THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES
 
 >
 
 T^^V-^ |N 
 
 FREE TRADE 
 
 IN 
 
 as 
 
 S;^ 
 
 •Si 
 
 0^ 
 
 SUGAR. 
 
 A Reply to Sir Thomas Farrer. 
 
 GEORGE MAETINEAU. 
 
 ■^ " We do not seek free trade in corn primarily for the pur- 
 
 ■*** pose of purchasing it at a cheaper money rate ; we require it at 
 
 the natural price of the world's market, whether it becomes 
 ^ dearer with a free trade or whether it is cheaper, it matters not 
 
 ^ to us, provided the people of this country have it at its natural 
 
 ^ price, and every source of supply is freely opened, as nature and 
 
 nature's God intended it to be ; then, and then only, shall we 
 
 be %2i\A?&e6.."— Speeches of Ric/iard Cotdeii, p. 105. 
 
 rUBLISHED FOR THE AUTHOR 
 
 BY 
 
 CASSELL & COMPANY, Limited: 
 
 LomJon, Paris, New York & Melbourne. 
 
 1889. 
 
 Price One Shilling. 
 330 S I ^
 
 FREE TRADE IN SUGAR.
 
 FREE TRADE 
 
 IN 
 
 SUGAR. 
 
 ■y 
 
 A Reply to Sir Thomas Farrer 
 
 GEORGE MARTINEAU. 
 
 " We (Jo noi seek free trade in corn primarily for the purpose of purchasing it 
 at a cheaper money rate ; we require it at the natural price of the world's market, 
 whether it becomes dearer with a free trade or whether it is cheaper, it matters not 
 to us, provided the people of this country have it at its natural price, and every 
 source of supply is freely opened, as Nature and Nature's God intended it to be ; 
 th-n, and then only, shall we be satisfied." — Speeches of Richard Codden, p. 105. 
 
 I'UliLISIlED FOR THE AUTHUR 
 
 CASSELL & COMPANY, Limited 
 
 LO.VDO.V, PARIS, NEW YORK d; MELBOURNE.
 
 -ii^ 

 
 
 CONTENTS. 
 
 r Letter 
 
 PREFACE. . . ... 
 
 INTRODUCTION 
 
 CHAPTER I. — Reply to Sir Thomas Farrer's Firsj 
 
 CHAPTER II. — Reply to the Second Letter 
 
 CHAPTER III. — Reply to the Third Letter 
 
 CHAPTER IV.— Reply to the Fourth Letter 
 
 CHAPTER v.— Reply to the Sixth Letter . 
 
 CHAPTER VI.— Reply to a Letter which is not Reproduced 
 
 CHAPTER VII.— Reply to the First Rejected Letter 
 
 CHAPTER VIII.— Reply io the Second Rejected Letier . 
 
 CHAPTER IX. — Reply to the Third Rejected Letter 
 
 CHAPTER X. — Reply to the Fouriji Rejected Letter 
 
 CHAPTER XI. — Reply to Noti s on B\ron de Worms' 
 Speeches 
 
 CHAPTER XII.— Reply to Reprint ok Chapter XLVHI. on 
 
 Sugar 
 
 CH.\PTER XIII. — Reply to Statistical Appendix . 
 
 APPENDIX A. 
 
 Reply to Sir Thomas P'arrer by W. P. B. Shepheard, Esq., 
 of Lincoln's Inn, Barrister-at-La\v, Reprinted irom 
 
 Sugar 
 
 vii 
 
 I 
 
 4 
 17 
 18 
 20 
 
 28 
 
 32 
 40 
 
 55 
 84 
 
 91 
 
 100 
 125 
 
 126 
 
 .%yirjH(\
 
 vi CONTENTS. 
 
 APPENDIX B. 
 
 PAGE 
 
 Mr. LtirtnocK's Lettefis in The Times in Reply to Sir 
 
 Thomas Farrer 137 
 
 APPENDIX C. 
 
 Mr. Shute's Letters in The Times in Reply to Sir Thomas 
 
 Farrer . . j 143 
 
 APPENDIX D. 
 
 Letter to Lord Salisisury krom Leading Representatives 
 OF all Branches of the Home, Colonial, and Foreign 
 Sugars-Trade, on the Price of Sugar .... 152 
 
 APPENDIX E. 
 
 The Most-Favoured-Nation Clause, by W. P. B. Shepheard, 
 
 Esq., of Lincoln's Inn, Barrister-at-Law . . . 15S 
 
 APPENDIX F. 
 Reply to Lord Bramwell 17S
 
 PREFACE. 
 
 Though it involves great repetition, I have, in the last four 
 chapters of this pamphlet, replied, paragraph by paragraph, 
 to the fresh matter in Sir Thomas Farrer's book. The 
 earlier chapters are reprints of my published replies to 
 those letters of Sir Thomas Farrer which were accepted by 
 the Tiims. 
 
 I have thought it best to make myself solely responsible 
 for the body of this little book. It is only for that reason 
 that very interesting replies to Sir Thomas Farrer, from 
 much abler pens than mine, are placed in the Appendix. 
 I hope that they will not, on that account, escape the atten- 
 tion of the reader, Mr. Shepheard's treatment of the sub- 
 ject, from the Political Economist's point of view, is most 
 valuable. The West Indians, and, in fact, all cane-sugar 
 producers, are well represented in Mr. Lubbock's letters ; 
 and the Sugar House workmen must be proud of so able 
 an advocate as Mr. Shute. Mr. Shepheard has also allowed 
 me to reprint his legal examination of the bearing of most- 
 favoured-nation treaties on the question. 
 
 Gllorge M.artineau. 
 
 Apnl 3, 1889. 
 
 P.S. — Since writing the abox'c, Lord Bramwcll's letter 
 has appeared in The Times. I have therefore added to the 
 Appendix a short repl}-, which shows that his argument is 
 entirely based on an erroneous assumption. 
 April 8, 1889.
 
 INTRODUCTION. 
 
 At the moment when this pamphlet is appearing, a " boom " 
 is taking place in the sugar markets of the world. The 
 leading market report in Mincing Lane says : " It is now 
 evident, as was foreseen might be the case, that the holders 
 on the Continent have the immediate future of the market 
 much in their hands, owing to the reduction of stocks in 
 Rurope and America, as well as to the decrease in some of 
 the leading sources of cane production." The bounty-fed 
 source of supply is now master of the situation, and no 
 wonder, seeing that its production is considerably more 
 than double the total visible production of the world. This 
 is the unnatural monopoly which, we are told, must not be 
 interfered with, because such interference would make sugar 
 dearer. Instead of which we find, not for the first nor the 
 second time, that it is the beetroot monopoly which fre- 
 quently causes an excessive rise in price ; while at other 
 times it brings about what Sir Thomas Farrer so truly 
 describes as " glut, collapse, and ruin." Both these effects 
 of artificial interference with trade and industry are, in Sir 
 Thomas Farrer's opinion, so beneficial to the general com- 
 munity that, in the name of Cobden, they must be defended
 
 X INTRODUCTION. 
 
 and maintained against the insidious attacks of those who 
 only ask for free trade in sugar. 
 
 It seems from the tables furnished by the Board of 
 Trade that when bounties first came upon the scene, about 
 1862, the annual beetroot sugar production amounted to 
 400,000 tons, and formed one- fifth of what the Board of 
 Trade erroneously calls the total production. Ten years 
 afterwards it amounted to 1,140,000 tons, which was more 
 than one-third of the I3oard of Trade total. It is now 
 2,800,000 tons, which considerably exceeds half the true 
 visible production of the world. In spite of these facts, Sir 
 Thomas Farrer denies that beetroot has, to that extent, 
 taken the place of cane-sugar in the world's consumption. 
 The figures he appeals to to prove his case — which he calls 
 Mr. Picton's return — are curiously chosen, and turn out to 
 be unreliable. The Board of Trade witness before the 
 Select Committee of 1880 brought forward similar figures, 
 gathered from the same Board of Trade table. He was 
 asked how it was that a figure given as representing the 
 total West Indian production was actually less than the 
 imports into the United Kingdom of West Indian sugar in 
 the same year. He replied that he could not explain it, but 
 would inquire into the matter. The result of his inquiry 
 was the discovery that the table furnished by the Board of 
 Trade only gave a portion of the West Indian production. 
 This is the table from which Mr. Picton's recent return has 
 been furnished. The error, which would have deceived the
 
 INTRODUCTION. xi 
 
 Select Committee but for the vigilance of the Chairman, is 
 now reproduced without hesitation. 
 
 The letters here reprinted from the Times are a 
 complete answer to the position taken up by Sir Thomas 
 Farrer, both on the question of the price of sugar and on 
 the larger question of Free Trade. He has taken no 
 notice of the main facts and arguments contained in my 
 letters ; but he does not hesitate to reproduce the assertions 
 which 1 have refuted, and even amplifies them to double 
 their original length. When his book was announced, it 
 was naturally supposed that he would direct his attention, 
 in the first instance, to dealing with our published replies. 
 Though there is plenty of fresh matter in his book, there is 
 not a single allusion to my arguments. The fresh matter 
 merely repeats, in various forms, the old assertions which I 
 am fairly entitled to consider that I have refuted, until 
 Sir Thomas Farrer shows that I have failed to do so. 
 Hitherto he has not made even an attempt in that 
 direction. 
 
 Cobden devoted all his energies to breaking down an 
 artificial monopoly and establishing free trade in our 
 markets. Sir Thomas Farrer devotes his to the defence of 
 an equally artificial monopoly, and to the maintenance of 
 protection to foreign producers on British markets. And 
 yet he does not hesitate to put the name of Cobden on 
 his title-page.
 
 FREE TRADE IN SUGAR. 
 
 CHAPTER I. 
 
 REPLY TO SIR THOMAS FARRER'S FIRST LETTER. 
 
 Sir, — There is one statement in Sir Thomas Farrer's letter 
 which, as it is repeated four times, and is in fact the text 
 on which his whole remarks are based, requires to be 
 contradicted if your readers are not to be misled. The 
 effect of the Convention, he says, will be to make sugar 
 dearer here and cheaper in other countries. I have already 
 in my former letters pointed out that this is impossible. 
 This country receives sugar from all parts of the world, and 
 has 5,000,000 tons to choose from. Bounty-fed sugar is sold 
 at the same price as other sugar, and all other sugar is, and 
 must be, sold at the same price as bounty- fed sugar. The 
 only effect the Convention will have will be the general 
 abolition of bounties, which Sir Thomas Farrer declares to 
 be bad things. But though he makes this admission he 
 harps on the great benefit which our own people derive 
 from bounty-fed sugar. What is this benefit? Is it a good 
 thing artificially to stimulate production in one place, and 
 thereby hinder and discourage production all over the 
 world ? Is it a good thing that consumers should be de- 
 pendent on one particular crop to such an extent, that, 
 whenever it is slightly less prolific than usual, prices rise 
 50 per cent. ? Until Sir Thomas Farrer answers these 
 questions he has no right to pretend that we are being 
 B
 
 2 FREE TRADE IN SUGAR. 
 
 robbed of a benefit by the abolition of bounties ; and 
 unless he shows that there are two prices for sugar his 
 whole contention is baseless. 
 
 The other points in his letter are that the ascertaining 
 the existence and amount of a bounty is impossible ; that 
 the most-favoured-nation article in our treaties is an ob- 
 stacle ; that retaliation is against our principles ; and that 
 the Convention restricts our freedom. I venture to point 
 out, as briefly as possible, that Sir Thomas Farrer is mis- 
 taken on all these points. There was a time when our 
 assertions as to the existence and amount of the bounties 
 were disputed — by Sir Thomas Farrer among others. But 
 now the foreign Governments have saved us further trouble 
 on this point by stating periodically the amount of their 
 bounties very accurately. So far from the most-favoured- 
 nation article being an obstacle, it turns out to be exactly 
 the reverse. It has been urged at the sittings of the Con- 
 ference that a country having such a treaty with us can 
 properly complain that the admission of bounty-fed sugar 
 destroys the equality which the most-favoured-nation 
 article is intended to secure. As to retaliation, it is most 
 unfair to pretend that there is any parallel between the 
 absurd and useless policy of retaliating against protective 
 duties and the very simple and practical process of 
 destroying protection to foreign producers on British 
 markets by the method proposed in the Convention. The 
 one is easy and effectual, the other impossible and futile. 
 Moreover, there is no retaliation in securing a bounty for 
 the revenue, or in giving a security to the contracting 
 Powers that bounties shall no longer operate to their dis- 
 advantage. Lastly, how does the Convention restrict our 
 freedom .'' Sir Thomas Farrer says it throws a doubt on 
 our advocacy of free imports. Whj^, then, do we prohibit 
 goods bearing false trade-m'-^rks? ^ So long as bounties
 
 FREE TRADE IX SUGAR. 3 
 
 continue it cannot be said that "free imports" apply to 
 sugar. Those who import sugar must be prepared to com- 
 pete with sugar which receives a subsidy. Is this freedom ? 
 Having already addressed you on this subject, I should 
 not have ventured again to trespass on your valuable space, 
 but as Sir Thomas Farrer has taken for his axioms the very 
 points which I had already disproved, and as the ex 
 cathedra style of his letter is likely to carry great weight, 
 I again beg for your kind indulgence.
 
 CHAPTER II. 
 
 REPLY TO THE SECOND LETTER. 
 
 Sir, — Sir Thomas Farrer's second letter expands to 
 three columns what he had previously said in one ; but it 
 does not, with one important exception to which I will 
 presently refer, add a single new point or argument to 
 those contained in his former letter, to which you kindly 
 permitted me to reply. Sir Thomas Farrer has paid my 
 arguments the greatest compliment he could by not 
 noticing them. 
 
 His former letter was characterised by Mr. Gladstone 
 as "weighty." The present one is full of brilliant and 
 telling phrases, and Sir Thomas Farrer is no doubt right in 
 thinking that they will answer his purpose better and be 
 more likely to make progress with the public than the 
 drier process of close reasoning or the accurate use of 
 words. 
 
 Sir Thomas Farrer's contention, identical in both letters, 
 may be divided into two main propositions, viz. : — 
 
 1. That the bounties are good things for this country, 
 because they make sugar cheaper than it would otherwise be. 
 
 2. That the Convention for their abolition is a Protec- 
 tionist measure, contrary to the principles of Free Trade. 
 
 These two points are amplified and reiterated in various 
 forms and many taking phrases ; but that is what they 
 amount to. We have replied to them for years in letters 
 to the Press, and counter-memorandums addressed to the 
 Board of Trade, until we are quite ashamed to repeat the 
 same language so frequently. No one has ever attempted 
 to grapple with our arguments, and yet the same brilliant
 
 FREE TRADE IN SUGAR. 5 
 
 phrases continue to appear from time to time, and no 
 doubt dazzle many a casual reader. 
 
 With regard to the first of these two short propositions 
 to which Sir Thomas Farrer's four columns may be reduced, 
 it is fortunate that he has now made an admission which 
 goes far to cut the ground from under his own feet. " It is 
 not the amount of the bounty," he points out, " but the 
 relation which bounty-fed sugar bears to other sugar 
 in quantity [and in price], which determines the effect of 
 bounty-fed sugar upon the market." This, with the 
 exception of the words which I have put in brackets, 
 which appear erroneous, is exactly what I have always 
 urged as the true state of the case, and I am glad that 
 Sir Thomas Farrer has now adopted the same view, 
 because it clears aways a host of misconceptions. It is not 
 the amount of the bounty, but the increased production 
 brought about by the bounty which affects the price of 
 sugar. This being so, and I think no one can dispute the 
 fact, much which follows might be omitted from Sir 
 Thomas Farrer's letter. He quotes some passages from 
 one of the many long memorandums of the Board ot 
 Trade, based on the assumption — now shown by his own 
 reasoning to be erroneous — that the cheapness is to be 
 measured by the amount of the bounty. The conclusions 
 arrived at on that basis are, therefore, utterly erroneous 
 and misleading, and it is curious that Sir Thomas Farrer 
 should lay stress upon them immediately after showing by 
 his own argument that they are based on false premises. 
 
 The facts with regard to the effect of bounties on 
 prices are very distinct and simple. The bounties on pro- 
 duction have unnaturally stimulated it ; consequently the 
 market has, from time to time, been temporarily glutted. 
 This has been followed by the natural process of reduced 
 production and a restoration of the equilibrium between
 
 6 TREE TRADE IN SUGAR. 
 
 supply and demand. If bounties were to continue in- 
 definitely, this would repeat itself until all natural 
 production disappeared and the world was supplied entirely 
 from bounty-fed sources. Practically, of course, this is impos- 
 sible ; but theoretically it is the completion of the curve. 
 Now, in the swing of the pendulum between artificially 
 stimulated over-production and the reduction of stocks to 
 normal proportions, it is clear that the market will pass 
 for a short time through a period of low prices. If these 
 low prices were the result of natural instead of artificial 
 over-production, the remedy would take a natural course. 
 But with the disturbing element of bounties the course 
 taken by the industry is also abnormal, and, as I main- 
 tain, seriously hurtful to the interests of the consumer and 
 the nation at large. Instead of producers straining every 
 nerve to be foremost in the race, they are deterred by the 
 very natural feeling that, however highly they may farm, 
 however perfect their machinery may be, there is still the 
 bounty looming in the background, against which they 
 cannot contend by any amount of perfection in cultivation 
 or manufacture. What has the result been ? That, while 
 the production of beetroot has increased by leaps and 
 bounds, there has been very slight increase in the pro- 
 duction of cane sugar. . In other words, the whole of the 
 enormous yearly increase in the world's consumption has 
 been filled up by betitroot sugar, stimulated by bounties. 
 The injurious result to, the consumer has been illustrated 
 several times during the last few years. A short beetroot 
 crop means now a rise of 50 per cent, in the price of 
 sugar. 
 
 So much for the bounties on production. The bounties 
 on refining affect prices in an entirely different way. The 
 refiner depends solely on the margin between the price of 
 raw and refined. It is to him immaterial, from that point
 
 FREE TRADE IN SUGAR. 7 
 
 of view, what price he gives for his raw sugar. He knows 
 that he and his competitors all get it at the same price, 
 and that he must get such a price for his refined as will pay 
 the cost of refining, and leave him on the right side. A 
 penny per ton, or any other fraction you like to mention, 
 will therefore turn the scale between profit and loss in his 
 case, and this fraction, though ruin to him, is quite in- 
 appreciable to the consumer. In his case, moreover, this 
 process of underselling by a mere fraction below cost price 
 is continuous, instead of coming, as in the case of the 
 producer, in short periods of low prices followed by a 
 rebound of the pendulum. 
 
 So far as bounties on refining are concerned, therefore, 
 the consumer (including the jam and confectionery maker) 
 makes no appreciable gain from bounties, and will suffer 
 no appreciable loss by their abolition. 
 
 The bounties on production, on the other hand, cause 
 the market to be periodically glutted, during which period 
 the consumer gets his sugar for a short time at a low price. 
 But he has to pay so much the more when the pendulum 
 swings in the opposite direction, since he becomes each 
 time more and more dependent on the beetroot crop ; the 
 practical result of which has been that several times during 
 the last few years he has had to pay an advance of 50 
 per cent. But a far more serious effect, as I have pointed 
 out, has been that all natural enterprise among cane-sugar 
 . producers has been paralysed, natural progress in manu- 
 facture stifled, and natural extension of cultivation hindered 
 and discouraged. Sir Thomas Farrer wishes that this 
 artificial hindrance to progress should continue, and he 
 advocates it not onl}' in the interests of the consumer, but, 
 more extraordinary still, in the name of Free Trade ! 
 
 If you will allow me, I will give my reply to Sir Thomas 
 Farrer's other point in a second letter.
 
 8 FREE TRADE IN SUGAR. 
 
 Sir, — I hope I have succeeded, in my replies to Sir 
 Thomas Farrer, in showing that bounties aie not, as he 
 contends, good for us, but that, on the contrary, they are 
 bad for the consumer as well as for the producer. I will 
 now deal with his other main point, and show that the 
 Convention for the suppression of these bounties is not, as 
 Sir Thomas Farrer desires his readers to believe, in any 
 way contrary to the strictest principles of Free Trade, but 
 that, on the contrary, it is the only means by which Free 
 Trade in sugar can be restored. I admit that all this has 
 been proved ad libiiuvi in reply to the same assertions 
 when emanating from the Board of Trade, and I fearlessly 
 assert that no attempt has ever been made by that depart- 
 ment to meet our arguments. But, unfortunately, the 
 readers of Sir Thomas Farrer's brilliant letters in your 
 columns are not aware of this, and I fear that, with many, 
 smart sentences go further than dry argument. I hope, 
 however, that any one who will give a moment's reasonable 
 consideration to the subject, unbiased by the unaccountable 
 influence of party spirit which seems to have distorted the 
 vision even of some clear-sighted people with regard to 
 this purely scientific question, will admit at the outset that 
 the effect of foreign bounties on articles imported into this 
 country is to protect the foreign producer on our markets 
 — that is, to give him an artificial advantage here over 
 other producers. This is clearly a flagrant outrage on Free 
 Trade principles, and no amount of eloquence or strong 
 language ought to blind the eyes of reasonable people to 
 the fact, or make them fancy that the removal of this pro- 
 tection to foreigners on British markets is in any way 
 inconsistent with Free Trade principles. On the contrary, 
 it might naturally be supposed that every reasonable man 
 would at once exclaim, " It is evidently absolutely necessary, 
 if Free Trade in sugar is to be maintained in this country.
 
 FREE TRADE IN SUGAR. 9 
 
 that these bounties should be abolished, neutralised, or pro- 
 hibited." So long as they continue to operate on our 
 markets they have the same effect as if a differential duty 
 were levied on all sugar not bounty-fed. The word 
 " Protection," as used in connection with Free Trade, 
 means an artificial advantage given to one producer over 
 another, and we Free-traders maintain that it is wrong in 
 principle and injurious in practice that any such artificial 
 advantage should exist, even when it is conferred on our 
 own producers. How much more must it be wrong in 
 principle and injurious in practice when the artificial ad- 
 vantage is conferred on the foreigner to the detriment of 
 the British producer in his own market. But, though we 
 destroy Free Trade, we get our sugar so wonderfully cheap ! 
 That is what Sir Thomas Farrer, the Board of Trade, and 
 the Cobden Club have always fallen back upon when 
 driven into this corner. This I have already disposed of 
 by showing that there is no appreciable gain even in the 
 supposed temporary cheapness ; and that any artificial 
 cheapness involves a diversion of the current of production, 
 which must end in the loss or great reduction of the 
 natural sources, and the consequent dependence of the 
 consumer on artificial sources of supply. The sugar 
 bounties have already lasted long enough to give practical 
 illustrations of this fact, several serious rises having 
 occurred in the market in recent years, owing to the con- 
 stantly increasing dependence of consumers on the success 
 of the beetroot crop. 
 
 The reasonable reader, to whom I have already ap- 
 pealed, would conclude that Sir Thomas Farrer, after these 
 points had been made clear, would be disposed to modify 
 his views. And there can be no doubt that under ordinary 
 conditions of discussion, with the single view of arriving 
 at the truth, this would be so. But, as it is, we have still
 
 ro FREE TRADE IX SUGAR. 
 
 the same mirage of politics hovering over our unfortunate 
 sugar question. Hence such phrases in Sir Thomas Farrer's 
 last letter as the following : — " Our English Minister, 
 misled by his Protectionist leanings, puts down foreign 
 bounties, not because they plunder the German taxpayers, 
 but because they give cheap sugar to his own countrymen." 
 " Keen-sighted for the narrow interests of a small pro- 
 ducing class ; blind to the wide interests of a great con- 
 suming and producing nation ; masquerading as a Free- 
 trader, but in fact a Protectionist;" and soon. This is 
 not dealing with an abstract question of political economy 
 in a scientific way, but simply following out the old rule of 
 abusing the attorney on the other side. 
 
 Sir Thomas P'arrer says a good deal about retaliation 
 —with a capital R — but I think my friend, the reasonable 
 reader, will at once see that there is no retaliation in the 
 matter. Parrying a blow is not retaliation, though Sir 
 Thomas Farrer wishes us to believe that it is. Protection 
 to foreigners on British markets is against our Free Trade 
 principles and contrary to justice and our own interests. 
 We therefore enter into a convention with certain countries 
 to secure the abolition cf this protection. But the foreign 
 Governments naturally point out that they cannot enter 
 into this arrangement unless they have some security that 
 they, in their turn, will not have to compete with bounty- 
 fed sugar. It would be impossible to make a treaty with- 
 out such security, and, as the object of the treaty is the 
 abolition of the most aggressive kind of protection, there 
 can be nothing of the nature of retaliation in giving the 
 required security in order to obtain a general agreement 
 for the abolition of the protection. All this is so self- 
 evident that it seems almost ridiculous to state \t in words, 
 and yet we are still met with the accusation of " trifling 
 with that two-edged weapon ' Retaliation.' "
 
 FREE TRADE IN SUGAR. I I 
 
 Having started with the two fallacious assumptions, 
 that bounties are good for us because they give us cheap 
 sugar, and that their abolition involves " Protection " and 
 "Retaliation" (the capitals are not mine). Sir Thomas 
 Farrer makes the most of them in every by-path he can 
 possibly discover. The " jam argument " was regarded by 
 the Board of Trade for years as a splendid red herring to 
 distract attention from the real facts of the sugar question, 
 and Sir Thomas Farrer still shows how well this telling 
 point can be brought in. A moment's reflection suffices 
 to show how absolutely baseless it is. According to Sir 
 Thomas Farrer's argument, if it means anything, the jam, 
 confectionery, and biscuit trades were created by means 
 of bounty-fed sugar, and depend for their existence on its 
 maintenance. If it does not mean that, it means nothing, 
 and }et it is only necessary to put it in those words in 
 order to show its absurdity. The facts arc that just as 
 much jam, confectionery, and biscuits were made (per head 
 of the population) when sugar was double the price. This 
 is easily proved by the annual consumption of sugar, which 
 shows no more rapid increase now than it did then. There 
 could not be a more conclusive proof of the entire absence 
 of any foundation for the "jam argument," with all its 
 ornamental accessories of the enormous quantity of sugar 
 required and number of men employed by these industries, 
 all depending for their very existence on the maintenance 
 of bounties. As Sir Thomas Farrer puts it, wath earnest 
 solemnity, " Arc these industries which ought to be trifled 
 with ? " 
 
 Another assumption, equally astounding w-hen put in 
 plain language, is that if we abolish bounties, " we put 
 a stop to those manufactures of our own which we now 
 export in order to pay for the bounty-fed sugar." This, 
 if it means anything, must mean that whatever bount}'-
 
 12 FREE TRADE IN SUGAR. 
 
 fed sugar is used in this country is used over and above the 
 quantity which under normal conditions would be con- 
 sumed. Thus stated, the point requires no further re- 
 lutation ; but if proof is required it may be found in the 
 statistics of our annual consumption to which I have 
 already referred. Sir Thomas Farrer will, no doubt, reply 
 that he did not say that this would be the result of 
 abolishing bounties, but of prohibiting them. But when 
 he wrote the sentence from which I have quoted he over- 
 looked what I had pointed out in reference to his former 
 letter, that, as the visible production of the world is five 
 million tons per annum, we shall continue to import what- 
 ever sugar we may want at the price ruling throughout 
 the world, whatever may happen with regard to the 
 remnant of bounty-fed sugar. Our consumers will con- 
 tinue to eat as much sugar, and therefore as much of our 
 own manufactures will continue to be exported in exchange 
 for it. 
 
 If I were not replying to letters which have been 
 characterised as " weighty " by very high authority, I 
 should feel constrained to apologise for wasting your 
 valuable space in refuting such glaring fallacies. 
 
 Among more miscellaneous errors, which I will correct 
 as briefly as possible, we come first to a repetition of what 
 I had already met in my former letter, that the bounties 
 are impossible to estimate. I will give one instance in 
 disproof of this. France, in 1884, started a new bounty 
 on production. This was done intentionally, not acci- 
 dentally, as Sir Thomas Farrer asserts, and it is this, not 
 the German bounty, as Sir Thomas Farrer says, which far 
 eclipses all other bounties. Part of the system is that the 
 French colonies shall receive exactly the same bounty as the 
 mother country, and this is accomplished by ascertaining 
 to a franc the amount of bounty obtained each year in the
 
 FREE TRADE IN SUGAR. I 3 
 
 French beetroot factories per lOO kilos of sugar, and giving 
 exactly the same amount per lOO kilos to the French 
 colonial sugar during the following year. What can be 
 done in France can, of course, be done equally well else- 
 where, the only data necessary for the calculation being 
 the rate of duty and the yield of sugar. This is quite as 
 accurately determined in Germany as in France. 
 
 On the point of cheapness, with which I have fully 
 dealt. Sir Thomas Farrer makes a remark which is prob- 
 ably regarded as telling and unanswerable. He says 
 producers arc in a dilemma ; the abolition of bounties will 
 either make sugar dearer, or it will not ; and if not, it will 
 be of no benefit to them. This I have already met in my 
 general argument as to cheapness. It is only occasionally, 
 and for very short periods, that the competition forces 
 prices down to a point at which producers lose, though 
 with regard to refiners the process is a continuous one. 
 The other influences brought about by bounties all tend 
 to raise prices so far as production is concerned, consumers 
 becoming more dependent every year on one particular 
 crop ; and as regards refined sugar, the cheapness is too 
 small to be appreciable. It is the hindrance to progress 
 and improvement and to the extension of cultivation 
 which harasses producers quite as much as occasional 
 depressions in the market, and it is for these reasons that 
 they desire to be placed on equal terms with their com- 
 petitors, if the mere fact of the inequality is not sufficient 
 ground in itself for demanding abolition of bounties as 
 a constitutional right. 
 
 In the effort to lay as much stress as possible on the 
 word " cheap," Sir Thomas Farrer describes our sugar 
 as so cheap that it is actually only half the price paid in 
 the country of production. This is an absolute delusion. 
 The price of sugar is the same all over the world ; the only
 
 14 FREE TRADE IN SUGAR. 
 
 reason why it is dearer in some countries than in others is 
 that in some it pays no dut}', in others a low one, and in 
 others a high one. 
 
 Sir Thomas Farrer asks, if we are going to abolish the 
 sugar bounties, what are we going to do about shipping 
 and other bounties .'' The answer is very simple. Do 
 away with them if you can, in the interests of Free Trade. 
 
 The Board of Trade, he says, has enunciated the salu- 
 tary doctrine that " Government should not interfere with 
 the course of trade." Certainly, let us apply it to the case 
 of the sugar bounties. The foreign Government interferes 
 with the course of trade by giving bounties. If this 
 interference operated only in its own country, we should 
 have no right to meddle with the matter ; but as the effect 
 is to interfere very seriously with the course of trade in 
 this country by actually handicapping British producers 
 and manufacturers in their own home markets, those 
 producers appeal to the very principle laid down by the 
 Board of Trade. 
 
 It is quite right that our Government should not in- 
 terfere with the course — the natural course — of trade. 
 How much more true must this be, and how much more 
 strictly should the principle be enforced, when we come to 
 the extraordinary instance of a foreign Government 
 interfering with the natural course of trade in British 
 markets ! And yet, when the very natural method of 
 putting a stop to so flagrant a violation of Sir Thomas 
 Farrer's principle by friendly international agreement is 
 attempted, he resists it tooth and nail ; first in the Board 
 of Trade, then by leaflets of the Cobden Club, and lastly in 
 four columns of The Times. " Let foreign nations take 
 care of themselves," he says ; " do not teach them that wc 
 are afraid of free imports." In this case the foreign nation 
 is taking care of itself by handicapping British producers
 
 FREE TRADE IN SUGAR. 1 5 
 
 in ■ their own markets, and Sir Thomas Farrcr defends 
 the process on principles of freedom and equality. 
 Thus, the deeper we dig into his letters the further we 
 get into the region of topsy-turvy. As in many other 
 cases, Sir Thomas Farrer repeats a point which I had 
 already fully met, without taking any notice of my 
 remarks. "If it is right," he repeats, "to retaliate on 
 bounties, it is much more right to retaliate on protective 
 duties.'" The error here is threefold. In the first place, 
 as I have shown, the action as to bounties cannot by any 
 straining of terms be called retaliation. Secondly, the 
 conditions are entirely different. Bounties operate 
 aggressively by protecting foreign producers in this 
 country, whereas foreign protective duties are an internal 
 arrangement of the foreign country with which we have 
 no right to interfere. Thirdly, any attempt to interfere 
 with foreign protective duties by retaliation would in 
 nearly all cases prove futile, while the very act of levying 
 the retaliatory duty would create the very protection which 
 I entirely agree with Sir Thomas Farrer in condemning. 
 But in dealing with the bounty the process is exactly the 
 reverse. The protection takes place in our market b\- the 
 action of the foreigner. The removal or prohibition of the 
 bounty annuls the protection, and restores Free Trade. 
 The process is easy, effectual, and, in fact, the onh- way of 
 securing a return to the condition of free imports which 
 Sir Thomas Farrer so much desires, but will not permit. 
 In fact, it is he who has perpetrated " the first official 
 abandonment of that policy of free imports which has 
 done so much for the material welfare of our toiling 
 millions." 
 
 On all points I have now, as in times past, met Sir 
 Thomas Farrer on his own ground, "the paramount 
 interest of the consumer," and I therefore trust that if he
 
 l6 FREE TRADE IN SUGAR. 
 
 continues his crusade in favour of bounties, he will first 
 deal with my arguments thoroughly and in as straight- 
 forward a way as I have endeavoured to demolish his. 
 The question of the rights of the producer, whether master 
 or man, I have hardly touched ; but I should think that a 
 good deal might be said about British producers — masters 
 and men — having a constitutional right to demand equality 
 with the foreigner on their own markets. At present the 
 foreigner decrees that British producers of sugar shall not 
 sell their goods under natural conditions in their own 
 markets. They are to submit to be handicapped even 
 in their own country. This is what Sir Thomas Farrer 
 defends on Free Trade principles, and the Cobden Club 
 backs him up. It is probably the most remarkable 
 instance of science turned upside down that was ever seen. 
 Mr. Gladstone has called public attention to Sir 
 Thomas Farrcr's arguments as being " weighty." They 
 have now in your columns been thoroughly weighed and 
 found wanting. And yet no one could be found more 
 capable than Mr. Gladstone, in his scientific days, to test 
 the weight of arguments and facts. I cannot believe that, 
 even if our sugar question were unfortunately to be 
 dragged into the arena of party strife, the delicate 
 balances so often used by our former chief would be found 
 to have lost their accuracy.
 
 17 
 
 CHAPTER III. 
 
 REPLY TO THE THIRD LETTER, 
 
 Sh-1, — At last Sir Thomas Farrer has replied to the argu- 
 ments and facts by which we have traversed his original 
 statements. Fortunately his reply is brief, so we can now 
 bring the issue to a point. He does not, he says, maintain 
 that bounties are making sugar cheaper, but he sticks to 
 it that their abolition will make it dearer. In support of 
 this paradox he cites, as usual, a memorandum of the 
 Board of Trade which asserts that even the countervailing 
 of the bounty would raise the price of sugar by a sum 
 equal to a 2d. income tax. As we have already shown 
 that even if bounty-fed sugar were prohibited prices would 
 not be in any way affected, and as Sir Thomas Farrer has 
 not dealt with our argument, it does not appear how 
 quotations from his own memorandums strengthen his 
 position. This is followed by a denial that the artificial 
 stimulus to the production of beetroot sugar hinders pro- 
 gress in the production of cane sugar, and thereby makes 
 the consumer every year more dependent on the beetroot 
 crop. He supports this denial by quoting a Board of 
 Trade report on the progress of the sugar trade. Well, 
 all I can say is that we who pass our lives in the sugar 
 market, and learn ev^ery fact respecting it with micro- 
 scopic accuracy, are almost as good judges on this matter 
 as the Board of Trade, which gets its information second- 
 hand. In any case, I defy any statistics to disprove the 
 simple fact that the increase in the world's consumption is 
 being supplied by bounty-fed beetroot sugar. 
 
 The rest of Sir Thomas Farrer's repl}' is merely a re- 
 assertion of statements, not a dealing with our refutation 
 of them. 
 C
 
 i8 
 
 CHAPTER IV. 
 
 REPLY TO THE FOURTH LETTER. 
 
 Sir Thomas Farrer asks me to reply to four questions, 
 all of which are so fully answered in my former letters that 
 I almost fear he has not devoted such careful study to my 
 arguments as I have to his. The questions to which he 
 challenges me to reply can only be answered by repeating 
 in brief what I have already argued in full. Sugar pro- 
 ducers suffer from bounties quite as much by being deterred 
 from progress as by being undersold. The amount by 
 which refiners are undersold is too small to have any ap- 
 preciable effect on prices. These points are fully explained 
 in my letter of the 5th inst. 
 
 The exclusion of bounty-fed sugar would have the 
 effect of immediately abolishing the bounty. As we have 
 constantly explained, it is solely for the purpose of giving 
 security to the contracting Powers and bringing about a 
 general abolition of bounties that this penal clause is re- 
 quired, and is, in fact, indispensable. The industry has 
 never asked for " the exclusion of foreign bounty-fed sugar 
 to benefit our own sugar producers." We have argued in 
 favour of a penal clause only because the negotiations for 
 the suppression of bounties cannot be successful without 
 it, and we have show^n, as the Spectator puts it, that such a 
 clause "is not only consistent with Free Trade, but positively 
 conceived in the interests of Free Trade." 
 
 Sir Thomas Farrer's third question is best answered by 
 transcribing it. "If bounty-fed sugar is the only source of 
 supply from which the enormously increasing demand of 
 the world is being met, and we cut off that supply, how
 
 FREE TRADE IN SUGAR. 19 
 
 can \vc do so without obliging people to use less sugar, or 
 to pay more for it than they would do if that supply were 
 not cut off? " The answer is so evident that it is almost 
 unnecessary to formulate it. It is the bounty we wish to 
 cut off, not the supply of sugar. We wish to bring back 
 the production and manufacture of sugar into natural con- 
 ditions — in other words to restore Free Trade — and we are 
 bold enough, in our faith in Free Trade, to believe that 
 under natural conditions sugar will be produced in suffi- 
 cient quantities to supply all the wants of the world, and at 
 the very lowest price at which its production and manu- 
 facture can be carried on. If Sir Thomas Farrer, as a 
 political economist, objects to that arrangement, he must 
 object to it on Protectionist, not on Free Trade grounds.
 
