 
 is hardly relevant to our present inquiry. 
 
 The problem of trusts is relevant to the 
 present inquiry, inasmuch as they form an 
 essential and dominating and growing factor 
 in the business of the world as at present 
 conducted. For, after all, " trust " is only the 
 
 9—2
 
 132 THE FISCAL PROBLEM 
 
 popular name for a business organization, 
 differing from other business organizations 
 chiefly by reason of its gigantic size and its 
 tendency to monopoly, gained through the 
 fusion and amalgamation of competing 
 interests. In America they prefer to call 
 them corporations. But whatever their name 
 be, we believe that they will in the near future 
 go on extending and consolidating, till they 
 control the trade, not of a country only, but 
 will have a widening international influence. 
 Such a tendency is already in action. 
 
 It is certain that the process of growth 
 and consolidation of capital will continue in 
 various forms. Whether we call it a trust, a 
 syndicate, a corporation, or simply a company, 
 the form it takes will be large. The name is 
 a matter of indifference ; the question whether 
 they can retain a monopoly is serious, but 
 even that is not vital with regard to dumping. 
 The vital point is that the forms taken by 
 capital in America will be vast, producing a 
 large surplus for export to this country. 
 
 We are here concerned, therefore, not with 
 speculative matters, as to the future power of
 
 DUMPING 133 
 
 trusts and syndicates to survive and retain a 
 monopoly. We must deal with the situation 
 as we find it. Trusts and syndicates exist 
 and are growing. We must face the facts, 
 forces, and tendencies of the actual inter- 
 national position. 
 
 The great organizations at present, then, are 
 trusts and syndicates. But the vital point 
 for the present question is, not that they are 
 trusts and syndicates — the vital point is that 
 they are gigantic and are likely to produce a 
 large surplus, through which they will continue 
 to depress and disturb our trade. 
 
 Let us recollect that the Americans have a 
 protected home market of 80,000,000, that our 
 own market of 42,000,000 is at present as free 
 to them as it is to us, and that the entire 
 British Empire, with the exception of such 
 colonies as have given us a preference, is 
 equally open to them. In these circumstances 
 the American industrial chiefs can go on 
 extending and consolidating their businesses 
 with a confidence which we cannot feel. In 
 economic history it is a well-known fact that 
 a period of booming prosperity usually leads
 
 134 THE FISCAL PROBLEM 
 
 to a large increase of productive power in 
 putting up larger plant, etc., and that a period 
 of depression usually results in a permanent 
 fall of prices. We must in America expect 
 to see a great increase of productive power 
 and falling prices. 
 
 The Americans can produce coal more 
 cheaply than we can. They maintain that 
 they can produce iron and steel more cheaply 
 than we can. Except in clothing and house 
 rent, American workmen can live as cheaply 
 as ours, and they spend more on these impor- 
 tant departments both because they have more 
 money to spend and have a higher standard 
 of living than our workmen. This means that 
 wages are higher in America, but that fact 
 is more than counterbalanced by its greater 
 efficiency through the larger use of labour- 
 saving machinery. Such are the conclusions 
 one must draw from a very careful examina- 
 tion of the evidence in the Fiscal Blue-Book. 
 
 As the latest example of American indus- 
 trial organization which has come to the 
 notice of the present writer, the following may 
 be interesting :
 
 DUMPING 135 
 
 " Co-operation among the Labour Com- 
 missioners of some of the principal grain- 
 growing States of America bids fair to prove 
 of great value to farmers and labourers alike. 
 The States included are Oklahoma, Kansas, 
 Missouri, Nebraska, Iowa, South Dakota, and 
 Minnesota, in which great inconvenience and 
 loss have been caused in the past by short- 
 ness of labour for the ingathering of the 
 immense crops of corn produced, although 
 there have been usually plenty of unemployed 
 men in the cities, who only needed facilities of 
 transportation and an assurance of prolonged 
 employment to induce them to go out as 
 harvesters. Fortunately, the harvesting in 
 the several States named does not take place 
 at the same time. Beginning in Oklahoma, 
 it occurs next in Kansas and Missouri, follow- 
 ing later towards the north in Iowa and 
 Nebraska, and later still in South Dakota and 
 Minnesota. The Labour Commissioners, who 
 expect to obtain cheap tickets for the men for 
 railway journeys, propose to despatch about 
 45,000 men to help in the earliest harvesting, 
 and then to pass them on to the later districts
 
 136 THE FISCAL PROBLEM 
 
 as soon as they have finished their first 
 contracts. By this arrangement, if it works 
 well, about half the number of extra hands 
 who would be needed if each man went to 
 only one State will suffice to meet the 
 demand. Farmers, it is expected, will be 
 saved from the need of offering excessively 
 high wages for extra hands, while the men 
 will be benefited by the prolongation of 
 employment at the ordinary but still high 
 wages paid in harvest."* 
 
 If my readers will be good enough to read 
 the article "Agriculture" in the first of the 
 new volumes of the "Encyclopaedia Britannica," 
 they will see how agriculture generally is 
 organized in America. 
 
 In view of all these facts and forces, which 
 are not only permanent, but of growing magni- 
 tude, I cannot see how our staple industries 
 can resist the process of dumping if it is 
 permitted to go on. It seems to me that 
 we have no choice in the matter, but must 
 undertake a thorough reform of our Fiscal 
 system. 
 
 * The Standard, June 10, 1904.
 
 CHAPTER X 
 
 SIFTED STATISTICS 
 
 (The following statistics are based chiefly on the 
 Fiscal Blue-Book, which is briefly referred to as 
 F. B.-B.) 
 
 In this chapter I propose to point out some of 
 the leading conclusions regarding our chief 
 industries, which may be fairly drawn from 
 an examination of statistics. 
 
 First let us take agriculture. The acreage 
 under wheat in the United Kingdom diminished 
 from 3,514,088 in 1875 to 1,456,042 in 1895, 
 rising to 1,901,014 in 1900. The estimated 
 produce in bushels, which had been 75,994,000 
 in 1890, was only 38,285,000 in 1895, and 
 54,322,000 in 1900. The number of people 
 occupied in agriculture in England and Wales 
 decreased from 1,904,687 in 1851 to 1,423,854 
 
 137
 
 138 THE FISCAL PKOBLEM 
 
 in 1871, and to 988,340 in 1901. Thus, when 
 we apply the three great tests of acreage under 
 wheat, of produce in wheat, and of number of 
 people employed, we are able to realize how 
 very serious has been the decline in agri- 
 culture. 
 
 Let us complete this brief summary by 
 stating some facts as to the movement of prices. 
 In 1875 the annual average price per imperial 
 quarter was 45s. 2d. It was 56s. 9d. in 1877, 
 the last year that it rose above 50s. In 1883 
 it was 41s. 7d., and the annual average has 
 never since risen above 40s. ; since 1892 it has 
 only twice exceeded 30s. The lowest annual 
 average, 22s. 10d., was in 1894, in which year 
 the weekly average sank to 17s. 6d., the lowest 
 on record, and the monthly average price for 
 October was only 17s. 8d. 
 
 It is a reasonable estimate that the capital 
 value of agricultural land diminished by about 
 £900,000,000 between 1875 and 1900, and 
 the spendable income derived yearly from the 
 land decreased by about £50,000,000 in the 
 same period. 
 
 In considering the position of our manu-
 
 SIFTED STATISTICS 
 
 139 
 
 facturing industries we should bear in mind 
 the following points : 
 
 1. That prices and values tend to go 
 down. 
 
 2. That machinery and processes tend to 
 improve, so that less labour is required in 
 proportion to output. 
 
 3. That less labour of women and children 
 in proportion to grown - up males is em- 
 ployed. 
 
 4. That population has increased, leading to 
 a widening home market, but also to a greater 
 need and capacity for employment. 
 
 Let us now take the cotton trade from 1890, 
 and apply to it the three tests of value of 
 exports, volume of entire trade, as shown by 
 quantity of raw cotton consumed, and the 
 number of people occupied in the industry. 
 
 Value of Exports from United Kingdom. 
 
 
 1890. 1893. 
 
 1896. 
 
 Yarn 
 Manufactures 
 
 £ £ 
 12,341,000 ! 9,056,000 
 62,090,000 54,699,000 
 
 £ 
 10,043,000 
 59,310,000 
 
 74,431,000 ! 63,755,000 
 
 i 
 
 69,353,000
 
 140 
 
 THE FISCAL PROBLEM 
 
 
 1899. 
 
 1902. 
 
 Yarn 
 Manufactures ... 
 
 £ 
 
 8,059,000 
 59,490,000 
 
 £ 
 
 7,404,000 
 65,054,000 
 
 67,549,000 
 
 72,458,000* 
 
 The estimated consumption of raw cotton in 
 the United Kingdom for the same period was 
 for each year as follows : 
 
 
 
 
 Million 
 
 Cwts. 
 
 1890 14-8 
 
 1891 .. 
 
 
 
 14-9 
 
 1892 .. 
 
 
 
 13-6 
 
 1893 .. 
 
 
 
 13-2 
 
 1894 .. 
 
