THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
LOS ANGELES
INSULAR FREE
TRADE
THEORY AND EXPERIENCE
BY
RUSSELL, REA, M.P.
CASSELL AND COMPANY, LIMITED
London, Paris, New York, Toronto and Melbourne
MCMVIII
NOTE.
I This pamphlet is a reprint of a lecture I delivered in
' Birmingham in 1905, considerably extended, with the
few fig-ures I made use of brought up to date. I have
retained the original form so far as the use of the first
person in matters relating to personal experience.
I assume on the part of my readers a knowledge of
the published records of international trade, and of
the statistical case for Free Trade and Tariff Reform as
presented to the country by their respective advocates.
My object has been to bring into opposition the two
theories of foreign trade — that of List and his followers
and that of Adam Smith and Free Traders, with the
fruits of their policies as practised by foreign nations
and by ourselves respectively ; and to add inductive
proof or disproof from the experience of two genera-
tions, to abstract deductive argument.
Russell Rea.
January, 1908.
CONTENTS.
SECTION I.
THE TWO THEORIES.
PAGE
The Function and Limits of Foreign Trade . . 6
The Fundamental Axiom admitted as the Basis of
both Theories ...... 9
The Partingf of the two Theories . . . .11
The Protectionist Theory . . . . -13
Application of Protectionist Theory to the United
Kingdom ....... 18
Consequences deduced from Protectionist Theory
if Great Britain persists in Free Trade . 21
SECTION II.
THE TWO THEORIES IN THEIR RELATION TO GREAT BRITAIN,
TESTED BY THE EXPERIENCE OF SEVENTY YEARS.
(I.) The Protectionist case from experience . . 23
(II.) The Free Trade case from experience . . 28
The nature of the proof required.
I. — Static 30
(a) Wc arc keeping the first call on the
trade of the world . . . -32
CONTENTS
PACJE
{l>) We are keeping the best of the trade of
the world . . . . . '35
(c) We are keeping- as much of the trade of
the world as we can do in good times . 36
The phenomenon of unemployment of the fit
and willing- in Great Britain . . . -39
Summary of the case (Static) . . . -41
II. — Dynamic — Protectionist arguments tested 43
{a) Are our markets contracting, and are
we at a disadvantage, constantly in-
creasing, in the international exchange
of commodities? . . . . -44
{b) Are our exports, if not shrinking in
quantity, degenerating in kind? . . 45
{c) Are British capital and labour flying to
protected countries? . . . ■ 5^
GENERAL CONCLUSIONS.
Failure of Protectionist Theory and Practice . . 54
(i) To benefit Protectionist countries . . 55
(2) To injure British trade . . . -59
Forecast of the future . . . . . .60
THE ETHICAL CASE.
National and International . . . . • ^3
SECTION I.
THE TWO THEORIES.
THE FUNCTIONS AND LIMITS OF FOREIGN TRADE.
Before entering into the consideration of a theory
of foreign trade, either the Free Trade theory or
any Protectionist theory, it is necessary to have a
clear idea of the functions and limits of foreign
trade in a nation.
In the great economic controversy in which the
people of this country have been engaged during
the last five years, it has been an error, committed
sometimes by Free Traders, and almost always by
Tariff Reformers, to speak of our foreign trade as
our " trade." Tariff Reformers have even published
statements of our exports and imports, and called
them our " National Balance Sheet." Nothing could
be more misleading. To one nation a foreign trade
may be a matter of small importance, and a very
minute proportion of the national industrial energy
be directed to the production of goods for export ;
to another it may be of the greatest importance ; but,
taken alone, its foreign trade is no measure of a
nation's activities, its income, its prosperity. The
truth is, the income of every nation is the produce
of its own industry, made either in its own home
by its own citizens, or its own capital and the enter-
7
prise of its own domiciled citizens abroad — that and
nothing more. The portion of this produce it may
suit one nation to exchange for the produce of other
countries is no indication at all of the quantity
remaining which it does not suit such nation to
exchange. The amount of foreign trade of a nation,
therefore, is no sufficient indication of its activities
or prosperity, and to speak of a table of exports and
imports as a national balance sheet is absurd.
During the course of the fiscal controversy, Free
Traders have pointed to the total sum of our exports
and imports, and the amount by which these exceed,
both in gross and per head, those of foreign nations,
as in themselves a proof of our superior efficiency
and wealth; Tariff Reformers have pointed to the
more rapid growth of the exports of certain foreign
countries in certain years as in itself a proof of our
relative decadence in efficiency and prosperity.