 20 
 
 CHAPTKR V. 
 
 RKI'LV TO THE SIXTH LETTER.^" 
 
 Sir, — Sir Thomas Farrcr's attack on Baron de Worms 
 must necessarily be a one-sided affair, it being evident that 
 the Baron is not Hkely to enter into a newspaper contro- 
 versy. It is clear that Sir Thomas Farrer has not read the 
 speech he criticises, but only a summary. If he had he 
 would have found that most of his points were fully met,, 
 and his questions answered. The occasion has, however,, 
 given him the opportunity of marshalling once more the 
 dry bones of an army which has been cut to pieces long 
 since. He had previously done his best to make your 
 readers believe that the Convention is a Protectionist 
 measure, and that it will make sugar dearer, and we had 
 shown, in reply, that it is a Free Trade measure which will 
 have no appreciable effect on the price of sugar, while it 
 will free the consumer from his present dangerous position 
 of dependence on an artificially stimulated source of pro- 
 duction. Nevertheless, Sir Thomas Farrer reproduces the 
 old phrases about Protection and dear sugar, just as if he 
 had remained master of the situation, and his assertions had 
 never been refuted. 
 
 In one place in the new letter Sir Thomas Farrer thinks 
 that the abolition of bounties must cause a large rise in the 
 price of sugar ; in another he doubts whether bounties have 
 had much to do with the cheapness of sugar. If this second 
 view be correct, all his former energy in endeavouring tO' 
 rescue the unfortunate consumer and jam maker from the 
 
 * Letter V., entitled " The Trotocol.s, " must be answered by a diplomatist.
 
 FREE TRADE IX SUGAR. 21 
 
 ■danger of having bounties abolished was misdirected. If 
 the other be the true opinion it is clear that bounties ought 
 to have been abolished long ago, and before they had 
 brought about such a dependence on an artificial industry 
 that their removal involves scarcity and high prices. 
 
 In another place Sir Thomas Farrer says : — " My own 
 opinion has hitherto been that the effect of bounties is 
 much exaggerated, and that neither their continuance nor 
 their abolition would, in the face of more important factors, 
 have the effect attributed to them by the anti-bounty 
 agitators." He surely means "by Sir Thomas Farrer." It 
 is he only who has attributed effects of an exaggerated 
 character to the continuance or abolition of bounties. We 
 have confined ourselves to the modest statement that 
 bounty-fed competition robs us of our legitimate profit, 
 which may be represented by the small sum of 6d. per cwt., 
 and has enabled foreign producers to be protected on British 
 markets to the extent of 350,000 tons of foreign refined 
 sugar per annum. As to the abolition of bounties, we have 
 simply pointed out that it would restore Free Trade, and 
 consequently benefit the consumer. The exaggerated 
 statements to which Sir Thomas Farrer refers are entirely 
 of his own invention ; such, for instance, as that the abolition 
 of bounties would deprive the jam and confectionery 
 makers of the bounty-fed sugar on which they depend for 
 their very existence. He now distinctly withdraws all that 
 part of his case by saying : — " As at present advised I doubt 
 whether bounties have had the effect attributed to them, 
 whether they constitute the chief causes of the recent cheap- 
 ness of sugar." It is really time that Sir Thomas Farrer, if 
 he writes many more letters, should inform his readers who 
 these " anti-bounty agitators " are to whom he so repeatedly 
 refers, and what the exaggerated statements are which he 
 ascribes to them. After the careful and complete refutation
 
 22 FREE TRADE IN SUGAR. 
 
 which \vc h<i\-c s^iven of the constantly reiterated assertions 
 of Sir Thomas Farrer, it is almost trifling with the subject 
 for him now calmly to ascribe them to " the anti-bounty 
 agitators." l^ut he goes on to deal with Baron de Worms 
 reph', that the abolition of bounties will not make sugar 
 dearer, and accepts] it as probably correct. " But then,'^ he 
 asks, " what becomes of the argument that it is the bounties 
 which have made sugar cheap, and have thus, as is alleged, 
 ruined our own sugar producers ^ " What, indeed ? It is 
 one entirely of Sir Thomas Farrer's creation, and he seems, 
 at present, loth to part with it, though it has for some time 
 been in a ragged state. 
 
 Having at last come definitely to the conclusion that 
 the continuance of the bounties will not make sugar cheaper, 
 and that their abolition will not make it dearer, which, if 
 he had stated it earlier, would have saved us and your 
 readers a deal of trouble, Sir Thomas Farrer wavers and is 
 staggered by being told by Baron de Worms that the 
 Furopean bounties amount to about ;z^9,ooo,ooo a year. 
 As the l^oard of Trade took the sugar question in hand 
 some years ago, it is difficult to understand why Sir Thomas 
 Farrer should be surprised at figures with which he ought 
 to be familiar. He thinks they show that the abolition of 
 bounties must cause a large rise in the price of sugar. If 
 so, they also show what a terrible rod in pickle the consumer 
 has laid up for himself by enjoying for so long the imaginary 
 benefits of bounty-fed sugar, and how much the Board of 
 Trade is to blame for resisting every effort to abolish 
 bounties at a time when their abolition would have had a 
 much less serious effect. A few years ago the consumer 
 was only dependent on bounty-fed sources of supply to the 
 extent of one-fifth of the world's visible production ; now 
 he is dependent on them to the extent of three-fifths of 
 the world's supply. It is therefore clear that if the abolition
 
 FREE TRADE IX SUGAR. 23 
 
 of bounties is to raise prices — which it can only do by re- 
 ducing production — it would do so much more violently 
 now than it would have done a few years ago. As long as 
 the bounties continue, the proportion of bounty-fed sugar 
 to the total supply of the world will constantly increase, 
 and consequently the longer we delay their abolition the 
 greater will be the danger and ultimate injury to the 
 consumer. 
 
 But Sir Thomas Farrer forgets that these bounties are 
 enabling an inferior article, beetroot, to compete with a 
 superior article, sugar-cane. The " gigantic subsidy " 
 which staggers him goes to make up the difference. 
 Cane sugar has not been ruined, as Sir Thomas Farrer 
 pretends. The industry can produce sugar at present 
 prices, and continues to do so, but it cannot progress in the 
 way it would have done if there had been free trade in 
 sugar. Planters and manufacturers are not disposed to 
 put fresh land into cultivation, erect new machinery, and 
 launch out into all the latest improvements, so long as the 
 present artificial state of things keeps matters in suspense 
 and destroys all confidence in the future. 
 
 At the outset of his letter Sir Thomas Farrer recapitu- 
 lates eleven points, which he sa\'s Baron de Worms has 
 failed to meet, any one of which is, in his opinion, enough 
 to destroy the Convention. I hope the readers of the 
 Times will not accept all such statements as true because 
 Sir Thomas Farrer declares them to be so. Nor can we 
 be expected to deal with all such statements of opinion — 
 the task would be endless. But when Sir Thomas Farrer 
 peruses the speech he will find that Baron de Worms dealt 
 with most of his eleven points, and saved the Convention 
 from immediate destruction. The large number of non- 
 contracting Powers is a pure assumption which has already 
 been shown to be entireh- unfounded. The alleged breach
 
 24 FREE TRADE IN SUGAR. 
 
 of commercial treaties is a matter which has been dealt 
 with very fully, and it has been urged at the Conferences, 
 as I pointed out before, that it is the bounties that are a 
 breach of commercial treaties. Sir Thomas Farrer comes 
 out now as a champion of Protection, for he actually 
 complains that the provisions of the Convention prevent us 
 from giving to our colonies the protection which the other 
 countries give to theirs. This objection is, in Sir Thomas 
 Farrer's opinion, enough to destroy the Convention, so he 
 e;,vidently thinks that the country is going to take a new 
 departure in commercial policy, and condemns Baron de 
 Worms for sticking by the good old principle of Free 
 Trade. He conjures up a number of purely imaginary 
 objections to the Commission for carrying out the pro- 
 visions of the treaty. They are absolutely groundless, and 
 yet he considers each one of them sufficient to destroy 
 the Convention. The old question of certificates of origin 
 was got rid of years ago, yet it now reappears as one of 
 the fatal objections. There are, according to Sir Thomas 
 Farrer, many other bounty-fed articles. We should be 
 glad to know of them, as they would be valuable allies, if 
 only in assisting us to meet his frequent onslaughts. The 
 Convention, it seems, is establishing a precedent which 
 will naturally lead to retaliation upon foreign corn. This 
 is one of the assertions which readers must not accept 
 merely because Sir Thomas Farrer happens to believe it. 
 We have already dealt fully with his use of the word 
 retaliation, and need not repeat the argument. It appears 
 that the one object which the authors of the Convention 
 have in view is the protection of our sugar industries ; and 
 yet we have fully explained that the only object is the 
 removal of protection to foreigners on British markets. 
 
 In joining issue with Baron de Worms on two points 
 Sir Thomas Farrer accepts his figures provisionally, and
 
 FREE TRADE IN SUCAR. 25 
 
 only for the purpose of argument. But surel}', figures arc 
 either right or wrong, and if wrong, any argument founded 
 on them must be perfectly useless and mere waste of time. 
 Sir Thomas Farrer docs not deal with the correctness of 
 the figures, but tries to throw discredit on them in this 
 indirect way. The first of the two points which are thus 
 argued is disposed of by the assertion that " if we cut off 
 half the producing world from our market, we do not know 
 how much sugar we may be excluding." Well, I should 
 have thought we did know exact!}'. If wc cut off half, 
 surely we shall be excluding half. Although the idea is 
 absurd, yet I am prepared to argue that even in that case 
 we should still be buying sugar at the price ruling through- 
 out the world, and that we should get as much sugar as we 
 wanted. But I do not think that this ridiculous statement 
 will mislead many of your readers. It is pretty well 
 understood by this time that the penal clause is intended 
 as a security to the contracting Powers, that the necessity 
 for enforcing it is not likely to arise, and that if it were 
 enforced it would at once bring about the abolition of the 
 offending bounty ; and that even if it did not, it could not 
 have any effect on the price of sugar throughout the world. 
 The details of his argument are too far-fetched to be 
 worth answering. I should advise Sir Thomas Farrer to 
 investigate more minutely the Brazilian guarantee, and the 
 sugar industry of the United States, before constructing 
 further fancy fluctuations in the supply of sugar, and 
 evolving the alarming situation on which he supports his 
 phantom argument. It would be well to know something 
 of the rudiments of the subject before instructing the 
 public through your valuable columns on the details of an 
 imaginary sugar trade. Sir Thomas Farrer is rapidly 
 developing into a commercial Rider Haggard. 
 
 The second point on which a rcpl\- is gi\cn to Baron
 
 26 FRKK TRADF. TX SUf.AR. 
 
 dc Worms is the cheap su^jar question, with which I ha\c 
 already dealt, and which is now settled in m}- favour. 
 
 There remains only the peroration, in which Sir 
 Thomas Farrer regrets that this countr}- has not waited 
 quietly until the bounties are abolished spontaneously, and 
 gives as his reason the very fact which has brought about 
 the present international arrangement. Germany and 
 Austria wished to get rid of bounties, but unfortunate!}' 
 France, jealous of the success of the German and Austrian 
 industries, started the same fiscal system, but on a very 
 exaggerated scale. It became absolutely neces.sary to do 
 something to check such a monster bounty, and conse- 
 quently the other countries were not sorry to see Great 
 Britain make a proposal for united action. How Sir 
 Thomas Farrer can point to this situation as an argument 
 for doing nothing it is difficult to understand. 
 
 Your readers will begin to ask why there should be all 
 this volume of controvers}'. We have also wondered to 
 the same effect. But still the nice long columns of nice 
 large print, in Sir Thomas Farrer's pleasant readable style, 
 continue to appear at regular intervals. W^hat is it all 
 about ? Why this persistent assertion of that which has 
 been shown to be erroneous ? Why should the protection 
 of foreigners on British markets be so constantly and 
 vigorously defended by an undoubted Free Trader ? 
 
 The letter concludes with a handsome apology to 
 Baron de Worms, thoroughly spoiled by the very gratu- 
 itous remark that his action can only be accounted for 
 by the fact that he is a sincere and deep, even if unad- 
 mitted and unconscious Protectionist. It is necessary to 
 bring that word in prominently, though Sir Thomas Farrer 
 knows perfectly well that abolition of bounties is a re- 
 storation of Free Trade. 
 
 As Baron de Worms is unable to reply in your
 
 FREE TRADE IX SUCAR. 2/ 
 
 columns, I hope }-ou will permit me to do so, and I ur^^^e 
 my request on the further strong ground that Sir Thomas 
 Farrer does not hesitate to repeat assertions without 
 attempting to meet the arguments by which we have 
 refuted them.
 
 28 
 
 CHAPTER VI. 
 
 REPLY TO A LETTER WHICH IS NOT REPRODUCED. 
 
 Sir, — You say to-day, in reference to another matter, 
 *' great is the power of undaunted assertion." In the wield- 
 ing of this power Sir Thomas Farrer has for years been an 
 eminent expert, and he exercises it once more, I hope for 
 the last time, in his reply^ to the arguments I have ventured 
 to put forward in refutation of his statements. He will not 
 attempt, he says, to reply at length, as it would involve a 
 repetition of former arguments. But how can a refutation 
 be met by a repetition of the statements it professes to 
 refute ? I may, therefore, fairly assume that my arguments 
 arc unanswerable, except as regards the " one or two 
 points " which Sir Thomas Farrer considers to require 
 further notice. Let us see what they amount to. 
 
 Sir Thomas Farrer again urges the point that foreign 
 protective duties interfere as much with the freedom of 
 trade as bounties. I dealt fully with this point, but Sir 
 Thomas refers to only a portion of my argument, and in 
 doing so he is obliged to use, as his only rejoinder, the 
 assertion that bounties do us more good than harm. As 
 a great portion of my former letters was directed to show- 
 that this is an entirely erroneous assumption, and that, on 
 the contrary, bounties are an injury to the consumer as 
 well as to the producer, it is hardly fair fighting to decline 
 to meet the arguments I adduced in refutation of the as- 
 sertion, and then to repeat it as a rejoinder on another 
 point. 
 
 * Dated October 24th.
 
 fri:e trade in sugar. 29 
 
 My argument, if I recollect right, was that if \vc were 
 to retaliate against foreign protective duties we should be 
 attacking foreign Governments with regard to a matter in 
 which they are entirely within their rights, namely, their 
 own import duties. We should, moreover, be rushing 
 into Protection and injuring our consumers for a very 
 problematical benefit. On the other hand, any course we 
 may pursue for the abolition of bounties would be carried 
 out without recourse to retaliation, it would be reasonable 
 and desirable as a means of removing the most flagrant 
 instance of Protection which it is possible to imagine, 
 namely, the protection of foreigners on British markets, 
 and its only result would be the restoration of Free Trade by 
 the removal of the bounty. This restoration of Free Trade 
 is as necessary for the consumer as for the producer, since 
 he would otherwise become more and more dependent 
 every year on the artificial source of production. 
 
 The other point to which Sir Thomas Farrer returns 
 affords me the very best means of illustrating the false 
 position into which the consumer is brought by the oper- 
 ation of bounties. He thinks I have not sufficiently 
 answered his argument, that if the increase in the world's 
 consumption is met by bounty-fed sugar, and we cut off 
 that supply, wc must either reduce consumption or increase 
 the price. My reply was to the effect that the operation 
 of the Convention would be to abolish bounties, and that if 
 Sir Thomas Farrer feared that one or tv.'O countries might 
 still remain obstinate and continue to give bounties — a very 
 improbable supposition — the annual available production 
 of the world, five million tons, would be sufficient to keep 
 up our supply at the world's price, whatever it might be. 
 I admit that, when I stated that argument in reply to Sir 
 Thomas Farrer, I did not by an}- means exhaust the sub- 
 ject. I did not, for instance, meet the supposition that a
 
 30 FREE TRADE IN SUGAR. 
 
 cutting-off of the bounty might involve a cutting-off of the 
 supply of sugar which \vc now get from bounty- fed sources. 
 That may be a supposition within the bounds of possibility, 
 and if that is what is in the mind of Sir Thomas Farrer, it 
 furnishes me with a most splendid illustration of the injury 
 which is being inflicted on Ikitish consumers by foreign 
 bounties. Of the five million tons which constitute the 
 world's visible and available annual supply of sugar, more 
 than half consists of beetroot sugar, nearly all of which is 
 bounty-fed. If the abolition of the bounties means the 
 "" cutting-off " of this supply, the unfortunate consumer will, 
 indeed, have to pay dearly for the privilege of eating 
 bounty-fed sugar. If this is to be the result, would it not 
 have been better for Sir Thomas Farrer and the Board of 
 Trade to have permitted the abolition of bounties ten years 
 ago, when the effect would have been less severe ; or would 
 it not be better to do so even now, rather than wait till 
 beetroot sugar grows to still larger proportions, and the 
 consumer runs the risk of a still more serious famine when 
 things are at last righted, as they certainly will be some 
 day ? As I said before, I fear no such result from 
 the abolition of bounties. They have, it is true, helped 
 greatly in establishing a most important industry on the 
 Continent, but I fully believe that, when the bounties are 
 abolished, that industry will enter heartily upon a Free 
 Trade struggle with cane sugar. Our colonial producers 
 arc quite aware of this, and neither they nor ourselves 
 shrink from the contest. We and our colonial friends 
 have hitherto had to contend against beetroot plus bounties. 
 Remove the bounties, and we are ready to hail the beet- 
 root in the same kindly spirit that we regard any fair and 
 equal competition, from whatever part of the world it may 
 come. 
 
 I am, of course, glad that Sir Thomas Farrer has not
 
 FREI-: TRADE I\ SUGAR. 
 
 31 
 
 attempted any serious reply to my arguments. \Vc may 
 congratulate ourselves that two facts in connection with 
 bounties are now fully established ; they are no benefit to 
 us whether we be consumers or producers, and their aboli- 
 tion is essentially a Free Trade measure. 
 
 It is to be hoped that the absurdly exaggerated mis- 
 conceptions with regard to this matter, of which we have 
 read so much during the last few weeks, will now give 
 place to more rational views. The subject, from the con- 
 sumer's point of view, is of much greater importance, and 
 involves considerations which go much deeper down into 
 the region of first principles than the general public are at 
 present aware. It is also a colonial question of very great 
 interest, and one not confined alone to our West Indian 
 colonies. I hope, therefore, that it will continue to meet 
 with proper attention from public men, quite apart from 
 the sugar refiner's position, and I earnestly trust that it 
 will be dealt with on its merits, and not as merely furnish- 
 ing clap-trap for political speeches.
 
 CHAPTER VII. 
 
 RKl'LV TO THE FIRST RKJECTEI) LETTER. 
 
 Sir Thomas Farrer regrets, with regard to Mr. Goschcn, 
 "the great amount of human sacrifice which the exigencies 
 of our poHtics demand." In other words, he regrets that 
 Mr. Goschen has changed his views about Free Trade 
 because he is a member of Her Majesty's Government. 
 Without commenting on the good taste of this insinuation, 
 in reference to a matter which, but for Sir Thomas 
 P'arrer, would be quite outside party politics, it may be 
 asked what evidence there is that Mr. Goschen has not 
 always held the same views which he is now prepared to 
 defend. It is well known that many eminent Free Traders 
 have defended the policy of the Convention, as " not only 
 consistent with Free Trade, but positively conceived in 
 the interests of Free Trade." There is, therefore, no reason 
 to brand Mr. Goschen as an apostate, or to ascribe to him 
 unworthy political motives, because he is of the same 
 opinion. However, he will no doubt defend himself against 
 this gratuitous attack at the proper time. 
 
 The resolutions of Trades Unions, representing nearly 
 half a million of the working classes, expressing satisfaction 
 with the penal clause of the Convention, are regarded by 
 Sir Thomas Farrer as hopelessly at variance with the terms 
 of the Convention. His first reason for this opinion, a 
 most curious and inconclusive one, is that the Protocol has 
 not been signed by the United States, a country which 
 naturally did not sign, as it did not send delegates to the 
 Conference. The reservations of other States, on which 
 he lays stress, had nothing to do with the penal clause ; 
 
 I
 
 FREE TRADE IX SUGAR. 33 
 
 and France, wliich he especially names, took a leading 
 part in its introduction. The second reason — namely, that 
 the clause excludes the whole product — is eminently un- 
 reasonable, because it must be evident that if security is 
 to be given to the contracting Powers b\' this mutual 
 engagement, it must be by dealing with the sugar pro- 
 duction of a bounty-giving country as a whole. 
 
 The observations in reference to the history of the 
 penal clause are quite inaccurate. The proposal is in no 
 way adverse to the interest of England as a consuming 
 nation, as we have frequently pointed out in our replies 
 to Sir Thomas Farrer^s previous letters. But this is his 
 special method of controversy. He not only fails to deal 
 with replies to his arguments, but he takes every oppor- 
 tunity of repeating what has already been fully refuted 
 This country has the whole world open to it from which 
 to draw its supplies of sugar. Even if the product of one 
 particular country were shut out — a contingency which 
 would almost certainly never practically arise — the bulk 
 of the five million tons of the world's annual production 
 would still be free to enter British markets at the world's 
 price. The objects aimed at by Spain and Germany are 
 quite misrepresented. Spain's object was, like that of all 
 who desire the abolition of bounties, simply to restore 
 freedom of competition, and thus enable her colonial pro- 
 ducers to progress under natural conditions, free from the 
 repressive influences of the bounty system. The object 
 of Germany was to stop the big bount}- by means of which 
 the French hope to regain their ascendency in the beet- 
 root industry. They both desire the penal clause, not for 
 the purpose, as Sir Thomas Farrer pretends, of keeping 
 sugar out of British markets, but as a mutual security 
 against protected competition. But these facts do not suit 
 Sir Thomas Farrer's line of thought, so the}' are twisted 
 D
 
 34 FRKE TRADK IN SUGAR. 
 
 into language which when examined proves to be incorrect. 
 Spain and Germany know perfectly well that they cannot 
 — though Sir Thomas Farrer puts the words into their 
 mouth — raise their prices to the English consumer. Prices 
 can only be raised by reducing production, and that 
 certainly will not be the effect of abolishing bounties. If 
 bounties be abolished, the production of cane sugar will 
 undoubtedly be largely increased, and that of beetroot 
 will certainly not fall off. The trade know perfectly well, 
 whatever Sir Thomas Farrer may say to the c^ntrar)', 
 that prices will not rise ; * but they also know that pro- 
 ducers will at last be able to carr}- on their business with 
 a sense of security to which they have long been strangers, 
 and which the restoration of Free Trade in sugar can alone 
 insure. 
 
 We now come to a very amusing episode in Sir Thomas 
 Farrer's attack. In piteous terms he complains that in 
 negotiating this Convention the Board of Trade was not 
 consulted. What does this mean } Was not Baron de 
 Worms himself one of the chiefs of the Board of Trade, 
 and was not that department also represented, and very 
 abl)' represented, by Mr. Bateman ? But, remembering 
 the evidence given before the Select Committee of the 
 House of Commons by Board of Trade officials, it was not 
 to be expected that that department would be asked to 
 take the whole control of the matter. The views of the 
 department were peculiar. They were strongly in favour of 
 bounties, so much so in fact that they, or some of them, 
 regarded a reduction of wages as a better remedy for the 
 evils arising from bounties than the abolition of the boun- 
 ties themselves. This was a strong view to take, and was 
 naturally resented by the working-classes. An attempt 
 
 * See Appendix, page 138.
 
 FREE TRADE I\ SUCiAR. 35 
 
 was made to deny that any such view had been propDundcd, 
 but the evidence is too distinct to be got over. The 
 Committee were naturally astonished at such a doctrine, 
 and gave the witness every opportunit}', in cross-examina- 
 tion, to explain it away, but each question only resulted in 
 emphasising the original statement, and there is no con- 
 text, in the rest of the evidence, to mitigate its effect. 
 Mere are the questions and answers, which, it must be 
 remembered, were submitted to the witness for correction 
 before being published : — 
 
 Report, Sugar Industries, August, iS8o. 
 
 Minutes of Evidence, page i8, Question 283. 
 
 " Supposing pretty equal conditions, one man gets £2 a 
 ton and the other gets nothing ; the man who gets nothing 
 would hardly be able to compete with the man who gets the 
 y^2 a ton on an article of iJ^22, would he ? — I do not know 
 but what he might be able to do so, if he lowered the profits 
 and wages in his trade. There are many conditions under 
 which a great many people could compete. You might 
 reduce the rent of a great deal of property which was grow- 
 ing cane sugar, so that you might have a large amount of 
 competition still." 
 
 Page 28, Questions 469, 470. 
 
 " It is your opinion, in answer to Question 283, that 
 export bounties must be met by a reduction of wages i* — 
 Yes ; that was suggested in reply to a question which was 
 put to me, and I said that when two men were competing, 
 if one of them got a special advantage of that kind, it did 
 not necessarily follow that the other man was put out 
 of the trade, but that he might meet it by reducing his 
 wages or profits." 
 
 " You think reducing the wages of the working men 
 and keeping on the bounty is better than taking off the 
 bounty and keeping the wages as they are ? — Yes."
 
 36 1 RF.l-: TRADE IX SL'CAR. 
 
 The next statement of Sii' Thomas Farrer's is entirely 
 erroneous. He says, that thougli the poor neglected 
 Board of Trade was not consulted, in spite of the 
 presence of its chief secretary as President of the Confer- 
 ence — a curious complaint for a subordinate official to make 
 with regard to his chief — yet the trades were no doubt 
 consulted, and the agitators were set in motion whilst the 
 public were kept in the dark. This most improper accusa- 
 tion is absolutely without foundation, and is exactly the 
 reverse of the facts, which are as follows : — A working man 
 of literary ability, quite unknown till the other day to any- 
 one connected with sugar, was writing a series of able 
 articles in a provincial newspaper, and, among other sub- 
 jects, dealt with the sugar question, about which he said 
 a good many things which were telling and some that were 
 unsound. But he wound up by declaring that working 
 men were not going to stand bounty-fed competition, and 
 that the way they meant to remedy it was to prohibit the 
 importation of bounty-fed sugar. This spontaneous, 
 individual opinion was the first that the sugar trade heard 
 about prohibition. The Trades Unions took up the idea, 
 and their action resulted in the resolutions to Lord 
 Salisbury from all the leading Trades Councils in the 
 kingdom. Xo idea then existed that any such proposal 
 was being considered at the Conference, and the first that 
 was heard of it was at a dinner given by the Grocers' 
 Company to the International Delegates, long after the 
 action of the Trades Councils. With the exception of the 
 hint given on that occasion, the trade were as ignorant as 
 the rest of the world of the stipulations of the Convention 
 until their publication. 
 
 This part of the subject winds up with a very undigni- 
 fied sneer at Baron de Worms, who is accu.sed of comparing 
 himself, in his Greenock speech, with the great author of
 
 FREE TRADE IX SUGAR. 37 
 
 the French Commercial Treaty. He docs nothing of the 
 kind. In reply to Sir Thomas Farrer's taunt about his 
 going cap in hand to foreign Powers, Baron de Worms 
 asks what there was exceptional in such a course. Did 
 not Cobden go to Paris ? Did not Mr. Chamberlain go to 
 Washington ? And this is what Sir Thomas Farrer calls 
 " self-conscious pride in his own achievement," and so on. 
 Baron de Worms A\as simply answering an argument, and 
 ju.stifying the action of the Government by quoting prece- 
 dents. There is too much of personal spite appearing in 
 Sir Thomas Farrer's unpublished letters. The earlier ones 
 A\cre not altogether free from it, but in these latter ones it 
 is so offensively prominent as quite to justify the Times in 
 suppressing them. 
 
 But this is not enough. In a footnote to this insult 
 Sir Thomas Farrer tries to make out, because Baron de 
 Worms quoted the Merchandise Marks Act in one of his 
 speeches, that therefore it is he and not the Trades Councils 
 who drew the parallel. Though this inference is un- 
 founded, the point is quite immaterial, except that it 
 contains an insinuation that the Trades Councils were 
 prompted, which is not the case. The further suggestion, 
 that the parallel between prohibiting fraudulent trade 
 marks and prohibiting bounty-fed sugar is unsound, be- 
 cause in the first case the offender is treated as a criminal, 
 is incorrect. The object of prohibiting fraudulent trade 
 marks is not to punish the offender but to defend the trade 
 of this country against unfair competition in its own 
 markets, the very same object as that for which bounties 
 are to be abolished. 
 
 The Trades Councils would not, in Sir Thomas Farrer's 
 opinion, have adopted these resolutions if they had been 
 acquainted with the facts of the case. These facts are, 
 according to Sir Thomas Farrer, that under the present 
 
 379786
 
 38 FREE TKADE IN SUGAR. 
 
 rJgiinc of bounties, which he calls free imports, prices have 
 fallen to less than half of that which other countries have 
 to pay ; that the Convention would diminish the supply 
 and raise the price ; that it would, in fact, cut off half the 
 sources of our supply ; that it endangers our trade ; and 
 finally, that it leads the way " to protection of corn." 
 This gives an opportunity for Sir Thomas Farrer's glaring- 
 fallacies, which have been refuted again and again, to be 
 once more marshalled in force, as if they had never been 
 defeated, or even attacked, and were invulnerable. But he 
 certainly will not succeed in getting the leaders of the 
 working classes to be deceived by any such language. 
 Their brains are made of very different stuff from what he 
 imagines. They are very quick to see the weak point of 
 an argument, and fortunately have plenty of good solid 
 common sense. They know perfectly well that this 
 country buys sugar at the same price as the rest of the 
 world, and no cheaper ; that the Convention will increase 
 our supplies and therefore lessen rather than increase the 
 price ; that to talk about cutting off half our source of 
 supply is an insult to their common sense; that in all 
 probability the penal clause will never be enforced, but 
 that if it is it will be on such a small scale, as compared 
 with the production of the world, that it can have no 
 possible effect on our supply of sugar ; that the danger to 
 our trade is a bogey conjured up by Sir Thomas Farrer 
 for the purpose of upsetting an arrangement about which 
 he peevishly complains that he was not consulted ; and, 
 finally, that abolishing bounties has nothing whatever to do 
 with protecting corn. They have not taken up the subject 
 for the reasons imagined by Sir Thomas Farrer, but for the 
 very simple one, so apparent to minds which prefer 
 straight to crooked ways, that they would not like to see 
 their own trade disturbed and harassed by foreign bounty-
 
 FREE TRADE IN SUGAR. 39 
 
 fed competition. If Sir Thomas Farrer succeeds in 
 throwing sufficient dust in the eyes of professional politi- 
 cians to procure the defeat of the Convention, he will find 
 that he has not won for himself the gratitude of the 
 working classes; and he will then discover that this fear 
 of the bounty system being extended to other trades will 
 raise an outcry which no Government will be able to 
 withstand. A proposal to neutralise the effect of bounties 
 by reducing wages is bad enough, but a direct encourage- 
 ment to foreign Powers to stimulate other trades by means 
 of bounties will turn out to be even worse. 
 
 The letter ends with the usual little bit of party politics, 
 which is quite beside the question except as indicating the 
 animus of the writer. 
 
 The last words are a cry: "Free Imports and Cheap 
 Food." That is exactly what those who advocate the 
 abolition of bounties desire. At present the unsubsidised 
 producer who desires to bring his .sugar to this or any. 
 other country is not free to do so unless he is prepared to 
 compete against those who receive a subsidy over and 
 above their natural profit. This is not freedom, and it 
 tends to discourage natural production, and to make the 
 consumer dependent on the artificial sources of supply, a 
 process which is not conducive to cheap food, and must 
 inevitably result, if Free Trade be not restored, in dear 
 food. It has been sufficiently often pointed out, in reply 
 to Sir Thomas Farrer, that a refusal to abolish bounties 
 means the maintenance of protection to foreigners on 
 British markets, and such a diversion of the natural 
 channels of supply as must eventually prove injurious to 
 the interests of the consumer. Though this is one of the 
 first principles of Free Trade, it is persistently ignored in 
 Sir Thomas Farrer's book.
 
 40 
 
 CHAPTER VIII. 
 
 REI'LV TO THE SECOND REJECTED LETTER. 
 
 No wonder that The r////t'i- declined to insert this letter, 
 for it is nothing but a rccJimiffc, almost in identical phrases, 
 of the letters which had already appeared. To the con- 
 tentions contained in it we have replied most conclusively 
 and repeatedly in letters which have also been published in 
 the columns of The Times, but to which .Sir Thomas 
 Farrer has never attempted to reply. He is trifling with 
 the subject and his readers by constantly repeating what 
 has already been so frequently and so fully refuted by 
 facts and arguments which he has failed to meet. 
 
 Sir Thomas Farrer begins by citing various instances 
 of supposed interference by foreign Governments with 
 production, with the \iew of stimulating it, and asks 
 whether these cases arc to be dealt with on the same 
 principles as the sugar bounties. That must depend on 
 their nature and extent, and on the possibility of applying 
 the same remed}-, namel}-, international agreement. Some 
 of his instances are very far fetched : Indian railways, for 
 instance, enjoy a Government guarantee,'^ but it would be 
 difficult to prove that that fact amounts to a bounty on the 
 production of corn ; certainly it does not constitute a 
 
 * The railways pay a higher dividend than that guaranteed by 
 Government, so there is absolutely nothing in the point. The 
 Economist says this is not so, but it turns out that this is a worse 
 mistake than Sir Thomas Farrers. I find on enquiry that out of a 
 total of 781,088 tons of wheat exported from India in 1888,631,811 
 tons were shipped from Bombay and Calcutta, and were conveyed to 
 the ports of shipment by the East Indian, the Great Indian Peninsula, 
 and the Bombay and Baroda Railway Companies— all companies 
 earning more than the guaranteed dividend.
 
 FREE TRADE IN SUGAR. 4 1 
 
 bounty on its exportation. Sir Thomas Farrcr must be 
 hard up for arguments when he calls the repealing of an 
 export duty " favouring sugar," and actually quotes it as 
 one of his instances of bounties which have been over- 
 looked. 
 
 But the next instance is still more strange. He urges 
 that " every protective duty or surtax is a bounty on 
 export, since, by enabling the nati\e producer to get a 
 high price at home, it enables and induces him to throw 
 his surplus on foreign markets at an unnaturally low 
 price." In other words, a foreign producer who has 
 realised and safely deposited at his bankers a large profit 
 on his home trade, is actually so foolish as to draw it out 
 of his bank and present it to consumers in this or other 
 countries in the form of goods at an unnaturally low 
 price. There is an excellent illustration in the sugar 
 trade to show how directly contrary to actual practice this 
 absurd theory is. The American refiners are highly pro- 
 tected in their own markets ; not an ounce of foreign 
 refined is admitted. A short time ago they had a bounty 
 on export, and sent large quantities of refined sugar to this 
 country. The bounty was reduced to an amount which did 
 not enable them any longer to compete with the larger 
 bounties of Europe. Their exports immediately dis- 
 appeared. Now, if Sir Thomas Farrer is right, they ought 
 to have gone on exporting, utilising the large profits made 
 in their protected home market to undersell foreigners 
 abroad. But, instead of that, they did exactly the reverse, 
 as any sensible man under the circumstances would do. 
 They took care never to make more than their home 
 market required, and the large profits which they con- 
 sequently realise they are keeping in their own pockets, in 
 preference to distributing them philanthropically through- 
 out the world.
 
 42 FREE TRAHE IN SUGAR. 
 
 As to the possibility of extending the bounty system to 
 other trades, Sir Thomas Farrer, in the form of a question 
 to Lord SaHsbury, ridicules the idea that " intelligent 
 Governments would, out of pure perversity, and at great 
 loss to themselves, voluntarily continue to make, out of the 
 money of their taxpayers, a present of the products of 
 their industry to foreign nations." But, as it happens, this 
 is exactly what France did in 1884. There was no bounty 
 on beetroot sugar in France before that date. There had 
 been a heavy bounty on refined, and the French beetroot 
 sugar manufacturers co-operated heartily with the British 
 sugar refiners in getting it greatly reduced. But when the 
 German bounty grew to large dimensions, the French beet- 
 root sugar manufacturers saw that they must also have a 
 bounty if they were to maintain the competition. Hence 
 the law of 1884, which deliberately gave to the French 
 manufacturers a bounty which, according to the Minister of 
 F'inance, amounted one year to 92,000,000 francs. If the 
 Government of one of the leading European nations — a 
 Republican Government — takes such a deliberate step as 
 this, and knowingly sacrifices such an enormous revenue, 
 why should not a hundredth part of that vast sum be 
 cheerfully voted as an export bounty on boots and shoes? 
 Sir Thomas Farrer falls into his old error in calling an ex- 
 port bounty a gratuitous present to foreign nations. It is 
 nothing of the kind. The exporter takes care to sell his 
 wares at the full market value. It is only when the bounty 
 has had the inevitable effect of over-stimulating production 
 that the bounty-fed exporter begins to find that he must 
 part with some of his artificial profit. But the portion 
 \\hich he gives away must always be very small, because 
 he does not need to part with it until the level of cost 
 price has been over-stepped, and directly that occurs com- 
 petition ceases, and the bounty-fed producer has it all his 
 
 I
 
 FREE TRADE IN SUGAR. 43 
 
 own way. The present made to foreign nations is, there- 
 fore, illusory, and for practical purposes non-existent. 
 