 
 
 14-4 
 
 1895 .. 
 
 
 
 14-6 
 
 1896 .. 
 
 
 
 14-7 
 
 1897 .. 
 
 
 
 14-5 
 
 1898 .. 
 
 
 
 15-5 
 
 1899 .. 
 
 
 
 15-7 
 
 1900 .. 
 
 
 
 14-5 
 
 1901 ... 
 
 
 
 14-7 
 
 1902 .. 
 
 
 
 14-61 
 
 The number of people employed in the 
 industry in England and Wales decreased 
 
 * F. B.-B., pp. 34, 35. 
 
 t Ibid., p. 367.
 
 SIFTED STATISTICS 141 
 
 from 605,755 in 1891 to 582,119 in 1901.* 
 Under the three tests, therefore, the infer- 
 ence we must draw is the same — that the 
 cotton industry has been slowing down into 
 the stationary stage. There are two im- 
 portant facts, however, which should not be 
 overlooked. The quality of the cotton we 
 consume is increasingly a finer one in pro- 
 portion as our cotton trade tends more and 
 more to produce the finer counts of yarn. 
 Also, fewer children and women are now 
 employed in the trade in proportion to adult 
 males. The fair conclusion is, then, that we 
 are holding our own, but that there is no 
 expansion manifest. In other words, we have 
 on the whole a stationary industry, and, as 
 the estimated consumption of raw cotton would 
 indicate, with comparatively moderate fluctua- 
 tions. In view of the increase in population 
 (amounting to nearly 4,000,000) from 1891 
 to 1901, we are the more bound to accept this 
 conclusion. 
 
 As to the woollen industry, on applying 
 
 * F. B.-B., p. 363.
 
 142 
 
 THE FISCAL PROBLEM 
 
 the same tests we find that the value of 
 exports is as follows : 
 
 
 1890. 
 
 1893. 
 
 1896. 
 
 Woollen and 
 worsted yarn 
 
 Woollen and 
 worsted manu- 
 factures 
 
 £ 
 
 4,086,000 
 20,419,000 
 
 £ 
 
 4,532,000 
 16,404,000 
 
 £ 
 
 5,655,000 
 18,269,000 
 
 24,505,000 
 
 20,936,000 
 
 23,924,000 
 
 
 1899. 
 
 1902. 
 
 Woollen and worsted 
 
 yarn 
 Woollen and worsted 
 
 manufactures 
 
 £ 
 
 4,875,000 
 14,789,000 
 
 £ 
 
 3,530,000 
 15,264,000 
 
 19,664,000 
 
 18,794,000* 
 
 The estimated consumption of wool for the 
 period from 1890 to 1902 was as follows : 
 
 1890 
 1891 
 1892 
 1893 
 
 Million 
 Lbs. 
 
 428 
 
 487 
 
 467 
 
 485 
 
 F. B.-B., pp. 36, 37.
 
 SIFTED STATISTICS 
 
 143 
 
 
 Million 
 
 
 Lbs. 
 
 1894 ... 
 
 507 
 
 1895 ... 
 
 510 
 
 1896 ... 
 
 520 
 
 1897 ... 
 
 495 
 
 1898 ... 
 
 568 
 
 1899 ... 
 
 523 
 
 1900 .. 
 
 502 
 
 1901 ... 
 
 541 
 
 1902 ... 
 
 494* 
 
 From the above list it will be seen that there 
 have been considerable fluctuations in the 
 quantities of wool consumed in the period 
 1890 to 1902. It should be stated also that in 
 1889 the amount was 470,000,000 pounds ; 
 but that was a record year, far surpassing 
 previous ones. The conclusion is that since 
 1889 there has been on the whole a lack of 
 vigorous expansion in our woollen and worsted 
 trade. This conclusion is fully confirmed by 
 the fact that the number of persons employed 
 in it in England and Wales decreased from 
 258,356 in 1891 to 236,106 in 1901. f Over 
 against this fact that fewer persons are employed 
 we must place the other facts, that processes 
 
 * F. B.-B., p. 368. f Ibid., p. 364.
 
 144 THE FISCAL PROBLEM 
 
 and machinery tend to improve, and that less 
 labour of juveniles is employed in proportion 
 to adults. All these considerations, when 
 taken along with the marked decline in the 
 value of exports, point the same way. On 
 the whole, we must come to the conclusion 
 that our woollen and worsted trade has a 
 tendency to be stationary. 
 
 The total number of persons employed in 
 the lace trade in England and Wales decreased 
 from 61,726 in 1851 to 49,370 in 1871, and 
 36,439 in 1901. 
 
 The total number employed in the linen 
 trade in England and Wales decreased from 
 27,421 in 1851 to 18,680 in 1871, and 4,956 
 in 1901. 
 
 In the silk trade there was a decline in the 
 number employed from 130,723 in 1851 to 
 82,963 in 1871, and 39,035 in 1901.* 
 
 With regard to the linen trade, we should, 
 however, remember that Ireland is the seat of 
 the industry, and that linen has to a large 
 degree been going out of fashion, in favour of 
 woollen goods, and especially of the finer 
 * F. B.-B., pp. 363, 361
 
 SIFTED STATISTICS 145 
 
 cotton goods that can more cheaply be made 
 to serve the same purpose. Compared with 
 other countries, Ireland is holding its own in 
 the linen trade fairly well. In silk our climate 
 and the taste and aptitudes of the people do 
 not very well fit us to compete against coun- 
 tries like France, where the raw material is 
 produced and the people have special aptitudes, 
 produced by generations of training in a finer 
 climate. No real significance can therefore be 
 fairly found in the decline of the linen and 
 silk industries. 
 
 We now pass from the textiles to the iron 
 and steel trade. A review of the various 
 departments of its export business, except 
 machinery and millwork, show symptoms of 
 stagnation in the period from 1890. Hard- 
 ware and cutlery, with many fluctuations, 
 declined from£2,764,000 in 1890 to£2,178,000 
 in 1902. Implements and tools experienced 
 a slight improvement from £1,338,000 to 
 £1,573,000 during the same time. Tin-plates, 
 severely injured by American tariffs, as we all 
 know, declined greatly for some years after 
 1891. The trade began to revive in 1899, 
 
 10
 
 146 
 
 THE FISCAL PROBLEM 
 
 and in 1902 its value was about two-thirds of 
 what it had been in 1890. The figures are: 
 
 1890. 
 
 1891. 
 
 1898. 
 
 1902. 
 
 £ 
 
 6,362,000 
 
 £ 
 
 7,166,000 
 
 £ 
 2,744,000* 
 
 £ 
 4,333,000 
 
 As regards other iron and steel exports, we 
 give the figures for some notable years : 
 
 1890. 
 
 1894. 
 
 1896. 
 
 £ 
 
 24,702,000 
 
 £ 
 
 14,128,000 
 
 £ 
 20,426,000 
 
 
 1900. 
 
 1901. 
 
 1902. 
 
 £ 
 
 27,646,000 
 
 £ 
 21,304,000 
 
 £ 
 
 24,545,0001 
 
 The number of persons employed in the 
 iron and steel trades (including dealers) 
 increased from 200,627 in 1881 to 202,406 
 in 1891, and 216,022 in 1901. Here is a 
 table J giving production and consumption of 
 pig-iron from 1881 to 1902 : 
 
 * Lowest. t F. B.-B., pp. 34-37. 
 
 X Ibid., p. 369.
 
 SIFTED STATISTICS 
 
 147 
 
 Year. 
 
 Production of Pig-iron. 
 
 Consumptioi 
 
 i of Pig-iron. 
 
 Total 
 
 Per 
 
 Total 
 
 Per 
 
 
 Million 
 
 Head 
 
 Million 
 
 Head 
 
 
 Tons. 
 
 Cwts. 
 
 Tons. 
 
 Cwts. 
 
 1881 
 
 81 
 
 4-6 
 
 6-7 
 
 3-8 
 
 1882 
 
 8-6 
 
 4-8 
 
 6-9 
 
 3-9 
 
 1883 
 
 8-5 
 
 4-8 
 
 7-0 
 
 4-0 
 
 1884 
 
 7-8 
 
 44 
 
 66 
 
 37 
 
 1885 
 
 74 
 
 4-2 
 
 6-5 
 
 3-6 
 
 1886 
 
 7-0 
 
 3-8 
 
 6-0 
 
 3-3 
 
 1887 
 
 7-6 
 
 4-2 
 
 6-5 
 
 3-6 
 
 1888 
 
 8-0 
 
 44 
 
 7-0 
 
 3-8 
 
 1889 
 
 8-3 
 
 44 
 
 7-2 
 
 3-9 
 
 1890 
 
 7-9 
 
 4-2 
 
 6-8 
 
 36 
 
 1891 
 
 74 
 
 4-0 
 
 6-6 
 
 3-5 
 
 1892 
 
 6-7 
 
 3-6 
 
 6-0 
 
 34 
 
 1893 
 
 7-0 
 
 3-6 
 
 6-2 
 
 3-2 
 
 1894 
 
 74 
 
 3-8 
 
 6-6 
 
 34 
 
 1895 
 
 7-7 
 
 4-0 
 
 6-9 
 
 3-5 
 
 1896 
 
 8-7 
 
 44 
 
 7-8 
 
 3-9 
 
 1897 
 
 8-8 
 
 44 
 
 7-8 
 
 3-9 
 
 1898 
 
 8-6 
 
 4-2 
 
 7-7 
 
 3-8 
 
 1899 
 
 94 
 
 4-6 
 
 8-2 
 
 40 
 
 1900 
 
 9-0 
 
 44 
 
 7-7 
 
 3-7 
 
 1901 
 
 7-9 
 
 3-8 
 
 7-3 
 
 3-5 
 
 1902 
 
 8-7 
 
 4-1 
 
 7-8 
 
 3-7 
 
 The above table unmistakably points to the 
 conclusion that the iron and steel trade, like 
 the cotton and woollen industries, is on the 
 whole stationary. There are considerable 
 fluctuations, but no vigorous expansion ; in- 
 
 10—2
 
 148 THE FISCAL PROBLEM 
 
 deed, there is no marked and sustained expan- 
 sion of any kind. 
 