Neither of these arguments is economically sound.
The foreign trade of the United States, for example,
does not amount to one-third per head of that of
the United Kingdom, but the average income of the
American is now at least as great as that of the
Englishman. It is, however, scarcely a real necessity
to him to import anything at all. His imports of food
are practically confined to sugar, tea, coffee, wine and
spirits, and fruits ; his imports of raw materials
chiefly to silk, hides, indiarubber ; and those of manu-
factured goods to special goods and articles of
luxury, diamonds being an item of importance, not to
staple manufactures for general consumption ; while
the great American exports of raw cotton and food
stuffs are only rendered necessary as payment for the
prodigious expenditure of American citizens in
Europe.*
To different nations in varying degrees is a
foreign commerce valuable, and to some necessary.
To ourselves, who have to import most of our raw
material, and half our food, a great export trade is
not only valuable, but vital.
And the question forced upon us to-day is, How
shall we best preserve our great export trade by
which we pay for our imports ? Shall we continue
our present policy of Free Trade, whatever course
may be pursued by foreign nations, or shall we
regulate our exchange by tariffs and preferences ^
THE FUNDAMENTAL AXIOM ADMITTED AS THE
BASIS OF BOTH THEORIES.
I will not insult the intelligence of my readers
by stopping to prove that foreign trade is really
exchange and nothing else, that imports are paid
for by exported goods and services and by nothing
else. There is no living or dead economist, English
* The late Edward Atkinson, a few weeks before his lamented
death, stated to the writer his reasons for believing that this
import of the Uaited States cannot be less than 60 millions,
and may reach 80 millions sterling per annum. This is, of
course, as genuine an American import as any which passes
through an American Custom house. It is imported direct into
the stomachs and on to the backs of American citizens, and in
the supply of their various personal wantvS, and is paid for by
the drafts which Brown, Shipley and Co., Baring Bros., etc.,
meet out of the proceeds of the sale of cotton in Liverpool, or
corn at Mark Lane.
lO
or foreign, Protectionist or f>ee Trader, who doubts
it. The Protectionist Professor Ashley calls the
notion that imports are paid for by money which
might otherwise " be spent at home," " the crudest of
popular fallacies, which ought no longer to need
refutation." That very able Tariff Reform cham-
pion, Mr. J. L. Garvin, says, " It is true that every
import must develop a corresponding export." Every
international banker and bill broker conducts his
business on this fundamental assumption, and proves
its truth in practice every day. Yet, while every
man with one grain of capacity to understand a
perfect deductive argument, or any practical experi-
ence in international commerce, knows, and will
explicitly admit, that exports pay for imports, nine-
tenths of the arguments of the Tariff Reformers
are implicit denials of this fact. All the arguments
of various kinds of British manufacturers, who truly
enough point out that foreign goods are imported
into this country in successful competition with their
goods, and that these goods might be made here,
and British labour employed to make them, are
arguments of this nature, they are implicit denials
of the axiom that these imports are now being paid
for, and must be paid for, by the produce of British
labour, though perhaps not of the labour employed
by the manufacturer advancing the argument.
It is necessary to be always on the watch for
some implicit denial of this fundamental principle.
For my own part, I always remember that when a
man asks that the German iron or American window
frames should be excluded from this country for
his benefit, he is asking, unconsciously, that my ship
which is earning the money to pay for these articles
shall be put out of commission and laid up.
THE PARTING OF THE TWO THEORIES.
The fact being accepted by the common consent
of all instructed persons, that exports and imports
do and must balance, we are prepared to consider
the rival economic theories and policies — that of
the regulation of imports by Protection, and that of
Free Trade. Mr. J. L. Garvin says, as I have quoted
already, " It is true that every import must develop
an export," but he goes on to say, " The vital ques-
tion is, What do you exchange for what ? " This is
a perfectly accurate and fair statement of the point
at which dispute arises between instructed Tariff
Reformers and Free Traders. By instructed Tariff
Reformers, I mean, of course, persons who have some
knowledge of the theory and practice of the inter-
national exchange — first of products, then of Bills of
Exchange, and then of bullion and the precious
metals. Among the advocates of Protection in and
for England, these men are a minute minority. They
are to be distinguished from the vulgar intriguing
manufacturer, who seeks to establish a corner at
home. They are to be distinguished from those
working men, fortunately few in number, who can
see that they and their particular trade would profit
at the moment if all the rest of the people would
consent to be taxed for their benefit, and cannot
12
see a step beyond. These men are the brain of
the Tariff Reform party, and they profess, not only
to be economists, but to be the most advanced and
the most scientific of theoretical economists. They
tell us that the old faith delivered to us as an ever-
lasting gospel by Adam Smith and Cobden was no
such thing, but was an excellent temporary system
which it suited England to adopt sixty years ago ;
but to maintain that it is a policy fitted for every
nation, at every stage of its economical development,
is to write yourself down an ancient fossil — a petri-
fied survivor of a former period of economic thought.