 Sir Thomas Farrer next asks Lord Salisbury " whether 
 as a matter of fact, notwithstanding the long existence of 
 sugar bounties, the production of sugar in all parts of the 
 world — bounty-fed or not bounty-fed — has not been con- 
 stantly increasing? " Is this advanced as a reason against 
 abolishing bounties ? Or is it regarded as strengthening 
 the position so persistently taken up by Sir Thomas 
 Farrer, in the face of overwhelming facts and arguments to 
 the contrary, that the abolition of bounties will make 
 sugar dearer? It is greatly to the credit of producers who 
 receive no bounties that, in spite of bounties which have 
 greatly assisted in the enormous increase in the production 
 of beetroot sugar, they have been able not only to hold 
 their own but to creep slowly ahead. There can be no 
 stronger proof of the correctness of the anticipation that 
 when bounties are abolished the production of cane sugar 
 will expand rapidly, and that consumers will thereby 
 secure a large increase in their supplies, an increase which 
 will not be dependent on the caprice of foreign Govern- 
 ments, The evil of the bounties has been that producers 
 never knew what was coming next. The rapid extension 
 of the beetroot crop under this artificial stimulus caused a 
 temporary glut in the markets of the world five years ago, 
 which was only remedied by the forcible contraction of 
 that crop, and by the accidental coincidence of an unpro- 
 pitious season. But so long as bounties continue there is 
 nothing to prevent and everything to encourage a periodical 
 recurrence of these unnatural gluts, which cause enormous 
 confusion, and often disaster, to the whole sugar trade of 
 the world, and certainly discourage any natural progress 
 and improvement outside the area of bounties. Hence the 
 whole trade becomes every }-ear more and more at the
 
 44 i"Ri:i-: tradf. in sugar. 
 
 mercy of the P2uropean production, of the climatic in- 
 fluences over a comparatively small area of the sugar pro- 
 ducing world, and of the constant changes in the bounty 
 system. All this disturbance to the natural course of trade 
 Sir Thomas Farrer desires to continue, and yet claims to 
 be the champion of Free Trade principles. 
 
 There are one or two points in explanation of the 
 present slight increase in the production of cane sugar 
 which are worth noting incidentally, as Sir Thomas 
 Farrer has raised the question, though they have nothing 
 to do with the subject of sugar bounlies. For instance, 
 Australia has of late years become a large producer of 
 sugar, parts of Queensland being eminently suited to the 
 growth of the sugar-cane. It was quite possible, a few 
 years ago, for that large increase to take place at the other 
 side of the world, solely for the supply of the home con- 
 sumption, even while European bounties were going on 
 increasing. But when the great glut of 1884 took place,, 
 the Australians at once saw that even they were no longer 
 outside the influence of the sugar bounties ; and since 
 then thc}- have been as active as any in urging that some 
 means should be found for stopping so unnatural and 
 injurious a competition. Another instance of very large 
 increase in production is to be found in the Sandwich 
 Islands, but this is fully explained by the fact that they 
 have the peculiar advantage of being able to sell their 
 sugar in the United States at the duty-paid price without, 
 having paid the duty. The answers to Sir Thomas 
 Farrer's questions to Lord Salisbury with regard to an 
 extension of the bounty system, and to the actual increase 
 in the production of sugar, are not, therefore, as he 
 assumes, calculated " to allay Lord Salisbury's appre- 
 hensions." 
 
 Sir Thomas Farrer passes to another subject, and states-
 
 FREE TRADE IX SUOAR. 45 
 
 that the Protectionist Party in the United States have 
 proposed a direct and intentional bounty on the export 
 of sugar, as a compensation to the sugar producers for 
 the proposed repeal of the duty. This is an error. It 
 has been proposed to halve the present duty on sugar ; 
 and as the Louisiana planters at present enjoy the pri- 
 vilege of selling their sugar at the duty-paid price without 
 having paid any duty, it is clear that if the duty were 
 halved they would lose half their artificial profit. It has 
 been proposed to make this up to them by giving them in 
 cash about the same amount as they would lose. But 
 this is no more a bounty on export than their present 
 artificial profit is. They do not want an export bount}', 
 nor would they use it if they had it, seeing that they do not 
 produce one-tenth of the consumption of the United States. 
 Their whole advantage is derived from being able to sell 
 their sugar for home consumption without having paid any 
 duty on it. There is no drawback on the exportation of 
 it, and, moreover, even the refiners are compelled to make 
 a declaration that the sugar they export and receive draw- 
 back on is not made from duty-free sugar. Nothing could 
 prove more conclusively that the United States Govern- 
 ment is determined that no bount}' on export shall be 
 obtained, and the same determination is shown in the 
 wording of the law regulating the drawback on refined, 
 and also of the Bill to which Sir Thomas Farrer refeis, 
 but which, apparently, he has not seen. He even makes 
 rhe further mistake of supposing that the proposed bounty 
 was also to be given on refining. 
 
 Now combes another repetition of old and exploded 
 ideas, which are found so telling to the ignorant and un- 
 suspicious reader that Sir Thomas Farrer loses no oppor- 
 tunity of repeating them, quite regardless of the refutations 
 which he has failed to combat. Bounties, he repeats, are
 
 4.6 FREE TRADE IN SUGAR. 
 
 an interference with trade which docs harm to the people 
 of the country which gives them, but good to us, " by giving 
 us cheap sugar at their expense." First, with regard to 
 the injury ascribed to bounties, it may be pointed out in 
 passing, without in any way defending the system, that 
 though it is a burden on the taxpayer, it certainly has, in 
 the case of German}^ assisted in building up one of the 
 finest industries in the world — an industry the benefits of 
 which are very widespread and far-reaching. Secondly, as 
 to its benefit to us, the contention of Sir Thomas Farrer 
 has been shown, over and over again, to be not only un- 
 founded, but the reverse of the fact. He is, in fact, arguing 
 in favour of Protection when he argues this main point 
 of his whole contention, that a gross infraction of the first 
 principles of Free Trade — a diversion of the natural 
 channels of supply — is to be defended on the ground that 
 it is beneficial. He is wrong, therefore, in principle ; but 
 he is still more wrong in his facts. The bounties do not 
 give us cheap sugar. He uses the expression even more 
 incorrectly in some passages, where he refers to the cheap 
 bounty-fed sugar as distinguished from the dear sugar 
 which receives no bounty. There is no such thing as 
 cheap bounty-fed sugar, because all sugar is sold at the 
 same price — quality for quality — no matter what may be 
 its origin. Sir Thomas Farrer knows this perfectly well ; 
 if he does not, he is quite unfit to deal with this or any 
 other commercial question. The only way in which 
 bounties make sugar cheap is by stimulating production ; 
 but then they at the same time tend to make sugar dear 
 by discouraging production, so that their ultimate effect 
 must be to leave the consumer dependent on the bounty- 
 fed production, which is clearly a very undesirable position. 
 Then, again, the bounty-fed producer does not give a 
 farthing of his bounty to the consumer until cost price is 
 
 I
 
 FREE TRADE IN SUCAR. 47 
 
 reached ; and directly you go below that point the bount}'- 
 fed producer is master of the situation. This, again, is not 
 a desirable position for the consumer. Thus Sir Thomas 
 Farrer's benefit derived from bounties, which he is so 
 anxious to retain, turns out to be no benefit, but an injur)-. 
 Bounties should therefore be abolished. Foreign Govern- 
 ments have at last expressed their readiness to abolish 
 them, if possible, by mutual agreement. But one thing is 
 absolutely essential to such an agreement ; there must be 
 some security that it will be loyally carried out, and that 
 the contracting Powers will be free from bounty-fed com- 
 petition in the future. Hence the penal clause. There was 
 no other way in which an agreement could be brought 
 about. The principle was admitted in the old Convention 
 of 1864, and was objected to by no one. The many Inter- 
 national Conferences which have been held since then have 
 clearly proved that no progress could be made till the con- 
 tracting Powers were furnished with the necessary securit}- 
 against bounty-fed competition. The principle of such a 
 clause has been declared by many high authorities of all 
 shades of political opinion to be perfectly sound, and the 
 clause to be absolutely necessary for the restoration of Free 
 Trade. But, unfortunately, Sir Thomas P'arrer thought 
 otherwise, and his department consequently barred all pro- 
 gress for many years. At last Lord Salisbury's Government 
 thought fit to override the views of the Board of Trade, and 
 hence Sir Thomas Farrer's tears. Hence it is that he over- 
 strains his argument and tries to make out that the penal 
 clause will strike half the sugar of the world, whereas it will 
 probably never strike an ounce. He assumes that "jealous 
 rivals " will search the by-paths of the world for pett}' 
 bounties, in order that the penal clause may not remain a 
 dead letter. All this is the discontented resentment of an 
 official who thinks his opinion has been slighted. The real
 
 48 FREE TRADE IX SUGAR. 
 
 fact being that if his erroneous views had been overruled 
 some years ago, great trouble and havoc in the sugar 
 market would have been prevented, and we should by this 
 time have been enjoying the blessings of Free Trade. 
 
 He objects to thus bringing about an agreement for the 
 abolition of bounties, for the same reason that he objects to 
 a protective duty on foreign corn. He goes further, and 
 says that all Free-traders object for that reason, whereas 
 in point of fact many Free-traders do not object but 
 approve, and certainly no Free-trader in his senses would 
 object for such a reason as that. There is no parallel in 
 any way between the two cases. A protective duty on 
 corn means, first, that the consumer has to pay an extra 
 price equal to the amount of the duty ; and secondly, that 
 the home-producer receives an artificial profit equal to the 
 amount of the dut)'. On the other hand, the penal clause 
 of the Convention cannot, under any circumstances, prevent 
 the British consumer from obtaining as much sugar as he 
 can possibly rcc^uire out of the five million tons of the 
 world's annual production, at the free and open price ruling 
 throughout the world, without hindrance or duty of any 
 kind. The consumer has not, therefore, as in the former 
 case, to pay any extra price, nor does the home or colonial 
 producer receive any artificial profit. And yet Sir Thomas 
 Farrer does not hesitate even to go so far, in throwing dust 
 in the eyes of his readers, as to pretend that the penal 
 clause will limit the supply of sugar and thereb}' make it 
 dearer. The fact that there are five million tons to choose 
 from is a sufficient refutation of this deliberate attempt to 
 deceive ; but there is a better refutation in Sir Thomias 
 Farrer's own words. Speaking farther on, at page 69, of 
 French sugar going to the United States and turning out 
 West India sugar, he concludes: — "And then the only 
 effect of the Convention, so far as British interests arc 
 
 1
 
 FREE TRADE IN SUGAR. 49 
 
 concerned, will be to divert good and cheap beet-sugar from 
 the United Kingdom to the United States, to give us bad 
 West India sugar instead of good beet-sugar, and, as 
 regards the West Indies, to give them a market here, but 
 at the same time to deprive them of a market in America, 
 which is at least equally good." Quite so ; when Sir 
 Thomas Farrer got as far as page 69, he found out that the 
 only operation of the penal clause, at the very worst, would 
 be to substitute one sugar for another ; but liere, at page 
 51, and in many other places, he does not hesitate to stick 
 to his old fallacy, which sounded so telling and conclusive, 
 and so destructive to the policy of the Convention, and to 
 continue to assert, in direct contradiction to his own de- 
 liberate statements elsewhere, that the result of the Conven- 
 tion must be to restrict supply and make sugar dearer. It 
 is a shame that those who desire the success of the Conven- 
 tion should be compelled to deal with such glaring cases of 
 deliberate misstatement. But look at the language of the 
 passage quoted above : " Good and cheap beet-sugar " is 
 a curious expression in many ways ; so is " bad West India 
 sugar." Many people prefer cane sugar to beetroot, some 
 even go so far as to give a higher price for it. Sir Thomas 
 Farrer is not one of these ; in fact, his language would 
 almost lead to the inference that he was a partisan of the 
 beetroot industry. But according to his view, beetroot is 
 not only " good " but " cheap." The sugar market is evi- 
 dently governed by some new economical law, not pre- 
 viously discovered, which causes the good article to fetch 
 less money than the bad. As to West India sugar being 
 " bad," Sir Thomas Farrer would find plenty of people in 
 Mincing Lane, both refiners and dealers, who would be 
 thankful for such a good supply of fine West India sugar 
 as used to come to market twenty years ago. 
 
 This enormous fallacy leads on to others. The 
 E
 
 50 FREE TRADE IN SUGAR. 
 
 imaginary restriction of supply, as stated at page 51, and 
 shown to be impossible at page 69, must involve a curtail- 
 ment or destruction of " the work of those who make the 
 goods with which we pay for foreign sugar." So that at 
 page 5 I Sir Thomas Farrer seriously believes that, in spite 
 of there being every year five million tons of sugar to 
 choose from, we are to be subject to a positive famine 
 because, by the possible operation of the penal clause, the 
 quantity of the world's production which will remain free 
 to enter British markets may be reduced to 4,950,000 tons, 
 or any other figure he likes to imagine. He fails to see 
 that the balance goes on to do its part in keeping down 
 the world's price, and that the world's price will always be 
 our price. We shall, therefore, have the same quantity of 
 sugar at the same price whether the penal clause is enforced 
 or not. The people who make goods to pay for sugar will 
 not, therefore, be ruined by a sugar famine, nor will the 
 jam-makers suddenly find their raw material cut off. The 
 beautiful structure so carefully raised on no foundation 
 goes to pieces, and the vigorous conclusion of the argument, 
 namely, that Lord Salisbury is sacrificing " the whole to a 
 class, the many to the few,'^ which is " the very essence of 
 Protection," falls to the ground, it is to be hoped for the 
 last time. The abolition of bounties, as has now been 
 repeatedly shown in reply to these clap-trap assertions, is 
 necessary, not for the benefit of or even in justice to the 
 few, but for the welfare of the whole community, since 
 bounties tend to contract supplies within an artificial area, 
 and must eventually leave the consumer at the mercy of a 
 protected monopoly. The attempt to remedy this flagrant 
 breach of the first principles of Free Trade is condemned by 
 Sir Thomas Farrer because he happens to have made a 
 mistake and docs not like to admit it ; he, therefore, sticks 
 to it that it is " the very essence of Protection." 
 
 I
 
 FREE TRADE IX SUf.AR. 5 1 
 
 This is followed by another repetition — the whole book 
 is a series of repetitions, one tune without ev^en the relief of 
 variations — of the statement that a large proportion of the 
 sugar of the world is to be excluded. This is absolutely 
 untrue and impossible. The worst that could happen is 
 that France should continue to give her large bounty, and 
 refuse to join the Convention. Sir Thomas Farrer takes 
 care not to tell his readers how small a proportion of our 
 imports comes from France. But whether the proportion 
 were large or small it would not matter, as has been 
 repeatedly explained. We can get any quantity of sugar 
 at the world's price, whether France be shut out or not. 
 France sends us only refined sugar, and the market 
 quotations show that the trade, and therefore the con- 
 sumers, greatly prefer British refined. There can be no 
 complaint, therefore, if British be substituted for French 
 refined, even though the perfidious British refiner should 
 thereby enjoy an increase in his business. But it would 
 seem as if Sir Thomas Farrer and his friends thought that 
 alone a sufficient reason for condemning the abolition of 
 bounties. And it must be recollected that it is for the 
 purpose of abolishing bounties, not of excluding com- 
 petitors, that refiners and producers have urged the 
 acceptance of the remedy so persistently insisted on by the 
 French Government as the only security to the contracting 
 Powers against bounty-fed competition. The sugar trade 
 of this country and our colonies have asserted, till they are 
 tired of repeating it, that they do not desire or expect 
 to stop foreign competition by the abolition of bounties, 
 but only to stop the artificial profit against which no 
 natural industry can eventually survive. 
 
 The United States, Sir Thomas Farrer says, are to 
 keep their immense markets open to the French sugar 
 which he erroneously assumes that we are about to reject.
 
 52 FREE TRADE IN SUCxAR. 
 
 Here he has fallen unconsciously and through ignorance of 
 his subject into an error which is fatal to his argument. 
 The French exports consist of sugar which, under the laws 
 of the United States, would be struck with a prohibitive 
 duty, and therefore could not find an outlet in the United 
 States. He speaks of other nations, whose " immense 
 markets" are open to the sugar we reject. What nations? 
 Where are these immense markets .■' But it does not matter, 
 for Sir Thomas Farrer admits in another place, as has 
 been already pointed out, that the whole thing, however 
 big it may be, only amounts to an exchange of one sugar 
 for another, in which no one will suffer, while British and 
 Colonial interests will benefit, and the consumer will 
 secure the free and open competition of those sugar 
 producers throughout the world who have hitherto been 
 repressed by bounty-fed competition. Natural production 
 will expand to its natural limits, and this country, like all 
 the rest of the world, will reap the benefit of the increased 
 supply. Sir Thomas Farrer is, in fact, lamenting over an 
 iniaginary loss of the protected article, and his lamentations 
 arc raised in the name of Free Trade. 
 
 There has been lately more than one practical illus- 
 tration of the fallacy of Sir Thomas Farrer's view on this 
 question. The United States gave a bounty on refined 
 sugar a few years ago ; the result being that very large 
 quantities, more than 100,000 tons, came to this country. 
 When the bounty stopped the importation stopped. On 
 Sir Thomas Farrer's theor)-, a very large quantity of sugar 
 was suddenly shut out of our markets, which ought to 
 have resulted, if his view be correct, in a partial sugar 
 famine, great rise in price, loss of work to those who make 
 goods to pay for our sugar imports, great injury to the 
 jam trade, and so on. In point of fact, however, the effect 
 was nil ; the reason being that the void was immediately
 
 FREE TRADE IX SUGAR. 53 
 
 filled up from elsewhere. The same quantity of sugar 
 was produced, and therefore the same quantity was im- 
 ported as before. 
 
 It is quite useless for Sir Thomas Farrer to suggest 
 that the Sugar Convention is reviving Custom House diffi- 
 culties, when the same thing has just been done, on a much 
 more serious scale, by imposing on our Customs Authorities 
 the duty of not only prohibiting the importation of goods 
 falsely marked, but also of detecting the false marks. In 
 both cases the remedy will speedily bring about the desired 
 cure ; but in the case of bounties the cure will come 
 without the application of the remedy. Prevention, in this 
 case, will prove to be better than cure. 
 
 The letters in The Times, in reply to Sir Thomas 
 Farrer, proved that the abolition of bounties would not 
 increase the price of sugar or decrease the supply. If 
 those proofs were unsound Sir Thomas Farrer had plenty 
 of opportunity, in his subsequent letters which were 
 published in TJie Times, to point out in what way his 
 opponents had failed to prove their case. He made no 
 attempt to do so ; he never alluded to the arguments. 
 He now publishes a book, where his opponents naturally 
 expected to find their arguments carefully examined, but 
 where not one single word is said in reference to them. 
 And yet in every chapter, and here again at page 53, Sir 
 Thomas Farrer does not hesitate again to repeat what has 
 been again and again refuted, disposed of, and absolutely 
 pulverised. He says that "the effect of the treaty, if it has 
 any effect, must be to make sugar indefinitely dearer and 
 scarcer than it is." He evidently appreciates the value of 
 iteration. He believes, and perhaps wisely, that he has 
 only to repeat a misstatement often enough, and it will 
 stick in the minds of his readers, while the refutation goes 
 bv unheeded or forgotten.
 
 54 FREE TRADE IN SUGAR. 
 
 He accuses "the Foreif^n Office " of liaving "a leaning^ 
 towards Protection." Here he attacks a department, not 
 the Gov^ernment ; and this gives us a further insight into the 
 reasons which have impelled Sir Thomas Farrer to dash 
 so valiantly into this crusade in favour of protecting the 
 foreigner on British markets. The Board of Trade, he 
 complains, were not consulted. Now he tells us that the 
 Foreign Office has a leaning towards Protection. The in- 
 ference is obvious. The two departments have evidentl)^ 
 been at loggerheads, and Sir Thomas Farrer has got the 
 worst of it. The Foreign Office was for Free Trade, the 
 Board of Trade was for protection to the foreigner on 
 British markets. The Foreign Office has had its way so 
 far, but Sir Thomas Farrer and his friends are going to 
 upset it if they can, and hence his book. 
 
 The red herring which is now to be dragged across the 
 true scent is the endeavour to prove that there is nothing 
 the matter with the sugar trade. It had a great success a 
 {cw years ago, owing to foolish statements of ignorant 
 people, and the party for \\hich Sir Thomas P'arrer acts 
 no doubt hopes to maintain the false scent and to continue 
 to divert the public mind from the real and vital question. 
 It is quite possible that they may succeed ; such red 
 herrings very often carry away the whole countr}' and 
 sometimes defeat ministries.
 
 55 
 
 CHAPTER IX. 
 
 REPLY TO THE THIRD REJECTED LETTER. 
 
 Thls is the red hcrrintj chapter. It has nothing to do 
 with the question whether foreign bounties are good things 
 or bad things, whether they should be abolished or en- 
 couraged. Sir Thomas Farrer begins, however, by telling 
 us that Mr. Gladstone "determined, notwithstanding the 
 report of Mr. Ritchie's Committee, to maintain a Conserva- 
 tive policy with respect to the sugar bounties." Did he 
 determine to maintain the abuse, the intolerable infringe- 
 ment of the first principles of Free Trade, brought about 
 by bounties protecting foreign producers on British 
 markets ? Was this his Conservative policy .'' We Liberals 
 accuse Conservatives of defending abuses, but certainly 
 they never in these latter days defended a greater abuse 
 than this. Mr. Gladstone's Conservatism must have arisen 
 from the fact that Mr. Ritchie, his political opponent, had 
 shown himself a remarkably able champion of Free Trade 
 principles. Thus one anomaly brought about another, 
 while the sugar trade had to grin and bear it. The 
 Government could not contradict the conclusive and 
 careful report of the Select Committee, so they started, 
 with Sir Thomas Farrer's able assistance, their useful red 
 herring. They could not den}-, what the Committee told 
 them in very plain language, that bounties were contrary 
 to Free Trade, and that their abolition, even with the 
 necessary security of a penal clause, was absolutely essen- 
 tial to the restoration of Free Trade. So they seized the 
 opportunity afforded them by foolish exaggerations of 
 ignorant persons, and proceeded to solemnly demonstrate
 
 56 FREE TRADE IN SUGAR. 
 
 that neither sugar refining nor sugar planting was yet dead. 
 If those industries had been dead they would have dragged 
 their herring in the opposite direction, and pleaded that 
 it was of no use to come to the rescue of a defunct industry. 
 
 Sir Thomas Farrer makes the most of what he calls 
 " Mr. Chamberlain's Memorandum ; " but we must recol- 
 lect that Mr. Chamberlain, being new to the work, naturally 
 took his inspiration from Sir Thomas Farrer, the depart- 
 mental head of his office. No one doubts for a moment 
 that the memorandum was written, not by Mr. Chamber- 
 lain, but by Sir Thomas Farrer, and that when Sir 
 Thomas Farrer quotes Mr. Chamberlain he is only quoting 
 himself. He does not tell his readers that every point in 
 this memorandum was carefully, and in official form, 
 answered and refuted, and that the next official document 
 which appeared from the Board of Trade calmly repeated 
 the same assertions, without showing any signs of having 
 received a refutation of them. He withholds this informa- 
 tion, but loudly complains that " the negotiators of the 
 present Convention " have made no attempt to answer the 
 arguments. Why should they, when a conclusive answer 
 is found in the Blue l^ook ? It is for the other side to 
 complain that the Board of Trade, when convicted of being 
 in the wrong, took no notice of the reply, but dared to 
 repeat what it was unable to defend. 
 
 But here comes the root of the whole matter, the cause 
 of all these ten chapters and six appendices. Sir Thomas 
 Farrer complains bitterly that " on former occasions the 
 Board of Trade, as the department which represents the 
 commercial interests of the country [how well it has repre- 
 sented them !] has always been consulted, and its advice, 
 if not followed, has been listened to with respect." Though 
 this is only interesting as indicating the true springs of 
 the present onslaught, and is quite immaterial to the
 
 FREE TRADE IN SUGAR. 57 
 
 great question at issue, it must, in passing, be exposed as 
 entirely untrue and misleading. The Board of Trade has 
 not been *' always consulted.'^ On the contrary, the 
 Board of Trade had nothing to do with the subject until 
 quite recently. The histor}^ of the change is interesting. 
 The negotiations about sugar bounties have been going on 
 for some twenty-five years, and, being international, have 
 naturally been conducted solely by the Foreign Office, and 
 its excellent commercial department ; assisted occasion- 
 ally by able officials from the Customs. Things were well 
 managed, and a good common-sense view of the necessities 
 of the case was taken. But a certain Government, when it 
 came into power, was moved by various considerations con- 
 nected with the action of its rivals in this matter, to take 
 the unusual step of removing the conduct of international 
 negotiations from the Foreign Office to the Board of Trade. 
 Sir Thomas Farrer then became master of the situation, 
 and ruled the roost. Of course nothing more was done ; 
 and this unfortunately happened just at the critical moment 
 Avhen bounties were having their inevitable effect of enor- 
 mously stimulating bounty-fed production and grievously 
 depressing the natural industry. In two or three years 
 from that date there was such a glut of bounty-fed sugar 
 that every producer outside the magic ring saw ruin staring 
 him in the face. And yet we are told to read all the 
 memorandums that flowed so freely from the Board of 
 Trade in i88i, when we know that three years later, owing 
 to the culpable suspension of the negotiations at the in- 
 stance of the Board of Trade, one of the biggest crises that 
 ever came upon an industry had arrived, and had most 
 undoubtedly been caused by the abnormal and sudden 
 expansion of the beetroot industr\' arising from the greatly 
 increased bounty. These facts are notorious to everyone in 
 the trade. If the crisisof 1884 had not been partial!}- remedied
 
 58 VKV.E TRADI", IX SUGAR. 
 
 b\' a spontaneous reduction in the production of beetroot, 
 coupled with unfavourable weather for the crop, we should 
 ha\-e seen a revolution in sugar production which ^\■ould 
 ha\'e involved ruin to many innocent people, and have 
 thrown the trade entirely into the hands of a mono- 
 poly. No one can dispute this. Are we to content our- 
 selves with reading memorandums of the Board of Trade, 
 which defend Protection on h^rce Trade principles, and to 
 remain, in the meantime, periodically subject to this dis- 
 turbance of our trade? So long as bounties continue to 
 interfere with the arrangements of nature these disturbances 
 \\ill undoubtedly recur, and every time with greater force. 
 Is it any comfort to be told that we are still employing 
 so many men ; that the colonies are producing so much 
 sugar ? It is greatly to the credit of those who have 
 survived the shock ; adversity is, no doubt, good for us 
 all. Even Sir Thomas Farrer might be disposed to take 
 a different view of men and things if he were to taste the 
 wholesome medicine. But surely these figures, these red 
 herrings, are no argument in favour of maintaining and en- 
 couraging a system of protection which operates, not in 
 the protected country, but in our own market, and which 
 the other day brought us all, colonial producers and British 
 refiners, within very measurable distance of shutting up 
 shop. And this happened only three years after the Board 
 of Trade undertook to manage the sugar question by issuing 
 erroneous disquisitions on a spurious Free Trade and an 
 imaginary Protection. 
 
 Sir Thomas Farrer goes on to ask, " Has the Board of 
 Trade been consulted, and has its advice been suppressed .'' 
 Or has the Foreign Office been afraid of it, and purposely 
 excluded it from the consultation ? " This would be all 
 very amusing if it were not shocking. A great British and 
 Colonial industry is brought within sight of ruin because.
 
 FREE TKADl': IX SUGAR. 59 
 
 for party purposes, a matter is removed from the depart- 
 ment properly concerned with its management, and which 
 has dealt with it for nearly twenty }'ears, and transferred 
 to a department which, though it professes to " represent 
 the commercial interests of the countr}-/' has for years 
 obstructed those interests in every possible way. Every 
 Government which has been in power since 1862 has not 
 only been in favour of, but has actively undertaken the 
 abolition of the sugar bounties, and yet, at a most critical 
 moment in the progress both of the bounties and of the 
 negotiations for their suppression, for some mysterious 
 reason the whole management is handed over to an official 
 notoriously hostile to the policy which had been followed 
 for twenty years. It is not for him to ask wh}- he was not 
 consulted, but for the trade to demand an explanation of 
 the conduct of the Government, which, without any ap- 
 parent reason, deliberately handed over their just claims to 
 consideration to the tender mercies of a bitter opponent. 
 The justice of their claims to consideration was being pro- 
 fusely declared on post-cards at the very moment when 
 they were being handed over to the office so well known 
 for its ability " how not to do it." 
 
 We are told that "the action of the Government," in 
 allowing the Foreign Office to manage its own affairs, 
 " constitutes a radical change in departmental policy." On 
 the contrary, the taking away from the Foreign Office of a 
 matter purely of international negotiation, and, moreover, 
 of a continuous negotiation which had been going on, 
 under the management of the P'oreign Office, for a long 
 series of years, which was still going on, and was on the 
 point of succeeding, is undoubtedly a very radical change 
 in departmental polic}\ But when to that is added the 
 fact that this long negotiation, so nearly brought to a 
 successful issue, is suddcnlv handed over to the tender
 
 6o IK Eli TRADE IN SUGAR. 
 
 mercies of an official notoriously hostile to its policy, there 
 can be only one inference. The trade can never be too 
 grateful to Mr. Ritchie for the spcndid way in which he 
 conducted the inquiry before the Select Committee, which 
 at once stamped him as a man of first-class ability ; but it 
 is to be feared that this exceptionally able conduct of the 
 case by Mr. Ritchie, so sound in every way that his 
 political opponents could not pick a hole in it, stimulated 
 them to take a course which would lead to the subject 
 being shelved, or got rid of by the red herring policy. 
 
 If, as Sir Thomas Farrer seems to suspect, the advice of 
 the Board of Trade has been suppressed, he urges that 
 *' Parliament has a right to know what the Board of Trade 
 has said." He wants members to be furnished with some 
 more of his " Memorandums." But how could the Board 
 of Trade be suppressed when its Parliamentary secretary 
 was President of the Conference ? Does Sir Thomas 
 Farrer mean to say that Parliament has a right to demand 
 the publication of memorandums drawn up by a sub- 
 ordinate official which his chief has thought proper to 
 disregard .'' This would, indeed, be " a radical change in 
 departmental policy." All this is very amusing, but it is 
 difficult for those whose vital interests have been so shame- 
 fully sacrificed while this official comedy has been going 
 on, to treat the matter without some slight disposition to 
 indignation. It was hoped by the Government of that 
 da}-, that a troublesome and difficult question would be 
 got out of the way, and Sir Thomas Farrer was selected as 
 a most efificient executioner. The culprits have survived 
 and escaped, but the executioner is after them, and is being 
 encouraged with shouts from his former employers. 
 
 It is Sir Thomas P'arrer who has started this official 
 grievance, and what is said here is strictly in reply to his 
 remarks. He has raised a subject which he had better
 
 FREE TRADE IX SUGAR. 6l 
 
 have left alone, for it is one on which he will most 
 assuredly be worsted. 
 
 Now we come to the great indictment against the 
 Government. They have published three Blue Books 
 without an index. Sir Thomas Farrer evidently thinks 
 that things were better managed during the short but 
 happy period when the Board of Trade ruled over the 
 sugar question. But then he forgets that they had washed 
 their hands of international negotiations. They had a soul 
 above such common work as that. Their labours were 
 confined to the periodical issue of " Memorandums " — 
 essays on the promotion of protection to foreigners. 
 Their indexes may have been far superior to those pre- 
 pared under the auspices of the Foreign Office, but the}- 
 neglected to indicate to the reader that every assertion of 
 the Board of Trade was answered in the pages of the 
 Blue Book. 
 
 The Government have negotiated in the dark, Sir 
 Thomas Farrer says. If so, the darkness must have fallen 
 over the subject during the Farrer memorandum period. 
 An examination of the library of Blue Books will show 
 that previous to that time every conceivable information 
 was in the hands of the Government, without which it 
 would have been impossible to carry on the complicated 
 negotiations which were on the point of success when the 
 Board of Trade intervened, darkness fell, and all was 
 still. 
 
 Next he complains that no one has been consulted but 
 sugar planters and sugar refiners. Well, even if this were 
 the case, which it is not, there would be nothing surprising 
 in applying for difficult and technical information about a 
 particular trade to the persons occupied in conducting that 
 trade. But, according to Sir Thomas Farrer, the Board of 
 Trade is the depository of all know'ledge, and its only
 
 62 FREE TRADE Ix\ SUGAR. 
 
 infallible source. He forgets that an exhaustive inquiry- 
 was held for two years, by a Committee of the House of 
 Commons, into every fact connected with this complicated 
 question. There were plenty of members on that Com- 
 mittee bitterly hostile to the negotiations for the abolition 
 of bounties, and consequently every corner was ransacked 
 for evidence to upset the inquiry. Sir Thomas Farrer 
 cannot, therefore, complain that he and his friends did not 
 have the amplest opportunity for throwing light upon the 
 subject. The evidence produced by them does not do 
 them much credit. Anyone who cares to read the minutes 
 cannot fail to see that the Board of Trade and their allies 
 made a very sorry show. One gentleman who presented 
 himself, especially to give information with regard to the 
 foreign statistics, absolutely did not know the English 
 equivalent for the Austrian weights. Theories were pro- 
 pounded by would-be experts in political economy, which 
 absolutely broke down under Mr. Ritchie's searching 
 cro.ss-examination. Everyone was consulted, and it was 
 quite clear, even in the minority report, that Sir Thomas 
 Farrer's friends had failed to make out a case. So much 
 for the accusation that the Government have consulted no 
 one. 
 
 Sir Thomas Farrer declares I am wrong in saying that 
 bounties have stimulated production."^ I think the most 
 uninstructed with regard to the sugar question would at 
 once admit, as a broad indisputable fact, that producers 
 who receive a bount}^ are artificially stimulated to produce 
 more than they would under natural conditions. They 
 have a special extra profit all to themselves, and the natural 
 
 * When I get further on in his book I find that he refutes himself 
 and confirms my statement ; for, at pages 107, 108, he describes the 
 ruin of Austrian manufacturers, owing to "the unnatural stimulus'' 
 of bounties having caused "a gkit."
 
 FREE TRADE IN SUGAR. 6^ 
 
 greediness of human nature inevitably leads them to make 
 as much of it as they can. Look at the figures to which 
 Sir Thomas Farrer is so fond of appealing, but which he 
 likes to arrange in his own way. In 1863-4 the European 
 beetroot crop was 349,000 tons ; in 1886-7 it was 2,730,206 
 tons. Can any one say that, the fact of heavy bounties on 
 beetroot sugar being now fully admitted, these bounties 
 have had nothing to do with this enormous increase in 
 production ? Certainly the people most capable of judging, 
 the beetroot producers themselves, distinctly declare that 
 their industry has been stimulated by bounties. 
 
 Then Sir Thomas Farrer says that I contradict this 
 assertion by maintaining that the abolition of bounties, 
 " coupled with the exclusion of some of our ways of sup- 
 ply," would not lessen supply nor raise price. I am not 
 responsible for the English, but I certainly maintain the 
 fact, which is in no way incompatible wath the other fact. 
 The beetroot industry is now firmly established as one of 
 the most valuable on the continent of Europe. It will 
 continue now to flourish, bounties or no bounties. But if 
 bounties go on, it will continue to do what it did in 1884, 
 over-produce, and injure itself as well as others. We don't 
 want over-production ; we dont want glutted markets. 
 They are bad for all, producers and consumers, merchants 
 and dealers, for they are invariably followed by a reaction 
 which goes as much too far in the other direction, and, in 
 the case of an artificially stimulated glut like this, they are 
 followed by the much more serious result of injur}- and ob- 
 struction to the natural sources of production. The other 
 point, the old one so often answered, which now figures in 
 curious language as " the exclusion of some of our ways of 
 supply," is thus well disposed of by I\Ir. Shepheard in his 
 able paper which is printed in the Appendix. " We now 
 come to the last proposition, * that prohibition of imports of
 
 64 FREE TRADE IN SUGAR. 
 
 bounty-aided sugar is a restriction on imports of sugar/ 
 This we deny, and, on the contrary, say that it is simply 
 the prohibition of bounties, not of sugar. It is the sub- 
 stitution of sugar without bounty for sugar with bounty. 
 If sugar wrapped in blue paper was excluded, whilst that 
 wrapped in white paper was admitted, there would be no 
 restriction on imports of sugar, but simply of the blue paper 
 wrappers. We secure the Free Trade wrapper for our 
 sugar by excluding the Protectionist wrapper of a bounty." 
 It is only necessary to add to this that, as there is plenty 
 of Free Trade sugar, and as the quantity of it will be 
 greatly increased by the conversion of protected sugar into 
 Free Trade sugar under the terms of the Convention, there 
 will be no reduction of supply. The price will, in any case, 
 be the price ruling throughout the world. It is marvellous 
 that any intelligent person should not see all this, or should 
 imagine that any one possessed of ordinary common sense 
 could possibly be deceived by such a transparent fallacy as 
 this which Sir Thomas Farrer is so fond of repeating, and 
 which he makes the sheet-anchor on which his whole 
 position depends. 
 