 The consumption of pig-iron per head of 
 population has been stationary since 1881. 
 The whole consumption was stationary from 
 1881 to 1894; in 1895 and 1896 it increased, 
 only to become stationary again. 
 
 There has been a great increase in our 
 exports of machinery and millwork. In 1850 
 its value was only £1,042,000 ; in 1860 it 
 had risen to £3,838,000, and in the record 
 year of 1873 to £10,020,000. After many 
 fluctuations, it rose in 1890 to £16,411,000. 
 In 1900 it was £19,620,000, and in 1902 
 £18,755,000.* But from the point of view of 
 British trade and its future prosperity, our 
 gratification at these figures must be qualified 
 by the consideration that this export goes to 
 equip our rivals, and so to enable them to 
 compete against us. 
 
 The boot and shoe trade now shows very 
 much the same stationary character. After 
 being menaced by American machine-made 
 wares it seems to be holding its own. 
 * P. B.-B., p. 97.
 
 SIFTED STATISTICS 149 
 
 When we pass to coal, we meet a very 
 different state o£ things. Everyone knows 
 that the coal trade has increased greatly in the 
 amount and value of its output, and in the 
 number of persons employed ; but the bearing 
 of this increase on the economic future of the 
 country raises the most serious reflections. It 
 is one of the largest natural assets of the 
 country — for purely industrial purposes, un- 
 doubtedly the very largest ; and it is being 
 diminished at a rapidly increasing rate. It is 
 certain also that long before we reach the 
 period of exhaustion of our coalfields, it will 
 cease to be economical to work them. If we 
 go beyond these points, we enter the region 
 of speculation. As scientific discovery and 
 invention advance coal may lose its special 
 value as an instrument of industry, and it may 
 prove that we have done well to dispose of it 
 so rapidly. But this is speculation or con- 
 jecture. 
 
 In tailoring we find a large increase as 
 regards the number of persons employed,* and 
 this is a pleasant feature so far as it points to 
 * F. B.-B., p. 365.
 
 150 THE FISCAL PROBLEM 
 
 an expanding trade, and a rise in the standard 
 of comfort at home. But we cannot shut our 
 eyes to the fact that it employs a low-grade 
 labour, largely supplied by aliens of a not 
 very desirable class. 
 
 Building* shows a remarkable increase in 
 the number of persons employed, as does 
 also printing and bookbinding, f In building 
 nearly as many are employed as in agricul- 
 ture, and more than we find occupied in all 
 the great textile industries combined. But 
 the prosperity of the building and print- 
 ing trades must be taken as a result and 
 symptom of the general prosperity of the 
 country, rather than as a cause of it. They 
 may be said to represent the superstructure 
 rather than the foundation of national well- 
 being. 
 
 Of all the trades in the country we can 
 contemplate with most satisfaction shipping 
 and ship-building. With many and great 
 fluctuations, the latter shows vigorous progress. 
 Here is the record of ship- building for the ten 
 years from 1893 to 1902 : 
 
 * F. B.-B., p. 363. t Ibid., p. 365.
 
 SIFTED STATISTICS 
 
 151 
 
 1893. 
 
 1894. 
 
 1895. 
 
 1896. 
 
 1897. 
 
 Tons. 
 584,674 
 
 Tons. 
 669,492 
 
 Tons. 
 647,634 
 
 Tons. 
 736,814 
 
 Tons. 
 644,697 
 
 
 1898. 
 
 1899. 
 
 1900. 
 
 1901. 
 
 1902. 
 
 Tons. 
 
 870,608 
 
 Tons. 
 949,010 
 
 Tons. 
 944,267 
 
 Tons. 
 983,133 
 
 Tons. 
 950,425 
 
 Recently we have been building a tonnage 
 equal to about ten times that of either France 
 or Germany. 
 
 As regards shipping, we advanced from 
 2,768,262 tons in 1840 to 5,690,789 tons in 
 1870, and to 10,054,770 tons in 1902. We 
 now possess about five times the tonnage of 
 Germany, about ten times that of France, and 
 eleven times the tonnage of the United States 
 registered for oversea traffic. Our shipping, 
 therefore, holds a magnificent position, which 
 may satisfy the most ardent patriot. It is 
 certainly worthy of an industry which is in 
 entire harmony with the needs, the history, 
 and the traditions of the country.* 
 
 * F. B.-B-, pp. 376-379.
 
 152 THE FISCAL PKOBLEM 
 
 Our general conclusion must, therefore, be 
 that some of our industries — such as lace, 
 linen, and silk — have decayed. But no special 
 significance with regard to our industrial and 
 commercial position may be attributed to this 
 fact. 
 
 Of much graver significance is the fact that 
 the great cotton, woollen, and iron and steel 
 industries are showing since 1890 very plain 
 indications that they have been slowing down 
 into the stationary condition. Table VI., 
 pp. 25-27 of the Fiscal Blue-Book, giving 
 quantities exported, clearly confirms this 
 view. 
 
 Coal-mining and machinery and millwork 
 make progress, but the questionable features 
 attendant on it prevent us from drawing any 
 pleasant conclusions regarding our industrial 
 and commercial future. 
 
 The progress of the building and printing 
 trades is a satisfactory symptom of national 
 well-being in the past, but they afford no 
 guarantee of the continuance of our prosperity. 
 They are the result, rather than a cause, of our 
 prosperity.
 
 SIFTED STATISTICS 153 
 
 In ship-building and shipping we see the 
 most gratifying evidence of a healthy and 
 vigorous progress on the old national lines. 
 But even in ship-building the chairmen of 
 leading companies, such as Armstrong and 
 Palmers, testify to the increasing severity of 
 competition. 
 
 If we look at the general course of our trade, 
 the conclusion we must form is the same. Since 
 the early seventies there has been no increase 
 in the value of our exports of manufactured 
 goods. There has been an increase in volume, 
 but, owing to the fall of prices, no rise in the 
 general value of these exports. Whilst there 
 have been considerable fluctuations since 1890, 
 we may in all fairness conclude that there has 
 been no perceptible increase either in general 
 value or volume. We give the figures for 
 some of the most notable years since 1890 of 
 our total export of manufactures (except 
 ships) : 
 
 1890. 
 
 1894. 1897. 
 
 1899. 
 
 £ 
 
 228,800,000 
 
 £ £ 
 
 183,500,000 200,900,000 
 
 £ 
 
 213,500,000
 
 154 
 
 THE FISCAL PROBLEM 
 
 1900. 
 
 1901. 
 
 1902. 
 
 £ 
 225,200,000 
 
 £ 
 
 221,000,000 
 
 £ 
 
 227,600,000* 
 
 It may be added that a glance at the frontis- 
 piece of the Fiscal Blue- Book will show how 
 far prices have fluctuated during the period 
 1890 to 1902. Volumes, of course, have fluc- 
 tuated as well. 
 
 Here is a table with some highly significant 
 figures : 
 
 Impokts into the United Kingdom of Manu- 
 factured and Partly Manufactured Articles. 
 
 1879. 
 
 1880. 
 
 1890. 
 
 1902. 
 
 £ 
 
 70,400,000 
 
 £ 
 83,200,000 
 
 £ 
 
 98,200,000 
 
 £ 
 
 148,900,000! 
 
 Our total imports of manufactured articles 
 rose from £52,881,468 in 1883 to £63,218,167 
 in 1890, and to £93,275,005 in 1900.J 
 
 It will be observed how remarkable has 
 been the increase in these imports since 1890. 
 
 * F. B.-B., p. 22. + Ibid., pp. 5, 6. 
 
 X Sir A. E. Bateman's Memorandum, p. 50.
 