The gospel of the modern " historical " and " scien-
tific " school, put forward in Germany sixty years
ago by Friedrich List, and preached by his disciples
and successors ever since, has, they say, entirely
superseded the ancient doctrine, which they nick-
name " Smithsianismus " and " cosmopolitan Free
Trade."
In considering the rival theories, that of Free
Trade as expounded by Adam Smith, preached by
Richard Cobden, and adopted by England, and
the Protectionist theory as promulgated by Fried-
rich List and his followers, and put into practice
by almost all other countries, including our own
Colonies, I shall not enter on the academic argu-
ment that Free Trade is the best system for all
nations, in all possible circumstances, in all periods
of their growth, that it is demonstrably right for all
time and all space, as a general economic proposition.
Still less shall I attempt to prove that no other
13
national considerations than those purely economic
should influence a national policy of foreign trade.
I shall confine this argument to an examination of
contemporary commercial phenomena, the growth
and the present lines of development of international
trade, considered specially in relation to this country
at the present time, and attempt to show that,
whether one holds fast to the theory of Adam Smith,
or adopts the Protectionist theory of List, Free
Trade is not only the best, but the only possible
fiscal system for this country.
THE PROTECTIONIST THEORY.
And first, what is this new learning, and what is
the light we can gain from it ? We find on examina-
tion that Friedrich List and his followers declare
themselves to be the only worshippers at the shrine
of true Free Trade, and that Richard Cobden's
clumsy foot had desecrated her temple, his sacrilegi-
ous hand had torn down her veil, and his profane
tongue had uttered her mysteries to nations which
had for long ages to live and labour before they
could be ready for initiation.
Of Free Trade itself, the abstract " Free Trade,"
written in capital letters, and uttered in whispers.
List, writing about the time of the institution of
the German Zollverein, says : " In the Union of the
three Kingdoms of Great Britain and Ireland, the
world witnesses a great and irrefragable example
of the immeasurable efficiency of Free Trade be-
tween united nations Let us only suppose all other
nations of the earth to be united in a similar manner,
and the most vivid imagination will not be able to
picture to itself the sum of prosperity and good
fortune which the whole human race would thereby
gain." And he piously adds : " Unquestionably, the
idea of a universal confederation, and a perpetual
peace, is commended both by common sense and
religion." Having thus given us a glimpse of a
vision brighter than " the most vivid imagination
can picture to itself," he straightway slams the door
of the temple, and says, " It is not for us or our
children's children ; " the way to go is long and hard,
and for each nation it has three great stages, long
as geological periods, to be passed, not by one, but
by all nations, before universal Free Trade can come.
In the first, a nation will " adopt Free Trade with
more advanced nations as a means of raising itself
from a state of barbarism, and of making advances
in agriculture ; in the second stage, promoting the
growth of manufactures, fisheries, navigation, and
foreign trade by means of commercial restrictions ;
and in the last stage, after reaching the highest
degree of wealth and power, by gradually reverting
to the principle of Free Trade and of unrestricted
competition in the home as well as in foreign
markets, that so their agriculturists, manufacturers,
and merchants may be preserved from indolence,
and stimulated to retain the supremacy they have
acquired." Note that this last stage must necessarily
be a state of one-sided Free Trade for the more
advanced nations, until all nations have achieved
IS
the same level of economic development. This, says
List, is the natural economic order, which would, in
due course, lead to a millennium of universal Free
Trade, if nations were composed of fleshless and
bloodless calculating economic units. But the units
and the rulers of a nation are jealous, passionate,
human beings, and a nation has other interests and
other ideals than those purely material and economic.