 The next criticism is on the figures quoted by Baron de 
 Worms, giving the amount of the bounties in various 
 countries. The figures are the result of a careful examina- 
 tion of the evidence furnished by the official statistics and 
 financial statements of the several countries, and have been 
 arrived at by one of the most eminent sugar statisticians in 
 Germany. In this case, therefore, it is not true to accuse 
 our Government of having consulted no one but sugar 
 planters and sugar refiners. Of course, however, Sir 
 Thomas Farrer wants to make out that they are all wrong. 
 He does not tell us where they arc wrong, or what the right 
 ones are. He has, by-the-bye, misprinted the figures, 
 which is a bad habit when figures are regarded as the
 
 FREE TRADE IX SUCAR. 65 
 
 stroiiij point. As to the flat contradiction of Baron dc 
 Worms' assertion, that the object of these bounties is to 
 develop the industry, it is only necessary to say that how- 
 ever the bounties originated, which is now a long time ago, 
 they have undoubtedly been allowed to continue after their 
 existence had been discovered, for the purpose indicated by 
 Baron de Worms. This is fully proved in every number of 
 every foreign journal connected with the beetroot industry 
 for the last twenty years, and in every debate which has 
 taken place in foreign Parliaments on the question. France 
 deliberately established an enormous new bounty in 1884, 
 because her industry could not otherwise compete against 
 the other European bounties. All this is on record in the 
 columns of "Ca^ Journal Officicl. ViWt what grounds has Sir 
 Thomas Farrer for assuming that the other bounties were 
 not intentional .'' Let him examine the evidence taken 
 before the Superior Council of Commerce in Paris in 1872, 
 and he will find it distinctly stated b\' one of the witnesses 
 that the bounty to the refiners, w hich had been going on 
 for long, was clearly foreseen and intended by those who 
 originated the system under which it was obtained. Why 
 should not the same have been the case with regard to duty 
 on the roots in Germany, duty on the density of the juice 
 in Holland and Belgiuin, and duty on the capacit}' of the 
 apparatus in Austria .'' We know from long experience 
 how carefully foreign Governments frame their fiscal legis- 
 lation with a view to encouraging industry, and it must 
 have been evident to the originators of these various laws 
 that they would inevitably give a bounty. The matter has 
 Httle bearing on the question, but I have undertaken to 
 reply fully to Sir Thomas Farrer's letters, and I find that 
 even on collateral points and in parenthetical remarks he is 
 generally wrong, ffe wants to know why the French 
 bount)' is calculated on the quantit\- produced. The reason 
 F
 
 66 i-Ki:i-: trapk ix slgar. 
 
 is that the fact of tlie bounty being obtainable on export 
 enables the producer to obtain it on his whole production. 
 He exports his surplus and makes the home consumer pay 
 him the full dut\--paid value on the remainder, he having" 
 paid less than the full dut}'. The same applies to German}-, 
 and therefore, to have been strict!)' parallel, the calculation 
 should have been made in the same \va)-. But it is quite 
 immaterial. The imi)ortant point is to know how much 
 artificial- profit is being made. Sir Thomas Farrer says he 
 is unable to prove or check these figures. He could if he 
 tried, but it would involve a considerable knowledge of the 
 European Sugar Trade, the fiscal SNstems and revenue 
 returns of the various countries, and a multitude of the 
 other details, in all of which the Board of Trade have dis- 
 played absolute ignorance. It is a curious fact, not 
 generally known, that e\-en the monthly statistics called 
 " the Board of Trade returns " are in great part returns the 
 details of which are absolutely unknown to the Board of 
 Trade. The statistical office of Her INIajesty's Customs 
 really compiles man}- of these figures — knows all about them,, 
 where the}- come from, what they mean. The Board of 
 Trade knows none of these things. It merely receives the 
 figures, puts its name on them, and gets the whole of the 
 credit. The Custom House does all the work and gets 
 none of the glory. I am glad to have this opportunity of 
 doing justice to a most able and industrious department, 
 which has too long been overshadowed by those who get 
 the lion's share, and, like the lion, get others to do the work 
 for them. 
 
 Because, as he confesses, he is ignorant of the origin of 
 these figures, and knows not how the}' are estimated, Sir 
 Thomas Farrer assumes that no one else can know. I 
 recommend him a course of reading for his leisure hours : 
 the De2itscJic Ziickcrindiistrie, \\\q Joiirrial des Fabiicants de
 
 I'RKE TRADE IN SUGAR. 6/ 
 
 Sucre, and the Si/crcric hidighie, arc published weekly ; 
 the Sncrerie Beige fortnightly. He will find in these 
 papers that facts and figures are not dealt with abroad in a 
 slipshod wa}% nor by those who are not fully up in their 
 subject. It would give him a new insight into statistical 
 methods and the examination of results. He will then 
 find that others have succeeded where he has either failed 
 or, as is more probable, has never made an effort. 
 
 Whatever may be his ignorance of detail, however, one 
 thing, he says, is certain, that the abolition of these 
 bounties of nine millions a year " must inevitably have the 
 consequence of diminishing the suppl}-, and raising the 
 price to the consumers of this countr}-." A foot-note says, 
 " See further on this point. Letter IV." It should have 
 been, " See further on this point, passim!' 
 
 The reply has been given so often that I will not 
 repeat it, because the context furnishes me with a new one. 
 Germany gave the other day a bounty of ^3,238,484 — her 
 own figures. That bounty has been greatly reduced, and 
 the German Go\-crnment has prepared a Bill for its total 
 abolition. Does an}- one suppose that the German 
 Government would do that if it thought that it would 
 reduce a production which has done more for the welfare 
 of the country during man)- years than an)- other industry? 
 It has been the salvation of German agriculture; it has 
 given emplo}'mcnt to untold numbers, both in the factories 
 and the fields — emplo}-ment also at the very time of \-car 
 when work is scarcest ; it has given a vast stimulus to the 
 makers of machinery, who have for }-ears done, and are 
 still doing, an enormous trade in the manufacture of the 
 very considerable plant necessary for sugar manufacture ; 
 it has greatly increased the head of cattle in all the 
 countries where it is carried on ; it has been one of the 
 largest customers to the artificial manure makers and
 
 68 FREE TRADE IN SUGAR. 
 
 importers. The railways, canals, and navigable rivers, are 
 loaded, sometimes with roots for the factory, sometimes 
 with sugar for export or home consumption, sometimes 
 with pulp for cattle, often w ith machinery for new factories, 
 or new machinery for old ones. Look, too, at the vast 
 consumption of coal necessary to evaporate the juice 
 expressed from nine million tons of roots, and the employ- 
 ment involved in the production and carriage of such a 
 quantity of fuel. Is the German Government deliberately 
 aiming a blow at such an industry as this ? No ; the 
 German Government, like the German industry and its 
 literary organs, knows a good deal more about sugar and 
 the sugar question than Sir Thomas Farrer and the Board 
 of Trade ever dreamt of. The statistician of that depart- 
 ment could not even tell the Select Committee \\hat 
 English weight was equivalent to a metrical centner, so it 
 is clear that the department had not gone deeply into the 
 facts and figures connected with this vast industry. It has 
 no means of judging, therefore, what will happen to the 
 industry w hen it loses the remainder of its bounty. That 
 the German Government does know is quite clear from the 
 action it has taken, and it is evident that its views on a 
 matter with which it is perfectly conversant are diametri- 
 cally opposed to those of Sir Thomas Farrer. 
 
 We come now to British figures. Baron De Worms 
 quoted the percentages of cane and beet in our imports 
 since 1852. Sir Thomas Farrer puts a foot-note : " I have 
 not checked them, and cannot find theni in the published 
 returns." He evidently regards any figures which do not 
 bear the Board of Trade mark as inevitably stamped with 
 the brand of inaccuracy. He could have checked them in 
 five minutes, but he did not do so. He prefers to remain 
 ignorant, and throw a vague doubt upon them in a foot- 
 note.
 
 FREE TRADE IN SUGAR. 69 
 
 He goes on to say that these figures have nothing to 
 do with the matter, because, in point of fact, the production 
 of cane sugar has not diminished. Yes, but how much 
 has beetroot increased in the last twenty to twenty-five 
 }-cars ? It has increased eightfold. The figures quoted 
 by Baron de Worms have, therefore, a great deal to do 
 with the subject. 
 
 Then come some West Indian figures, which Sir 
 Thomas Farrer condemns because they are hypothetical. 
 That all depends on the value of the hypothesis, and that 
 he declines to examine. He takes the opportunity, how- 
 e\er, of branding the West Indian proprietors as "an 
 interest seeking Protection." The word with the capital P 
 is always brought in wherever possible, and especially 
 when a serious discussion has to be avoided. Bounties are 
 Protection to the foreign producer on British markets. Sir 
 Thomas Farrer considers that those who desire this pro- 
 tection removed are " seeking Protection." He never tells 
 us why or how, but he lays it down as one of the dogmas 
 which, as they are published by the Cobden Club, must be 
 accepted as infallible. 
 
 So far .Sir Thomas Farrer seems to have broken down 
 about the facts. But he, on the contrary, seems quite 
 pleased, for he opens his next subject by saying, " This 
 disposes, so far as I can find out, of all the facts, or 
 supposed facts, relating to the sugar trade which arc 
 produced by the Government in support of the change 
 which they propose." As I have shown, his method of 
 " disposing of" the figures is by saying that he never heard 
 of them, cannot check them, is unable to prove them, can- 
 not find them in the published returns, and so on. His 
 remarks and criticisms I have shown to be, in every case, 
 erroneous. The figures could have been checked, and the 
 origin and accuracy of them ascertained if he had desired.
 
 ■JO FREE TRADE IN SUGAR. 
 
 But he only desired to discredit them, and therefore it was 
 better not to ascertain their accurac}-. But what does Sir 
 Thomas Farrer mean by saying that these are the only 
 facts and figures in support of the change which the 
 Government proposes ? There is a great library of Blue 
 Books on the subject, extending back to the time when 
 the international negotiations began, in 1862. Those 
 negotiations have gone on ever since, except during Sir 
 Thomas Farrer's short and useful reign. During the 
 whole of that time successive Governments were accumu- 
 lating information on the subject, all of which is on record 
 in the Blue Books. Then came the Select Committee, the 
 minutes of its evidence, and its reports. And }-et the 
 Government is now accused by Sir Thomas Farrer of taking 
 action on insufficient information. Was there ever a more 
 outrageous assertion ? The Government arc, in fact, 
 merely continuing negotiations which were nearly success- 
 ful ten years ago, but which were suddenly upset by the 
 transfer of the conduct of the question from the Foreign 
 Office to the Board of Trade, a transfer which thoroughly 
 answered its purpose of getting rid of a troublesome 
 business, and allowed the sugar industries no alternative 
 but to take the advice of the Board of Trade and combat 
 bounties by a reduction of wages. 
 
 In spite of all this mass of information, accumulated 
 during twenty-five years of constant negotiation, and an 
 inquiry by a Parliamentary Committee, which extended 
 through two sessions. Sir Thomas Farrer says that 
 " Government ought to be called on to give a new 
 exhaustive report upon the present condition of the 
 trade." He wants to show, what every one knows, that 
 the trade is not dead. If it were there would be no 
 outcry against sugar bounties. Dead people give no 
 trouble.
 
 rRKK TKADI'; I\ SUGAR. 7 1 
 
 He bc<^in.s liis " attempt to slate some facts ^' by com- 
 paring production in 1872 with that in 1886. He has 
 chosen years favourable to the complexion he wishes to 
 put on the comparison. But it does not matter, because 
 the fact of our having survived is no argument against 
 remedying such an evil as bounty-fed competition. He 
 cannot show from these figures what struggles sugar pro- 
 duction has gone through in competing against an artificial 
 profit, nor what struggles it ^\"ill ha\-e to face in the future 
 if this artificial profit is to continue the main factor in the 
 trade. It is, therefore, hardly worth pointing out errors in 
 his statement, or in the inference he draws from it. I think 
 he will find, if he examines the sources from which these 
 figures are drawn, that the list of British cane sugar \\'hich 
 supplies his figures for 1872 omits some countries which are 
 included in the list for 1886. In drawing his inference he 
 forgets that large sugar industries, such as those in Australia 
 and the Sandwich Islands, have sprung up since 1872, the 
 first being for many }-ears independent of bount}' influences, 
 and the second being stimulated b}- the fact that its sugar 
 was sold in the United States at the duty-paid price with- 
 out having paid any duty. However, these are only minor 
 points. It does British colonial enterprise great credit to 
 have held its own so many j-ears against such long odds. 
 But the c^uestion for the Government to consider is the 
 future. It is only during these last few years, since 1883, 
 that the great glut has arrived. If the bounties continue 
 the crisis \\ill not be removed, but aggravated. The German 
 Government see this perfccth' well, and so do many other 
 people on the Continent. The British Government have, 
 therefore, done valuable service, even to the beetroot trade 
 itself, by helping to bring about this international agree- 
 ment. 
 
 Sir Thomas h'arrcr speaks of Java liaving increased its
 
 72 FKKE TRADE IN SUGAR. 
 
 production " in spite of the abolition of a bounty on export 
 which formerly existed." Does he not mean the regu- 
 lations by which the Ja\a planters were compelled to send 
 their sugar to Holland — regulations which they were 
 thankful to get rid of, and the abolition of which did much 
 to give an impulse to their industry ? 
 
 Of course, there are other causes operating on the sugar 
 trade, just as there are on everything else in the world. 
 No one is so foolish as to maintain that the only influence 
 which has been exercised on the sugar trade of the world 
 has been that of bounties. Demerara has increased its 
 production because it in\ented a new kind of sugar which 
 has been very popular, and has always commanded a high 
 price. But even Demerara was in a bad wa}- in 1884, when 
 the big beetroot crop drove prices down to ruination point. 
 It does not follow, because production docs not immediatcK- 
 fall off, that therefore there is no suffering or difficult}- or 
 danger. Producers keep going long after those troubles 
 have shown above the horizon. They even increase pro- 
 duction in bad times, so as to reduce working expenses. 
 Sir Thomas Farrer does not tell us who drew the inference 
 from liaron dc Worms' figures, that beetroot is killing cane 
 sugar. There is no need to draw an\- inference at all 
 from the figures. Thc\- simply announce the fact that 
 beetroot has to a great extent supplanted cane in our 
 markets. In refined sugar alone we now have 350,000 
 tons of foreign refined beetroot where we formerly had 
 none. And yet Sir Thomas Farrer thinks that he has 
 disposed of Baron de Worms' figures because he shows that 
 beet sugar has not killed cane sugar. 
 
 Cane sugar, he points out, has gone elsewhere. Cer- 
 tainly it has, but when the bounty-fed glut comes, such as 
 that of 1884, it does not escape the effect of it. If sugar 
 becomes a drug in the market in Europe, so it does in
 
 FRKK TRADK I\ SUCAR. 73 
 
 America. Even Australia now feels it, and cries out 
 loudly for the abolition of bounties. He says his figures 
 prove that cane sugar can hold its own. All that they 
 prove is that it has held its own, but the)- do not demon- 
 strate, which is the whole point of the question, whether 
 it can stand another year like 1884. Such a year will 
 speedily come again if bounties continue. 
 
 The next paragraph begins : " Beet sugar, then, has not 
 displaced cane sugar in the world generalh'." This is a 
 curious conclusion to come to when, as I have shown, it 
 appears that the beetroot production has, during the last 
 twenty-five years, been multiplied b\' eight, and that it 
 now constitutes half — more than half — the total visible 
 production of the world ; whereas then it was but a drop 
 in the ocean. I am not very old, and yet I recollect the 
 first sample of beetroot sugar ever seen in Mincing Lane. 
 Some slight change must have taken place since then in 
 the relative proportions of beet and cane, although Sir 
 Thomas Farrer does lay it down as one of his dogmas to 
 be swallowed b}- all believers, that " beet sugar has not 
 displaced cane sugar in the world generall}'." \^'h\', exen 
 the United States have imported 25,000 tons of beetroot 
 sugar since the ist of Januar\-. Sir Thomas Farrer must 
 give us some better statistics than those contained in Mr. 
 Picton's return before he will make us believe this new and 
 startling information. 
 
 We are then told that "beet growers are at this moment 
 much alarmed at the future possibilities of cane sugar, 
 when the same science shall have been applied to its 
 manufacture as is now applied to beet.'' How carefull}' he 
 suppresses the real reason for their alarm, which he will 
 find full}- stated in the foreign journals which I have 
 already recommended to his notice. He will there find it 
 fully set out, that the abolition of bounties will enable
 
 74 FRKK TRADE IX SKiAR. 
 
 capitalists t() embark in undertakings in cane sugar 
 countries which they would never think of risking till 
 bounties were out of tlie way. 'I'his will lead to improved 
 culture, improved manufacture, increased production, and 
 reduced cost. This is exacth' what we ask for in the 
 name of Free Trade, and which Sir Thomas Farrcr opposes 
 for reasons best known to himself, but which he has uttcrh' 
 failed to expound successfully in this or an\- other book. 
 
 Undoubted 1}' there are many causes for the production 
 of beetroot sugar. No one ever imagined that it was pro- 
 duced because there happened to be bounties. I myself 
 took a leading part, in the year 1871, in advocating the 
 introduction of the crop into this country. Under Free 
 Trade conditions it is a crop and an industry which would 
 be the salvation of the British farmer, and a godsend to 
 the rural population, more especially in the winter months. 
 It furnishes an excellent food for cattle. The high culti- 
 vation necessary for its growth greatly improves the land, 
 and thus increases the yield of wheat. All these facts, in 
 addition to Sir Thomas Farrer's eulogium, prove that we 
 are losing a most valuable addition to our agricultural 
 enterprises. But would anj'one in his senses embark in 
 this most desirable pursuit, so long as his Continental 
 competitors received a bounty ? It turns out, therefore, 
 that Sir Thomas Farrer's .beetroot eulog)^ is one more 
 argument, and one of the strongest, for the abolition of 
 bounties. I am grateful to him for having brought up a 
 matter which has ahvax's appeared to me of the very 
 highest importance to this countr}-, and which is much 
 more urgently called for in the present condition of our 
 agricultural industry than it was when I took it up in 
 1871. 
 
 This leads Sir Thomas T^arrer on to another point, 
 which also turns out on examination to tell strongly
 
 FRKK TRADi: IN SUOAK. 75 
 
 against him, and to cry out loud for the aboHtion of 
 bounties. He is still seeking for reasons to account for the 
 production of beetroot sugar, and for its beating cane 
 sugar. He declines even to recognise the fact that beet 
 beats cane because it receives a bounty, though he now 
 fully admits the existence of the bounty. He therefore 
 argues that cane is beaten because " whilst capital, science, 
 and industry liave done their utmost for beet, cane has not 
 generally had the same advantages." This is tb'^ main 
 ground on which our colonial producers demand the 
 abolition of bounties. The very reason which has enabled 
 the beetroot industry to apply with lavish hand every im- 
 provement of modern science, has stood in the way of 
 improvement in cane sugar. The beetroot growers and 
 manufacturers, by means of the extra profit obtained by 
 the bounty, have had ample capital to embark in costly 
 machinery, expensive experiments, and generous farming. 
 The colonial producer, on the other hand, has had hanging 
 over his head the deterring influence of a bounty-fed com- 
 petition. He hesitates to embark capital in improvements 
 and extended cultivation, so long as bounties continue. 
 He knows that they must bring back a recurrence of such 
 disastrous years as 1884. He wants Vree Trade, but Sir 
 Thomas Farrer won't let him have it. 
 
 We now jump to a different subject. Sir Thomas 
 Farrer tells us that loaf sugar has almost disappeared, and 
 has been replaced by lump sugar. We who manufacture 
 that article alwa}'s thought that the two words were 
 synonymous. However, it is of no consequence, as the 
 matter appears to have no connection with the abolition of 
 bounties. But when Sir Thomas P^arrer says that loaf 
 sugar has almost disappeared, he wanders considerably 
 from the path of accuracy, for it certainly appears to us 
 who make it that the consumption goes on increasing
 
 'jG FREE TRADE IN SUGAR. 
 
 rapidl}'. In correction of another statement, it may be 
 mentioned as an historical fact, that in 1875 the French 
 bounty on loaf sugar, which then reached its zenith and 
 immediately declined rapidly, had succeeded in shutting up 
 every loaf-sugar refinery in this country, only one of which 
 survived the shock. Of course new ones have sprung up 
 since the bounty was reduced, for the competition has now 
 been transferred to crystallised and granulated sugars, as 
 I foretold in my c\-idence before the Select Committee in 
 1879.' 
 
 Sir Thomas Farrcr explains that crj'stallised and 
 granulated sugars are made at the place of original 
 production, and he desires his readers to infer that it is 
 for this reason, and not because of the bount)', that they 
 interfere with the British refiner. But it is the extra profit 
 of the bounty which hurts us, not the production of the 
 sugar. We have for }'ears asserted that it is not the 
 importation of foreign sugar that we object to, but the 
 bount}', which destroys free and open competition. 
 
 The manufacture of sugar is undoubtedly improving 
 all o\'er the world, as Sir Thomas Farrer explains, but 
 what has this to do with the abolition of bounties ? 
 He sa}-s it shows ho\v dangerous it would be to keep 
 up an industr}' by artificial means. We, on the other 
 hand, sa}' that it is dangerous to all parties, especially 
 the consumer, to keep down an industry by artificial means. 
 We aslc, therefore, that the artificial disturbance caused 
 b}' the bounty shall be removed, and Sir Thomas Farrer 
 condemns this removal on the ground that it would 
 be keeping up an industry b}' artificial means. He 
 desires to mystify his readers, and he is very likely to 
 succeed with a certain class, but not with those who take 
 the trouble to think. 
 
 Sir Thomas Farrer declines to gi\-c recent Board of
 
 FREE TRADE IN SUGAR. 7/ 
 
 Trade returns, which would have shown tlic cnoruKJus 
 increase in the importation of foreign refined su<;ar, 
 because, he sa\-s, he is not quite sure that raw and refined 
 sugar have the same meaning now which the}- had in 1880. 
 If he hkes to inquire at the Custom House, where the 
 returns are made up, he will find that there is just as 
 distinct a line of demarcation between the two kinds, and 
 one identicalK' the same now as it was then. The 350,000 
 tons of refined sugar which we now annually import from 
 abroad are, in fact, more absolutely refined than the (c\v 
 thousand tons which we imported in the old da}'s before 
 bounties, and which were taken for transhipment to (jther 
 ports. 
 
 Now we come to the figures by which Sir Thomas 
 Farrer proves that sugar refining, like cane sugar pro- 
 duction, is not dead. I might quote him by saying that, 
 with regard to these figures, " it would be satisfactory to 
 know where they come from, how they are estimated ; " 
 but it is not worth while, though I happen to know that, 
 in regard to one of the centres of the industry, the figures 
 were procured from a person who had no means of 
 knov.'ing the facts but simply guessed at them, and that 
 consequently they are incorrect. Ikit it is absoluteK* 
 immaterial, because the larger the industry the more 
 important it is to defend it against such a competition, 
 such a subversion of every principle of Free Trade, as 
 is involved in the protection of foreigners on British 
 markets by means of bounties. 
 
 We who ought to understand our own business are 
 told, by one who cannot possibly have more than a most 
 superficial knowledge of it, this astounding piece of news, 
 that " if refining is diminishing, it can scarceh' be due to 
 bounties, since the refiners receive in the price of the 
 unrefined \'ellow beet sugar full compensation for the
 
 78 FREI-: TRADE IX SUCAR. 
 
 bounties on foreign wliite sugar." It is, to us who are in 
 the trade, almost impossible to believe that anyone could 
 for a moment conceive an idea so absolutely devoid of all 
 reasonable foimdation. Our opponents must indeed be hard 
 upforarguments when the\'have recourse to such a miserable, 
 or rather such a comic argument as this. We are competing 
 against foreign refiners, whose raw material is this very 
 " unrefined yellow beet sugar " of which Sir Thorns Farrer 
 speaks. If we buy it, we gi\e the same price for it as 
 our foreign competitor does, and we have to pay the 
 carriage on it. We both turn it into refined sugar, on 
 \\hich he gets a bounty and we do not ; and yet this 
 "unrefined yellow beet sugar," which we both buy at the 
 same price, but on which we ha\-e to pay the carriage, 
 compensates us in some mysterious way, only known to 
 Sir Thomas Farrer and his friends, for the bount\' which 
 our foreign competitor enjoys. It is trifling with intelligent 
 readers to advance such arguments as these. 
 
 It is remarked in a foot-note to this, though with what 
 object is not apparent, that according to report the sugar 
 trade is now doing much better. Why ? Because there 
 was a short beetroot crop, very slightly short, but just 
 enough to give a little temporary relief from the fierce 
 onslaught of foreign competition. 
 
 The labour emplo}-ed b)- trades subsidiary to sugar 
 refining would, according to Sir Thomas Farrer, be em- 
 ployed in any case, because " other trades of a like nature 
 are equall}' called into existence by the businesses to 
 which the emplo}'ment of foreign sugar gives rise." Does 
 Sir Thomas Farrer seiiously believe — or is he only throw- 
 ing dust in our eyes— that foreign refined sugar calls into 
 existence any " businesses " \\ hich would not be equally 
 called into existence if the refined sugar were made here ? 
 
 He is pleased to have demonstrated " that the business
 
 FREE TRADE IN SUGAR. 79 
 
 of rcfinini;" is not dead in Enc,daiid." No one ever said it 
 was. But he admits that " British refineries have suffered 
 loss of profit in recent }-ears ; " though he adds, without a 
 shadow of foundation for the statement, " but not more 
 than their foreign bount)'-fed competitors have notoriously 
 suffered." Where are the usual array of figures in proof 
 of this most erroneous statement.' It is notorious, on the 
 contrary, that refiners in all European countries, except the 
 United Kingdom, have been making large fortunes out of 
 the bounty. 
 
 Now we come to that celebrated red herring, " the jam 
 argument." It has been disposed of many, many times, 
 but here it is again, though none of the replies to it have 
 ever been dealt with or even referred to. Is it the little 
 sixpence per hundredweight, by which the British refiner 
 is undersold, that brings the vast jam trade into existence ? 
 Or is it the low prices for raw sugar, which did not begin 
 till 1884? If the former, the thing is absurd, because such 
 an amount as that only represents the ordinary daih' 
 fluctuations of the market, and can have no possible effect 
 on the use of sugar. If the latter be what Sir Thomas 
 Farrer means — there is no other alternative — then all this 
 wonderful expansion in the jam industry must have taken 
 place in the last four years. But if Sir Thomas Farrer 
 examines the yearly consumption of sugar, he will find 
 that the rate of increase has actually been less since 1884 
 than it was before. If the jam industry expanded before 
 1884, it did so for other reasons than those put forward by 
 him. The real reason was, of course, the abolition of the 
 sugar duty. But .Sir Thomas Farrer wishes it to be 
 believed that bounties have had something to do with it, 
 so that he may marshal his figures and show that the 
 destruction of the refining industry would be the salvation 
 of the jam industr}-. A letter appeared in the Tinits some
 
 80 l-KIiE TRADE IN SUGAR. 
 
 time ago froin Messrs. Keiller and Son, the well-known 
 jam, marmalade, and confectioner}' manufacturers, contra- 
 dicting all this ; but even such a contradiction has no 
 effect on Sir Thomas Farrer when he gets hold of a 
 favourite red herring. It has done him great service and 
 made an immense impression on that curious structure 
 called the public mind. He will no doubt go on hammer- 
 ing away at it as long as it dravvs. He quite ignores also 
 the fact, so frequently proved, that sugar will be just as 
 cheap after bounties are abolished as it is now, probably 
 ■cheaper, since there will be a great expansion in the 
 production of cane sugar, which, by the wa}', all good 
 jam makers much prefer to beetroot. 
 
 It is curious that Sir Thomas Farrer is obliged to have 
 recourse to a Vienna paper in order to enlighten his readers 
 as to the state of our home trade, and neglects to examine 
 or quote from foreign papers when they deal with matters 
 connected with their own industry, w ith which they must 
 inevitably be better acquainted than Sir Thomas Farrer. 
 
 I'he use of sugar in brewing and cattle feeding has, in 
 the opinion of Sir Thomas Farrer, an important bearing 
 on the question of bounties. Does he mean that less sugar 
 would be used for these purposes if there were no bounty ? 
 If so, the idea is so absurd as to be quite unworthy of 
 •discussion. Again I repeat, that sugar will be as cheap, 
 if not cheaper, after the abolition of bounties than it is 
 now. Moreover, brewers must have cane sugar, and so 
 must cattle. The abolition of bounties will therefore be 
 a. positive advantage to both those interests. And yet 
 Sir Thomas Farrer laments that these important "facts" 
 are carefully concealed from the Government by the 
 cunning representatives of the sugar trade ; " they are 
 not among the promptings of the refiners and West Indian 
 planters, to whom alone Ministers seem to listen." The 
 
 I
 
 FREE TRADE IN SUGAR. 8 1 
 
 real fact being that these " facts " have been thoroughly 
 exposed long ago, and shown to have no foundation. As 
 to prompting the Government, 1 never, during the long 
 course of my experience in this question, saw a Govern- 
 ment so ready to take its own line, so absolutely indepen- 
 dent of all species of prompting. This is very natural, 
 considering the great mass of accumulated information and 
 evidence which they have before them. 
 
 Sir Thomas Farrer next turns his attention to con- 
 sumption and price, but his figures are not so cleverly 
 handled as usual. He tries in general terms to make 
 out that the low prices, which of course he desires his 
 readers to suppose to arise from bounties, have enormously 
 increased consumption. The consumption was greatly 
 increased by the gradual reduction and final abolition of 
 the duty. But if he desires to deal with the really low 
 prices brought about by the over-production of beetroot 
 sugar, which only began in 1884, then, as I said just now, 
 he will find that the rate of increase in consumption has 
 not been greater since that date than it was before. As 
 a matter of fact, curiously enough, the rate of increase has 
 been rather less. 
 
 The cost of sugar to foreign consumers is, he urges, 
 *' at least twice, and often probably much more than twice, 
 what it is in England." Well, that entirely depends upon 
 the amount of duty levied upon it. Whatever that amount 
 may be is the only measure of the increased cost to the 
 foreign consumer. In fact, Sir Thomas Farrer is merely 
 singing the praises of the abolition of the duty in this 
 country ; but he wants his readers to believe that all the 
 benefit arising from that measure is the result of our en- 
 joying bount}'-fed sugar. If he does not mean that, what 
 is he driving at? "It is folly," he says, "to endanger 
 such results for the purpose of protecting industries so 
 G
 
 82 FREE TRADE IX SUGAR. 
 
 comparatively small and so precarious as sugar refining 
 and West India planting." The results to which he refers 
 are, as I have said, purely results of the abolition of the 
 duty. By " protecting " us, he means abolishing the 
 bounties. 
 
 The abolition of bounties will, as I have shown, un- 
 doubtedly give us a better and more uniform supply of 
 sugar, and will, therefore, intensify instead of endangering^ 
 the advantages we now enjoy from having duty-free 
 sugar. The abolition of bounties will also relieve the 
 sugar refiners and West India planters from Sir Thomas 
 Farrer's imputation of being " small " and " precarious " in- 
 dustries, because they will expand in size and strengthen 
 in constitution. This, like so man}' of Sir Thomas 
 Farrer's contentions, is what people call a specious 
 argument. I should be disposed to call it b}- a stronger 
 name. I cannot imagine that those who advance such 
 arguments really believe in them. It is still more diffi- 
 cult to appreciate the position of those readers who not 
 only swallow such arguments but call them " weighty." 
 
 But I find, in the next paragraph, that I am quoted in 
 support of these fallacies. I must first correct the quota- 
 tion. What I said was that a short beetroot crop had on 
 more than one occasion actually caused a rise of 50 per 
 cent, in the value of sugar. This was in proof of the con- 
 tention that the consumer is becoming more and more 
 dependent on the beetroot crop. Sir Thomas Farrer 
 now asks, if this be so, how much more would the 
 stoppage of the bounty or the exclusion of the bounty-fed 
 sugar affect price .■■ The answer is obvious. A short crop 
 reduces the supply of the world, and, therefore, raises 
 prices. The abolition of bounties will not reduce the 
 supply of the world, nor will the prohibition of bounty- 
 fed sugar, and, therefore, prices will not be affected by either
 
 FRKE TRADl-: IX SL'CAK. 83 
 
 of these contingencies. Ai^ain, I ask, is such a fallacy 
 really believed by those who propound it, or is it all make- 
 believe ? And yet the chapter ends with the jubilant cry, 
 that these alone are sufficient reasons for rejecting the 
 Convention, and that the case against it has now become 
 overwhelming. Those who are asking for arguments with 
 \vhich to defeat the Government must be thankful for small 
 mercies if these are the best they can get.
 
 H 
 
 CHAPTER X. 
 
 REPLY TO THK FOURTH REJECTED Lin'TER. 
 
 A FOOTNOTE at the end of the last chapter catches my eye. 
 The fact that a shght reduction in the enormous beetroot crop 
 is now sufficient to raise prices 50 per cent, is caught at by 
 Sir Thomas Farrer as being a dangerous admission, because 
 if there were no beetroot we should only have cane sugar 
 to depend upon. Quite so, and if there were no cane we 
 should only have beetroot to fall back upon. Let bounties 
 go on long enough, and we shall soon see what even an 
 approach to that state of things will bring about. As it 
 is, we are now so dependent on beetroot that every fluctua- 
 tion in the crop causes a much more violent fluctuation in 
 the market. This is an artificial state of things which only 
 the abolition of bounties will remedy. We want to see a 
 cane sugar crop big enough to make us quite indifferent 
 to the changeable weather on the Continent. This is 
 necessary if the consumer is to get a steady supply of cheap 
 sugar. But Sir Thomas Farrer is determined that we shall 
 not have that if he can help. He ends his footnote by 
 talking about the old times (1779), when we were depen- 
 dent entirely on West India sugar, and therefore a cyclone 
 caused a big rise. This is exactly my case. Let us have 
 Free Trade in sugar, and then market prices will not be 
 governed by one particular and comparatively small area 
 of production."^ 
 
 • Since writing the above a "boom" has occurred in the sugar 
 market, entirely owing to our dependence on the bounty-stimulated 
 beetroot crop. A trade circular of March 29th says : " It is now 
 evident, as was foreseen might be the case, that the holders on the
 
 FREE TRADE IX SUGAR. 85 
 
 This new cliaptcr i.s all about America. Sir Thomas 
 Farrer's point is that if " the cheap French sugar" is pro- 
 hibited in Europe, because h'rance won't agree to the 
 Convention which she was so active in negotiating; — an 
 improbable supposition — this " cheap French sugar " will 
 then go to the United States and displace " inferior cane 
 sugar." France will have a large market and will snap her 
 fingers at everybod\-. But Sir Thomas h'arrer is evidently 
 not aware that France wants to export refined sugar, and 
 those kinds of sugar which arc absolutely excluded from 
 the United States by prohibitive duties. Things will, there- 
 fore, not be quite so easy for France as Sir Thomas Farrer 
 imagines. This disposes of the principal contention in this 
 chapter. 
 
 Please note that sugar refining in the United States 
 employs 150,000 men, as quoted from an official report 
 by Sir Thomas Farrer ; and that the United States do not 
 import bounty-fed refined sugar. The number of men 
 estimated by Sir Thomas P'arrcr to be emplo}-cd b\- 
 British refiners is 4.260. The difference in the quantity 
 turned out in the two countries must indeed be large if the 
 American refiners emplo}- 150,000 men against our 4,260. 
 It is more than thirt}--five times as many, and this in a 
 country where labour-saving is carried much further than 
 Avith us. How does Sir Thomas Farrer explain this 
 extraordinary discrepanc}- between two countries whose 
 consumption is almost identical ? 
 
 Note again that this official report proceeds with its 
 description of the United States refining industr}- as 
 follows : — " It is one in which large fortunes ha\-c been 
 
 Continent have the immediate future of the market much in their 
 hands, owing to the reduction of stocks in Europe and America, as 
 well as to the decrease in some of the leading sources of cane pro 
 duction."
 
 86 FREE TRADE IN SUGAR. 
 
 made under a system of drawback rates, which for this 
 reason is not hkely to be abandoned. That the drawback 
 rates at present allowed act as a bounty cannot be denied." 
 l^ut at page 64 Sir Thomas Farrer says : — " British 
 refineries have suffered loss of profit in recent years, but 
 not more than their foreign bount}'-fed competitors have 
 notoriously suffered." Here we have Her Majesty's 
 Minister at Washington (Commercial, No. 15, 188S; No- 
 141, page 91) telling us exactly the reverse of what Sir 
 Thomas Farrer tells us. The American refiners are making 
 large fortunes out of a bounty which used to be two shillings 
 per hundredweight, but which is now reduced to less than 
 one, and yet we are told that foreign refiners, many of whom 
 receive much higher bounties than the Americans, are 
 suffering from loss of profit just as severely as the British 
 refiners. Of course we who are in the trade know that 
 this is untrue, but it is satisfactory to drop upon an official 
 document which contradicts it so thoroughly. 
 
 Having arrived at the conclusion that the United States 
 are about to play an important part both as producers and 
 refiners, Sir Thomas Farrer proceeds to say that, as regards 
 export bounties, they are in precisely the same position as 
 the bounty-giving countries of Europe. This is an error ; 
 there is no export bounty on the sugar produced in the 
 United States, and a very minor one now on. the sugar 
 refined from imported sugar. This small remnant of a 
 bounty will undoubtedly be done away wath as soon as the 
 United States Government is made to understand that it is 
 a bounty, and that matters will be facilitated by its abolition. 
 The United States Government must be fully alive to the 
 advantage which would accrue to their own sugar-growers 
 by the abolition of bounty-fed competition. This is of still 
 greater importance if Sir Thomas Farrer is right in 
 assuming that sugar production is about to increase
 
 FREE TRADE IN SUGAR, 87 
 
 largely in the United States. Producers there do not 
 desire that the market should be periodically glutted by 
 an artificially stimulated production. They will, therefore, 
 do all they can to promote the present effort for the 
 abolition of bounties. It is not at all likely, therefore, 
 that the United States will ever come under the penal 
 clause. 
 
 The error is repeated here as to the proposed bounty 
 to counterbalance the loss of duty to the Louisiana planters. 
 It is not an export bounty. 
 
 Sir Thomas Farrer paints an alarming picture of this 
 country " quarrelling with her own best friends," and 
 "depriving herself of the produce — all the contingent 
 produce — of that great country." The answer, in addition 
 to that which I have already given, is that the production 
 of the United States is not more than a tenth part of its 
 consumption, and that, therefore, it will be a very long 
 time before it becomes an exporter of its own sugar. 
 Probably that time will never arrive. 
 
 He speaks of the United States making this country a 
 free gift of sugar. This is nonsense. Sugar is sold at the 
 market price of the day, whatever may be its origin. 
 There are never two prices in the same market, nor is 
 sugar ever given away. 
 
 Then comes the great question of the most-favoured- 
 nation clause. It is curious that Sir Thomas Farrer 
 should have raised this important point a propos of the 
 United States ; because it happens to be the United States 
 that have put the very rational construction on this clause 
 which would not only make it inoperative in the case of 
 bounties, but might make it positively instrumental in 
 compelling their abolition. 
 
 The whole question turns upon the interpretation to be 
 put upon the most-favourcd-nation clause. The wording
 
 88 FREE TRADE IN SUGAR. 
 
 of the clause is usually uncanditional, but it seems that 
 the United States Government have had occasion, in past 
 times, to import conditions into its interpretations. 
 
 Much more recently our own leading statesmen have 
 done the same. A debate which took place in the House 
 of Commons in 1878 gave rise to ver\- interesting ex- 
 pressions of opinion on this point. 
 