 SIFTED STATISTICS 155 
 
 An explanation of this increase will be found 
 on pp. 72 and 73 of the Fiscal Blue-Book. As 
 is well known, a great part of our trade with 
 Holland and Belgium is really in German 
 goods, which come to us through Rotterdam 
 and Antwerp. Our trade with Germany, 
 Holland, and Belgium, must for statistical 
 purposes be treated as one. Our imports of 
 manufactured and partly manufactured goods 
 from Germany increased from £9,447,584 in 
 1890 to £16,057,099 in 1902 ; from Holland 
 they increased from £15,447,380 in 1890 to 
 £19,785,587 in 1902 ; from Belgium from 
 £12,680,772 in 1890 to £20,684,353 in 1902. 
 Our imports from the three countries, there- 
 fore, increased from about £37,500,000 in 
 1890 to £56,500,000 in 1902, a total increase 
 of £19,000,000. 
 
 Of the same class of imports from France 
 there was an increase from £25,848,006 in 
 1890 to £31,071,418 in 1902; from the 
 United States from £10,279,669 in 1890 to 
 £20,930,627 in 1902. 
 
 Let us now compare with these statistics 
 the figures of our exports of manufactured or
 
 156 
 
 THE FISCAL PROBLEM 
 
 partly manufactured articles to the same 
 countries for the corresponding years :* 
 
 
 1890. 1902. 
 
 To Germany 
 
 To Belgium 
 
 To Holland 
 
 To France ... 
 
 To United States ... 
 
 £ 
 
 15,950,000 
 
 6,766,000 
 
 9,392,000 
 
 12,537,000 
 
 29,089,000 
 
 £ 
 
 16,442,000 
 
 7,061,000 
 
 6,829,000 
 
 10,250,000 
 
 19,468,000 
 
 73,734,000 
 
 60,050,000 
 
 Here we have a decline in round numbers of 
 £13,500,000 in these exports to the leading 
 industrial and commercial nations. 
 
 From the same pages we take the following 
 figures regarding the same class of exports : 
 
 
 1890. 
 
 1902. 
 
 
 £ 
 
 £ 
 
 To British India ... 
 
 32,089,000 
 
 30,873,000 
 
 To self - governing 
 
 
 
 colonies ... 
 
 35,516,000 
 
 52,211,000 
 
 To other British 
 
 
 
 colonies and pos- 
 
 
 
 sessions 
 
 11,549,000 
 
 12,875,000 
 
 79,154,000 
 
 95,959,000 
 
 F. B.-B., pp. 32, 33.
 
 SIFTED STATISTICS 
 
 157 
 
 This is an increase of nearly £10,000,000. 
 Yet is it not correct to say that but for our 
 colonies there would be a substantial decline in 
 our entire export of manufactured and partly 
 manufactured products. From 1890 to 1902 
 there was a decrease from £149,651,000 to 
 £131,686,000 in these exports to foreign 
 countries.* But our trade with our colonies 
 shows no evident expansion except during 
 the South African War. The Imperial 
 market is also is being invaded by our 
 rivals, as set out in the following table, 
 showing the average annual proportion of 
 imports received by India and our leading 
 colonies :f 
 
 
 United Kingdom : 
 
 In 1893-1895. 
 
 In 1898-1900. 
 
 British India ... 
 
 Australasia 
 
 Natal 
 
 Cape 
 
 Canada 
 
 73 
 41 
 
 72 
 
 81 
 35 
 
 64 
 38 
 67 
 68 
 25 
 
 * F. B.-B., pp. 32, 33. 
 
 t Sir A. E. Bateuian's Memorandum, p. 20.
 
 158 
 
 THE FISCAL PROBLEM 
 
 
 Proportion from Ger- 
 
 Proportion from United 
 
 
 many : 
 
 States : 
 
 In 1893- 
 
 In 1898- 
 
 In 1893- 
 
 In 1898- 
 
 
 1895. 
 
 1900. 
 
 1895. 
 
 1900. 
 
 British India 
 
 2-0 
 
 2-2 
 
 1-8 
 
 1-5 
 
 Australasia 
 
 1-7 
 
 3-2 
 
 3-1 
 
 6-9 
 
 Natal 
 
 2-2 
 
 31 
 
 4-8 
 
 9 
 
 Cape 
 
 3-5 
 
 37 
 
 4-5 
 
 10-9 
 
 Canada 
 
 3 9 
 
 4.4 
 
 45-9 
 
 59-3 
 
 The plain conclusion to be drawn from 
 statistics is just what we all knew in a more 
 or less vague way, and, indeed, what we might 
 under the circumstances naturally expect : that 
 our rivals are invading our home markets, the 
 Imperial markets, and all the markets of the 
 world. This process is well summed up in the 
 following table, showing the increase of total 
 exports of manufactured goods from France, 
 Germany, and the United States :* 
 
 Years. 
 
 France. 
 
 Germany. 
 
 United States. 
 
 
 Million £. 
 
 Million £. 
 
 Million £. 
 
 1880 
 
 74 
 
 83 
 
 21 
 
 1890 
 
 80 
 
 107 
 
 31 
 
 1895 
 
 76 
 
 109 
 
 38 
 
 1900 
 
 90 
 
 149 
 
 90 
 
 Sir A. E. Bateman's Memorandum, p. 17.
 
 SIFTED STATISTICS 159 
 
 As regards the United States, it will be said 
 that a very large portion of these exports are 
 farm and mineral products, which have passed 
 through only the primary stages of manu- 
 facture. That is true, but a growing pro- 
 portion of them also belongs to the most highly 
 finished stages of manufacture, such as agri- 
 cultural implements and machinery, sewing- 
 machines, typewriters, machine tools, electrical 
 appliances, etc. 
 
 It is also said that the industrial progress 
 of our rivals is due to natural and inevitable 
 causes, which we can do nothing to prevent. 
 This is to a very large degree true. Whatever 
 we might have done, there would have been a 
 large increase in the German and American 
 output of coal, pig-iron, and steel. In all 
 these departments the Americans have far out- 
 stripped us. The Germans are overtaking, or 
 already have overtaken, us in the output of 
 iron ore, pig-iron, and steel. In so far as 
 these things are inevitable, they must be 
 accepted ; but the fact of their being thus 
 inevitable makes it all the more a mighty 
 change in our economic environment, which
 
 160 THE FISCAL PROBLEM 
 
 we must seriously consider. The main lesson 
 of statistics, therefore, is that since 1875 there 
 has been in our economic environment a great 
 change, which has begun to show its natural 
 effects more clearly since 1890, these dates 
 being taken roughly as the landmarks of the 
 process. 
 
 To prevent misconception, I wish to add 
 that no suggestion is made that the country 
 has ceased to be prosperous. During the 
 whole course of the industrial revolution 
 there has been a displacement of labour and 
 industry. That displacement still continues. 
 Besides such features of it as have already 
 been indicated in this chapter, we may speci- 
 ally mention the great increase in services 
 required by the growth of railways, by the 
 vast growth of municipal activity since 1835, 
 and by the growth of the postal and telegraph 
 and other departments of the State. These 
 are all symptoms of advance in a well-ordered 
 and well-equipped community, as is also the 
 notable increase in the numbers of the teach- 
 ing and medical professions. All these, and 
 others we need not specify, afford employment
 
 SIFTED STATISTICS 161 
 
 in meeting the higher needs of civilization, 
 and mark a vast improvement in our internal 
 condition. 
 
 With regard to external relations, the 
 services we render by our enormous shipping, 
 as also in insurance and finance, etc., taken 
 along with the interest from our investments 
 abroad, fully account for the difference between 
 our exports and imports. On this question a 
 good deal of needless discussion has taken place. 
 
 But the very grave fact remains that, 
 following on the serious decline of agricul- 
 ture, our great staple industries in cottons, 
 woollens, iron and steel show plain symptoms 
 of slowing down into the stationary stage. 
 And the causes of this are not less plain. 
 Our trade is hampered or prohibited by the 
 fiscal barriers which so many nations have 
 raised against us, whilst in our own markets, 
 in the imperial markets, and in the world 
 market we are exposed to dumping. In our 
 trade statistics we can undoubtedly see the 
 effects of the forces involved in dumping, 
 which, moreover, have not yet come into 
 anything like full operation. 
 
 11
 
 CHAPTER XI 
 
 TARIFF REFORM AND INDUSTRIAL PROGRESS 
 
 The study of economic forces and the study 
 of statistics which we have made in preceding 
 chapters appear to lead to the same conclu- 
 sion. Our staple industries are not secure 
 against the process of dumping carried on by 
 such formidable competitors as Germany and 
 the United States. The most ardent and 
 convinced Free Traders will admit that we 
 are bound to exercise the elementary right of 
 self-defence against such competition when it 
 begins to threaten industries which are neces- 
 sary to the well-being of the country and to 
 its security as a leading Power. While it 
 may or may not be desirable that we should 
 pursue a system of reciprocal preferential 
 tariffs with our colonies, it is absolutely 
 162
 
 TARIFF REFORM 163 
 
 necessary to safeguard our staple industries 
 against unfair competition. The latter point 
 is evidently the more urgent, for we may 
 exercise our choice regarding our relations 
 with the colonies ; but if we are to remain a 
 great Power, we must maintain our staple 
 industries. The latter point is therefore the 
 pivot of the whole question. 
 