It is certain that the nations of the world will
not consent to pursue the even scientific path of their
natural economic development. Therefore, however
sound the theory may be, the facts of life must be
looked in the face, and even the sound economic
theory must bend to a National Policy. Wars
will happen, and a nation economically dependent
upon other countries, either for food or manu-
factures, will be at a fatal disadvantage against a
more self-contained people. Therefore, this natural
economic order of progress, from an infancy of Free
Trade, through an apprenticeship of Protection, on
to a manhood of Free Trade, must be controlled and
modified by considerations not economic but political
and social. And thus arose the National Economics
of List and his followers — the foundation principle
being, in his own words, " Every great nation must
seek, before all other things, the independent and
uniform development of its own powers and re-
sources. Agriculture, manufactures, commerce, and
navigation must all be developed in a nation pro-
portionately."
It is now sixty years since List lived and wrote
j6
his greatest book, " The National System of Political
Economy." At that time the manufactures of
Germany were insignificant, and her exports chiefly
agricultural produce. His immediate object was to
persuade his countrymen to enter upon his second
economic stage, that of protection of their manu-
factures, that they might thus develop their own
powers to manufacture for themselves ; and, to
induce them to face a certain immediate loss and
burden, he invented his celebrated dogma that imme-
diate production and enjoyment are not the princi-
pal thing, but " Productive Power," and that, to build
up a manufacturmg productive power, it is worth
while to tax an agricultural community.
Round this dogma the Free Trade and Pro-
tectionist argument in all countries of the world
except our own, which had already reached List's
third stage when his book appeared and to which,
therefore, it had no application, has centred. It is
on it the Protectionists have achieved such victories
as they have up to the present won. It is the well-
known plea for the protection of infant industries
until they are strong enough to take care of them-
selves, but always in seeking to guide his country-
men through what he called the three great economic
phases of development, through Free Trade to Pro-
tection, and then back from Protection to Free
Trade, this national idea was the dominant one ;
and he taught that the trade of the country must
be controlled and restricted by imposts on either
manufactures or agricultural produce so as to produce
17
as nearly as possible this internal economic equili-
brium ; in short, that nothing should be imported
that can reasonably be produced within the limits
of the country itself.
Germany in late years has pursued the policy of
its most celebrated Protectionist teacher, and, al-
though, as we shall see later, a great expansion of
German manufactures was inevitable under any fiscal
system, yet this expansion has been stimulated by the
protection accorded to her manufactures, until, accord-
ing to the " National " theory, it is now excessive.
Professor Wagner, of Berlin, views with the
greatest anxiety what he regards as the present
excessive industrialisation of Germany, his views on
this matter are shared by many others, and it cannot
be doubted would be held to-day by List, were he
alive. The tendency of the new German tariff is to
redress the balance. While it adds slightly to the
duties for the protection of manufactures, it adds
much more largely to the duties for the protection
of agriculture. Therefore, while it may restrict our
direct sales to Germany, it must still more restrict
her power to compete in other markets with us.
This is quite as it should be, according to the
Nationalistic theory. It is better that they should
sell less manufactures, if they also buy less food,
and if, incidentally, they have to cat less and wear
less, that is their proper sacrifice to a patriotic theory.
This is the theory, in as few words as I can put
it, of the theoretical, " historical," and so-called
" scientific " Protectionist economist.
B
i8
To follow it is, from the point of view of the
world at large, avowedly economically, a policy of
the " second best." It is directed, not to extend
international trade, but to contract it within the
smallest possible limits. Nevertheless, we find it
accepted and acted upon, for the present, alike by
foreign nations and our self-governing Colonies.
The great question put to us to-day is not what
is the best commercial policy for the world, but what
is the best policy for Great Britain, in a world of
nations which have adopted more or less thoroughly
a Protectionist policy .-' Is it possible for us to per-
severe in our solitary course of Free Trade and live ;
or shall we turn our backs on Adam Smith and
Cobden, and put ourselves into line with other
nations, and follow List and his school .''
APPLICATION OF PROTECTIONIST THEORY
TO THE UNITED KINGDOM.
We have, therefore, now to consider List's theory
of a self-contained nation, "with its agriculture,
manufactures, commerce, and navigation developed
in strict proportion," in its application to England.