 The Attorney-General said : " Now, what was the 
 meaning of the 'favoured-nation clause'.' He took it that in 
 whatever language that clause might be expressed — and 
 the language of the different treaties Avas not always the 
 same — but whatever language might be used, the real 
 meaning was this — ' You, Great Britain, shall treat us in 
 the same way as you treat the most favoured nation with 
 whom you have a treaty ; that is to say, you shall treat 
 us as well as you treat them under the like circnvistances' " 
 
 The Solicitor-General observed "that the 'fa\oured- 
 nation clause ' assured equality of rights to all the parties 
 concerned, but the mistake was to say that that involved 
 identity of treatment." 
 
 Mr. Herschell " quite agreed with the honourable and 
 learned Solicitor-General that equalit\- of right did not 
 necessarily mean identity of treatment. But he did sa}' 
 that equality of right did mean identity of treatment under 
 siin liar circu instances. ' ' 
 
 Mr. Gorst said : " What we had promised to do was 
 not to establish any prohibition of importation or transit 
 against the produce of any country with which we had 
 entered into treaties containing the ' most-favoured-nation 
 clause,' which would not, under like ciirumstances, be applic- 
 able to all other countries." 
 
 The Chancellor of the Exchequer said that " this 
 country was bound to treat all foreign nations alike — but 
 that was, alike under similar circumstances'''
 
 FREE TRADE IX SUGAR. 89 
 
 This question of the most-favoured-nation treatment will 
 be found fully dealt with b}' the Select Committee of the 
 House of Commons on Sugar Industries, both in the evi- 
 dence taken before the Committee and in its Report. 
 
 In 1879 Professor Sheldon Amos, with Mr. W. P. B. 
 Shepheard of Lincoln's-Inn, gave an opinion on the subject, 
 in which they came to the conclusion, after careful examina- 
 tion of all the points, " that imports of sugar into this 
 country may, without contravening the favoured- nation 
 clauses of existing commercial treaties, be distinguished as 
 to countries of origin wherein bounties on export arc or 
 are not obtainable, and a countervailing duty levied on 
 sugar imported from countries where export bounties are 
 obtainable, whilst sugar from all other countries is admitted 
 duty free." . . . "In conclusion we beg to state that our 
 opinion is based upon the broad principle that equality of 
 fiscal condition, as between either Treaty Power and an\- 
 third country the most favoured by the other Treat}' 
 Power, is the object of favoured-nation clauses, and that 
 the one who destroys such equality cannot appeal to the 
 treaty against the act necessitated to reinstate that 
 equality." * 
 
 In a speech delivered at a public meeting at the Mansion 
 House, in 1880, Mr. Arthur Cohen, Q.C., M.P., said :— 
 " Again, there has been raised a cry about the difficulties 
 to be overcome with respect to the ' favoured-nation ' clauses. 
 On this point, however, I venture to say that no law\-er of 
 much eminence will be found to declare that ' favoured- 
 nation ' clauses preclude our right to levy countervailing 
 duties." 
 
 The " suggestion " to which Sir Thomas Parrer refers, 
 with regard to bounties being a breach of the most-favourcd- 
 
 * See Appendix, page 158, for full details
 
 go FREE TRADE IN SUGAR. 
 
 nation clause, has been marvellously distorted in liis ver- 
 sion of it. A country which has a most-favoured-nation 
 clause treaty with us might very reasonably complain that 
 the treatment of the most favoured nation was not accorded 
 to it, if sugar receiving a bounty was admitted on the same 
 terms as sugar receiving no bounty. The complaint is not 
 against the bounty-giving country, for, as Sir Thomas 
 Farrer puts it, inflicting an injury on England. That is 
 nonsense, and has nothing to do with the point. The 
 complaint is that England admits sugar with a bounty on 
 the same terms as sugar without a bounty, and consequent!}' 
 the sugar-exporting country which gives no bounty loses 
 the equality of treatment stipulated for in the treaty. 
 
 The summing-up of the chapter as regards the United 
 States sounds very nice, but need not be dealt with, as I 
 have shown that each portion of the case, from Sir Thomas 
 Farrer's j^oint of view, is without a foundation. It is rather 
 amusing, however, to read of the United States as a country 
 "which may prove to be one of our best sources of supply." 
 The annual consumption of the United States is about 
 1,500,000 tons, and is going up by leaps and bounds. The 
 production is about 150,000 tons, and is certainly not 
 flourishing. It is very doubtful whether the Louisiana 
 industry can live long, in spite of the large protection it 
 enjoys. But these are the little assertions which deceive 
 the unsuspecting reader, and help to make the whole 
 treatise " weighty."
 
 91 
 
 CHAPTER XI. 
 
 RErLY TO NOTES ON BARON DE WORMS' SPEECHES. 
 
 The notes on Baron de Worms' speech are frequently mere 
 repetitions of what Sir Thomas Farrer says elsewhere. In 
 such cases I pass them over as already answered. For in- 
 stance, his remarks about the figures which state the amount 
 annually given in bounty in each country have been dealt 
 with. He adds a sneer at " Anti-Bounty agitators " who 
 ^re accused of having given loose estimates. As I have 
 frequently, during the last seventeen years, had occasion 
 to estimate the amount of some of the bounties, and to 
 give full particulars in support of my calculations, I can 
 only say, in reply to this accusation, that I have heard 
 many loose contradictions from Sir Thomas P'arrer and his 
 friends, but have never seen my statements refuted. The 
 Board of Trade must learn the rudiments of the subject 
 before they can deal with the difficult technical details 
 connected with bounties on sugar. 
 
 Another variation in this foot-note which requires notice 
 is the assertion that the bounty operates as an inducement 
 to export sugar. This is not correct. It operates as an 
 inducement to over-produce, and to export the surplus 
 So long as the surplus is exported the producers can obtain 
 the same amount of bounty on the portion delivered fcr 
 home consumption, since they get the full duty-paid value 
 from the consumer, while they themselves have not paid 
 the full duty. The rest of the note has already been dis- 
 posed of The second note has been answered. On 
 the third and fourth notes see my remarks. The figures 
 are not disproved ; they may, therefore, be taken as a
 
 92 FREE TRADE IN SUGAR. 
 
 statement of fact. It is difficult to appreciate Sir 
 Thomas Farrer's angry attack on a statement of fact. 
 He says, in his marginal abstract of Baron de Worms' 
 speech : " Beet has supplanted cane in the English 
 market. Therefore bounties have ruined cane." I have 
 looked several times at the portion of the speech which 
 this professes to be an abstract of, but I can find no such 
 statement. It is very nice for Sir Thomas Farrer's readers 
 to be able to run their eyes down the margin and thus 
 be saved the trouble of reading the text of the speech. 
 It gives them more time thoroughly to enjoy the foot- 
 notes. But it is not quite fair to print your opponent's 
 speech with a false marginal abstract. 
 
 As to note five, see my replies in another chapter. I 
 notice in this note the old expression, " cheaper foreign 
 sugar." All the angry indignation at figures which are 
 not disproved, expressed by Sir Thomas Farrer in these 
 foot-notes, should be hushed when he considers the amount 
 of dust which he is deliberately throwing in the eyes of his 
 admiring readers. 
 
 The conclusion of the note speaks of the Government 
 " making a great change in our financial policy." What is 
 this .'' There is no financial arrangement in the sugar Con- 
 vention. We have undertaken to apply the principle of 
 the Trades Marks Act. That is not a financial arrange- 
 ment. Other countries, it is true, have the option of 
 levying what they call " surtaxes," because they prefer that 
 method, it being more in keeping with their commercial 
 policy. 
 
 The sixth note again deals with hypotheses, the value 
 of which entirely depends on their truth. Sir Thomas 
 Farrer does not attempt to show that the facts stated are 
 not facts, nor that the inferences drawn are unsound. He 
 says he has "been accustomed to a diligent inquiry into
 
 FREE TRADE IN SUGAR. 93 
 
 real facts," and therefore his failure to contradict the facts 
 here quoted is the highest possible testimonial to their 
 correctness. This does not prevent him from again abusing 
 the Government. 
 
 Note seven is a repetition of a previous one previously 
 dealt with. 
 
 Note eight is dealt with elsewhere. As to the 
 " speeches and writings " of " foreign nations," they all go 
 to show that Baron de Worms is right and Sir Thomas 
 Farrer wrong. Everywhere it will be found that the 
 official view abroad is that the abolition or reduction of 
 bounties is a " sacrifice," for which Her Majesty's Govern- 
 ment are called upon to be grateful. 
 
 The same remarks apply to note nine. 
 As to note ten, the dispute seems to turn upon the 
 meaning of the word " adhere." Sir Thomas Farrer had 
 asserted that Austria and Belgium had not adhered to the 
 Convention. Baron de Worms sa}s " that is absolutch' 
 incorrect." Sir Thomas Farrer, in his foot-note, sa\-s, 
 " My statement is absolutely correct," and then begins to 
 tell us about the United States, Sweden, Denmark, and 
 France, all of which information has nothing to do with the 
 correctness or incorrectness of his statement, which referred 
 only to Austria and Belgium. He admits that Austria 
 and Belgium have signed the Convention. Belgium's 
 reservation does not, as he asserts, appear in the Protocol. 
 His foot-note in this case is a decided failure. 
 
 The eleventh foot-note gives another opportunit}' of 
 talking about foreign Ministers making us a present of 
 cheap sugar. If they do so, which I deny, and which I 
 have proved to be untrue, they certainly do not do so 
 without a purpo.>*e ; and yet Sir Thomas Farrer, in his 
 third loot-note, takes Baron de Worms to task for imputing 
 motives to foreiern Governments in giving bounties. Sir
 
 94 FREE TRADE IN SUGAR. 
 
 Thomas Farrer has not yet told us why foreign Ministers 
 give us cheap sugar, though he is vei}' fond of telh'ng us 
 that they do so. If it be true, surely the British pubh'c 
 will regard such a proceeding with considerable suspicion. 
 I wonder how Northampton would like foreign Govern- 
 ments to present us with cheap boots and shoes. How 
 would Leicester like to see its staple products given away 
 by " foreign Ministers ? " 
 
 In reply to note twelve, I may remind Sir Thomas 
 Farrer, in distinct contradiction to one statement, that 
 the refiners unanimously petitioned the Government to 
 establish refining in bond, and even offered to pay the 
 expense. The whole correspondence is in the Blue Books, 
 and explains fully the former objections. 
 
 He blames Baron de Worms for tying our hands so 
 that we can never revert to protective duties. Curious 
 language this for the Cobden Club. 
 
 The thirteenth note puts one of Sir Thomas Farrtr's 
 fallacies in language Avhich is worth noting. England 
 " receives the worth in sugar of a subsidy of ;^9,cco,oco a 
 year." This is Sir Thomas Farrer's view, in his ov.n 
 words, of the benefit of the bounty to this country. We 
 know that, in i88i, he made Mr. Chamberlain hint at 
 some such idea, but now we have it on a larger scale and 
 in plain language. The real fact, as my readers now know, 
 is very different. The first operation of a bounty is to 
 stimulate production. The sugar exported is sold at the 
 market price, and, therefore, so long as prices are above the 
 cost of production, the whole of the bountygoes,together with 
 the natural profit, into the pockets of the producers. When 
 prices fall, by reason of over-production, below the level of 
 natural profit, part of the bounty goes to make up for loss 
 of natural profit. But at the .same moment natural pro- 
 ducers, having lost their natural profit, are deterred from
 
 FREE TRADE IX SUGAR. 95 
 
 proceeding with the competition. If they do proceed, tliey 
 are giving, out of their own pockets, exactly the same sum 
 as the small fraction of the bounty which has enabled 
 bounty-fed producers to get rid of their over-production 
 without loss. The fraction of the bounty which turns the 
 scale between profit and loss is a very small one ; the 
 benefit which importers enjoy is very short-lived, for of 
 course the immediate effect of arrival at cost price is 
 reduction of production and a reaction in the market, 
 which, as recent experience has shown, is violent and 
 injurious. The consumer gets an infinitesimal fraction of 
 the bounty, but onh' at the moment when cost price is 
 reached ; and whatever benefit he gets, he compels natural 
 producers to contribute the same " present " out of their 
 own pockets. This, briefly, is the history of the operation 
 of a bount}-. I have often explained it before, but the 
 outrageous statement, that England " receives the worth in 
 sugar of a subsid}' of ^9,000,000 a year," compels me to 
 repeat it. Why does Sir Thomas Farrer never deal with 
 such an explanation as I have now given } It lias been 
 given him often enough, from the days of " Mr. Chamber- 
 lain's memorandum " till now. Why does he never attempt 
 to show that I am wrong and he is right ? 
 
 He goes on to say that there is no more harm to the 
 community in disturbing the natural course of production 
 by bounties — artificially stimulating it in one place and con- 
 sequently hindering its progress in the rest of the world, 
 thereby making consumers dependent on the success of 
 artificially stimulated crops — than there is in the ordinary 
 process of importing produce under natural conditions. I 
 hope my readers, and his too, can see the difference. 
 
 The most-favoured-nation clause, to which matter note 
 fourteen refers, has been dealt with elsewhere (p. 158). 
 I may, however, remark here, as Sir Thomas Farrer
 
 96 FREE TRADE IX SUGAR. 
 
 includes France in his list of countries which, he says, will 
 claim their rights under that clause, that it would be at 
 least surprising if France, which has always urged a penal 
 clause in the Sugar Convention, and which has now added 
 the special bar to objection on most-favoured-nation 
 grounds, should turn round and claim her rights as a most 
 favoured nation. 
 
 As to the fifteenth note, I think we may safely expect 
 that the United States will see their great interest in se- 
 curing the abolition of bounties. In any case they will 
 never, probably, be exporters of their own production, and 
 the export of refined sugar is at an end. The penal clause 
 will, therefore, not affect them. France, Belgium, Austria, 
 and Brazil — a list given by Sir Thomas Farrer at the end 
 of his foot-note, to put a finishing touch to the terror of his 
 readers — will take good care that the Convention shall come 
 into force. To Brazil it is a matter of life and death that 
 bounties should cease. Austria has prepared her fiscal 
 arrangements in full expectation of a general agreement. 
 Belgium is legislating in the same direction. The French 
 Government are heartily sick of the big bounty they so 
 foolishly started in 1884, and will be thankful to have a 
 good excuse for backing out of it. 
 
 The foot-note which comes next contains one of the 
 largest errors I have yet come across in this book. We 
 know that Sir Thomas Farrer has pretended that excluding 
 bounty-fed sugar will reduce supplies and raise price. To 
 this I have replied that as our markets are open to the 
 sugars of the world, the visible supply of which is 5,000,000 
 tons annually, we cannot run short of sugar, and we must 
 always get it at the price ruling throughout the world. Sir 
 Thomas Fari'er has also refuted his own theory by pointing 
 out, in another place, that if, which is most improbable, we 
 should ever exclude French sugar, it would go elsewhere,
 
 FREE TRADE IN SUCiAR. 97 
 
 and the sugar which it displaced would come here. Of 
 course that is so. In other words, so long as the world 
 makes enough sugar for everybody, we shall get as much 
 as we want, because if we refuse one particular mark we 
 shall get another instead. But now comes the new and 
 remarkable fallacy of this particular foot-note. In support 
 of the old fallacy, Sir Thomas Farrer now urges that " a 
 small diminution of supply may cause a great increase in 
 price." Certainly, we have felt it severely in the last 
 twelve years. The beetroot crop is now more than half 
 the visible supply of the world. Whenever, therefore, that 
 crop is deficient, even to the small extent of five to ten per 
 cent., we now get a big rise in sugar, much to the injury of 
 the jam trade. We are now dependent on the beetroot 
 crop, thanks to bounties. But this has absolutely nothing 
 to do with refusing one particular sugar and taking another 
 kind instead. Our markets are open to the whole 5,000,000 
 tons, except, as Mr. Shepheard puts it, when the sugar is 
 in blue paper wrappers. Sir Thomas Farrer has confused 
 a diminution in production with a prohibition of blue 
 paper wrappers. 
 
 All notes referring to preceding letters have been 
 replied to in the replies to the letters. 
 
 The next note states that Sir Thomas Farrer is in 
 favour of free imports. Is the importation of sugar which 
 receives no bounty to be called a free import, when the 
 person who desires to bring it here cannot do so without 
 making the same present to the consumer as that which, 
 according to Sir Thomas Farrer, the person who brings us 
 bounty-fed sugar makes. For instance, take the extreme 
 case in which Sir Thomas Farrer is right in saying that 
 bounty-fed sugar brings a small present in the sack's 
 mouth ; that is, when prices are doyvn below natural profit 
 level. The unsubsidised sugar, if it is to continue to be 
 II
 
 98 FREE TRADE IX SUGAR. 
 
 imported, has then to pay a tax by putting exactly the 
 ^ame present in the mouth of the sack. If it does not do 
 so it has to stop outside. Are these free imports ? 
 
 In the next note Baron de Worms is blamed because 
 he did not produce Board of Trade returns or other official 
 proofs of the veracity of his figures. Sir Thomas Farrer 
 does not attempt to show that they are wrong, and as he 
 boasts of being very careful about figures we may 
 therefore assume that they are unassailable ; but he never- 
 theless complains that they are not " proved," i.e., the)' 
 have not got the official stamp, there is no chapter and 
 verse. This is the official idea of correctness. A figure 
 or a fact is not worth consideration unless it comes out of 
 a Blue Book. There are more figures and facts in the 
 heaven and earth of the commercial cosmos than are 
 dreamt of in Sir Thomas Farrer\s philosophy. 
 
 The last note contains the stereotyped reply to the 
 question, where should we be if other trades were inter- 
 fered with b\' bounties. The reply always is that it would 
 be very nice to have everything given us for nothing. It 
 is a thoroughly senseless reply ; but even in the sugar 
 question there has sprung up a sort of traditional arrange- 
 ment — that of meeting arguments with cut-and-dried 
 clenchers, which have been found from experience to tell. 
 There never was greater nonsense, and yet the most 
 distinguished men have used it, with grave and learned 
 faces, and a frown at the ignorance of those around them. 
 Of course we all know that a trade will be killed long 
 before it is necessary to give its produce away for nothing. 
 Take boots and shoes. If the cost price is 5s. a pair, it is 
 evident that selling boots and shoes for 4s. iid. will kill 
 the trade. The difference of a penny makes very little 
 difference to the buyer, but e\er}- difference, the difference 
 of life and death, to the seller.
 
 FREE TRADE IN SUCAR. 99 
 
 This ends the great and searching criticism of Baron de 
 Worms' speech. An examination of the parts of the 
 speech which have not been touched would enable us to 
 read between the lines with regard to the strength of Sir 
 Thomas Farrer's position. Even his notes have given 
 opportunity for a further considerable damage to it. 
 
 As to the note on an extract from Baron de Worms' 
 speech at Liverpool, I will point out, in the first place, that 
 a countervailing duty is not a retaliatory duty. Warding 
 off a blow is not retaliating. A duty on blue paper wrappers 
 is not retaliation. A collecting of a bounty for the benefit 
 of the revenue is not retaliating. " By all means send us 
 your bounty-fed sugar, but let us put it on an equality with 
 other sugar by taking the bounty off before it goes on the 
 market." That is not retaliation, but a method of restoring 
 Free Trade. I could quote a Cobden prize essay wherein 
 that observation is very forcibly put. 
 
 As to the Merchandise Marks Act, Sir Thomas Farrer 
 has already dealt with the subject, and so have I. The 
 effect on trade is the same in both cases. The Act is for 
 the purpose of stopping this injurious effect upon trade, not 
 for the purpose of punishing fraud. The assistance of the 
 bounty is neither " unconscious " nor " unintentional," as 
 Sir Thomas Farrer ought, by this time, to be well aware. 
 
 The remainder of the note I have already answered 
 
 (p- n)'
 
 lOO 
 
 CHAPTER XII. 
 
 REPLY TO REPRINT OF CHAPTER XLVIII. ON SUGAR. 
 
 From '■'■Free Trade v. Fair Traded 
 
 This reprint begins with a note, in which the old attack on 
 the Foreign Office is repeated. That department, it is 
 suggested, has managed to confuse the pubUc on important 
 points, and has tumbled information pell-mell out before 
 the public, without an index, without a summary or digest' 
 and without information as to the state of the trade or the 
 effect of bounties. " Diligent in the service of our sugar 
 planters and refiners ; negligent of all other British 
 interests ; obedient to Spain and Germany, our Govern- 
 ment are legislating, and inviting Parliament to legislate 
 in the dark." 
 
 Murder will out. Here again, the true reason for this 
 book crops up, with all the bitterness intensified by the 
 long effort to suppress it. The old jealousy between the 
 Board of Trade and the Commercial Department of the 
 Foreign Office bursts forth once more. It is to be hoped 
 that the chief of that department will not consider it his 
 duty also to write a book. He probably has a different 
 view of the nature of his official duties. What arc the 
 British interests which the Government are neglecting in 
 this matter.' Certainly not those of the consumer, who, 
 as I have repeatedly shown, is already suffering from the 
 effects of bounties, and will suffer severely if they continue. 
 Certainly not those of other industries, which may at any 
 moment be attacked in the same way, if the present 
 opportunity to abolish the bounty system be declined by 
 our Government. Things have gone so far that any such
 
 FREE TRADE IN SUGAR. lOI 
 
 action on the part of the Government, or of Parh'ament, 
 would be regarded abroad as a distinct invitation to further 
 aggression. The Government is accused of being obedient 
 to Spain and Germany ; but if there is any obsequiousness 
 at all it is towards France, that being the country which 
 has for years urged upon the British Government the 
 policy which they have at last had the courage to pursue — 
 the only policy which can restore Free Trade in sugar. 
 As to legislating in the dark, if Blue Books be illumi- 
 nation, with or without indexes, the legislation will come 
 off under a flood of most brilliant light. 
 
 Now for the Chapter on Sugar, reprinted from Sir 
 Thomas Farrer's book, " Free Trade v. Fair Trade." 
 
 In the first place it must be pointed out that the 
 abolition of bounties has no connection with the con- 
 troversy known as the Fair Trade controversy. The 
 arguments in the one case are the opposite of those in 
 the other. The Fair-traders desire to meet foreign 
 protective duties by counter protective duties. Those 
 who ask for abolition of bounties desire to abolish the 
 protection of foreigners in British markets, a matter en- 
 tirely within our own control. We have no power to 
 compel foreign nations to abolish protective duties on 
 British goods ; but we have the power to prevent foreign 
 producers from being protected by foreign bounties in our 
 own markets, a process which is equivalent to striking with 
 a differential duty British goods as against f reign goods 
 in British markets. The action proposed by Fair-traders 
 would introduce protective duties into this country. The 
 act of abolishing foreign bounties would, on the contrar}-, 
 restore Free Trade in our own country. Free Trade 
 cannot exist so long as bounties are permitted to give an 
 advantage to the foreigner over the British producer in 
 our home markets.
 
 102 FREE TRADE IN SUGAR. 
 
 The chapter begins with a long dissertation on the 
 " importance of sugar, poHtically and economicall)%" its 
 " enormous and increasing supply," and " England's share 
 as compared with other countries." " It is food ; " " it 
 gives employment ; " " it is also raw material; " and " these 
 are results obtained by free importation." But we have 
 not yet got free importation. When we do, the benefits 
 so eloquently stated will be complete. We ask for this 
 completion of our, at present, imperfect system of free 
 importation of sugar, but Sir Thomas Farrer energetically 
 resists the demand. At present, those producers who 
 receive no bounty are not free to send their sugar to our 
 markets, unless they are prepared to compete with sugar 
 which receives a bounty, and, if necessary, to pay out of 
 their own pockets a sum equivalent to the present which 
 Sir Thomas Farrer declares that the bounty-fed producer 
 is making to this country. We ask that free importation 
 shall become a reality, so that the blessings of a large and 
 and unrestricted supply shall also become real and per- 
 manent. That it is not so now the experience of the 
 market for the last few years has abundantly shown ; and 
 at the present moment the market is greatly disturbed, 
 prices arc rising rapidly, because a scarcity of sugar is 
 apprehended. The beetroot crop, it seems, has been 
 over-estimated, and there is not sufficient cane sugar to 
 supply the deficiency. The opportunity is seized b}- 
 continental speculators to make a corner. There could 
 not be a better illustration of the injurious influence of 
 bounties. The consumer is at the mercy of the beetroot 
 crop, because it has been artificially stimulated, and the 
 production of cane sugar, consequently, artificially kept 
 down. 
 
 Then follows a dissertation on sugar duties and draw- 
 backs, the " difficulties of European Governments," the
 
 FREE TRADE IN SUCiAR. I03 
 
 abolition of our sugar duty, and the consequent reduction 
 in price to the British consumer. This is the real, true 
 and only reason for the expansion of the confectionery, 
 jam, and biscuit industries, though Sir Thomas Farrer 
 wants us to believe that those industries depend for their 
 prosperity entirely on the unstable foundation of foreign 
 bounties — a curious contention for a Free-trader to 
 set up. 
 
 The chapter then plunges into the details of the 
 foreign bounties. As to the German bounty, Sir Thomas 
 Farrer says it is impossible to gauge its amount with 
 accuracy. If, however, he had made himself acquainted 
 with the details of foreign commercial and industrial 
 statistics he would have found that it can be, and in fact 
 is, most accurately estimated every year. He explains 
 that the amount of the bounty depends on the quantity 
 of sugar which is produced, over and above the quantity 
 which the beetroot is officialh- estimated to yield, and on 
 which the duty is levied. He is not aware that a most 
 elaborate official report appears annually, giving the 
 quantity of sugar actually produced, the quantity of roots 
 worked, and, consequently, the amount of bounty received 
 by the producers. This chapter was written in iS86, and 
 he admits that " under this system tJic German production 
 has increased fivefold since 1871." This is indeed an 
 admission worth putting in italics. It admits our whole 
 case. Of course this enormous increase, and the conse- 
 quent glutting of the markets, which came off in 1884, 
 has prevented cane sugar from progressing as it otherwise 
 would have done. So far, on Sir Thomas Farrer's own 
 admission, the consumer has become dependent, b}- arti- 
 ficial means, on one particular source of suppK-, and 
 therefore on the weather which maj- happen to prevail in 
 one particular district of Europe. The sugar market
 
 104 FREE TRADE IN SUGAR. 
 
 indicates this fact with ridiculous clearness. It is quite 
 a new feature in the sugar trade. In the spring, the 
 lateness of the sowings, owing to prolonged wintry 
 weather ; in the summer, the want of rain, or the too 
 great abundance of rain ; in the autumn, the want of 
 sun, the prevalence of bad weather, or the too early- 
 approach of winter ; all these things are now watched, 
 in every market throughout the world, with feverish 
 anxiety. Sudden fluctuations arc perpetually taking 
 place, solely on account of the state of the weather on 
 the Continent. Can any one say that the consumer is not 
 becoming absolutely under the thumb of the beetroot 
 crop ? There are many other possible events besides bad 
 weather which might have a disastrous effect on the 
 Continental production of beetroot sugar ; and where 
 would the consumer be then? If the producers of cane 
 sugar were free to expand their production, without fear 
 of bounty-fed competition, all this dependence on one 
 crop would be immediately got rid of. 
 
 The next statement is equally instructive. " In the 
 present year (1886) the import of raw sugar from Germany 
 is decreasing largely, and that of refined sugar increasing." 
 Why ? Because the bounty on refined was, at that time, 
 made larger in proportion to that on raw. If there was to 
 be a bounty in Germany that was the natural step to take. 
 The British refiners have fought the battle for the colonial 
 producers most loyally from the very first. They have 
 always maintained the broad principle that if bounties are 
 to be abolished they must be abolished all round, both on 
 raw and refined. They know perfectly well that they and 
 their foreign competitors buy raw sugar at the same price, 
 and that, therefore, the ridiculous theory that bounties on 
 raw sugar are an advantage to them is all nonsense. But 
 now, as I predicted, and as this statement confirms, they
 
 FREE TRADE IN SUGAR. IO5 
 
 have to fight for their ovv^n preservation as well as for the 
 safety of our colonies. 
 
 At the end of the same paragraph I find still another 
 statement which admits my case. Sir Thomas Farrer tells 
 us that " in fact, there has been a glut in the sugar trade, 
 much aggravated by the foolish system of bounties." It 
 begins to appear that he would be a valuable witness if 
 we had another Parliamentary inquiry into the state of 
 the sugar industries. 
 
 The official report from our Embassy at Berlin, from 
 which Sir Thomas Farrer quotes, says that the German 
 refiners cannot compete successfully with our own. The 
 exports of German refined sugar have, nevertheless, as Sir 
 Thomas Farrer states, enormously increased, and are going 
 on increasing, now that refined sugar is allowed an in- 
 creased proportion of bounty. 
 
 All this helps our case very much, and I am grateful 
 to Sir Thomas Farrer for giving publicity to it. Still more 
 does the quotation from Deputy Gehlert's statement in the 
 Reichstag, in which he bitterly complains that the German 
 sugar industry has been subsidised, during the preceding 
 ten years, to the extent of ;^7,50o,ocx), and that "in the 
 year of the sugar crisis (1884) the State subsidy amounted 
 to fully ;!^2,ooo,CXDO." He laments that since it has been 
 thus subsidised it has '^solely in consequence of this stimulus, 
 attained its present dimensions." I thought Sir Thomas 
 Farrer always maintained that bounties had nothing to do 
 with our troubles, or those of our colonial friends ; and yet 
 hequotesthis speech which proves exactly the reverse. Could 
 our complaints be stated more strongly, or with greater 
 authority ? He does not even dispute Herr Gehlert's 
 figures, though they have not been checked by the Board 
 of Trade, but accepts them with alacrity. 
 
 Austria, he tells us, has also ''felt the recent glut and
 
 I06 I'-RKE TRADE IN SUGAR. 
 
 titc react ion from the ini/iatiirnl stimulus!' If this be so 
 
 in countries where bounties still continue, how must the 
 poor commonplace producer fare, who receives no bount) ? 
 Sir Thomas Farrer tells us that even in Austria, where 
 there is still a good substantial bounty, " bankruptcies and 
 failures among Austrian sugar makers were notorious 
 during 1884 — 85." How then does he propose that our 
 colonial producers, unsubsidised and, for his part, uncared 
 for, are to survive ? Bounties, Sir Thomas Farrer now 
 admits, have got to such a pitch that they are ruining even 
 the producers who enjoy them, owing to "the unnatural 
 stimulus." And yet he lias just brought out a new book 
 to prove that bounties should not be abolished, because it 
 would rob the poor man of his cheap sugar and ruin the 
 jam trade. How is the poor man to have cheap sugar, or 
 jam to be made at all, if not only the unsubsidised, but 
 even, on his own showing, the subsidised industry is being 
 ruined by " the unnatural stimulus ? " We are told in one 
 part of the book that cane sugar was never more flourishing 
 — cane sugar which receives no bounty — but now we are 
 told that bounties haxe been such an unnatural stimulus 
 that even the happy receivers of the bounty, the creators 
 of cheap sugar, are being ruined. How then, if bounties 
 go on, and the same thing recurs, are we to go on enjoying 
 cheap sugar? We arc told, in another place, that cane 
 sugar cannot hold its own against beetroot, even if bounties 
 were abolished, because it is "bad sugar," and its makers 
 have no enterprise. Surely this must be a mistake, seeing 
 that cane sugar survived' a shock which Sir Thomas Farrer 
 now fully admits to have been so severe, owing to the un- 
 natural stimulus of bounties and the consequently glutted 
 markets, that even the bounty-fed beetroot industry was 
 shaken to its foundations. All that Sir Thomas Farrer is 
 telling us now, in this reprint from his former work, is per-
 
 FREE TRADE IX SUGAR. lO/ 
 
 fectly true ; but it knocks to pieces everything whicli he is 
 advancing in the new book. It appears now that he admits 
 and fully appreciates the fact, that the "unnatural stimulus " 
 of bounties culminated, in 1884, in a great glut of sugar, 
 which brought ruin on man}' of the bounty-fed producers ; 
 and yet he is straining evir}- nerve to prevent the only 
 remedy for an evil which must, a fortiori, bring ruin on 
 those who receive no bounty. He is fighting hard to main- 
 tain bounties, because their abolition would deprive us of 
 cheap sugar, and all the while he ras fully appreciated, and 
 described in giaphic language, a crisis which nearly brought 
 ruin on the whole sugar production of the world, and which 
 he himself admits to have been brought about by " the un- 
 natural stimulus of bounties." For more than a hundred 
 pages his readers have been trifled with ; now, at page 107, 
 they are told facts which show that all the rest was fiction. 
 It was an unfortunate moment for Sir Thomas Farrer when 
 he determined to reprint this old chapter. Cheap sugar 
 and a ruined industry cannot co-exist. He admits that 
 the glut caused by the unnatural stimulus of bounties 
 brought the sugar industry within sight of ruin. This is 
 perfectly true ; but, that being so, how is a recurrence of 
 the crisis to be avoided 1 Bounties must continue. Sir 
 Thomas Farrer says, or we shall be robbed of our cheap 
 sugar. But he shows that if they do continue we must 
 have another crisis, with ruin staring us in the face. Is 
 this the best and only way of keeping up a good supply of 
 cheap sugar ? Sir Thomas Farrer cannot now possibly 
 escape this dilemma except b\' frankly admitting that the 
 abolition of bounties is the onl)- wa}- out of it. 
 
 Continuing his histor}^ of bounties, Sir Thomas Farrer 
 passes on to France. He makes a mistake about her pro- 
 duction having increased rapidl}'. Until the new bounty 
 was started, in 1884, the French production languished
 
 I08 FREE TRADE IN SUGAR. 
 
 owing to the bounty-fed competition of her neighbours. 
 This was the origin of tlie legislation of 1884, as he 
 correctly proceeds to explain. In a foot-note he quotes, 
 from the Produce Markets Reviciv, an estimate of the pre- 
 sent French bounty, which exactly tallies with the figures 
 given by Baron de Worms. In the one case he accepts 
 the figures without dispute ; in the other he treats them 
 with every mark of disrespect and suspicion. 
 
 Belgium is described as " perplexed by the distress of 
 her sugar interest." This is because the larger German 
 bounty had, as Sir Thomas Farrer so well describes, 
 created a glut by its unnatural stimulus ; also because the 
 new French bounty, one of much larger dimensions, 
 threatened a greater crisis. 
 
 Holland does not, as erroneously stated here, "tax her 
 sugar by chemical measurement of the quantity of sugar 
 contained in the juice." Her exports are almost entirely 
 refined sugar, owing to a bounty quite distinct from the 
 bounty on the juice. These, however, are mere errors of 
 detail. 
 
 As to Russia, Sir Thomas Farrer's statement clearly 
 shows how a bounty immediately results in large exports 
 and that, therefore, these exports of foreign sugar, under 
 the bounty systems of the Continent, are purely artificial, 
 and consequently unstable and unreliable. They are, 
 nevertheless, in his opinion, so essential to the well-being 
 of the community that they must be bolstered up and 
 retained at all hazards. Down with Protection, he cries, and 
 long live artificial exports ! 
 
 The United States produce a certain quantity of sugar, 
 as we have seen already, and we have been told elsewhere 
 by Sir Thomas Farrer that if, at any time, we were to 
 enforce the penal clause against them, we might be shutting 
 out one of our largest sources of supply. Here, however,
 
 FREE TRADE IN SUGAR. IO9 
 
 he uses different language, for he speaks of " their domestic 
 industry, which does not produce a fraction of the amount 
 consumed in the country, and which languishes in spite of 
 Protection." There is a pleasing variety in these two state- 
 ments, and we must evidently be careful not to accept too 
 readily all the brilliant points of this versatile writer. 
 
 Some doubt is expressed by Sir Thomas Farrer as to 
 whether there was, at one time, a bounty on the exportation 
 of refined sugar from the United States. But if he refers 
 to the Blue Books he will find full particulars of the bounty 
 and the method of calculating it. The American bounty 
 furnishes one of the most complete illustrations of the way 
 in which bounties create an artificial trade. Directly it 
 commenced the exports of American refined began, and 
 continued to increase as long as the bounty lasted. By 
 our constant efforts we at last procured its abolition. The 
 exports immediately ceased. A few years afterwards the 
 duties were altered, and this gave the American refiners an 
 opportunity of again mystifying the authorities as to the 
 amount of drawback which ought to be allowed. It should 
 have been 2-40 dollars the 100 lbs., as is clearly proved by 
 calculation from the duty levied on the raw sugar. These 
 calculations are fully stated in the Blue Books. But the 
 American refiners succeeded in getting a drawback of 2"82 
 dollars, which gives a bounty of 42 cents the 100 lbs., or 
 about 2s. per cwt. The exports immediately recommenced 
 on a large scale, and, as Sir Thomas Farrer says, we were 
 inundated for a time with American refined sugar. Again 
 we agitated, and at last the Secretary to the Treasury at 
 Washington admitted that the drawback was excessive, 
 reduced it to 260 dollars, and intimated that it would 
 probably have to be still further reduced ; all of which 
 information is in the Blue Books. The immediate result 
 of this reduction was that the artificial exportation
 
 no FREE TRADE IN SUGAR. 
 
 languished and speedily ceased, the remaining bounty not 
 being enough to compete with the big European bounties. 
 There could not be a better illustration of the precarious 
 nature of the supply of sugar created by bounties. But, 
 nevertheless, it is this precarious supply that Sir Thomas 
 Farrer contends is so essential to the very existence of our 
 jam trade, and so necessary for the welfare of the consumer. 
 The sudden appearance, and equally sudden disappearance, 
 of an artificial importation of American refined sugar, 
 which amounted. Sir Thomas Farrer tells us, to 10,000 tons 
 a month, and gave a total import, in 1885, of 114,000 tons, 
 is also a most useful illustration of a fact which absolutely 
 annihilates one of Sir Thomas Farrer's most valuable 
 theories. He contends that if we were, by any unlikely 
 chance, ever compelled to enforce the penal clause against 
 some country which, after the conclusion of the Convention, 
 persisted in giving bounties, and thereby endangered the 
 treaty, we should be restricting our supply of sugar and 
 raising the price. I have replied fully to this ever\' time it 
 has been repeated, by pointing out that we have nearl}- 
 five times as much sugar to choose from as we want, and 
 that therefore we shall always get what we want at the 
 world's price. Sir Thomas Farrer has also destroyed his 
 own theory by showing that prohibition would only result 
 in substituting one sugar for another. But now we have a 
 more practical proof of the fallacy of his original theory. 
 