 But if we start from this point, all the rest 
 naturally follows. It means in the first place 
 a radical change in the attitude of the manu- 
 facturing classes towards tariff questions. In 
 1846 the manufacturing classes carried Free 
 Trade ; we may expect that they will now 
 decide the movement towards a modification 
 of that policy. The new policy can be 
 carried only by a combination of the manu- 
 facturing and farming interests, and the two 
 interests will again find themselves in 
 harmony, after a divergence which has con- 
 tinued for more than sixty years. If the 
 farmers may require to pay more for their 
 agricultural implements and other necessaries 
 in order to prevent dumping, they have a 
 claim for favourable consideration which their 
 
 11—2
 
 164 THE FISCAL PROBLEM 
 
 new allies, the manufacturers, cannot resist. 
 This will lead probably, among other things, 
 to a moderate tariff on food, which, again, 
 involves preference with the colonies. 
 
 In two very important aspects of the whole 
 question the manufacturers will gain materi- 
 ally : they will be safeguarded against dump- 
 ing, and they will obtain in the colonies a 
 preferential market for their goods. It is 
 reasonable to maintain, is it not, that the 
 landed interest has a right to corresponding 
 advantages ? The people who live on the land 
 will have to consider and decide what these 
 advantages should be. But before such 
 advantages can be conceded to agriculture, the 
 people of this country generally will have the 
 right to insist that our land system and our 
 agricultural methods be placed on an enlight- 
 ened and progressive basis. 
 
 For my part, I think it is premature to go 
 into details at all precisely. We have all 
 learned a good deal since the Fiscal contro- 
 versy began, and I believe we shall have to 
 go on learning for a considerable time before 
 we arrive at anything like a fixed tariff
 
 TAEIFF REFORM 165 
 
 policy. The details of our Fiscal policy may, 
 probably enough, be a matter of debate for 
 generations to come. Regarding the general 
 direction, however, in which we shall need to 
 move, we must decide before it is too late. 
 
 In defining the general principles which 
 should guide our tariff policy, let it be 
 clearly understood that it is under the condi- 
 tions which now prevail, or tend to prevail, 
 we consider it necessary to have recourse to 
 protective measures. So far and so long as 
 the conditions leading to dumping may 
 continue, so far and so long must we protect 
 our staple industries. The measures we 
 adopt may be more or less temporary. Their 
 extent and continuance will depend on the 
 necessities of the situation that call them 
 forth. 
 
 It is a secondary question whether we use 
 the word " Protection " to describe these 
 measures, but it is important that we should 
 discard misleading associations connected with 
 the history of the word. The old Protective 
 system was in the main designed to serve the 
 interests of the land-holding class. The new
 
 166 THE FISCAL PKOBLEM 
 
 system, if it is adopted, can be carried only 
 by a sufficient number of votes of the whole 
 population and in the national interest. The 
 word, if we continue to use it, will have a 
 new significance. The thing it now denotes 
 will be very different from the old. 
 
 The details of the measures we adopt will 
 depend on circumstances. The first step is 
 to convince the country that such measures 
 are necessary — that is to say, we must first 
 attain to clearness as to principles. Practical 
 details can be afterwards discussed and 
 arranged. Nor should we forget that the 
 situation may undergo even radical changes. 
 When the tobacco trade of this country was 
 recently menaced by American competition, it 
 promptly organized itself to meet the invasion. 
 It is possible that our iron and steel trades 
 may find it necessary to form some kind of 
 syndicate or trust to deal with dumping. 
 There may be an international agreement 
 among the British, German, and American 
 steel trades to divide the world market among 
 them so far as they can. Proposals to that 
 effect have been mooted. In either case we
 
 TARIFF REFORM 1G7 
 
 may see a gigantic monopoly established in 
 this country, and whatever happens it will be 
 the duty of Government to see that the 
 country receives no detriment. For it is 
 essential that we continue to have an efficient 
 and flourishing steel industry, and also that 
 it be not a monopoly burdensome to the 
 people. 
 
 A great British iron and steel syndicate 
 would be fairly adequate to deal with dump- 
 ing. The cheap raw material or partly 
 manufactured article would be welcome, as 
 the organized trade would see that one 
 department should not be injured for the 
 benefit of others, and it could arrange the 
 prices of finished articles to meet the invaders. 
 But, whether fighting its German or American 
 rivals, or operating as a huge monopoly in 
 the home market, it would be for the interest 
 of the country that our Government should 
 be in close touch with it, to support it in 
 international competition, or to control it in 
 its action as a monopoly. For we may 
 assume that the country is not yet prepared 
 to see the iron and steel trade formed into a
 
 168 THE FISCAL PROBLEM 
 
 public trust on the model of that proposed 
 under the Port of London Bill. Such a trust, 
 we need not say, while going by the same 
 name, would be a thing totally different from 
 the American trust. Such a trust, formed 
 and controlled under public auspices, is a 
 type worthy of serious reflection in connec- 
 tion with the present controversy. 
 
 On one point, as it seems to me, there is no 
 reason for doubt. We shall need a Govern- 
 ment that will keep itself in closer touch 
 with the business life of the country. The 
 Governments of the United States and of our 
 great self-governing colonies, as well as the 
 Government of Germany, show a far deeper 
 interest and take a far more active part in the 
 industrial and commercial life of their peoples 
 than ours does. With us the theory that the 
 State should stand aloof from trade, leaving 
 it to take its course, has been too long 
 prevalent. If we are to compete against our 
 rivals we must give this theory up. The 
 voters of the country should also insist that 
 a smaller proportion of classically-trained 
 men from Eton and Harrow and a
 
 TARIFF REFORM 169 
 
 larger proportion of men conversant with 
 business should be found in the higher ranks 
 of the Administration. Our Government 
 should take a worthy part in the promotion 
 of industries vital to the country, and for this 
 purpose it should be itself guided by men 
 who thoroughly understand industrial condi- 
 tions. In many ways Government can 
 support and supplement private enterprise, 
 and in so doing not weaken it, but give it 
 increasing confidence and strength. 
 
 Let us show how this might be done. 
 Lancashire has been suffering, and is likely to 
 suffer, from the deficiency in the supply of 
 cotton, owing to short crops in the United 
 States. Many parts of the Empire are 
 admirably suited to grow cotton — Queensland, 
 South Africa, East Africa, Central Africa and 
 Nigeria, as well as India and Egypt. Why 
 should not a Government that has a wide out- 
 look ahead have taken more prompt and ener- 
 getic means to promote the growing of cotton in 
 the former regions ? Nigeria and West Africa 
 particularly are very well situate for growing 
 and sending cotton to Lancashire. Bad as
 
 170 THE FISCAL PROBLEM 
 
 things are in Lancashire at present, they 
 might be vastly worse — for example, if the 
 dealers of cotton in America were to combine 
 with the manufacturers there to cut off our 
 supply altogether, and so ruin our cotton 
 trade entirely. Such a step is not too much 
 for the audacity and energy of speculators 
 beyond the Atlantic. 
 
 Or take our iron trade. The best of the iron 
 ores very accessible to us at home, in Spain, 
 and in Scandinavia, tend to become depleted. 
 The island of Newfoundland has immense 
 supplies of iron ore. Its Government was in 
 difficulties some time ago, for the development 
 of the island has been retarded by unfavour- 
 able conditions of climate and soil. In those 
 circumstances it should not have been beyond 
 the wit of man to devise arrangements by 
 which, while benefiting the people of New- 
 foundland, we might have secured for our 
 industries a vast supply of iron ore, which 
 could have been cheaply conveyed across the 
 Atlantic to our shores. What we appear 
 above all things to lack, both in our Govern- 
 ment and in our business men, is a sufficient
 
 TARIFF REFORM 171 
 
 measure of the initiative and energy which we 
 see at work across the Atlantic. 
 
 We have already spoken of the need for 
 progress in our land system and our agri- 
 cultural methods. The movement for tariff 
 reform leading to favourable consideration for 
 agriculture will give a really progressive 
 Government the right to encourage, if not to 
 insist on, much needed change. It is no 
 exaggeration to say that no working man who 
 has any self-respect or any regard for the 
 future of his children will stay on the land. For 
 generations the intelligent and enterprising 
 rural worker has gone into the towns or to 
 the colonies in search of a decent and honour- 
 able career. The progress in education, by 
 intensifying the discontent with such con- 
 ditions, has only increased this tendency. 
 
 The time has come when this should be 
 entirely changed. About the w r ay to do so 
 there should be no manner of doubt. 
 Denmark, France, and more recently, Ireland 
 have shown us the way, and we could improve 
 upon it. The rural cultivator should have 
 access to the land, and should have some
 
 172 THE FISCAL PROBLEM 
 
 kind of fixed relation to it and interest in it. 
 The ideal would be a system of freehold 
 homesteads, occupied under the sanction of the 
 State and worked by co-operative methods. 
 
 The English rural worker has been a land- 
 less serf, and he has had no home in the true 
 sense of the word. To him the love and joy 
 and pride of home have been feelings hardly 
 known. The freehold homestead would give 
 him a home and a fixed interest in the soil of 
 his country. 
 