 By the sudden disappearance of the American bount}- 
 we suddenly lost a supply of refined sugar amounting to 
 more than 100,000 tons a year. This was exactly as if 
 American refined sugar had been suddenly prohibited. 
 Did we suffer from restricted supplies ? Did the un- 
 fortunate consumer suddenly find the price of sugar raised 
 a halfpenny a pound ? Of course, nothing of the kind 
 happened. We got our sugar from somewhere else, or 
 
 I
 
 FREK TRADE IN SUGAR. MI 
 
 made it ourselves, and people were quite unconscious that 
 anything liad occurred. This finally disposes of Sir 
 Thomas Farrer's fallacy about the effect of prohibition. 
 
 It is incorrect to say that Brazil " guarantees a high 
 rate of interest on the capital employed in sugar making." 
 This statement would lead readers to suppose that the 
 sugar producers in Brazil received interest on their capital 
 from the Government. They do nothing of the kind. The 
 bulk of Brazil sugar is produced by persons who have been 
 so occupied for generations before there was any idea of a 
 Government guarantee. This guarantee is only offered 
 with the view of inducing fresh capitalists to embark in 
 large central factories, with all the latest improvements. It 
 is undoubtedly an artificial interference with the course of 
 trade, but it does not touch the bulk" of the sugar produced 
 in Brazil, and it is certainly very far removed from the 
 export bounties with which we are now dealing. Brazil is 
 in such a sad state, as to her sugar industry, that she cer- 
 tainly ought to be among the first to promote the abolition 
 of bounties. As Sir Thomas Farrer says, " ruin is ini- 
 fendino 07rr her sugar factories" but it is ridiculous for him 
 to ascribe this to the fact that the Government offers to 
 guarantee the interest on the capital devoted to improving 
 the industry. The ruin of the Brazilian sugar industr}' will 
 be just as much the result of " the glut " caused by " the 
 unnatural stimulus ' of bounties, as those other ruins which 
 Sir Thomas Farrer has very properly a.scribed to that 
 cause. But how curious it is to see Sir Thomas Farrer 
 here admitting that a large sugar industry like that of 
 Brazil, has " ruin impending over her factories," when, in 
 another place, he contends that it is quite a mistake to 
 suppose that the cane sugar industry is suffering, whether 
 from bounties or any other cause. 
 
 He now thinks he has shown that " foreign Governments
 
 112 FREE TRADE IN SUGAR. 
 
 are all floundering in the difficulties from which we, by 
 abandoning all taxation of sugar, have happily emerged." 
 Does he mean that the ruin which he so frequently 
 describes, in these last few pages, as impending over 
 foreign sugar industries, owing to " the glut " caused by 
 " the unnatural stimulus " of bounties, is escaped by our 
 home and colonial industries ? A reply to this question is 
 very necessar}', for it otherwise puts Sir Thomas Farrer in 
 a very awkward dilemma. He evidently does not see his 
 danger, for he goes on to say : — " Above all, in all these 
 countries, however much manufacture and export may 
 have increased, there is great distress among the pro- 
 tected classes. Protection and bounties have produced 
 their usual results, viz., an unnatural stimulus, and large 
 immediate profits, followed by a glut, collapse and 
 ruin." 
 
 How are we, and our friends in the West Indies, 
 Mauritius, India, Australia, Natal, and our other friends in 
 Java, Cuba, Porto Rico, Brazil, Egypt, Manilla, and a host 
 of other places, to meet this " glut, collapse and ruin," if 
 even the bounty-fed. producers suffer from it ? We have 
 come to a very serious point now, for here we have the 
 truth stated in most emphatic words — words that even Sir 
 Thomas Farrer cannot explain away or evade. My 
 question must be answered, or his whole book becomes 
 waste paper, always excepting this valuable appendix. 
 But there is another question even more difficult for Sir 
 Thomas Farrer to answer, and more destructive to all that 
 he has hitherto urged. How is the British consumer to 
 enjoy cheap sugar under the bounty regime — a regime 
 which Sir Thomas Farrer says is his only safeguard against 
 dear sugar — if the result of the bounty rcgiinc is " collapse 
 and ruin .•• " How is the jam maker, whose whole existence, 
 we are told, depends on the maintenance of bounties — how
 
 FREE TRADE IX SUGAR. II3 
 
 is he to get on when this inevitable " collapse and ruin '' 
 follows the next inevitable "glut ?" 
 
 I have wasted my time in answering Sir Thomas 
 Farrcr's book ; for here it is answered, refuted, and dis- 
 posed of for me, by this one happy sentence of his, in this 
 most fortunate appendix. 
 
 After this, it seems hardly worth while to continue the 
 dreary work of minute criticism ; but it must be finished 
 as it w'as begun, paragraph by paragraph, even at the risk 
 of bathos, after this crushing blow to his book, delivered by 
 the author's own hand. 
 
 It seems that this country enjoys a large export trade 
 to Germany, Holland, and Belgium. Sir Thomas Farrer 
 argues that our imports of bounty-fed sugar from those 
 countries are, therefore, desirable, because we pay for them 
 with our exports, and thereby give employment to our 
 workmen in manufacturing the goods exported. He does 
 not say, though he must know, that if we did not import 
 this bounty-fed sugar we should import sugar from else- 
 where, and this sugar would be equally paid for by 
 exports. We might import it from our own colonies ; in 
 w^hich case we should not only have exactly the same work 
 to do in manufacturing the exports to pay for it, but we 
 should have the further advantage of giving employment 
 to our colonial brethren, and very likely making machin- 
 ery and a hundred other things for their sugar in- 
 dustry. We might also import raw instead of refined 
 sugar ; in which case we should have exactly the same 
 work to do in making exports to pay for the raw 
 sugar ; and we should have the additional advantage of 
 employing our own people in refining it, and of making 
 all the necessary appliances for so doing. In either 
 case we should enjoy the still greater advantage, by the 
 abolition of the bounties, of securing the consumer and 
 I
 
 114 FRIiE TKADK IN SUCAR. 
 
 jam maker against the catastrophe whicli would result 
 from the " glut, collapse, and ruin " brought about, as Sir 
 Thomas Farrer so truly says, by " an unnatural stimulus." 
 The " collapse and ruin " must inevitably fall first on those 
 who receive no bounty. From that quarter, therefore, the 
 consumer and jam maker will first of all lose their supplies. 
 Whether the bount\' will continue long enough to extend 
 the " collapse and ruin" to the subsidised industry remains 
 to be seen. But as far as we and our cane sugar friends 
 are concerned, it is evident from Sir Thomas Farrer's own 
 showing, that our fate is sealed if bounties continue. He 
 has also demonstrated with equal clearness that a continu- 
 ance of the bounties must be followed by dear sugar — an 
 absolutely certain result of " collapse and ruin " in the 
 sugar industry. 
 
 Now comes Sir Thomas Farrer's great point against 
 us, up to which all these valuable admissions have been 
 leading. He accuses us of wanting the same protective 
 system which has brought " collapse and ruin " on the 
 sugar industry. xAnd all because we ask for an inter- 
 national Convention for the abolition of bounties, and 
 for that without which we know, from the experience of 
 fifteen years of constant negotiations, that no international 
 agreement can be obtained. It is impossible to procure 
 from foreign Governments a mutual undertaking to abolish 
 bounties unless they have full security that their industries 
 will not have to compete with bounty-fed sugar in the 
 markets of the contracting powers. For this reason, and 
 for this reason onU', have we urged the adoption of a penal 
 clause. We have had no ulterior motive. So far from 
 desiring Protection— with a capital P — we should deprecate 
 it most strongly. We are far too keenly alive to the 
 advantages of P^-ce Trade, and to the injury which Pro- 
 tection would inflict on our industry. We have, however,
 
 FKLE TKADK IX SUGAR. II5 
 
 argued in favour of the penal clause for one other reason, 
 and that is because we are firmly convinced that it is " not 
 only consistent with Free Trade, but positively conceived 
 in the interests of Free Trade." For the last fifteen years 
 we have stated all this, and proved the correctness of our 
 view, in every possible form, whether in the columns of 
 the press, or in "memorandums" addressed to the Board 
 of Trade. Sir Thomas Farrer has seen our statements 
 constantly — more especially recently in the columns of the 
 Times in reply to his renewed attacks, and yet he does not 
 hesitate to bring out a new book and again state, what he 
 knows has been contradicted and refuted so often — that 
 we are asking our Government to " imitate the systems of 
 other nations ; " that we are asking for " Protection " and 
 " Retaliation." The abolition of Protection to foreigners 
 on British markets cannot be called Protection to us. 
 That word, when spelt with a capital P, means that the 
 protected industry is placed in an artificial position, by 
 which it is enabled to obtain an artificially high price for 
 its products. That is the position in which foreign sugar 
 producers are placed by means of bounties ; and they 
 obtain the artificial advantage even in our markets. To 
 remove that infraction of Free Trade does not transfer the 
 artificial advantage to us ; it merely removes the inequalit)' 
 and restores Free Trade. And just as the removal of this 
 inequality is not Protection, so also it cannot, by any 
 twisting of language, be called Retaliation. 
 
 Then we are told that the interest of the refiner is 
 opposed to that of the West Indian planter, because the 
 one wants raw sugar cheap, and the other wants it dear. 
 This very shallow fallacy has greatly taken the fancy of 
 some people. The answer is that if raw sugar is cheap it 
 is equally cheap to all refiners, and therefore there is no 
 virtue in it from the refiners' point of view, except that
 
 Il6 FRKE TRADE IN SUCAR. 
 
 people eat more sugar when it is clieap. Hut that is not 
 Sir Thomas I'arrcr's point. He tliinks we get more profit 
 when raw sugar is cheap. To take a practical illustration, 
 it happens that when raw sugar went down to los. a cwt., 
 in the crisis of 1884, the refiners were anything but 
 flourishing. The crisis, as Sir Thomas Farrer has ex- 
 plained, was brought about by a glut of sugar, caused by 
 the unnatural stimulus of bounties, and when the glut came 
 it brought a glut of all kinds of sugar, both raw and refined. 
 There was too much refined sugar, and the refiners had a 
 bad time. It is clear, therefore, that what the refiner wants 
 is not low prices, but only a sufficient margin between the 
 price of raw and refined to pay the cost of refining and 
 leave him a fair profit. All this it would have been sup- 
 posed that a political economist would have known. 
 
 Sir Thomas Farrer then proceeds again to demonstrate 
 that the refining industry is in a most flourishing state. 
 But he forgets how he has just stated that the unnatural 
 stimulus of bounties causes "glut, collapse, and ruin." We 
 know it to our cost ; but because we have stood the shock 
 and braved the storm, we are to be taunted with the ac- 
 cusation of having cried out before wc were hurt. We had 
 the foresight to see what was coming many years ago ; and 
 the crisis of 1884 — the "glut, collapse, and ruin" — fully 
 justified our anticipations. And yet, for years before that 
 crisis took place, we were met with this same taunt by Sir 
 Thomas Farrer and his friends. He so far admits his error 
 now, that he adds the following reservation : — " Since 1884, 
 however, there is reason to believe that our refiners have 
 been hard hit by the continuance of the German bounties, 
 the new Russian bounties, and the import of refined sugar 
 from America, encouraged by low Atlantic freights and 
 probably also by a system of bounties." Why does he 
 omit to mention the new French bounty, which he says
 
 VRVA-: TRADE IN SUCAR. 11/ 
 
 amounts to " from ^3,000,000 to ^^4,000,000 a year," and 
 which so overtops all other bounties that it is bound 
 speedily to bring about another period of " glut, collapse, 
 and ruin," unless all bounties are abolished by mutual 
 agreement ? However, it is satisfactory to have at last this 
 tardy recognition from Sir Thomas Farrer that we are not 
 suffering from an altogether imaginary grievance. It is 
 followed by a calm statement, without comment, of the 
 fact that the imports of foreign refined sugar had in- 
 creased in 1885 to 256,000 tons, to which another ico,000 
 tons has since been added. The loss of manufacture of 
 350,000 tons of refined sugar, added to the fact of having 
 to compete against manufacturers who receive an artificial 
 profit, and who can therefore always turn the scale against 
 us, is no insignificant grievance, though Sir Thomas l*"arrer 
 does his best to minimise it. He kindly gives us his 
 sympathy, but adds that "after all, sugar refining in this 
 country is at the best a comparatively small trade." This is 
 in curious contrast with what he says when he wishes to 
 make out that wc are very flourishing. Then we are told 
 that the consumption of sugar in this country " represents 
 an annual expenditure of ^^"3 0,000,000,"^ or about half the 
 sum which the people of the United Kingdom pay for 
 wheat." It is evident, therefore, that our industry, " at the 
 best," would be a very considerable one, were it not that 
 the foreigner is allowed to be protected on our markets, 
 and consequently gets the lion's share of the trade. 
 
 Then our trade is, as usual, compared with the jam trade, 
 under the extraordinary impression — or rather with the 
 view of creating the impression — that the two industries 
 of sugar refining and jam making cannot flourish together 
 in the same country. Why should not the jam maker 
 
 * Sir Thomas Fairer has only made a mistake of / 1 o,ooo,coo here.
 
 IlS 1 RF.K TRADE IN SUGAR. 
 
 make as much jam, and as much profit, with I^ritish as 
 with foreign sugar? This dilernma evidently struck Sir 
 Thomas Farrer, because he adds that, for these "subsidiary 
 trades, foreign refined sugar has special advantages." We 
 know that what the Board of Trade says should be always 
 accepted as indisputable ; otherwise, we should have 
 claimed some slight knowledge of our trade, and been 
 disposed to smile at so absurd a statement. Every kind 
 of refined sugar which is made abroad is also made here, 
 and many other kinds also. As British refined sugar 
 invariably fetches a higher price than the similar kind of 
 foreign, it is difficult to understand how it can be shown 
 that the foreign is preferred. It is a notorious fact that 
 the best jam makers prefer cane to beet sugar ; some will 
 have it. As the foreign refined is all beetroot, it cannot be 
 preferred. The point is unimportant, but it serves to 
 show the kind of straws which are caught at by Sir 
 Thomas Farrer and his friends. 
 
 His next task is to show, by similar methods, that the 
 West Indian planters are not injured by bounties. He forgets 
 his recent assertion, that "the unnatural stimulus" of bounties 
 has brought about " glut, collapse, and ruin." That states 
 the whole of their case. So long as bounties continue they 
 must be subject to the recurrence of such a crisis ; an an- 
 ticipation which is quite sufficient to paralyse any industry. 
 
 Two mis-statements may be noted in passing, though 
 they are repetitions of old ones. " In some countries — e.g., 
 in France — there has in late years been no bounty, and 
 yet the production increases rapidly." The real facts, as 
 to France, tell in precisely the opposite direction. The 
 French production dwindled, owing to neighbouring bounty- 
 fed competition. To save it from destruction the law of 
 18.S4 \\as passed, giving a heavy bounty to the producers. 
 The other countries are not specified.
 
 FREE TRADE IN SUGAR. I 19 
 
 The otlicr mistake is a bad one, showing great ignor- 
 ance of the rudiments of the subject. We are told that 
 " it is onl\' on the sugar exported that a bounty can 
 possibly be paid, and this is only 700,000 tons out of a 
 total of beet-sugar production of about 2,000,000 tons." 
 Nothing could possibly be more erroneous. Sir Thomas 
 Farrer has explained that the bounty is obtained by 
 producing more sugar than the official quantity which 
 the roots are estimated to yield, and on which the duty is 
 levied. He ought, therefore, to have seen at once that, 
 thanks to the outlet afforded by the drawback system, the 
 producer is always able to obtain from the consumer the 
 full duty-paid value of the sugar. He therefore obtains, 
 owing to the export drawback, the bounty not only on the 
 quantity exported, but also on that which is taken for 
 home consumption. 
 
 The allegation that bounties tend to make the consumer 
 dependent on the bounty-fed supply. Sir Thomas Farrer 
 says, " scarcely needs refutation." Unfortunately it is an 
 accomplished fact, and has been so for some years. Three 
 times since 1876 there has been a deficient beetroot crop, 
 and on each occasion there was a rise of 50 per cent, in the 
 price of sugar. That is what we call dependence on the 
 bounty-fed supply, which will become intensified every year 
 that bounties continue. At the present moment we arc 
 seeing the progress of what looks very like a corner in 
 sugar, of which Continental operators are the authors. 
 They have discovered that from now till next October they 
 are masters of the situation, and they mean to make us pay 
 for it. Sir Thomas Farrer will therefore find that we are 
 already considerably nearer the " virtual monopoly " which 
 he derides than he was aware of His refutation comes to 
 nothing, for it is founded on the statement that " much of 
 the supply of beet sugar is not bounty-fed," which I have
 
 I20 FRKK TRADE I\ SUGAK. 
 
 just sho^\■n to be incorrect. He also speaks of the " diversi- 
 fied area of production," wliich makes it as impossible to 
 create a monopol}- as it would be with wheat. But he has 
 shown elsewhere that in the course of a very few years the 
 beet sugar production was increased five-fold, and that this 
 exaggerated growth, caused b}' the " unnatural stimulus " 
 of bounties, ended in " glut, collapse and ruin." What is 
 the use of a diversified area of production under such con- 
 ditions as these, whether the article be sugar or w^heat .' It 
 is marvellous to hear a great political economist — one who 
 professes to follow Cobden — use such language as this. 
 
 Beet-sugar, he says, has " increased in a much larger 
 l)roportion " than cane-sugar ; and )'et he brings that fact 
 forward as his proof that beet is not supplanting cane. I 
 have dealt with his figures already, but I note here that he 
 la)-s great stress on West India sugar having increased 
 20,000 tons in three years. This is indeed introducing 
 comedy into statistics. The ordinary fluctuation in the 
 crop of one island alone would amount to more than that 
 figure. All the figures are, however, quite immaterial, now 
 that we have got the admission that bounties lead to " glut, 
 collapse, and ruin." It is only necessary to be noticed in 
 order to indicate another of the feeble straws to which Sir 
 Thomas Farrer clings. 
 
 There is "no reason to despair of the future of cane- 
 sugar." No, none whatever, unless bounties continue, when, 
 as Sir Thomas Farrer tells us, the " unnatural stimulus " 
 brings about the necessary consequence of "glut, collapse, 
 and ruin." Skill and industry are alone necessary, he 
 thinks, to enable cane to compete with beetroot. But who 
 will be disposed to apply skill, industry, or money on an 
 industry over which the.se terrible results of the bount}' 
 sj'stem, so well described b}- Sir Thomas Farrer, are 
 impending ?
 
 FREE TRADE IN SUGAR. 121 
 
 The case and prospects of the cane-sugar producers, who 
 receive no bounty, are " not worse probably at the present 
 moment than those of protected sugar producers in foreign 
 countries." Sir Thomas Farrer does not say on what facts 
 or reasoning this assertion, so apparently contrary to 
 common sense, is based. We ordinary men of business 
 certainly believe that an industr}' which receives an artificial 
 profit in addition to its natural one, can survive "glut, 
 collapse, and ruin " longer than the industry which depends 
 only on its natural profit, and which is, therefore, heavily 
 handicapped in the race. 
 
 The only reason given for this apparent paradox is re- 
 markable. The cane-sugar producers are told that " there 
 has been a general glut, and they, in common with others, 
 have suffered." Sir Thomas Farrer forgets that he has 
 already fully explained the nature of this glut : that it was 
 caused by the over-production of beet-root sugar, arising 
 from the " unnatural stimulus " of bounties. This is not 
 " a general glut," but a particular, special, and artificial glut, 
 brought about, as he says, by an unnatural cause. He can- 
 not deny that so long as the unnatural cause continues the 
 same effects will recur. On what grounds, then, can he 
 possibly maintain that " a share of the American market," 
 coupled with " skill and energy," can overcome the dis- 
 astrous effects of bounties which he has so accurately 
 described ? 
 
 Then comes the same argument as that which con- 
 cluded the question of the refining industry. "The West 
 India interest is a small interest." He does not allude to 
 Mauritius, Natal, India, Australia, or any other sugar- 
 producing British colon)-. The price of sugar. Sir Thomas 
 F"arrer says, has been reduced b}' bounties to the extent of 
 ;^ 5,000,000. A little earlier he told us the reduction was 
 ;^9,ooo,ooo. It does not matter, there is no foundation for 
 
 L
 
 122 FREE TRADE IN SUC.AR. 
 
 cither figure. Bounties, as I have shown, have no effect on 
 price except by over-production ; and none of the bounty 
 reaches this country until the level of natural minimum 
 profit is passed ; and then the least fraction which turns 
 the scale between profit and loss sends the pendulum 
 swinging in the opposite direction. 
 
 But following Sir Thomas Farrer's reasoning, where 
 does it lead us ? He is, in fact, arguing for the perpetual 
 maintenance of bounties. He says, " They ask us to sacri- 
 fice a sum which is more than equal to the whole of their 
 production." He declines to do so ; the bounties must 
 continue rather than make such a sacrifice. " The much 
 larger interests of consumers in the United Kingdom " 
 demand it. Bounties, Sir Thomas Farrer says, produce 
 "glut, collapse, and ruin," which is a state of things so 
 beneficial to consumers that it must be maintained at all 
 hazards. 
 
 He says the remedy we propose won't do, because it is 
 Retaliation with a capital R ; and that all the arguments 
 against Retaliation and Protection apply to our case. I 
 have alread}' proved at great length, and several times 
 that we do not propose either Retaliation or Protection, 
 and that the very sound and conclusive arguments 
 against buch a policy, if they have any bearing on our 
 case, arc arguments in favour of the proposed remedy. I 
 will not go over the ground again ; it is sufificient to state 
 once more the remedy \\-hich is proposed, and which Sir 
 Thomas Farrer deliberately and so repeatedly misrepre- 
 sents, long after his statements have been refuted, and 
 without attempting to meet the refutation. The remedy 
 — the only possible remedy — for bounties, is to get all the 
 bounty-giving countries mutually to agree to abolish them. 
 Every Government that has been in power in this country 
 for the last quarter of a century has been endeavouring to
 
 FREE TRADE IX SUCAK. I 23 
 
 bring this about. We have been parties to a Convention 
 for this purpose, which did not work. We have taken part 
 in man)' international conferences since that treaty lapsed, 
 in order to bring about a more effective one. We have 
 several times been within an ace of succeeding, and we 
 should long since have done so if wc had consented to giv^e 
 the contracting Powers sufficient security that their indus- 
 tries would not have to compete in our markets against 
 bounty-fed sugar. In spite of many high authorities main- 
 taining that such a security would be " not onh- consistent 
 with Free Trade, but positively conceived in the interests 
 of Free Trade," Sir Thomas Farrer and his friends have 
 hitherto succeeded in preventing this security being given, 
 and consequently all our negotiations have been fruitless. 
 Sir Thomas Farrer and his friends prefer " glut, collapse, 
 and ruin." The present Government have, however, pre- 
 ferred to act on their own opinion, rather than on that of 
 Sir Thomas Farrer. They have obtained a Convention, 
 and have agreed to a penal clause so that the abolition 
 of bounties may be a reality, and not a dead letter. If 
 Parliament agrees to the necessary legislation — preferring 
 Free Trade to the protection of foreigners on British 
 markets — it is almost certain that the penal clause will 
 never be enforced ; all bounties will be at once abolished. 
 That, if it were enforced, there would be no effect on the 
 market and no injury to the consumer, I have already 
 sufficiently proved. 
 
 In a footnote the following passage occurs, in reference 
 to the amount of bounty and of countervailing duty, the 
 chapter having been written before the Government had 
 adopted the idea of prohibition : — " The point, however, is 
 immaterial to my argument, since, whatever the dut\' may 
 be, the price must be raised by the amount stated in the 
 text, or the duty would fail in its proposed effect.'' Of all
 
 124 PKhE TRADE IX SUdAR. 
 
 the glaring fallacies contained in the book, this is, perhaps,, 
 the most extraordinar}-. Can Sir Thomas Farrer reall}- 
 believe that a duty to countervail a bounty raises the price 
 of the sugar on which it is levied ? Two exactly similar 
 sugars are, of course, sold at exactl}' the same price. But 
 one of them, having received a bounty, is struck with a 
 countervailing duty of 2s. j^er cwt. Does Sir Thomas 
 P^arrer really believe that that sugar immediately fetches 2s. 
 per cwt. more in the market than the other exactly similar 
 sugar which has received no bounty and paid no duty? Or 
 does he believe a still more incomprehensible thing, namely, 
 that because this one particular sugar, which has received 
 a bounty and paid an equivalent duty, has been so 
 treated, therefore the whole of the imports of the United 
 Kingdom have been raised in price to the extent of 2s. 
 per cwt. ? He must believe either the one or the other ;, 
 and each is a rediictio ad ahsurdmn. 
 
 Most of the remainder of this chapter has already 
 been fully answered. There is only one remark requir- 
 ing notice. Most of the foreign Governments desire 
 to abolish their bounties. Sir Thomas Farrer admits, but 
 adds that they will not do so when they see that we wish 
 it. He must have a very bad opinion both of their 
 common sense and their good feeling. They all accepted 
 our invitation to a Conference ; they have expressed their 
 desire to abolish bounties, and their satisfaction at our 
 Government's efforts to bring about an arrangement. Is 
 there some Board of Trade memorandum which is to make 
 them change their minds at the last moment .' Un- 
 doubtedly Sir Thomas Farrer will do his best to make 
 the negotiations a failure. It rests with Parliament to 
 say whether his are the views most conducive to the 
 welfare of the country and the progress of Free Trade.
 
 125 
 
 CHAPTER XIII. 
 
 REPLY TO STATISTICAL APPENDIX. 
 
 The little appendix containing the latest returns of 
 sugar production appears to have been kindly inserted 
 as assisting in proving our case. Consumption appears to 
 be at a standstill, the increase for the year being only 
 9,000 tons out of 1,182,618 tons. 
 
 The production of cane sugar, it seems, has decreased 
 98,000 tons, while the production of beetroot sugar has in- 
 creased by 393,000 tons. 
 
 The imports of foreign refined have increased 33,000 
 tons in one year, and now amount to 350,000 tons a year, 
 a quantity sufficient to keep a good many sugar houses 
 going. The quantity of raw sugar imported, deducting 
 exports, has fallen off 37,000 tons. 
 
 This exhausts the information furnished by these 
 figures. Every one of them supports our case. Cane 
 sugar standing still, or rather falling off. Beetroot still 
 increasing by leaps and bounds. It is but a few years ago 
 that the production was under a million tons; now it is 
 nearly three million. It is considerably more than half 
 the visible production of the world. Foreign refined im- 
 ports have increased enormousl)- in the last few years, and 
 are still increasing.
 
 126 
 
 APPENDIX A. 
 
 REPLY TO SIR THOMAS FARRER I5V W. P. 15. SHEl'lIEARD, 
 ESQ., OF LINCOLN'S INN, BARRISTER-AT-LAW. 
 
 {^Reprinted from " Sugar.") 
 
 SIR THOMAS FARRER AND THE SUGAR CONVEXTIOX. 
 
 The controversy, so long waged in the Blue Books between 
 former officials of the Board of Trade and the representa- 
 tives of the sugar industr}^ has been shifted to the columns 
 of the Times. Sir Thomas Farrer appears in his accus- 
 tomed jv/e as champion of foreign Protection ; he sees a 
 British industry restricted by unfair trading, and he de- 
 nounces the means taken to remove the restriction. Sir 
 Thomas Farrer should start an " Unfair Trade League," 
 and proclaim himself the president. We are afraid the 
 foreign bounties have destro}'ed some economic reputations 
 as well as closed our sugar refineries. How is it possible 
 to reconcile Sir Thomas Farrer's bold advocacy of one ot 
 the worst forms of Protection with his protestations in 
 favour of Free Trade .' And yet the Cobden Club has 
 endorsed Sir Thomas Farrer's views in a leaflet. Surely 
 these latter-day Free Traders have got adrift ! They no 
 longer appeal to the well-known principles upon which 
 P'ree Trade was established ; on the contrary, Sir Thomas 
 Farrer proclaims himself a patriot rather than a Free Trader. 
 As a Free Trader, he denounces bounties ; as a patriot, he 
 approves them. We can only explain Sir Thomas Farrer's 
 position on this bounty question by recalling to mind 
 Cobden's warning " that there were many heads which 
 
 I 
 
 i 
 
 I
 
 FREE TRADE IX SUCAR. 12/ 
 
 could not comprehend and master a proposition in political 
 economy." 
 
 Now, the proposition in political economy which Sir 
 Thomas Farrer appears to get into confusion about hap- 
 pens to be the very one upon which the whole fabric of Free 
 Trade was built up. The early English economists based their 
 advocacy of Free Trade upon the advantage of leaving to 
 natural causes the determination of the channels of industry 
 and trade. The great political expositors of Free Trade 
 succeeded in overthrowing the Protectionists by the appeals 
 they made to the people against the interference of govern- 
 ments with the natural course of trade. What are the 
 principles relied upon by Cobden in the press of the con- 
 troversy in which he was engaged ? He says — " We do 
 not seek Free Trade in corn primarily for the purpose of 
 purchasing it at a cheaper money rate ; we require it at the 
 natural price of the world's market ; whether it becomes 
 dearer with Free Trade, or whether it becomes cheaper, 
 it matters not to us, provided the people of this country 
 have it at its natural price, and every source of supply is 
 freely opened, as nature and nature's God intended it to be; 
 then, and then only, shall we be satisfied." 
 
 Here was the primary idea which, vindicated by the 
 more abstruse science of political economy, carried convic- 
 tion to the minds of the people. To it is due the impulse 
 which destroyed Protection in this country, and it is the 
 same impelling conviction which, notwithstanding the ill- 
 conceived efforts of Sir Thomas Farrer, will bring about the 
 cessation of the bounties. How is it that so much miscon- 
 ception exists as to the principles involved in the discussion 
 of this bounty question .' To read Sir Thomas P'arrer's 
 letters which appeared in the Times of the 5th of Sep- 
 tember and 3rd of October, one would suppose that the 
 Government were upon the eve of giving effect to some
 
 128 FREE TRADE IN SUGAR. 
 
 great Protectionist interference with the natural order of 
 things in our sugar trade. As the full text of the Sugar 
 Convention appears in our present issue, our readers can 
 judge for themselves as to its provisions. We search in 
 vain for any semblance of Protection ; for any form!^of re- 
 taliation ; or for what Sir Thomas Farrer is pleased to 
 designate as "the first step openly taken b}' the British 
 Government in the direction of commercial retaliation and 
 restriction — the first ofificial abandonment of the policy of 
 free imports." 
 
 We hardly know how to do justice to the discursive and 
 loosely-reasoned statements of this latter-day I'ree Trader. 
 We cannot, with the sublime generosity of the Times, afford 
 space to reproduce the letters. Yet to sift out the leading 
 propositions brings into cruel juxtaposition the most con- 
 flicting assertions : " Foreign bounties are very bad things " 
 — " The compensatory advantages to us are very great " — 
 " Our true policy is to let foreign nations take care of them- 
 selves" — " They, in their folly, offer us a free gift" — ''These 
 Sugar Bounties are uncertain and, in their origin at least, 
 unintentional " — "To exclude bounty-fed sugar must be to 
 deprive the consumer of sugar which he now enjoys." Is 
 it necessary to string together any more of these miscel- 
 laneous apothegms ? We will do that which Sir Thomas 
 P'arrer has shirked doing ; he knows the value of generali- 
 ties : dolosus versaUtr in geiieralibus. We will endeavour 
 to convert his generalities into specific propositions. Here 
 they are : (i) P'oreign bounties on export are a benefit to 
 us as a nation ; (2) An international agreement for the 
 abolition of bounties involves a return to Protection'; (3) 
 The exclusion of imports of bounty-aided sugar is a viola- 
 tion of the most-favoured-nation Article; (4) The prohibi- 
 tion of imports of bounty-aided sugar is a restriction on 
 imports of sugar.
 
 FREE TRADE IN SUGAR. 129 
 
 We cannot reduce to any intelligible proposition Sir 
 Thomas Farrer's attempted exposition of the effect of 
 bounties on prices. The relation of bounties to market 
 values is the />ous asinornin in the political economy of the 
 question. Few thinkers get across this bridge, and Sir 
 Thomas Farrer is not one of them. 
 
 Taking, then, the propositions into which we have 
 endeavoured to summarise all that is material to the 
 controversy in Sir Thomas Farrer's letters, we proceed to 
 deny them seriatim. We join issue with Sir Thomas 
 Farrer on the first, and assert that foreign export bounties 
 are no benefit, but an injury, to us as a nation, because 
 they are a violation of Free Trade. 
 
 The chain of economic reasoning supporting our con- 
 tention is as follows : — There are two forms of Protection, 
 one by a differential and hostile tariff, whereby States 
 exclude or restrict the entry of foreign competing labour 
 products into their own markets : this is defensive Protec- 
 tion. The other, by means of export bounties whereby 
 States exclude or restrict the entry of labour products 
 competing with their own into foreign markets : this is 
 aggressive Protection. 
 
 But how exclude or restrict? We reply, by the 
 operation of a differential price. Let the United Kingdom 
 be the common market for labour products of our own and 
 other States. Our policy of Free Trade opens our market 
 to all competitors, without favour or restriction to any. 
 This policy rests on the unassailable conviction that the 
 natural advantages of each competitor are the best elements 
 for determining the course of competition. Let the com- 
 petitors be A, B, C, D, up to X. Each, under a Free 
 Trade regime, relies solely on the natural market price to 
 recoup cost of production. But directly A, B, and C get 
 an export bount}-, they receive both the market price (/"x) 
 J
 
 I30 FREE TRADE IN SLUiAR. 
 
 and tlic cash bounty (^y) ; but all the other competitors 
 only receive the market price {£x). Therefore, there is a 
 constant differential element in price operating against all 
 competitors without bounties. 
 
 Let us compare this variation from the pure Free 
 Trade competition of natural advantages with the variation 
 which would follow the imposition of Protective tariff 
 duties. Competitors A, B, C, D, up to X, having been 
 admitted to our market at one and the same rate of, 
 or without payment of, duty, are now, with the exception 
 of (say) A, B, and C, subject, by our assumption, to a duty 
 of ;^y. 
 
 Then all competitors, except A, B, and C, get the 
 market price, £:s. — £y (the duty) ; whilst A, B, and C 
 receive the undiminished market price, £x. The differen- 
 tial element in each hypothetical case is the same, viz., £y. 
 
 For the sake of clearness, we will tabulate the effects 
 of these two forms of Protection : — 
 
 Under Protective Duty System. 
 
 A, B, and C (duty-free competitors) 
 
 receive market price - - - ;^x 
 Other competitors (subject to duty ^y) £>^ — ;^\' 
 
 Differential fiscal advantage to A, B, 
 
 and C £y 
 
 Under Export Bounty System. 
 
 A, B, and C (bounty-aided competitors) 
 receive market price {£x) and 
 bounty (;^y) . . . _ £x+£y 
 
 Other competitors . - - . ;^x 
 
 Differential fiscal advantage to A, B, 
 
 and C . - - . - £y
 
 FRia-: TRADE IN SUCiAR. I3I 
 
 It is clear, then, that the economic mischief is in both 
 cases identical. Moreover, it is the very mischief Free 
 Trade was instituted to prevent — viz. : The mischief of 
 competition being restricted by State intervention instead 
 of developed by the free play of natural advantages, and 
 the consequent result of the inferior and, therefore, more 
 costly production ousting the superior and, therefore, 
 cheaper production. 
 
 It is obvious that, so far as the displacement of natural 
 channels of industry is concerned, foreign bounties on 
 export operate directly on our own country. A fugitive 
 and precarious advantage temporarily enjoyed by our 
 consumers of to-day is no compensatory advantage, as Sir 
 Thomas Farrcr would make out, for the permanent loss of 
 the work and wages incidental to a great industry, and for 
 the transfer to the consumers of to-morrow of the burthen 
 of the bounty-aided and, therefore, inferior and more costly 
 zone of production. He says the consumers of the United 
 Kingdom pay ^30,000,000 annually for their sugar. At a 
 wage rate of £60 a year, this sum represents work and 
 wages for 500,000 men. The tendency of bounties is to 
 shift production from the cane-sugar zone, in which British 
 interests lie, to the beet-sugar zone — the one gains what the 
 other loses. This is clearly indicated by the statistics of 
 imports. Instead of some five per cent, of the total imports 
 of sugar to this country being beet sugar, as was the case 
 during the ten-year period preceding the bounty system 
 (1852 to 1 861), over 60 per cent, is now the percentage of 
 beet sugar. 
 
 Now we desire to be perfectly fair to our opponent, 
 and at once admit that he does not wish to urge that the 
 substitution of the sugar from one zone for that of another 
 by arbitrary means is a benefit, but that the bounty which 
 effects the substitution is a benefit.
 
 132 TREE TRADE IN SUGAR. 
 
 But now comes the difficulty of our opponent's position. 
 Every British or national industry is of some value to this 
 country. But its value, we allow, is never esteemed great 
 enough to make it worth our while to support it by State 
 aid against the natural forces of world-wide competition' 
 We leave it to its own inherent power in reliance on its 
 natural advantages to stand or fall. We do not impose 
 restrictions on it ; we do not favour it. But ought any 
 foreign State be allowed to impose restrictions ? What is 
 a bounty unless it is a restriction on competition? It is, in 
 other words, the price paid by a foreign State to us for the 
 purpose of restricting the competition of a British industry 
 France gives us a bounty in order to stop the competition 
 of our refiners. The cash bounty is the advantage which 
 Sir Thomas Farrer makes the most of. But the nation 
 has its share of the ;^30,ooo,ooo worth of work and wages, 
 represented by our sugar consumption, subjected to an 
 annually-increasing diminution. 
 
 If the officials of the Board of Trade are to stand 
 behind a counter in order to sell British industries to 
 foreign governments, we must have a better price than 
 some " uncertain amount of bounty " for such an industry 
 as that of sugar. On the one side of the account is the 
 " uncertain bounty " derived from the " folly " of foreign 
 governments. On the other side of the account is 
 diminished and diminishing work and wages. In short, 
 for a mere donation, not renewable except at option 
 of foreign donor, we are selling the permanent wage 
 annuities of successive generations of our working 
 classes. 
 
 Every four tons of sugar consumed per annum repre- 
 sents just ^60 per annum to labour. Is it beneficial to 
 the whole nation to sell permanent annuities of £60 for 
 an uncertain donation of say ^^"20 per annum — that is,
 
 k 
 
 FREE TRADE IN SUGAR. 1 33 
 
 taking the bount}- as high as £'^ per ton — in other words, 
 to sell the work and wages incidental to the production of 
 every four tons of sugar, say £60, for the uncertain bounty 
 of from £2 to £t, per ton ? 
 
 When we perceive the effect of bounties on our labour 
 interests, we are not surprised to learn that it was due to 
 the pressure of the great Trades Unions of this country 
 upon the government, at a critical period in the recent 
 Con''erence, that the absolute exclusion of bounty-fed 
 sugar was agreed to. We should be false to our faith in 
 Free Trade if, like Sir Thomas Farrer, we could bring our- 
 selves to believe that, under any other regime than that of 
 Free Trade, our consumers of sugar would realise for their 
 purchasing power the utmost value the world was capable 
 of affording them ; or that the production of sugar could 
 ever be settled on any better basis than its natural basis, 
 as established by the salutary process of e\"olution, ever 
 tending to secure the survival of the fittest. 
 
 But Sir Thomas Farrer wishes, apparentl}-, the inference 
 to be drawn that the greater the import of foreign bounty- 
 aided sugar, the greater the demand on our labour for 
 goods in exchange. He somehow fails to discern that 
 every unit of wealth produced within our own zone of 
 production is the reciprocal demand for another unit in 
 exchange. Hence if the natural course of things happened 
 to enable us both to produce the whole ;{J"30,ooo,ooo of 
 sugar and the goods for which it was exchanged, the 
 national labour would operate on both sides of the 
 exchange, instead of one side only, as in the case suggested 
 by Sir Thomas Farrer. Therefore there is no prima facie 
 advantage in additional imports of foreign sugar, on the 
 grounds that they stimulate exports of British goods. 
 Passing from this digression, we assert that economic 
 reasoning leads us step by step to the absolute conclusion
 
 134 FREE TRADE IN SUCIAR. 
 
 that foreign bounties are a permanent injury to the nation 
 as a whole. 
 
 The more advanced economic thinkers have always 
 supported what is termed "Free Trade," on the grounds 
 that it eliminated nationalities from the area of produc- 
 tion by extending the principle of the sub-division of labour 
 over the whole available area of production, and that 
 the most effective sub-division of labour was always the 
 direct result of the play of natural, as opposed to arbitrary 
 or State-created forces. 
 
 No economic thinker ever confused the great principles 
 of Free Trade with the questions involved in the comparative 
 advantages of indirect and direct taxation. But Sir Thomas 
 Farrer, as well as other leaflet writers for the Cobden Club, 
 seems to assume that any import duty is a violation of Free 
 Trade. No one denounced this confusion of thought more 
 persistently than Cobden. Speaking at a contested election 
 for the City in 1843, he said : " We have said thousands of 
 times that our object is not to take away the Queen's 
 officers from the Custom House, but to take those officers 
 away who sit at the receipt of custom to take tithe and 
 toll for the benefit of peculiar classes." 
 
 In spite of true economics, and of Cobden's own warn- 
 ing, the latter-day Free Traders of the Cobden Club have 
 so warped the minds of the . working-classes that they 
 absolutely declare, by their authorised representatives, in 
 favour of absolute prohibition of bounty-aided sugar, 
 rather than of the mere ti'ansfer of the bounties into our 
 revenue by a countervailing duty. We do not quarrel 
 with the decision ; its advantages in point of simplicity 
 and effectiveness are great. 
 
 We now come to the second proposition : " That an 
 international agreement for the abolition of bounties in- 
 volves a return to Protection." We join issue on this, and
 
 FREE TRADE IN SUGAR. 1 35 
 
 assert that the Convention is simply the restoration of Free 
 Trade. How can Protection, which is national exclusive- 
 ness, ever be involved in an international agreement ? If 
 all States now giving bounties were by independent action 
 to abolish them to-morrow, would the result be a return 
 to Protection ? Of course not ! Then why should an 
 international agreement to effect the same result be 
 regarded as a violation of Free Trade ? But the inter- 
 national agreement was to be secured only by the equitable 
 and salutary provision that any nation standing out should 
 not retain a differential advantage over the adherents of a 
 sounder policy. Its bounty-aided products are excluded ; 
 but it cannot complain — bounties are voluntary, and ivkiiti 
 lion jit injuria. 
 
 On the third proposition we likewise join issue. We 
 deny that the prohibition of imports of bounty-aided sugar 
 is contrary to the provisions of the most favoured nation 
 Article in our commercial treaties. We agree with the 
 representatives of Spain and Germany, at the recent Inter- 
 national Conference, that export bounties themselves are 
 a direct violation of the spirit and intention of that Treaty 
 Article. We have already demonstrated that the effect of 
 a bounty on international competition is exactly identical 
 with the effect of a differential duty. The most favoured 
 nation Article is a provision directed against all differential 
 treatment {inter se) of the imports of foreign States into 
 our ports. If any one of these foreign States can be 
 permitted to vary in its own favour, by means of export 
 bounties, its competing position with other foreign States 
 on our markets, then the ver}' mischief which the favoured- 
 nation Article was intended to prevent immediately arises. 
 This is a sufficient reply to Sir Thorrias Farrer's bare and 
 unsupported assertion. But it may be necessary at some 
 future time to discuss this point more full}- in its bearing
 
 136 FREE TRADE IN SUCAR. 
 
 on international law. It is obvious, liowevcr, that unless 
 some positive action is taken against imports of bounty- 
 aided goods, each nation is almost bound to secure itself 
 in its full enjoyment of the most-favoured-nation Article 
 by giving whatever bount}^ it may find necessary to restore 
 the equality of competition which was the object of that 
 Article. 
 
 \Vc now come to the last proposition, that " prohibition 
 of imports of bounty-aided sugar is a restriction on imports 
 of sugar." This we deny, and, on the contrar}', say that it 
 is simply the prohibition of bounties, not of sugar. It is 
 the substitution of sugar without bounty for sugar with 
 bounty. If sugar wrapped in blue paper were excluded, 
 whilst that wrapped in white paper were admitted, there 
 would be no restriction on imports of sugar, but simply of 
 the blue-paper wrappers. We secure the Free Trade 
 wrapper for our sugar by excluding the Protectionist 
 wrapper of a bounty. 
 
 In conclusion, we regret that Sir Thomas Farrcr should 
 have sought to damage a great national industry ; that he 
 should have advanced theories which assail the very 
 foundations of Free Trade ; that he should champion the 
 interests of foreign Protectionists. But the Convention is 
 unassailable ; it will be ratified by Parliament, and in- 
 augurate that regime of " P'ree Trade and no Protection " 
 so long in abeyance as regards our great Home and 
 Colonial sugar industry. Under this regime, each and 
 every nation will once more enjoy the full advantages of 
 its respective natural resources for the production of sugar.
 
 APPENDIX B. 
 
 MR. LUBIJOCK S LKTTERS IN THE TIMES, IN RErL\' 
 TO SIR THOMAS FARRER. 
 
 Sir, — The letter in your columns of yesterday on the 
 subject of the Sugar Bounties Convention from Sir T. H. 
 Farrer will be read with the attention to which anything 
 coming from the pen of the late permanent chief of the 
 Board of Trade is naturally entitled. That the Convention 
 should be as gall and wormwood to him will cause no sur- 
 prise to those who have for years past watched the intense 
 — I had almost said the acrimonious — zeal which he has 
 displayed in preventing anything whatever being done to 
 bring about a cessation of bounties. 
 
 Sir Thomas Farrer says — " Bounties, like protective 
 duties, are bad things ; but this is not the way to get rid 
 of them/'' Perhaps he then would explain how he would 
 get rid of them. The doctrine was preached many years 
 ago that foreign Governments, if left alone, would abolish 
 bounties themselves. This has been tested for twenty- five 
 years, with the result that the policy of giving bounties, so 
 far from being abandoned, has been largely extended. 
 Your correspondent taunts the Government with going cap 
 in hand to foreign Powers, but this has been rendered 
 necessary by the commercial policy of this country for the 
 last half-century. Would he have wished the Government 
 to follow the example of Spain, who, when she wished us 
 to reduce the duties on her wines, did not come to us cap 
 in hand, but imposed 30 per cent, extra dut}' on English
 
 138 fri;e trade in sugar. 
 
 goods going into Spain ? Although this measure was 
 successful, it was one which Sir Thomas Farrer would 
 hardly wish to see imitated by our Government. 
 
 Your correspondent speaks more than once of cheap 
 bounty-fed sugar in such a way as to lead anyone who was 
 excessively ignorant into the belief that bounty-fed sugar 
 is cheaper than non-bounty-fed sugar. I need hardly say 
 that this is not, and never can be, the case, either with or 
 without the Convention. Sugar, bounty-fed or otherwise, 
 will sell at the same price in the same market relatively to 
 its value at all times. 
 
 Sir Thomas Farrer fears that we may possibly under 
 the Convention be prevented from buying sugar from the 
 United States and Sweden. The United States produce 
 less than 200,000 tons, and consume more than 1,200,000 
 tons, so that they are not likely to have any surplus sugar 
 to send us for some time to come. Sweden may or may 
 not export sugar, but if she does the quantity is so small 
 that it finds no place in any published returns available to 
 those interested in the sugar industry. He also throws out 
 some doubts respecting France^ Austria, Brazil, and Den- 
 mark. But the quantities of sugar we receive from France 
 and Austria are comparatively small, while from Denmark 
 wc receive none at all. But as regards Austria and Brazil, 
 there can hardly be a doubt as to their adhesion to the 
 Convention, and I believe it will be found that France will 
 also come in. But even if these Powers remain outside, 
 the total amount of sugar available for export from France 
 and Austria is hardly one-twentieth of the world's supply, 
 and the effect of excluding their sugar would consequently 
 be absolutely inappreciable upon the price. Moreover, it 
 must be borne in mind that it is only sugar receiving a 
 bounty that will be boycotted. Brazil does not give a 
 bounty, so that her sugar would in no case be shut out ; 

 
 FREE TRADE IN SUGAR. 139 
 
 and as for France and Austria, these Powers are solemnly 
 committed by their declarations in the Protocol to the 
 policy of suppressing bounties. 
 
 Further, a complaint is made that the process of ascer- 
 taining whether sugar is bounty-fed or not, " is one of the 
 most perplexing technical questions which financial neces- 
 sities have ever inflicted upon legislators — a question which 
 all the cleverest experts of the ablest Governments have 
 hitherto been unable to solve." But this is a complete mis- 
 take. It is quite true that some of the authorities of the 
 Board of Trade, while Sir T. Farrer was its chief, pro- 
 fessed to find great difficulty in ascertaining whether 
 bounties were granted or not in certain countries, but no 
 such difficulty has been found by foreign officials, and the 
 countries giving bounties are perfectly well known not only 
 to them, but to all concerned in the industry. I should 
 be sorry to think that the officials of our own Board of 
 Trade, under their late chief, were lacking in intelligence 
 as compared with foreign officials ; but if Sir T. Farrer, 
 when alluding to " the cleverest experts of the ablest 
 Governments," meant to refer to his own department, there 
 is, I fear, no other conclusion to be arrived at. 
 
 Further, some alarm is expressed at the possible effect 
 the Convention may have in preventing our colonies from 
 giving bounties, and that we may have to boycott their 
 sugar. It is really quite amusing to see Sir Thomas P^arrer 
 posing as the friend of our colonial sugar industries, and 
 professing alarm on their account ; but I am happ}' to be 
 able to reassure him. The colonies are included in the 
 Convention, and all their sugar industries are full}' repre- 
 sented upon the British and Colonial Anti-Bounty Associa- 
 tion, of which I am the chairman, and I am in a position to 
 say that there is not the slightest fear of our having to boy- 
 cott any colonial sugar whatever.
 
 I40 FREE TRADE IN SUCIAR. 
 
 It is not for mc to sa\- whether Sir T. Farrer's allusions 
 to Baron Henr)' de Worms arc in good taste ; but I do 
 know that those who are practically acquainted with the 
 subject are best able to appreciate the great ability shown 
 b}' the Baron in overcoming the difficulties he has had to 
 contend against — difficulties which Sir T. Farrcr, in spite 
 of his condemnation of bounties, has certainly not assisted 
 to remove. I believe the services rendered by Baron de 
 Worms will be more generously appreciated by an unpre- 
 judiced public, as I know they are by our sugar-growing 
 colonies and the home industries connected with sugar. 
 
 I am. Sir, your obedient servant, 
 
 N. Lubbock, Chairman of the British 
 and Colonial Anti-Bounty 
 Billiter House, Sept. 6. Association. 
 
 Sir, — I had hoped that the Sugar Convention might 
 now have been allowed to rest until the House of CoUi- 
 mons discussion takes place, when I venture to say the 
 public will have a better opportunity of learning the truth 
 about the bounty question than by reading Sir Thomas 
 Farrer's one-sided and incorrect statements. 
 
 I cannot claim your indulgence to afford me space to 
 answer in detail the three columns of statements and argu- 
 ments occupied by Sir Thomas Farrer's letter in TJie Tiiws 
 of the 3rd inst. I would, however, ask your permission to 
 make a few general remarks in reply. 
 
 Sir Thomas appears to maintain : — 
 
 (i) That if bounties are abolished sugar will become 
 dearer. 
 
 (2) That bounties are bad things, but foreign protective 
 
 I
 
 FREE TRADE IX SU(;AR. I4I 
 
 duties arc worse, and that as wc do not remedy the one 
 evil we must not remedy the other. 
 
 (3) That bad as bounties are for the general industry 
 of the world, they are good for us. 
 
 (4) That by stopping bounty-fed sugar " we put a stop 
 to those manufactures of our own which we now export in 
 order to pay for the bounty-fed sugar." 
 
 My reply is as follows : — 
 
 (1) The highest authorities upon sugar both in Germany 
 and England are of opinion that if bounties are abolished 
 the value of sugar will not be raised. Ample reasons 
 could be given for this if space permitted. 
 
 (2) We do not interfere to get rid of protective duties 
 abroad, because we cannot do so effectively. If Baron de 
 Worms could bring about a mutual agreement among 
 foreign Powers to abolish protective duties in the same 
 ■way as he has brought about an agreement to abolish 
 bounties, he would undoubtedly have a double claim on 
 the gratitude of his countrymen. 
 
 (3) Sir Thomas assumes that bounties have reduced the 
 price of sugar, apparently ^5 per ton, judging from a quota- 
 tion he gives from a report of Mr. Giffen's. It is not im- 
 possible that at some particular moment, as in 1884, sugar 
 was £'^ per ton below the price it would have been at had 
 bounties never existed, just as in 1877 the price was pro- 
 bably ^10 per ton higher from the same cause ; but the 
 idea that sugar has been permanently at a price anything 
 like £^ per ton below what it would have been but for 
 bounties is quite preposterous. At the present moment I 
 am confident that there is no depreciation due to bounties. 
 But even if Sir Thomas could show some slight gain in 
 price, he has an annual loss of from ^^3,000,000 to ;^4.ooo,coo 
 to set against it.
 
 142 
 
 IKKb: TRADE IN SU(;AR. 
 
 (4) It siirch' seems liardly necessary to point out that if 
 bounties are abolished, manufactures of our own will be 
 equally exported to pay for non-bounty-fed sugar. 
 
 Bounties are bad things, says Sir Thomas Farrer, but 
 they are better than Free Trade. Is not Sir Thomas 
 " masquerading as a Free-trader ? " 
 
 I remain, Sir, )-our obedient servant. 
 
 North Berwick, Oct. 6. N. LUBBOCK.
 
 143 
 
 APPENDIX C. 
 
 I 
 
 MR. SriUTES LETTERS IN THE TIMES IX REl'LV TO 
 SIR THOMAS FARRER. 
 
 Sir, — The members of the London Workmen's Anti- 
 Sugar Bounty Association have read with some pain, and 
 no Httle curiosity, Sir Thomas H. Farrer's letter of three 
 columns upon the Sugar Convention which appeared in 
 The Times of the 3rd inst. 
 
 It pained us to witness so nmch zeal for the main- 
 tenance of the bounties. In a letter that appeared as 
 recentl}- as last month, and upon previous occasions, Sir 
 Thomas Farrer, without reserve, condemned the bounties 
 as bad things. He then only exhorted the masters who 
 were being ruined by the bounties, and their skilled 
 employes in danger of finding themselves levelled down 
 to the condition of day labourers, to bear patiently, as 
 inevitable, the great injury which attends this pernicious 
 system. But new he defends it by special pleading; and, 
 notwithstanding his social position and official experience, 
 WQ feel constrained to ask, " Who is this that darkeneth 
 counsel by words without knowledge ? " 
 
 There is a great deal of padding in the letter of the 
 3rd inst., intended to gain the interest and the votes of 
 many who are not acquainted with the sugar trade and the 
 history of the origin and effect of the bounties. The letter 
 before us contains much that is true, and much that is 
 new, but unfortunatel}- " that which is true is not new, and 
 that which is new is not true."
 
 144 FRKE TRADE IN SUGAR. 
 
 Sir Thomas Farrer seems to go much further in this 
 attempt to discredit the labourers of the Government than 
 he has ever done before ; and it appears to us that " more 
 is meant than meets the ear." It is not until we have 
 nearly arrived at the bottom of the first column that we 
 find anything worthy of notice. After an allusion in very 
 bad taste to Messrs. Kelly and Peters, with whom our 
 association has no connection whatever, but who have 
 certainly worked hard for our cause, and persevered for 
 many years, and, after a sneer at Baron de Worms and at 
 Messrs. Martineau and Lubbock, we come to the assertion 
 that foreign bounties can only injure the West Indian 
 sugar growers and the British sugar refiners " by making 
 sugar cheaper to us all than it would otherwise be, and the 
 abolition of the bounties can benefit them only by making 
 it dearer to us all." 
 
 There is a studied injustice in this statement which 
 we hope the majority of fair-minded men will perceive. 
 The object of the Convention, with which every State 
 that attended it agreed in principle, is to put an end 
 to an artificial price that is destroying a home industry. 
 Neither the British public that consumes, nor the jam 
 boilers and kindred trades, the makers of brewers' sub- 
 stitutes, &c., have any right to receive the inducement 
 of the bounties to patronise the foreigner. The sugar 
 can be refined in many parts of the United Kingdom 
 certainly as well and as cheaply as in any other country, 
 and therefore the difi'erence caused by the bounty is not 
 a question of the cost of production. It is simply a 
 bribe. We arc not asking for any " benefit " when we 
 demand that this premium shall be defeated by the 
 decision at which the majority of the Convention has 
 agreed to. 
 
 Although the bounty is only one farthing per pound,
 
 FREE TRADE IN SUGAR. 1 45 
 
 it has been found to be sufficient to nearly destroy the 
 home industry of sugar refining, and to make moribund 
 what still survives of it. Our association includes all 
 the employes of the sugar refineries that have not closed 
 their gates in this immense gathering of population and 
 consumers in the whole valley of the Thames between 
 Windsor and Woolwich. Our name unfortunately is not 
 " legion," for only four refineries remain at work. Our 
 association was formed about twelve months ago, when 
 five refineries were open, and every man in them eagerly 
 joined us. There are only four at work now, and some 
 of our members have for months been depending upon 
 precarious employment about the docks, losing probably 
 half their time. Others, who once earned their 30s. and 35s. 
 per week, are now hiring barrows at one shilling per week, 
 and trying to sell toys and other things in the streets. 
 When we see this outcome of the bounty system, pro- 
 ducing so much suffering among skilled and industrious 
 citizens, we feel bound to declare that there is " something 
 rotten " in it. The professors, who regard it from a very 
 different point of view, do not admit this undeserved 
 suffering into their calculations. We can point out to 
 them that there are more things in Heaven and earth 
 than are dreamt of in their philosophy. It cannot be 
 worth while, for the sake of the saving of one farthing 
 per pound below the true cost of production, to suffer an 
 independent honest industry, that asks no favour, to 
 be destroyed. Probably there is no other business in 
 the world that sails so close to the wind. It is worked 
 by the exercise of the most rigid econoni}', and b\- the 
 rapid turnover of a very large capital. It is easy to 
 understand that one farthing per pound advantage granted 
 by foreign exchequers to foreign competitors must speedily 
 put an end to sugar refining in this country. 
 K
 
 146 FREE TRADE IN SUGAR. 
 
 The Government has certainly been right in counting 
 the cost of the loss of this manufacture to the community — 
 the loss of costly plant, and the suffering of working men, 
 and balancing these losses against the almost imperceptible 
 eleemosynary saving in the domestic use of sugar, or in 
 its employment in trades that have no right to, and no 
 occasion for, this advantage. The bounties perhaps, on the 
 average, reduce the price of sugar one farthing per pound 
 below the true cost of production. Perhaps they do not 
 affect the price quite so much. Some portion of the 
 premium, after underselling the British refiners, may re- 
 main in the foreigners' pockets. But certainly this premium 
 cannot permanently affect the price by more than its own 
 value. It has not got the purse of Fortunatus. Reversing 
 this rule, if we succeed in defeating the bounties by the 
 agreement of the Convention, the price cannot remain 
 higher than the point from which these meddling bounties 
 had depressed it, whatever may be the temporary effect of 
 speculation. 
 
 Sir T. H. Farrer may be an excellent theorist, but we 
 do not accept his ipse dixit upon the working and the 
 fluctuations of markets, for he is not a merchant. We see 
 no reason why we should hesitate to do away with an evil 
 which has been condemned by Mr. Gladstone in un- 
 measured terms as well as by the leaders of the party now 
 in office. 
 
 Our opponents seem to treat us as if we had no ex- 
 istence. But, thanks to the Government, we have not been 
 forgotten. 
 
 We wish our fellow citizens to reflect and judge what 
 would be now the general opinion about the bounties if 
 the refining of sugar had been localised in one particular 
 portion of the United Kingdom, instead of being distri- 
 buted all over England and Scotland. If, for instance, the 

 
 FREE TRADE IX SUCIAR. 147 
 
 whole body of masters and men, with their capital and their 
 acquired skill, were already ruined and suffering, or in 
 imminent jeopardy of bankruptcy and the workhouse. If 
 these were all concentrated in such a condition within one 
 of the four provinces of Ireland, so as to arrest the attention 
 and the sympathy of everybody — especially if it were 
 obvious to the least observant that there were no other 
 available manufacturing employments in the province 
 except agricultural labour — we might feel sure that no 
 theories would hinder us from applying a remedy. 
 
 We desire that practical men capable of taking large 
 views and of considering every interest should deal with a 
 great question like the bounties. We do not wish it to be 
 left in the hands of experts. The great Richard Cobden, 
 who introduced and negotiated the French Commercial 
 Treaty, would never have adopted Sir T. H. Farrer's academ- 
 ical views of this international question. The baronet's 
 letter would have us believe that we gain customers for 
 British manufactures by giving a preference to bounty-fed 
 sugar. This is quite an incorrect argument, because the 
 bribe of a farthing per pound cannot appreciably increase 
 the consumption, and our custom is only transferred from 
 sugar producers in other parts of the world, who would not 
 take less, and might very likely take more of our commo- 
 dities in exchange for their raw material. It is for our 
 advantage that the cultivation of cane sugar throughout 
 the breadth and circumference of the tropics should be 
 encouraged b\- the abolition of the bounties. We should 
 then be less affected by the local accidents of a failure of 
 crops, and a great deal more emplo\'ment would be given 
 to shipping and to our docks, and to all other waterside 
 interests. 
 
 It is obvious that it would be better for the whole com- 
 munity if the trade were restored to its natural channels by
 
 148 FREE TRADE IN SU(;AR. 
 
 the destruction of the bounties. The majority of the Con- 
 vention has agreed to a certain course, and those who still 
 hesitate will find it necessary to come in to the agreement, 
 as they cannot do without the great British market. 
 
 Touching upon the question of markets, we come to the 
 last argument in the letter before us which seems to us to 
 be worthy of notice, and that is the comparison between 
 retaliation to induce other countries to practise Free Trade 
 with us, and the destruction of bounties by countervailing 
 duties or by exclusion. The difference is very obvious. 
 Retaliation fails because we do not control the markets of 
 other countries. We double the injury. to ourselves by 
 increasing the cost of what we could import for our own 
 use, and we appear to have become converts to the prin- 
 ciples of Protection, which we strengthen by our example. 
 On the other hand, what our Government has joined the 
 majority of the Convention in agreeing to is simply to 
 prevent the sale of bounty-fed sugar at an artificial price 
 which is unjust to a great interest in our own market, which 
 we absolutely do entirely control ; and as no other sugar- 
 producing country can get along without this market it is 
 quite certain that the object of killing the bounties must 
 be accomplished. 
 
 Yours respectfully, 
 
 George Shute, 
 
 Member of the Executive of the London Workmen's Anti-Sugar- 
 Bounty Association, representing all the operatives of the sugar 
 refineries now remaining at work in London and in London suburbs, 
 viz. : — Messrs. H.Tate and Sons, Thames Sugar Refinery, Silvertown, 
 Essex ; Messrs. A. Lyle and Sons, Plaistow Wharf Sugar Refinery, 
 Silvertown, Essex ; Messrs. D. Martineau and Sons, St. George's 
 East, London ; Messrs. L. Cowan and .Sons, Hammersmith, London, 
 S.W. 
 
 Thames Sugar Refinery, Silvertown, Essex, Oct. 6.
 
 FREE TRADE IN SUGAR. 1 49 
 
 Sir, — The members of the London Workmen's Anti- 
 Sugar Bounty Association cannot help remarking with 
 wonder and with some amusement Sir Thomas H. P^arrer's 
 numerous letters that rapidly follow each other in their 
 efforts to discredit the results of the Convention with which 
 every country that was represented agreed in principle. 
 
 These letters, which a great authority that before 1886 
 condemned the bounties now considers to be " weight}^' 
 are not like those of " Junius," for a peep at which in 
 country towns the post-boys sometimes nearly lost their 
 saddle-bags. We suspect there will be few readers of these 
 dreary pro-sugar-bounty letters except workmen and their 
 employers, who, like ourselves, feel that our future welfare 
 depends upon the success that has been achieved by the 
 Government. 
 
 We recommend everybody who feels the least interest 
 in this important international question to read what Baron 
 de Worms will say on the ist of November at the banquet 
 to be given to him at Greenock. It is probable that on this 
 occasion he will reply to and demolish all the objections 
 that are being raised to the agreement that has been 
 signed. 
 
 Sir Thomas Farrer is still harping on this subject to- 
 day, and, like other theorists, is full of prophecy. He 
 avoids the question whether or not it is right to allow the 
 foreign. State-nursed, protected sugar to be sold at an 
 artificial price in our own home market and to acquire the 
 monopoly of it by beating the home industry to the 
 ground. Sir Thomas knows that this is not right, and 
 that it is not free trade. We are masters in our own 
 market, and we ought to defeat ihe injustice of the bounties 
 which ruin fellow-citizens It is quite absurd to compare 
 this to a war of tariffs and a policy of retaliation. We 
 have no control over foreign markets. We can only
 
 ISO FREE TRADE IN SUGAR. 
 
 retaliate by punishing ourselves, making the raw materials 
 for our manufacturers and the food their hands live upon 
 unnaturally dear. What we principally take in exchange 
 from abroad are raw materials and food. We should also 
 seem to have become converts to protection, and would 
 strengthen its principles by our unlucky example. The 
 professors of the Cobden Club ought to know better than 
 throw sand in the eyes of the public, who are too busy to 
 think these questions out. These doctrinaires are, in fact, 
 prostituting a great name and a great memory — the 
 memory of a statesman of wide sympathies, who would have 
 taken the part of his countrymen in the circumstances we 
 are in. It is unjust to use the authority of Cobden's name 
 to make people believe that defeating bounties has any- 
 thing whatever to do with the puerile trifling of fair-traders 
 and retaliators. 
 
 Until recently, Sir Thomas Farrer always admitted 
 that " bounties are bad things." Why, then, hesitate to 
 destroy them ? Why should we be afraid to strike while 
 the iron is hot, and while the majority of the Convention 
 will sign the agreement ? We know that it must be neces- 
 sary for the countries that have not yet signed to follow 
 suit. They agree with us in principle, and are only pro- 
 crastinating in order to conciliate the vested interests into 
 which the rotten system of bounties has, unfortunately, 
 attracted much capital and much trained skill, causing 
 ultimately a lamentable waste. Out of consideration for 
 this unhappy outcome of a foolish policy, the bounty- 
 paying countries arc getting three years' grace. In the 
 meanwhile they will be taught that they have no alternative 
 but to follow the action of the majority and submit to the 
 inevitable. They cannot get along without the great 
 British market. They cannot profitably occupy their 
 machinery and capital in refining sugar for '' savages in
 
 FREE TRADE IN SUGAR. 15I 
 
 Owhyee " and other outlandish places. They will find 
 themselves obliged to join the agreement of the Con- 
 vention. 
 
 Sir Thomas Farrer troubles himself, and wants to 
 trouble us, about the fluctuations of the markets of the 
 future. We have confidence in restoring the trade to its 
 natural channels, and in giving everybody interested a fair 
 field and no favour. 
 
 Sir Thomas Farrer wishes to know how it will be 
 possible ever again to impose a duty upon sugar. This 
 would be setting back the hands of the clock as much as 
 if it were proposed to re-enact the sliding-scale .system for 
 wheat. In fact, such arguments are like making " cages 
 for gnats, and chains to yoke a flea." 
 
 We working-men are very thankful for what the 
 Government, despising jealousy and misrepresentation, are 
 doing on our behalf in this most intricate and difficult 
 negotiation. We beg the Government to persevere — to 
 " go in and win," as Sheridan said to his soldiers at the fall 
 of Richmond. We could not refer to better advice than 
 the words of the Preacher — " He that observeth the wind 
 shall not sow ; and he that regardeth the clouds shall not 
 reap." 
 
 Yours respectfully, 
 
 George Shute, 
 
 Member of the Executive of the London Workmen's 
 Anti-Sugar Bounty Association. 
 
 Thames .Sugar Refinery, Silvcrtown, E., October 27
 
 152 
 
 APPENDIX D. 
 
 LETTER TO LORD SALISBURY FROM LEADING REPRE- 
 SENTATIVES OF ALL BRANCHES OF THE HOME, 
 COLONIAL, AND FOREIGN SUGAR TRADE, ON THE 
 PRICE OF SUGAR. 
 
 l^illitcr House, London, E.C., 
 
 iith December, 1888. 
 
 The Most Honourable The Marquis OF Salisbury, 
 K.G., &c. &c. 
 My Lord Marquis, 
 
 I have the honour to convey to your Lordship the 
 enclosed letter, embod}-ing an expression of opinion b}' 
 those entitled to speak with great authority upon the 
 subject, as to the effect the abolition of bounties, provided 
 for in the Convention, will have upon the supply of sugar 
 in the United Kingdom, and the price to be paid by the 
 consumer. 
 
 In commending this letter to your Lordship's kind 
 attention I am to point out its thoroughly representative 
 character, the signatures comprising those who are engaged 
 in the sugar-refining industry in the United Kingdom, as 
 well as those interested in the growth and production of 
 sugar in the British Colonies, and other countries, including 
 the East Indies and Java, the West Indies and British 
 Guiana, Mauritius, Natal, Queensland, New South Wales, 
 Fiji, Cuba, and Brazil. The representatives of the 
 engineering and other industries in the United Kingdom 
 have also expressed their concurrence. 
 
 It may be a.sked, if we as producers, merchants, and 
 traders do not believe that present prices will be raised by
 
 FREE TRADE IN SUGAR. 1 53 
 
 the abolition of bounties, \vh\' should we be so active in 
 promoting that abolition ? To such an enquiry wc reply, 
 that our interest lies not in raising prices but in depriving 
 our competitors of the cash bounty, as an addition to the 
 amount of the market price— vvhatc\'cr that may be — which 
 enables them to obtain a higher real price than our 
 producers, and therefore to increase and improve their 
 production to our detriment, while we are conversely, from 
 the same cause, precluded from increasing and improving 
 to the same extent. In short, our interest requires that all 
 producers should recoup their cost of production solely and 
 only from the market price of the whole world's competition, 
 so that all producers may have the same opportunity and 
 the same inducement to progress in proportion with the 
 increase of consumption. 
 
 At present, whatever the price may be, we are still 
 hindered by the prospect of bount}'-fcd competition from 
 making the progress which under natural conditions we 
 undoubtedly should make. So long as the price of sugar 
 depends upon such uncertain and fluctuating conditions as 
 are brought about by the bounty s}-stcm, prudent capitalists 
 are necessarih' reluctant to invest capital in the industr}-. 
 
 I have, &c., 
 
 (Signed) N. LU15B0CK, 
 
 Chairman of the West India Committee and of the British 
 and Colonial Anti-Bounty Asoociation. 
 
 30th November, 1888. 
 
 The Most Honourable The Marouis of Salisi5URV, 
 
 K.G., &c. 
 My Lord Marquis, 
 
 We venture respectfull}- to address your Lordship 
 
 upon the main objection which has been raised to the
 
 » 
 
 154 FREE TRADE IN SUGAR. 
 
 Sugar Bounties Convention, viz. : that its effect will be 
 to raise the price of sugar to the consumer. 
 
 We claim to speak with authority upon this subject, 
 inasmuch as we represent the Home Industry connected 
 with sugar refining, the sugar-producing industry of the 
 British Colonies and other countries, also the engineering 
 and other industries in the United Kingdom connected 
 with the production, manufacture, and distribution of 
 sugar. Indeed, we practically represent the whole of the 
 British Sugar Industry, in all its various departments both 
 at home and abroad. 
 
 We are, therefore, thoroughly acquainted practically 
 with the cost of producing and refining sugar, and we can 
 unhesitatingly express our conviction, that the coming into 
 force of the proposed Convention, and the consequent 
 abolition of bounties, will not raise the price of sugar 
 above its present level, nor will there be any restriction in 
 the quantity of sugar imported into this country. 
 
 We have, &c. 
 
 The following is the list of names attached to the 
 above letter : — 
 
 N. Lubbock, Chairman of the West India Committee and the 
 
 British and Colonial Anti-Bounty Association. ■* 
 
 James Duncan, Chairman of the British Sugar Refiners' Com- 
 mittee. I 
 
 Hogg, Curtis, Campbell & Co., Proprietors and Merchants, West 
 Indies and British Guiana. 
 
 Robert Kerr, Chairman, Scottish Sugar Refiners' Association. 
 
 Tom Neill, Honorary Secretary, Scottish Refiners' Association. 
 
 Abram Lyle & Sons, Sugar Refiners, London. 
 
 George Martineau, Honorary Secretary, British Sugar Refiners' 
 Committee.
 
 FREE TRADE IN SUCAR. 1 55 
 
 Thomas Daniel & Co., Limited, Edward Chambers, Director, 
 
 Proprietors and Merchants, West Indies and British Guiana. 
 The Rt. Hon. E. P. Bouverie, Chairman of the Colonial Company, 
 
 Limited. 
 Maclaine, Watson & Co., Merchants, London and Java. 
 Smith, Wood & Co., Merchants, London and Manila. 
 Arbuthnot, Latham & Co., Merchants, London. 
 C. Czarnikow, Sugar Broker, London. 
 Thomas J. Johnston, Director of the St. Lucia Central Sugar 
 
 Factory Company, Limited. 
 Jas. Child, Chairman of the Aerated Bread Company, London. 
 Sir Thomas Thornhill, Bart., Barbados. 
 C. Tennant, Sons & Co., London and Trinidad. 
 Thomson, Hankey & Co., Merchants, London. 
 Daniel de Pass, Sugar Planter, Natal, South Africa. 
 C. Washington Eves, Sugar Planter, Jamaica. 
 E. D. & F. Man, Sugar and Colonial Brokers. 
 Cottam & Hill, Sugar and Colonial Brokers. 
 C. & C. J. Coles, Sugar and Colonial Brokers. 
 J. V. Drake & Co., lo and ii, Mincing Lane, and Magdeburg 
 
 Sugar Merchants. 
 The Dennery Co., Limited: the St. Lucia Usines and Estates 
 
 Co. ; /. H. Hales, Manager, Sugar Producers, S. Lucia, W.L 
 J. & E. Williams, Sugar Merchants and Brokers, Mincing Lane, 
 
 London ; and Magdeburg. 
 Carey and Browne, Produce Brokers, 36, Mincing Lane. 
 William Anderson & Co., 10, Mincing Lane, Sugar and Colonial 
 
 Brokers. 
 Macdonald, Hutcheson & Co., London and Greenock, Sugar 
 
 Brokers. 
 C. M. & C. Woodhouse, Sugar Brokers. 
 Livens & Bishop, 27, Mincing Lane, Sugar Brokers. 
 L. Cowan & Sons, Hammersmith Bridge Works, and 7, Mincing 
 
 Lane, Sugar Refiners. 
 Ed. Kynaston, lo. Mincing Lane, Sugar Broker.
 