 The area of the homestead should be 
 sufficient to employ and support a family. 
 Being freehold, it would be handed down 
 from father to son, so long as the end be 
 fulfilled for which it is instituted. Around it, 
 therefore, would gather all the beautiful and 
 tender and sacred associations which naturally 
 cling to the family and ancestral home. 
 
 Under modern conditions such a freehold 
 could be suitably and effectively worked only 
 by co-operative methods. Co-operative banks 
 and co-operative dairies would need to be 
 established on an adequate scale. Co-operative 
 buying of seeds and manures, as well as
 
 TARIFF REFORM 173 
 
 co-operative selling, should be greatly 
 extended. In many parts of the country 
 co-operative drainage and co-operative weeding 
 would be a prime necessity. Not a hundred 
 miles from London are many districts where 
 the curious traveller is in doubt what the 
 prevailing crop may be — weeds or wheat, 
 weeds or potatoes. 
 
 It is possible enough that England may 
 never again be a wheat-growing country 
 on the extensive scale that at one time pre- 
 vailed, but for dairy and garden farming, as 
 well as for stock-raising and for root-crops, we 
 have advantages which are not surpassed in any 
 country in the world. Such farming would be 
 eminently suitable for the freehold homestead, 
 and the freeholder would have close at hand 
 one of the very best markets in the world. 
 
 A long time, unfortunately, may pass before 
 such an ideal be extensively realized, but it 
 is one towards which we should work. 
 Every approximation towards it is desirable. 
 
 There is another matter which is hardly 
 less important. For three centuries of English 
 history we have had a Poor-Law system which
 
 174 THE FISCAL PROBLEM 
 
 can only be regarded as a lamentable make- 
 shift, designed to mitigate evils which should 
 never have been allowed to come into existence. 
 The time, we hope, has come when measures 
 more in harmony with good public policy and 
 industrial democracy may be adopted. In past 
 days it has too frequently been the workman's 
 lot after passing through the intermediate 
 horrors of accident, sickness, and want of 
 employment, to look forward to the final 
 horror of the workhouse. However it may be 
 with the unthrifty and dissipated poor, this is 
 not a tolerable lot for the thrifty and indus- 
 trious worker. More than twenty years ago 
 Germany showed us a better way of dealing 
 with accidents, sickness, and old age. The 
 German way may not be the best that we 
 could imagine, but it was at least a beginning. 
 Let us try to improve on the German method. 
 With regard to our commercial relations 
 with foreign countries, we have heard far too 
 much about retaliation in this Fiscal contro- 
 versy. As w r ar is not the first but the last 
 word in diplomacy, so retaliation is not the 
 first but the last word in international trade.
 
 TARIFF REFORM 175 
 
 A new Fiscal policy would simply be an 
 intimation to foreign countries that we are 
 not prepared to see vital industries ruined by 
 unfair competition. The mere discussion of 
 it raised by Mr. Chamberlain has already had 
 a very salutary influence in Germany. 
 
 We are the very best customers of France, 
 Germany, and the United States. From the 
 United States we usually take about half the 
 farm products exported ; in 1901 we took 
 42 per cent, of their entire exports. From 
 France we import to the annual value of about 
 £50,000,000, or three times as much as they 
 import from us. The group of countries, 
 Germany, Holland, and Belgium, which 
 commercially should be regarded as one, 
 imported from us about £26,000,000 less than 
 we got from them in 1902. In such a 
 strong position we could surely do much by 
 friendly negotiation to improve our trade with 
 these countries. The weapon of retaliation 
 would be kept in the remote background. At 
 the same time, one would be quite ready to 
 advocate total prohibition of certain imports if 
 necessary to protect vital industries.
 
 176 THE FISCAL PROBLEM 
 
 It may now be taken as part of the policy of 
 America to conclude commercial treaties. In 
 accepting the nomination for the Presidency 
 in 1904, Mr. Roosevelt said that, whenever 
 the need arose, there should be a readjustment 
 of the tariff. It was beyond doubt that such 
 changes could be made only by those devoted 
 to the principle of Protection. He added : 
 " We believe in reciprocity with foreign 
 nations on the terms outlined in President 
 McKinley's last speech, which urged the 
 extension of our foreign markets by reciprocal 
 agreements whenever such agreements could 
 be made without injury to American industry 
 and labour." 
 
 Under a system of commercial treaties not 
 unlike that with France in 1860, our trade 
 with our kinsmen in America would be really 
 much freer than it is now ; and we should 
 also have a freer trade with our neighbours 
 in France, Belgium, Holland, and Germany — 
 freer and more profitable. 
 
 In connection with this subject it may be 
 well to say something further about the general 
 relation of the State to industry. After the
 
 TARIFF REFORM 177 
 
 great struggles of the seventeenth century, as 
 we all know, Parliament became the controlling 
 power in the State ; but Parliament itself was 
 mainly controlled by the landed class, which, 
 in general, moved the whole machinery of 
 government in its own interests. During the 
 early part of the nineteenth century that class 
 imposed and upheld the Corn Laws and 
 strenuously opposed reform, especially the 
 reform of the franchise. The result was that 
 the rising industrial middle class and the 
 mass of the people came to look upon the 
 Government as a kind of alien power, or, if 
 you like, a necessary evil, whose operations 
 must be kept within strict bounds. 
 
 Such a view had a very reasonable historical 
 justification. The movement for freedom in 
 England was to a large degree simply a 
 powerful reaction against a State dominated 
 by a landed aristocracy. 
 
 Repeated extensions of the franchise have 
 now changed the old state of affairs. The 
 basis of political power in this country is an 
 electorate consisting of the mass of the people. 
 But the theory of government still held by 
 
 12
 
 178 THE FISCAL PROBLEM 
 
 many takes no account of this vital change in 
 the basis of power. They still adhere to the 
 view that the Government is an alien power, 
 which must be distrusted and opposed, or at 
 least curtailed. 
 
 We do not affirm that there is no justifica- 
 tion whatever now for retaining this view. 
 The Government has defects enough. But the 
 right and reasonable way now is, not to suspect, 
 circumscribe, and weaken it, but to make it a 
 more efficient organ for the promotion of the 
 public good. If we have not such a Govern- 
 ment, the want of it will be serious ; it may 
 be a fatal element of weakness in the competi- 
 tion which we must now wage w T ith foreign 
 countries. The view of the functions of the 
 State to which we have referred, while it had 
 full justification as a phase of history, is at 
 the present time mainly a prejudice ; and it is 
 not an idle or harmless prejudice : it may be a 
 fatal one. 
 
 One of the worst consequences of such a 
 theory of government is to discourage prevision, 
 and that preparation for the future which is 
 based on prevision. There are many things
 
 TARIFF REFORM 170 
 
 which Government alone can do, and if Govern- 
 ment is trammelled and disabled, in accordance 
 with the theory, they will not be done at all. 
 Our politicians meanwhile, finding their legiti- 
 mate functions limited, have had plenty of 
 time to play the party game, and so it has 
 become habitual with them to spend an in- 
 ordinate time in playing the party game, to 
 the detriment of the country. 
 
 Thus the want of prevision and of timely 
 preparation has been elevated almost into a 
 first principle of government, and one of the 
 prime functions of Parliament and of politics 
 generally is to play the party game in the 
 most unedifying manner. Recent events have 
 shown that those two defects are as bad as 
 ever. In past times we have been able, in 
 spite of them, to muddle through by virtue of 
 the vitality and energy of a growing nation, 
 on which more than aught else Anglo-Saxon 
 superiority has depended. It would be the 
 height of unwisdom to rely on our doing so 
 in the altered circumstances of the. country 
 and Empire. 
 
 The circumstances of the Empire call for 
 
 12—2
 
 180 THE FISCAL PROBLEM 
 
 insight, prevision, and initiative. In the sphere 
 of industry and economics we need a wide 
 constructive policy, in which Protection will 
 be merely an incident, though it may be a 
 very important incident. We are in want of 
 a well-considered organic policy that can rise 
 above routine and pedantry and the miserable, 
 endless strife and sophistry of parties. 
 
 In Germany the Monarch and his servants 
 of the bureaucracy play too great a part. 
 Government in the United States seems 
 destined, if the people do not assert them- 
 selves in time, to be more and more controlled 
 by combinations of millionaires. Our colonies 
 at the antipodes hold that the State should be 
 and is a co-operative society, in which each 
 citizen has a share. We agree with the 
 colonies. It will indeed be a happy day for 
 this country when every voter feels assured 
 that the theory and practice of government 
 among us rise to something like the colonial 
 ideal. 
 
 Under such a government it would be clear 
 that the argument of the cheap and the dear 
 loaf belongs to a condition of things which we
 
 TARIFF REFORM 181 
 
 have for ever left behind. But even in our 
 present circumstancess it is one that should 
 have little real weight. Everyone who has 
 any acquaintance with the working classes 
 knows that the essential thing for them is 
 regular employment at a reasonable wage. It 
 is most important that bread be cheap, but 
 compared with stead}^ employment a difference 
 of a halfpenny in the quartern loaf is of very 
 little consequence. If a system of mutual 
 preference with the colonies gives us a secure 
 and continually expanding market, which will 
 lead to regular employment at home, we may 
 cheerfully pay, if need be, a halfpenny more 
 for our quartern loaf. We get along in life 
 every day by striking a balance of advantages 
 and disadvantages. So it must be in Imperial 
 business. We may be sure that the tariff wall 
 in the colonies will be kept so low as to offer 
 us such a market. The colonists are our 
 kinsmen, and are men of business besides, and 
 would not mock us with vain proposals. Their 
 own industries can thrive in reasonable com- 
 petition with ours. 
 
 For a really progressive policy the first
 
 182 THE FISCAL PROBLEM 
 
 condition is to be rid of formulas. Speaking 
 of omens, Hector, son of Priam, said that there 
 was but one best omen — to tight for our country. 
 So the statesman has only one best formula — to 
 think and act for the interests of the country 
 and empire. And if it be urged that such a 
 formula, being agreed to by all, does not afford 
 much guidance, we may reply that we do gain 
 a great deal if we recognise that other formulas 
 are not only useless, but misleading.
 
 CHAPTER XII 
 
 THE STATE AND PROGRESS 
 
 It will be seen that tariff questions are a 
 most important moment or factor in the 
 evolution of modern States, and in the struggle 
 for existence on which evolution largely 
 depends. The strength of a nation can be 
 duly fostered only by the full utilization of 
 its natural resources and advantages, by the 
 development of the industrial aptitudes of the 
 people which is thus secured, and by the 
 promotion of their physical, mental, and 
 moral well-being in the widest sense. In 
 other words, national strength in the long- 
 run is based on a numerous, efficient, highly- 
 trained, and prosperous population, which is 
 able to make adequate use of its natural 
 resources and opportunities. 
 183
 
 184 THE FISCAL PKOBLEM 
 
 From this point of view we may better 
 understand how serious a matter it is that our 
 rural population has declined to such an 
 extent since 1851. Our experiences in the 
 South African War should have brought 
 home to us the lesson that military aptitudes 
 are most likely to be cultivated by life in the 
 country. We can see how essential it is for 
 Germany that the decay of her rural popula- 
 tion should not be the price she has to pay 
 for her industrial prosperity. For France, 
 which has no such great stores of coal and 
 iron as Germany, it has been even more vital 
 to protect her farming population from 
 American competition. Russia has found by 
 bitter experience the disadvantage of depend- 
 ing on foreign countries for manufactures and 
 for the technical skill needed for manufactures 
 and in war, and appears, therefore, to be 
 determined, in the face of great present 
 sacrifices, to build up a native industry. 
 And she is likely to be successful. She is 
 becoming in the widest sense a self-sufficing 
 empire. With regard to cotton, for example, 
 she not only grows her own raw material in
 
 THE STATE 185 
 
 Central Asia, but manufactures it in her own 
 mills. All these three great countries have, 
 after mature reflection, decided that it is good 
 national business to make sacrifices for the 
 present in order to secure greater future 
 advantages, or to lose in one direction in 
 order to make a larger gain in another. 
 
 We may be assured, then, that the adoption 
 of Protection by countries like Germany, 
 France, and Russia is not a piece of eccen- 
 tricity, as some Free Traders believe, but a 
 policy arrived at after careful inquiry and 
 long deliberation by their most competent 
 men. It is their method of safeguarding the 
 most vital interests of their people. We may 
 ourselves some day be called upon to decide 
 whether we shall need to safeguard industries 
 which are essential to the equipment of our 
 fleet ; for it is not likely that a highly- 
 developed technique will flourish in the 
 Government dockyards and arsenals after it 
 has begun to decline in the country at large, 
 if we allow certain of our staple industries to 
 go down. We have already referred to the 
 lamentable deterioration of the national
 
 186 THE FISCAL PROBLEM 
 
 physique caused by the evils of factory life 
 and the decline of agriculture. 
 
 With regard to a matter of vast importance, 
 we now appear to have reached a turning- 
 point in the history of the world. As the city 
 State made way for the territorial State or 
 nation, so the nation is now passing into the 
 empire or vast aggregate of States. At 
 present there are only four great political 
 systems in the world — the British Empire ; 
 the United States (through the Monroe 
 doctrine exercising a vague kind of protec- 
 torate over the American Continent) ; the 
 Central European Powers, led by Germany ; 
 and the Dual Alliance, consisting of France 
 and Russia. In politics, as in industry, the 
 scale has grown, and success in the future 
 will be largely a question of scale. 
 
 The greatest problem of all is how to 
 combine efficiency with the large scale. This 
 is specially the problem for the British 
 Empire. We have got an empire sufficiently 
 vast. How can we make it efficient ? Amid 
 much that is difficult and obscure, some points 
 are clear enough.
 
 THE STATE 187 
 
 The broad foundation of the Empire is to 
 be found in the community of blood, language 
 and literature, history and institutions, social 
 and political ideals, which exists among the 
 people who have founded it ; and the Empire 
 continues by the free assent of this people. 
 Feelings of sentiment and of enlightened self- 
 interest concur to make the assent not only 
 free, but easy and natural. As a powerful 
 navy and a sufficient army are required for 
 the safety of the Empire, the problem of 
 defence is a vital one, which should concern all 
 its parts and members. To all these bonds 
 should the tie of a closer common interest in 
 matters of trade be added ? 
 
 As the Empire rests on the free assent of 
 its leading members, so it is clear that in all 
 matters pertaining to defence and trade the 
 leading members must exercise perfect freedom. 
 Our self-governing colonies are perfectly 
 justified in retaining in their own hands, so 
 far as they wish it and see good, the general 
 problem of organizing their local defences, 
 both military and naval. They will also 
 retain fiscal autonomy in the fullest sense,
 
 1 8 8 THE FISCAL PROBLEM 
 
 and we may be sure will not allow their 
 tariffs to be regulated by any body of men 
 sitting in London, however composed. For 
 ourselves we shall claim the same freedom. 
 On this basis there may be wide scope for 
 mutual preferences. Anything like a hard- 
 and-fast arrangement, if attempted, would 
 only do harm. 
 
 On these points there can hardly be any 
 doubt. The self-governing colonies best know 
 their own circumstances, and they have not 
 yet lost their distrust of Downing Street. 
 Our mismanagement of the War in South 
 Africa, largely due to the spirit of routine 
 and to our want of knowledge and insight 
 into local conditions in that country, has 
 certainly not tended to lessen it. They are 
 members of the Anglo-Saxon family circle 
 who have come of age and who are preparing 
 for a great future, which they must work out in 
 their own way and on their own responsibility. 
 
 Events like the War in South Africa, 
 which no one can foresee, may, by methods 
 we know not, hasten the consolidation of the 
 Empire. There can be no harm in discussing
 
 THE STATE 189 
 
 principles and possibilities, but any attempt 
 to hurry things unduly would be mischievous. 
 In the meantime we should remember that 
 the vastness of the scale on which empires are 
 being conducted is growing, and that the 
 responsibilities which the British Empire is 
 imposing are becoming more onerous every 
 year. It is not only desirable, but necessary, 
 that a greater organic unity, leading to a 
 greater efficiency, should be attained. 
 
 The consolidation, security, and peaceful 
 progress of the Empire are objects so splendid 
 that a considerable economic sacrifice on the 
 part of Great Britain would be justified, if 
 necessary, to obtain them. But no sacrifice 
 beyond what we already make for our navy 
 and in other ways appears to be needed. The 
 system of preferences by which we should 
 always have an available and an expanding 
 market in the colonies would far more than 
 compensate for moderate taxes on food. 
 
 A system of preferences, once adopted, 
 might in time also assist us in entering into 
 better trade relations with the United States. 
 Next to our own colonies, it would in every
 
 190 THE FISCAL PROBLEM 
 
 way be desirable to give a preference to the 
 States. As we are their best customers, we 
 should be able, when negotiations for com- 
 mercial advantages began, to do something 
 effectual in the way of bargaining with them. 
 The fear of offending them by granting 
 preferences to the colonies may be dismissed 
 as one of the very worst arguments adduced 
 during the Fiscal controversy. If Britain is 
 to be afraid of doing in the most moderate way 
 what America has been so long doing to 
 excess, if we are the only people in the world 
 who dare not adopt a national Fiscal policy 
 when it suits our interests, then indeed we 
 have been brought low. It is vastly more 
 probable that the Americans, as a practical 
 people, will be ready to deal with us, when 
 bargaining is going on. A reduction of their 
 tariff in certain directions would, we imagine, 
 do no harm to them and much good to us. 
 Their home market is so large, so varied, and 
 so rapidly growing that a moderate share of it 
 for certain classes of our goods would make a 
 serious difference to our manufacturers. The 
 time is surely come when a wider and freer
 
 THE STATE 191 
 
 comprehension of our business relations with 
 America, and an intelligent management of 
 them, would be better than allowing them to 
 take their course, as we have hitherto done. 
 