 156 FRKE TRADE IN SUCAR. 
 
 Bieber & Co., 4, Fenchurch Avenue, London and Brazil, 
 
 Merchants. 
 Mee, Billing is: Co, 9, Great St. Helen's, London and Brazil, 
 
 Merchants. 
 Raggio-Carneiro & Co., 129A, Winchester House, London and 
 
 Brazil, Merchants. 
 James Keiller & Sons, Manufacturing Confectioners, Marmalade 
 
 and Preserve Makers, Dundee and London. 
 Erdmann & Sielcker, Merchants, London and Java. 
 Blyth, Greene, Jourdain & Co., London and Mauritius. 
 Sendall and Wade, Merchants and Proprietors, St. Kitts, W.I. 
 J. C. Shaw, Madras, East Indies. 
 Sir Daniel Cooper, Bart., G.C.M.G., for Australia, New Zealand, 
 
 and Fiji. 
 Young, Ehlers (S: Co., Merchants and Proprietors, London and 
 
 Australia, 
 Boddington & Co., Merchants and Proprietors, West Indies and 
 
 British Guiana. 
 D. Larnach, Banker and Proprietor, Australia. 
 Jno. McConnell & Co., British Guiana, Proprietors and Merchants, 
 
 London and Liverpool. 
 For the Natal Central Sugar Company, Limited. D. Dors, 
 
 Managing Director. 
 R. J. Jeffray, for Queensland and Victoria. 
 James B. Alliott, for Messrs. Manlove, AUiott & Co., Limited, 
 
 Engineers and Manufacturers. 
 Hermann Voss for the Anglo-Continental (late Ohlendorfif's) 
 
 Guano Works, Limited. 
 Charles Parbury, Proprietor and Merchant, Australia. 
 F. Parbury & Co., Proprietors and Merchants, London and 
 
 Australia. 
 p.p. George Fletcher & Co., ^^'. Parratt, Engineers and Manufac- 
 turers, London and Derby. 
 Sandbach, Tinne & Co., West India Planters and Merchants, 
 
 Liverpool.
 
 I 
 
 FREE TRADE IX SUGAR. 157 
 
 Alex. Garnett & Co., West India Planters and Merchants, 
 
 Liverpool. 
 Sir T. Edwards Moss, Bart., West India Planter, Otterspool. 
 Bushby, Son & Beazley, Sugar Brokers, Liverpool. 
 Edward H. Harrison & Son, Produce Brokers, Liverpool. 
 Nichs. Waterhouse & Sons, do. 
 
 Fairrie, Astley & Co., do. 
 
 Brancker, Boxwell «S: Co., do, 
 
 Hampshire, Turner & Co., do. 
 
 A. Litherland Jones & Co., do. 
 
 Macfie & Sons, Sugar Refiners, Liverpool. 
 Henry Tate &: Sons, do. 
 
 For Fairrie &: Co., Limited, James Fairrie, Sugar Refiners, 
 
 Liverpool. 
 James Leitch & Co., Sugar Refiners, Liverpool. 
 Jos. Heap & Sons, do. 
 
 For the Sankey Sugar Company, Edward C. Turner (partner), 
 
 Sugar Refiners, Liverpool. 
 G. Jager & Sons, Sugar Refiners, Liverpool. 
 Crosfield, Barrow & Co., do. 
 
 George Crosfield iS: Co., Sugar Merchants, Liverpool. 
 Anthony Jones & Co., do. 
 
 Edward P. Parry & Co., do.
 
 158 
 
 APPENDIX E. 
 
 THE MOST-FAVOURED - NATION CLAUSE, BY W. P. B. 
 SHEPHEARD, ESQ., OF LINCOLN'S INN, BARRISTER- 
 AT-LAW. (1879.) 
 
 The whole question of the character and consequences 
 of the sugar bounties was thoroughly investigated by a 
 Select Committee of the House of Commons in 1879, ^"^ 
 a report was issued by that Committee on the 4th of 
 August, 1880. 
 
 Shortly after the labours of the Parliamentary Com- 
 mittee were concluded, a further attempt to bring about 
 an international settlement was made by Her Majesty's 
 Government. But the French Government, early in 1881, 
 met the proposals of Her Majesty's Government for an in- 
 ternational conference to put an end to bounties by insisting 
 on a preliminary' understanding as to the admissibility of 
 the principle of levying countervailing duties against sugars 
 which might be exported under bounty by other States 
 not adopting the conclusions of the conference. 
 
 This preliminary basis — which the experience of 
 previous conferences had shown to be essential for an in- 
 ternational agreement — was at once rejected by Her 
 Majesty's then Government, and thereupon the matter 
 dropped. 
 
 During subsequent negotiations for the renewal of a 
 commercial treat}' with France the necessity of some 
 express stipulations as to export bounties was urged upon 
 the British Commissioners by persons interested in the
 
 I 
 
 I 
 
 FREE TRADE IN SUGAR. 1 59 
 
 sugar trade. But with the failure of those negotiations the 
 opportunity of raising the question passed away. 
 
 It remains therefore to be considered whether the pro- 
 visions of existing treaties are not materially affected by 
 any State granting export bounties. 
 
 By commercial treaties [see List of Treaties of Com- 
 merce and Navigation. Commercial No, 27, 1879 (c. 2424)] 
 various States have granted to, and secured from, Great 
 Britain the treatment of the most favoured nation. Under 
 the most-favoured-nation articles in these treaties each 
 treaty State is entitled to receive the same treatment as 
 that accorded to the nation most favoured by the other 
 treaty State. 
 
 Such article does not in terms preclude a State from 
 favouring its own subjects ; but this liberty, it is submitted, 
 must be limited by some principles of international relations, 
 and any exercise of such liberty in a way to endanger the 
 interests of other States would be just ground for diplomatic 
 remonstrance. This liberty of advancing the interests of 
 its own subjects is independent of all treaties — is, in fact, 
 inherent in the independence of one Sovereign Power to 
 exercise natural rights without reference to other Sovereign 
 Powers. To what extent, then, is this liberty cut down by 
 such an engagement as that which arises when two Powers 
 mutually accord one to the other most-favoured-nation 
 treatment? For the purpose of illustration, let it be 
 assumed that Great Britain and France arc bound by the 
 engagement of a treaty to give the one to the other most- 
 favoured-nation treatment. It is clear, then, that neither 
 State so bound can give any other State exclusive favours. 
 To this extent, then, the inherent liberty of each State is 
 restricted by the treaty engagement. It is necessar}' 
 clearly to understand that the rights and duties of each 
 contracting State in respect of this engagement are, as
 
 l60 FREE TRADE IN SUCiAR, 
 
 regards rig/its, to be enjoyed ivitliiii the territory of the 
 other State, and as regards duties to he performed \v\t\\\x\ its 
 oivn territory. France, for instance, is to enjoy the right of 
 favoured-nation treatment within British territory, and to 
 perform the duty of according that treatment to Great 
 Britain within French territory. The right is satisfied in 
 accordance with the treaty when France receives within 
 British territory the same treatment as the nation most 
 favoured by Great Britain. If, for instance. Great Britain 
 were to give a bounty on all goods imported from Germany 
 the rights of France would be at once interfered with. But 
 if Germany gave an export bounty the economic conse- 
 quence to France would be identical with that which 
 would follow from Great Britain giving an import 
 bounty on goods from Germany. In either case Ger- 
 man exporters would possess a State favour which 
 was wanting to French exporters, and such State favour 
 would be operative upon the competition between France 
 and Germany on the markets of Great Britain. An 
 identical result would follow if Great Britain levied a 
 greater import duty against goods from France than on 
 those from Germany when the conditions of export were 
 the same in both countries. In the foregoing illustration 
 of tliree methods of producing the eoiiseqiieuees of differe7ttial 
 treatment^ two are clearly forbidden by the terms of the 
 most-favoured-nation article — viz. : i. The grant by Great 
 Britain of an exclusive import bounty on goods from 
 Germany. 2. The imposition by Great Britain of a higher 
 duty on goods imported from France than on those from 
 Germany, conditions of export being the same in both 
 countries. 
 
 But in the third case — viz., of Germany granting an 
 export bounty on her own goods, the consequences to 
 France are the same as those which would have resulted
 
 FREE TRADE IN SUCAR. l6l 
 
 from Great Britain having violated the terms of the most- 
 favoured-nation article by either of the two methods just 
 referred to. One result from the action of Germany in giving 
 export bounties would be to diminish the trade between 
 Great Britain and France intended to be facilitated by their 
 reciprocal engagements under the most-favoured-nation 
 article. 
 
 The favoured-nation article as a treaty compact enables 
 Great Britain to obtain the benefit of the con\entional as 
 distinguished from the general tariff of many foreign States, 
 and in return those States, — this country having one 
 uniform tariff, — can only rely upon Great Britain main- 
 taining a firm opposition to all attempts on the part of any 
 foreign State to vary in its own favour the equality of the 
 international competing basis intended to be secured by 
 the terms of the most-favoured-nation article. It is clear, 
 therefore, that an export bounty by any one State is a 
 direct diminution of the value of the reciprocal considera- 
 tions which enable Great Britain to secure the benefits of 
 most-favoured-nation treatment from various other States. 
 Upon these grounds Great Britain, it is submitted, might 
 protest to Germany, with whom a like engagement has 
 been entered into, that the grant of such export bounties 
 was productive of consequences which were identical with 
 the consequences which would ensue to French and other 
 foreign commerce if Great Britain herself violated her 
 favoured-nation engagements with foreign Powers, and thus 
 operated to render those engagements of Great Britain 
 more or less valueless. 
 
 If, in the foregoing illustration, there be substituted for 
 France all the States possessing most-favoured-nation 
 engagements with Great Britain the argument is applicable. 
 Many States, instead of one State, suffer consequences 
 economically analogous to the evils of the differential 
 L
 
 1 62 FREE TRADE IN SUGAR. 
 
 treatment which the terms of the most-favoured-nation 
 article purport to prevent. 
 
 The sum and substance of the argument come to this 
 Whilst on the one hand the favoured-nation article does 
 not restrict the liberty of either contracting Power to favour 
 its national productions, yet, on the other hand, if it favours 
 them by export bounties consequences result to the various 
 most-favoured-nation engagements of the other contracting 
 Power which deprive them of their value as effectually as 
 if specifically violated. The argument can, however, be 
 carried no higher. It is absoluteh- conclusive as to the 
 economic analogy between the effects on international 
 competition of an export bounty and a differential duty * 
 it is fairly conclusive that the favoured-nation article gives 
 either of two contracting Powers the right to complain of 
 an export bounty by the other contracting Power, on the 
 grounds that such form of protection affects the value 
 of similar engagements with other Powers. Passing 
 from argument to authority, we would first refer to the 
 responsible position taken up by the Government of the 
 United States in dealing with a difficulty arising out of the 
 interpretation of this very clause, as far back as 1822, in 
 connection with the treaty of 1803, for the cession by 
 France of Louisiana to the United States. 
 
 Art. VIII. of that treaty was as follows: "A I'avenir 
 et pour toujours apres I'expiration des douze annees 
 susdites les navires P'ran^ais seront traites sur le pied 
 de la nation la plus favorisee dans les ports ci-dessus 
 mcntionnes." 
 
 All conditions are absent from this article. Neverthe- 
 less, conditions were claimed as of right by the United 
 States. What the conditions were has no bearing on the 
 principle of interpretation, upon \\-hich point alone we refer 
 to this international dispute.
 
 FRl:!!': 'I-RADE IN SUGAR. 163 
 
 The cause of the dispute was the advantage enjoyed by 
 Great Britain in respect of her vessels being placed upon 
 the same footing as the vessels of the United States, whilst 
 vessels from France were subjected to heavy tonnage 
 duties upon entering the American ports, including those of 
 Louisiana. The question is thus referred to in the official 
 report of Committee of Commerce, communicated to the 
 House of Representatives, 15th March, 1822: — 
 
 "France. The extra duties imposed in 1S17 by the 
 French Government on the produce of the United States, 
 when imported into France in vessels of the United 
 States, have excluded them from a competition with 
 French vessels carrying American produce to France. 
 Feeling the injustice of such impositions on the part of 
 France, the merchants memorialised Congress. On con- 
 sideration of their complaints, an Act passed the 15th 
 May, 1820, subjecting French vessels entering the ports 
 of the United States to a tonnage duty of eighteen 
 dollars a ton after the ist July, 1820." 
 
 The facts which appear to have originated the coiitest 
 may be concisely summarised thus : — The United States 
 were under obligation to treat the ships of France upon 
 the footing of the most favoured nation in the ports of 
 Louisiana. It is important to notice that this treaty obli- 
 gation has no conditions specified. But it would appear 
 that at that date (1820) British vessels entering the ports, 
 say of New Orleans, were admitted on the same terms as 
 American vessels, whilst those of France were subjected to 
 a heavy tonnage duty. Surely upon the words of the 
 Treaty the French could plead their right to the same 
 treatment as British vessels in the ports of the ceded 
 territory. It was part of the consideration for the cession- 
 And yet the claim was disallowed by the President of the 
 United States, and why ? We will let the President state
 
 l64 FREE TRADE IX SUCAR. 
 
 his own case as it appears in his l^^ifth Annual Message of 
 3rd December, 1821. 
 
 " It is my duty to state, as a cause of very great regret, 
 that very serious differences have occurred in this nego- 
 tiation, respecting the construction of the Eighth Article 
 of the Treaty of 1803, by which Louisiana was ceded to 
 the United States, and likewise, respecting the seizure of 
 the Apollo in 1820, for a violation of our revenue laws. 
 The claim of the Government of France has excited 
 not less surprise than concern, because there does 
 not appear to be a just foundation for it in either 
 instance. By the Eighth Article of the Treaty referred to 
 it is stipulated that, after the expiration of twelve years 
 during which time it was provided by the Seventh or pre- 
 ceding Article that the vessels of France and Spain should 
 be admitted into the ports of the ceded territory, without 
 paying higher duties on merchandise, or tonnage on the 
 vessels, than such as were paid by citizens of the United 
 States, the ships of France should for ever afterwards be 
 placed on the footing of the most favoured nation. By the 
 obvious construction of this Article, it is presumed that it 
 -was intended that no favour should be granted to any 
 Power, in those ports, to which France should not be forth- 
 with entitled ; nor should any accommodation be allowed 
 to another Power, on conditions to which she would not 
 also be entitled on the same conditions. Under this 
 construction no favour or accommodation could be 
 granted to any Power to the prejudice of P'rance. 
 B}' allowing the equivalent allowed by those Powers, 
 she would always stand in those ports on the footing of 
 the most favoured nation. But if this Article should be so 
 construed as that France should enjoy of right, and with- 
 out paying the equivalent, all the advantages of such con- 
 <litions as mi^jht be allowed to other Powers in return for
 
 IKKK 'IRADl-: IN SUGAR. 165 
 
 important concessions made by them, then the whole 
 character of the stipulation would be changed. She would 
 not only be placed on the footing of the most favoured 
 nation, but on a footing held by no other nation. She 
 would enjoy all advantages allowed to them, in considera- 
 tion of like advantages allowed to us, free from any and 
 every condition w^hatsoever." 
 
 By the following quotation from the President's Sixth 
 Annual Message of 3rd December, 1822, the dispute 
 appears to have terminated in France concluding a treaty 
 of commerce : — 
 
 "On the 24th June last a Convention of Navigation 
 and Commerce was concluded in this city between the 
 United States and France, by ministers duly authorised for 
 the purpose. The sanction of the Executive having been 
 given to this Convention under a conviction that, taking all 
 its stipulations into view, it rested essentially on a basis of 
 reciprocal and equal advantage, I deemed it my duty, in 
 compliance with the authority vested in the Executive by 
 the second section of the Act of the last session of the 
 6th May, concerning navigation, to suspend by proclama- 
 tion, until the end of the next session of Congress, the 
 operation of the Act entitled, ' An Act to impose a new 
 tonnage duty on French ships and vessels, and for other 
 purposes,' and to suspend likewise all other duties on 
 French vessels, or the goods imported in them, which ex- 
 ceeded the duties on American vessels, and on similar 
 goods imported in them." 
 
 Now in VVheaton's " Elements of International Law" this 
 dispute is referred to in connection with the principle laid 
 down by this Jurist on the " Interpretation of Treaties." 
 The reference appears as a foot-note to the following 
 passage in the text. " Public treaties are to be interpreted 
 like other laws and contracts. Such is the inevitable
 
 l66 FREE TRADE IN SUGAR. 
 
 imperfection and ambiguity of all human language that the 
 mere words alone of any writing, literally expounded, will 
 go a very little way towards explaining its meaning. Cer- 
 tain technical rules of interpretation have, therefore, been 
 adopted by writers on ethics and public law to explain the 
 meaning of international compacts in cases of doubt." 
 
 The note in Wheaton, by the Editor, Mr. Lawrence, 
 does not give the views taken by the President which we 
 have quoted, but contains the following passage from Mr. 
 Adams' note to the French Minister, meeting his demand 
 that orders might be issued to such effect that in future the 
 8th article of the Treaty of Cession should receive its 
 entire execution, and that the advantages granted to Great 
 Britain in all the ports of the United States might be 
 secured to France in those of Louisiana. To that demand 
 Mr. Adams replied that he was instructed to say " that the 
 vessels of France arc treated in the ports of Louisiana upon 
 the footing of ' the most favoured nation', and that neither 
 the English nor any other foreign nation enjoys gratuitous 
 advantage which is not equally enjoyed by France. But 
 English vessels, by virtue of a conditional compact, are 
 admitted into the ports of the United States, including 
 those of Louisiana, upon payments of the same duties as 
 the vessels of the United States." 
 
 The sum and substance then of this historic episode, 
 which we have detailed from official documents, amount to 
 this : viz., that notwithstanding the absence of all con- 
 ditions from the words of the Louisiana Treaty, yet con- 
 ditions were imported into its interpretation by the United 
 States. 
 
 In 1878 a debate in the House of Commons upon the 
 favoured-nation clause contains some valuable authority 
 upon its proper interpretation. 
 
 To make the debate intelligible, as bearing upon the
 
 P'REE TRADE IX SUGAR. 1^7 
 
 point we arc now discussing, \vc must explain that the 
 Contagious Diseases (Animals) Bill, as introduced by the 
 Government, subjected cattle from foreign countries to 
 compulsory slaughter, with power to the Privy Council to 
 release the Channel Islands and the Isle of Man from 
 restriction ; and, as regards Canada and America, excepted 
 these countries from restriction until an order was made 
 by the Privy Council with respect to these excepted 
 countries. 
 
 American cattle would, therefore have been free until 
 subjected to provisions for compulsory slaughter by order 
 in Council. Consequently, as between foreign countries 
 generally and America, inequality of condition would have 
 been specifically created had the Bill become Law. The 
 inequality would have arisen from the fact that America 
 would have been free until the Privy Council issued an 
 order ; whilst as regards other foreign countries, immunity 
 from disease would not have freed them from restriction 
 until an Act of Parliament was passed. The Government 
 introduced an amendment, enabling the Privy Council to 
 exempt Denmark, Sweden, Norway, Spain, or Portugal. 
 Still, inequality of conditions would have remained. This 
 inequality raised a debate on the " favoured-nation clause." 
 In the course of the debate, which we only propose to 
 follow so far as it contains direct opinion on the favoured- 
 nation clause. Sir Henry James, who raised the question, 
 pointed out the inequality in the provisions we have referred 
 to, and consequent violation of the " favoured-nation clause." 
 Sir Charles \\\ Dilkc observed " that it would not 
 be in the power of the Privy Council, under this Bill, 
 to admit French cattle, even although P"rance was en- 
 tireh" free from disease, while it would be in the power 
 of the Pri\-y Council to admit the cattle of countries that 
 competed with France ; and, therefore, with like freedom
 
 l68 FRKE TRADE IN SUCAR. 
 
 from disease, there could not be a like principle of treatment 
 applicable to all cases." Upon this inequality Sir Charles 
 W. Dilke rested his arguments against the Bill as violating 
 the favoured-nation clauses. 
 
 The Attorney-General (Sir John Holker) said, "Now, 
 what was the meaning of the ' favoured-nation clause ? ' 
 He took it that in whatever language that clause might be 
 expressed — and the language of the different treaties was 
 not always the same — but, whatever language might be 
 used, the real meaning was this, ' You, Great Britain, shall 
 treat us in the same way as you treat the most favoured 
 nation with whom \'ou have a treaty, that is to say, you 
 shall treat us as well as you treat them under the like cir- 
 cumstances.' . . . Really and truly, then, the favoured- 
 nation clause meant that which was expressed in the case 
 of Austria, namely, that neither of the high contracting 
 Powers or parties should establish a prohibition of importa- 
 tion, exportation, or transit against the other which should 
 not, 'under like circumstances' be applicable to the third 
 country most favoured in this respect." 
 
 Sir William Harcourt said the Attorney-GeneraPs 
 " whole argument was founded on the very points for 
 which those who opposed the Bill had contended . . . 
 The Attorne)'-General had laid down the principle that 
 in the most -favoured -nation clause they must, under 
 similar circumstances, deal with all countries alike. He 
 (Sir William Harcourt) was not going to quarrel with that 
 proposition, though, if strictly interpreted, it would be found 
 not to be quite correct." 
 
 Referring to the bounty on loaf sugar, Sir William 
 Harcourt said: — "They were bound to admit this sugar, 
 under similar circumstances, from different countries ; but 
 they had great difficult}- with P'rance when a bonus was 
 given by France itself upon this sugar. The)- might have
 
 IRFE TRADE IX SUGAR. 169 
 
 said the circumstances were not similar in a countr\- which 
 gave a bonus on their sugar, and therefore they would not 
 admit it. But it would not be politic to maintain a pro- 
 position to that extent . . . What a nation could claim 
 under the ' favoured-nation clause ' was that there should be 
 an immediate power under similar circumstances to admit 
 it to equal rights with others." 
 
 The present Lord Chancellor, then the Solicitor- 
 General, observed " that the ' favoured-nation clause ' 
 assured equality of rights to all the parties concerned, 
 but the mistake was to say that that involved identity 
 of treatment." 
 
 Lord, then Mr., Herschell " quite agreed with the hon. 
 and learned Solicitor-General that equality of right did 
 not necessarily mean identity of treatment. But he did 
 say that equality of right did mean identity of treatment 
 under similar circumstances." , 
 
 Sir John, then Mr., Gorst said : " Now, what we had 
 promised to do [under our treaties] was, not to establish 
 any prohibition of importation or transit against the 
 produce of any country with which we had entered into 
 treaties containing the ' most- favoured -nation clause' 
 which would not under like circumstances be applicable 
 to all other countries." 
 
 The Chancellor of the Exchequer said " That this 
 countr\' was bound to treat all foreign nations alike — • 
 but that was, alike under similar circumstances." 
 
 Mr. Gladstone observed that " he would say one word 
 upon the doctrine of similar circumstances. He did not 
 deny that it was a doctrine that could not utterh" be ex- 
 cluded from discussion of that kind. . . . ' Similar circum- 
 stances^ were very large words ; they admitted of infinite 
 discretion in interpretation."'' Referring to a most-favoured- 
 nation treaty, Mr. Gladstone said : — " Did not the treaty
 
 I/O FREE TRADE IN SUGAR. 
 
 mean that there should be immediate equality? What he 
 concluded was that it did mean that there should be im- 
 mediate equality/' 
 
 It is not necessary to add to this valuable body of 
 opinion. Sir William Harcourt and Mr. Gladstone pro- 
 perly qualified the doctrine of " like circumstances" from 
 too great an extension. 
 
 The upshot of the debate was the withdra\\al by the 
 Government of all distinction between foreii^n countries, 
 by subjecting all alike to provisions of compulsory slaughter, 
 with power to the Privy Council to exempt any countries 
 upon being satisfied as to freedom from disease. 
 
 The principle of the Contagious Diseases (Animals) 
 Act of 1878 was to exclude, not cattle, but disease. To 
 exclude protection from our markets is all that our sugar 
 industry need contend for. It is impossible to suppose we 
 are precluded from excluding protection by any favoured- 
 nation clause, otherwise this clause in the last Austrian 
 treaty would render nugatory all the efforts of our Govern- 
 ment for the abolition of bounties. 
 
 It is on the markets that the provisions of commercial 
 treaties are meant to have, and must have, their effect. 
 Our national policy is to secure free trade competition. 
 As regards foreign markets, we admit our inability to 
 do more than obtain, when we can, the " most-favoured- 
 nation treatment." Against protection for the national 
 industries of foreigners on their home markets we are 
 powerless. But we venture to say that the true spirit 
 of our commercial treaties will be violated if, on our own 
 home market, our national production may be liarassed by 
 foreign States claiming, under those treaties, unrestricted 
 right of entry for their products when heavily subsidised 
 by export bounties. Such a claim has never yet been 
 advanced by any foreign State in the discussion of this
 
 fri:e trade in sucar. 171 
 
 I 
 
 M question. Moreover, such foreign States as gi\c bounties 
 ■ harass not only our own home and colonial production, but 
 the production of other foreign States in treaty with us, 
 who give no bounties. Indeed, in Mr. C. M. Kennedy's 
 letter to Lord Derby of the 21st April, 1H74, we find that 
 M. Deseilligny, the French Minister of Commerce, had 
 stated " that bounties avowed or disguised, granted by 
 foreign Powers, might be checked by a general provision 
 of English law to impose a duty on sugar imported from 
 foreign countries which are held to give bounties on ex- 
 portation." 
 
 In 1879 this question was referred by persons interested 
 to the late Professor Sheldon Amos, of the Inner Temple, 
 and Mr. Shepheard, of Lincoln's Inn, and their opinion 
 was as follows : — 
 
 " The question submitted to us is whether the imposi- 
 tion by Great Britain of a countervailing duty against 
 sugar upon the export of which a bounty was obtained, 
 whilst sugar upon which no bounty was obtained was 
 subjected to no such duty, would contravene the most- 
 favoured-nation clauses of existing commercial treaties. 
 
 " Before considering the question from a juridical point 
 of view, it is necessary to settle the meaning of the term 
 ' bount}'.' P^or the purpose of this opinion we confme the 
 term bounty to that proportion of drawback which is in 
 excess of actual duty paid. It is not necessary to discuss 
 how such excess arises, but it is evident that when a State 
 returns on all exported sugar a particular amount b\- way 
 of ' drawback,' and such amount is in excess of the duty 
 actually levied, such excess amount constitutes an actual 
 premium or bounty on exportation. 
 
 " An exporter from a foreign countr}- recei\"ing such a 
 bounty becomes an importer into this countr}-, possess- 
 ing a tariff or fiscal advantage over other importers not
 
 172 FREE TRADE IN SUGAR. 
 
 enjoying a bount\-. This seems such an obvious economic 
 consequence that wc arc entitled to assume it as such 
 without discussing purely economic points. 
 
 " Although this tariff advantage is not created b)- the 
 importing State, \'ct it can only be enjoyed by the foreign 
 exporter upon sufferance of the importing State, therefore 
 such tariff advantage virtually depends upon the negative 
 action of the importing State. 
 
 " We also assume that the countervailing duty to which 
 our opinion is to apply is a duty which shall correspond 
 in amount to the bounty as defined. We further assume 
 that if such a bounty as defined be met by such a duty as 
 defined, the importer enjoying such bounty, but liable in 
 consequence to such duty, is thereby in no different fiscal 
 position to an importer enjoying no bounty and paying no 
 duty. 
 
 " These points are such as must be established by 
 economic reasoning, and for the purpose of this opinion 
 we are asked to assume them, and we do so without 
 expressing our opinion as to their validity on economic 
 grounds. 
 
 " For the purpose of illustrating the arguments which 
 lead to our conclusion we propose to take the Treaty of 
 Commerce between Her Britannic Majesty and His Majesty 
 the Emperor of Austria of 1876. This treaty was for one 
 year, and expired on the 31st of December, 1877, but 
 previous to such expiration was renewed by a subsequent 
 treaty of 26th November, 1877, from year to year, at a 
 year's notice of denunciation from either side from any date. 
 We understand that the treaty so renewed is still in force. 
 
 " The 1st Article of the Treaty defines the rights of the 
 subjects of either sovereign power resident in the territories 
 of the other. 
 
 " The 2nd Article is as follows : — ■
 
 ]Ri:e trade in sugar. 173 
 
 Article II. 
 
 " The produce and manufactures oi] as well as all goods 
 coming from Austria-Hungary, which are imported into the 
 territories and possessions, including the colonies and 
 foreign possessions, of Her Britannic Majesty, and the 
 produce and manufactures of, as well as all goods coming 
 from, British possessions, which are imported into the 
 Austro-Hungarian monarchy, whether intended for con- 
 sumption, warehousing, re-exportation, or transit, shall 
 therein, during the continuance of this treaty, be treated 
 in the same manner as, and in particular shall be subjected 
 to no higher or other duties than, the produce and goods of 
 any third country the most favoured in this respect. 
 
 " No other or higher duties shall be levied in the Austro- 
 Hungarian monarchy on the exportation of any goods to 
 the territories and possessions, including the colonies and 
 foreign possessions, of Her Britannic Majesty, or in the 
 territories and possessions, including the colonies and foreign 
 possessions, of Her Britannic Majesty, on the exportation 
 of any goods to the Austro-Hungarian monarchy, than on 
 the exportation of the like goods to any third country the 
 most favoured in this respect. 
 
 " The two high contracting parties likewise guarantee to 
 each other treatment on the footing of the most favoured 
 third country, in regard to the transit of goods through 
 the territory of the one from and to the territory of the 
 other. 
 
 " The 3rd Article is as follows : — 
 
 Article III. 
 
 " Every reduction in the tariff of import and export 
 duties, as well as every favour or immunity that one of the 
 contracting parties grants to the subjects and commerce of
 
 1/4 FREE TRADE IN SUGAR. 
 
 a third Power, shall be participated in simultaneously and 
 unconditionally by the other. 
 
 " The 4th Article is as follows : — 
 
 Article IV. 
 
 " The stipulations of the foregoing Articles, I. to III., re- 
 lative to the reciprocal treatment on the footing of the 
 most favoured third countr}-, shall not apply — 
 
 " I. To those special and ancient privileges which are 
 accorded to Turkish subjects for the Turkish trade in 
 Austria-Hungary. 
 
 " 2. To those advantages which are or may be granted on 
 the part of the Austro- Hungarian monarchy to the neigh- 
 bouring countries solely for the purpose of facilitating the 
 frontier traffic, or to those reductions of, or exemptions 
 from, customs duties which are only valid in the said 
 monarchy for certain frontiers, or for the inhabitants of 
 certain districts. 
 
 " 3. To the obligations imposed upon either of the high 
 contracting parties by a Customs Union already concluded, 
 or which may hereafter be concluded. 
 
 "The 5th Article is as follows : — 
 
 Article V. 
 
 " Neither of the high contracting parties shall establish a 
 prohibition of importation, exportation, or transit against 
 the other which shall not, under like circumstances, be 
 applicable to the third country most favoured in this 
 respect. 
 
 "The 6th Article refers to trade-marks, &c. 
 
 " The 7th Article determines the duration of treaty. 
 
 " And the 8th Article provides as to its ratification. 
 ■ " From the foregoing it appears that our opinion must be
 
 FREE TRADK IN SUGAR. I75 
 
 governed by the interpretation to be placed on Article II., 
 which may be concisely described as a favoured-nation 
 importing and exporting clause. 
 
 " We are of opinion that, under this clause, Her Majesty 
 has become bound {inh-r alia) to accord to Austria every 
 advantage in respect of her exports to this country ac- 
 corded to the most favoured third country ; and this 
 equality of fiscal conditions between such most favoured 
 third country and Austria, the latter State must be taken 
 to have accepted as the basis of the compact. 
 
 "Moreover, Her Majesty has been likewise bound to same 
 effect by similar clauses in other treaties to France, Ger- 
 many, Belgium, Italy, &c. The result, then, of these re- 
 spective obligations can only be attained by the produce 
 of each of the several exporting countries being admitted 
 on terms of fiscal equality into this country. If, therefore, 
 one of such exporting countries destroys this equality by 
 giving a fiscal advantage which it is within the power of 
 this country to neutralise, we consider that the interpreta- 
 tion of this clause would favour rather than preclude the 
 exercise of such power. 
 
 " Independently of all treaties, each country has full 
 power to deal with importations from other countries on 
 any terms it pleases — to exclude some and to favour 
 others. The favoured-nation clause is a restriction upon 
 this power, in order to bring about equality of fiscal con- 
 ditions between the importers from either treaty Power and 
 importers from third countries into the territories of the 
 other treaty Power. 
 
 " Moreover, it is clear that the articles of a treaty of 
 commerce are directed to the interests of classes of the 
 subjects of the respective Sovereign Powers in their several 
 characters as importers, exporters, &c. Therefore the in- 
 jurious operation of any State tariff or fiscal arrangements
 
 176 . FREE TRADE IN SUGAR. 
 
 upon importers, exporters, &c., in their respective 
 characters as such, raises a proper question under the 
 treaty. And in our opinion, it is not the less a treaty 
 question, because it may happen that the fiscal action 
 which prejudices some one class of citizens in their treaty 
 characters may benefit some other class. Therefore, we 
 are of opinion that imports of sugar into this country 
 may, without contravening the favoured-nation clauses of 
 existing commercial treaties, be distinguished as to coun- 
 tries of origin wherein bounties on export are or are not 
 obtainable, and a countervailing duty levied on sugar im- 
 ported from countries where export bounties are obtainable, 
 whilst sugar from all other countries is admitted duty free. 
 This construction is consistent with the fact that the Sugar 
 Convention of 1864 between Great Britain, France, Holland, 
 and Belgium contained an article admitting the principle 
 of the imposition of a differential surtax against countries' 
 not parties to that Convention, giving export bounties, 
 notwithstanding that at the date of that Convention this 
 country was bound by treaty with Russia to admit her pro- 
 ducts at no "other or higher duties than are or shall be 
 payable on the like article the growth, produce, or manu- 
 facture of any other foreign country." [See Treaty of 
 Commerce with Russia, 1859, Art. 2.] 
 
 " Moreover, notwithstanding such article in the Conven- 
 tion of 1864, favoured-nation clauses were contained in the 
 commercial treaties entered into during the period of ten 
 years for which that Convention was in force ; and such 
 favoured-nation clauses must be held as subject to the 
 treaty engagements under which, during such period, Great 
 Britain was subject by that Convention of 1864. 
 
 " In conclusion, we beg to state that our opinion is based 
 upon the broad principle that equality of fiscal condition, 
 as between either Treaty Power and any third country the
 
 FRF.E TRADE IX SU'iAR. I77 
 
 most favoured b)- the other Treaty Power, is the object of 
 favoured-nation clauses, and that the one who destroys such 
 cquahty cannot appeal to the treaty against the act neces- 
 sitated to reinstate that equalit}'. 
 
 ''(Sij/icy/) Sheldon Amos, of the Inner Temple 
 
 Barrister-at-Law. 
 
 " Professor of Jurisprudence to the Council of Legal Education of 
 Inns of Court for three years ending 1875, and late Professor 
 of Jurisprudence to Uni\ersity Coll., London. 
 
 "(S/^/^tv/) W'allwyn Pover B. Shepheard, of 
 Line. Inn, Barrister-at-Law. 
 "July 22nd, 1S7.." 
 
 M
 
 178 
 
 APPENDIX F. 
 
 THE SUGAR CONVENTION, 
 
 To the Editor of " The Times." 
 
 Sir, — Lord Bramwcll desires to prove that the price of 
 sugar must rise if bounties are aboh'shed ; and his proof 
 would be perfectly correct if the sugar market had arrived 
 at the point he imagines, namely, below the level, to use 
 his own words, of " the average rate of profit." But he 
 overlooks the fact that, if we had arrived at that point, 
 tliose producers who receive no bounty, and who at 
 present are supplying the world with 2,400,000 tons a 
 \'ear, would have " discontinued production," having 
 already got below that level. It is to avoid that calamit}', 
 which would be a great injur)- to the community at large 
 as well as to the producers in particular, that we urge the 
 abolition of bounties. Lord Bramwell's argument is clearly 
 based on the assumption that the market has already been 
 driven down by bounties to the level of the cost of pro- 
 duction. He sa}s : "This is obviously a bounty on 
 exportation. The result is that the sugar is cheaper here 
 than in the country where it is made, not only by the tax 
 which consumers there pay, btct by the extra sunt paid in 
 drazvbaeks." He assumes that the drawback is given awa)- 
 to the buyer ; in other words, that cost price has been 
 reached. If there were any doubt on this point, it would 
 be set at rest by what follows at the end of the argument, 
 where Lord Bramwcll savs : —
 
 FREE TRADE IN SU(iAR. 1/9 
 
 " At present the German producer can sell his sugar at 
 a certain price because he gets the bounty. He gets no 
 more than the average rate of profit on this capital, or 
 competition would bring his price down. Then when the 
 bounty is taken away, to get that average profit he must 
 raise his price. He will do so, or discontinue 'Jiis pro- 
 duction." 
 
 If the world were supplied entirely with bounty-fed 
 sugar, this would be an exact description of the situation, 
 and we should be most foolish to desire the abolition of the 
 bounty. But, as it is, the world is supplied with 2,800,000 
 tons of bounty-fed sugar and 2,400,000 tons of sugar which 
 receives no bounty. If we had arrived at the price 
 imagined by Lord Bramwell; the producer who received no 
 bounty would, as Lord Bramwell says of the bounty-fed 
 producer when he loses his bounty, "discontinue his 
 production," since he would be unable, owing to the 
 bounty-fed competition, to fall back on the alternative of 
 raising his price. 
 
 This position will be reached if bounties continue ; we 
 were close upon it in 1884, the period so well described by 
 Sir Thomas Farrer as one of "glut, collapse, and ruin." 
 It is to avert the stoppage of the natural sources of pro- 
 duction that we advocate the abolition of bounties, and we 
 do so on the broad grounds of the interest of the consumer 
 no less than on the narrower grounds of the interest of the 
 producer. 
 
 At present the market price of sugar is far removed 
 from the level imagined by Lord Bramwell, and therefore 
 his reasoning does not apply. If production were flowing 
 in its natural channels unhindered by the incubus of an 
 artificial competition, sugar would be cheaper instead of 
 dearer than it is now. At the present moment the whole 
 world is suffering, in the increased cost of sugar, for having
 
 I So P^REE TRADE IN SUGAR. 
 
 become too dependent on one particular source of supply 
 — a dependence artificially brought about by the bounty 
 system. 
 
 The following is a quotation from a market report of 
 last Saturday, in proof of this assertion : — " It is now 
 evidently, as was foreseen might be the case, that the 
 holders on the Continent have the immediate future of the 
 market much in their hands, owing to the reduction of 
 stocks in Europe and America, as w:ell as the decrease in 
 some of the leading sources of cane production." In other 
 words, the beetroot producers can corner the market. 
 
 George Martineau. 
 
 21, Mincing Lane, E.C., 
 April 3rd, 1889. 
 
 3 S 
 
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