 Reciprocal commercial relations, established 
 in a rational and friendly way, would probably 
 lead to closer political relations. The greatest 
 disaster which the Empire has sustained was, 
 we need not say, the revolt of the American 
 colonies, caused by the obstinate unwisdom of 
 George III. It would be unwisdom tenfold 
 worse if we did not strive to undo the mischief 
 he wrought. Peaceful co-operation, leading to 
 a reunion of the English-speaking peoples on 
 a federal basis, should be our aim. Such a re- 
 union will perhaps not be so difficult as it 
 may appear. In all the vast heritage of the 
 English race the Mississippi Valley, or, to be 
 more accurate, the vast region between the 
 Atlantic and 100° W., the line about which the 
 rainfall ceases to be adequate, has the greatest 
 permanent natural advantages and resources. 
 There can hardly be any doubt that it is 
 destined to be the central home of the race, and 
 the American Republic will naturally become
 
 192 THE FISCAL PROBLEM 
 
 the head of the race. The Republic need not 
 assert such a position, which will come to it in 
 the inevitable course of events, and all the 
 more readily if it is not prematurely or unduly 
 asserted. The greater will naturally draw 
 unto itself the less. Such a prospect opens 
 up a wide vista of political transformation, 
 along which we may see interesting glimpses 
 of the probable future of the British Empire. 
 So much as to a possible future. For the 
 present, we are sure that it is the bounden 
 duty, in private and public life, of every man 
 who speaks the English tongue and shares in 
 the superb traditions of our race to do nothing 
 that may hinder such a peaceful reunion, and 
 to leave nothing undone that may aid in 
 bringing it to pass. 
 
 Some of my readers may not agree with me 
 as to the future position of America in the 
 English-speaking world. They may say, and 
 rightly, that in the aggregate the British 
 Empire will continue to be more powerful 
 than the United States is likely to be. But 
 the geographical and other difficulties which 
 hamper the organic action and development
 
 THE STATE 193 
 
 of the Empire are very serious, whereas 
 the Republic lies in the centre of the English 
 world. Fronting the two great oceans, the 
 Atlantic and the Pacific, the Republic is 
 admirably situated for leading the future 
 destinies of the great nations that will speak 
 our tongue. 
 
 We will not labour this view, though we 
 believe that it is a simple interpretation of 
 growing facts. The main point for us at 
 present and in the near future is to promote 
 common feeling and harmonious action, with a 
 view to federal reunion. No one need fear 
 that such a federation would lead to aggres- 
 sive policies and militarism. It would be 
 useful for common defence, but it would be 
 little suited for offensive war. It would 
 insure peace over about one-half the land 
 surface, and tend to secure it on all the seas 
 of the globe. 
 
 Such a federal union need not involve any 
 jealousy of other great Powers. With regard 
 to Germany, for example, everyone who has 
 any knowledge of history, every lover of 
 historical equity, must be glad that the 
 
 13
 
 194 THE FISCAL PROBLEM 
 
 Fatherland has at last won a worthy place 
 among' the nations. After a journey through 
 the dark valley of humiliation, which con- 
 tinued for centuries, she has gained a place in 
 the sue. Her influence in Central Europe has 
 been a steadying one. Her policy is not one 
 of heady adventure, or reckless, irresponsible 
 ambition, but is the far-seeing and enlight- 
 ened pursuit of high national aims. We have 
 for centuries had the best place in the sun, 
 and can keep it without any reasonable cause 
 for misunderstanding with Germany. What 
 we have to do is to cultivate an enlightened 
 sense of our own real interests, national and 
 Imperial, and for these we have ample scope. 
 
 While this is so, we should uot forget the 
 penalties that wait on national inefficiency. 
 National efficiency must be many-sided. 
 Nations that desire to remain great must be 
 widely skilled in the arts both of war and peace. 
 
 All these branches of efficiency must be 
 deep- routed in a wise insight, which discerns 
 the signs of the times in which we live ; and 
 no one who discerns the signs of the times 
 can fail to see that the English-speaking race
 
 THE STATE 195 
 
 again stands at the cross-roads. Issues far 
 beyond human calculation will depend on the 
 road we choose. When the English Monarchy 
 came to the cross-ways at the crisis with the 
 American colonies it made a wrong choice, in 
 a spirit of unwisdom, arrogance, and obstinacy. 
 How unutterably lamentable it will be if 
 from faction, prejudice, or pedantry we choose 
 wrong now ! It is possible we may. 
 
 But there are many grounds for the sure 
 hope that it will not be so. The signs showing 
 the road we ought to travel are so many and 
 so plain that we can hardly fail to read them 
 aright. Economics and politics, interest and 
 sentiment, all point the same way. It is, 
 indeed, one of the happiest features of the whole 
 situation that the political interests of the 
 English-speaking world agree with its indus- 
 trial and commercial interests in recommending 
 a course of action, which is enjoined also by 
 the highest morality. 
 
 The great English family of nations, one of 
 the most glorious births of time, has arrived 
 at the stage, to which all families some day 
 come, when the younger members begin power- 
 
 13—2
 
 196 THE FISCAL PROBLEM 
 
 fully to react on the parents. Beyond the 
 Atlantic the great Republic has long been of 
 full age, and Canada has been for more than a 
 generation in the same position. Australia 
 and New Zealand have more recently followed 
 their example. A South African Common- 
 wealth, based on the reconciliation of Boer and 
 Briton will, we hope, soon take a worthy place 
 beside her sisters. There will then be four 
 great daughter States — great on the Continental 
 scale. 
 
 Freedom will still be an essential condition 
 controlling the relations of the Motherland 
 and her daughters, but it should be free asso- 
 ciation, not free competition. Peace, concilia- 
 tion, arbitration, association, should be growing 
 factors in the development of the mighty family 
 circle. Wise, far-seeing direction in this 
 spirit should take the place of the short-sighted 
 reliance on things muddling through. 
 
 Circumstances are now quite different with 
 us from the days described by Bismarck in 
 his speech in the German Reichstag on May 2, 
 1879, when he spoke of the great and mighty 
 England, the strong athlete with well-trained
 
 THE STATE 197 
 
 muscles, entering the commercial arena and 
 challenging all comers. Those days of vic- 
 torious free competition in trade have for ever 
 passed away from us. Giant athletes have 
 appeared in the arena to take up our challenge. 
 The most oi^antic of all is one of our own 
 children. It will be one of the most fatal 
 delusions that ever afflicted a great people if 
 we imagine that we can contend successfully 
 against such rivals under the conditions which 
 have now set in. 
 
 There is a better way lying straight and 
 plain before the mind's eye of all men who are 
 able to see. It is the way of friendly under- 
 standing and negotiation, of fair dealing, of 
 straightforward and sympathetic co-operation 
 on the higher levels of industrial, commercial, 
 and political life. In the case of the eldest 
 daughter of the English family circle, it has 
 first of all been the way of reconciliation. We 
 have gone that way already with the less hesita- 
 tion because we knew that the past mischief was 
 entirely of our own making. The best results, 
 encouraging us to further efforts, have followed. 
 We have only to persevere in well-doing.
 
 198 THE FISCAL PROBLEM 
 
 As is usual and natural, the political con- 
 ditions thus established will react on the 
 economic. The vast and growing requirements 
 of empire are imposing on the Motherland a 
 burden of taxation which might in time prove 
 intolerable ; but as the daughter States take up 
 their share of privilege and responsibility, our 
 obligations will be lightened. In this way 
 we shall be able to reconsider our economic 
 and Fiscal position with reference to our alter- 
 ing circumstances, and thus continually adjust 
 ourselves to our changing environment. It 
 should be our constant endeavour, by strenuous 
 reform at home, and by keeping ourselves in 
 harmony with our environment, to secure a 
 steady, wise, and beneficent progress. 
 
 THE END 
 
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 ture of the socialistic controversy. He has the 
 courage of his convictions, the knowledge by 
 which to support them, and the power of present- 
 ing them in a striking and interesting manner. 
 Professor Nicholson's opponents would do well 
 to consider seriously whether they are in a 
 position to answer his objections.' — Manchester 
 Guardian." 
 
 THE TARIFF QUESTION. 
 
 WITH SPECIAL REFERENCE TO 
 WAGES AND EMPLOYMENT. 
 
 Crown 8vo., paper covers. 
 Price 6d. 
 
 This is the Address referred to by Mr. Asquith 
 in his Speech in Fife, October 14, 1903, 
 when he said : 
 ' ' Another contribution to the question which 
 also appears to-day is well worthy of being read 
 and pondered. I refer to the opening address 
 which was given by Professor Nicholson, Pro- 
 fessor of Political Economy in the University of 
 Edinburgh, to his class yesterday. Professor 
 Nicholson is one of the most distinguished of 
 British economists. As far as I know, he is not 
 a politician. I have not the remotest idea to 
 which political party he belongs, or whether he 
 belongs to either, and it is all the more important 
 and significant, therefore, that you should 
 observe that a student moving in the daylight 
 of reason, with no political or party axe to grind, 
 contributes his share by a masterly analysis of 
 the leading factors of the case to demolish the 
 very foundation of this pernicious scheme for 
 the revolution of British industry." 
 
 PUBLISHED BY 
 
 ADAM & CHARLES BLACK, SOHO SQUARE, LONDON.
 
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