If this ideal be accepted, with this Kingdom for its
unit, then it must be admitted our Free Trade has
been wrong, our manufactures, our shipping, and
most of our foreign trade are wrong. We have
twenty millions of people in this country who have
no business to have been born. And the most wrong
of all are the Tariff Reform Commission, who are
aiming at increasing still further this national
19
disease, the excessive development of our manufac-
turing side. What we must do on this theory is
to tax imported food, so as to encourage its pro-
duction at home, let in foreign manufactures free,
so as to discourage our own overgrown industries.
By this means, if severe enough, we should bring
back some of our own surplus people to the land,
and starve out or drive out others until the blessed
equilibrium was established. The new German
tariff is a deliberate attempt of this character,
practised upon a nation which, as yet, imports a
comparatively small portion of its food.
The application of German economic theory, and
American economic practice, in this form, with this
country for its self-supporting economic unit, we
may surely rule out of the range of practical politics.
But the English Tariff Reformer of the neo-German
Nationalistic school does not take this Kingdom as
his economic unit. His unit is the Empire. There
is no lop-sided development of manufactures in the
Empire taken as a whole. Here is his ideal economic
national unit. But he here comes face to face with
an obstacle completely insurmountable. The unit
refuses to unify. The British Empire is a great
fact, but, unfortunately, it is not an economic unit
in the sense required for a " National " economic
policy. We have India practically a Free Trade
country, with which we do as much trade as with
Australia, Canada, and the South African Colonies
put together, and we have these self-governing Colo-
nies, each determined to work out its own national
30
economic development in its own area, on the lines
of strictly national — that is, Colonial — Protection.
To speak quite frankly, I have at this moment more
hope that Germany will find her new tariff insup-
portable, and relax it — I have far more hope, even
an expectation, that the United States will exten-
sively reform her tariff in the Free Trade direction
than I have of a similar movement in any of our
self-governing Colonies. We have to acknowledge
the candour of our Colonial brothers. Throughout
this controversy they have made it clear that, pre-
ference or no preference, their ideal is the self-
contained nation — their national economic unit is
the Colony, not the Empire ; and the means they
take, and mean to continue to take, to secure this end,
is Protection, effective Protection, of their manufac-
tures. Notwithstanding any small preference they
may give us over other foreign countries, foreigners
we remain, and the national economic unity of List is
accepted by the Colonies, each for itself, as the ideal
at which it aims — the economic equilibrium which
will enable it to do without any foreign trade at all,
either with the Mother Country or with other foreign
countries.
On the theory of List and his followers, which
our Tariff Reformers accept, and are doing all they
can by means of translations to make knov/n and
popular in this country, all these nations, and especi-
ally our own Colonies, are economically and politic-
ally right in being Protectionist in the present stage
of their industrial development, with the exception
of Germany and the United States, who have ad-
vanced far enough for the third or Free Trade stage.
But even Germany and the United States, although
not economically justified, may be politically right in
retaining a Protectionist system. At any rate, at
present they do retain it.
The practical problem before us, therefore, I
repeat, is not the question whether, in the abstract,
Free Trade is " the best policy for England." On
every purely economic theory it is. Adam Smith
and Cobden teach that it was always right for
England and for other nations, too ; List and his
school teach that for England it was not always
right, but it is right now in her advanced stage of
economic development. So far the English Protec-
tionist would agree with us. The position is that
most foreign nations, in matters of trade, have
adopted the tactics of war, and we find ourselves
solitary Free Traders, one-sided Free Traders, in a
" world of Protectionists."
Surely, then, of all nations on earth we ought to
be the most miserable. Every other nation is school-
ing itself, by painful tariffs, to do without us, and we
are becoming more and more dependent upon others,
and what will be the end of it ?
CONSEQUENCES IF WE PERSIST IN FREE TRADE.
The deductive economist of the Protectionist
school proves to us by deductive reasoning what the
end ought to be and what it must be ; the whole
catalogue of woes is set forth by Mr. Balfour in his
22
" Economic Notes on Insular Free Trade." Our
staple manufactures, the exports in which we used
to trust, will be shut out ; we shall have to pay for
our imports all the same. How are we to do so .''
We are even now being " engineered " — Mr. Balfour's
word — by the foreigners' tariffs out of one trade into
another to pay for them ; " necessarily " they say all
these changes are from superior to inferior trades ;
meanwhile our manufactures are becoming continu-
ously less and less necessary to the foreigner, we are
at a disadvantage in the exchange, we must " neces-
sarily " not only sell our inferior goods, the produce
of low-class and sweated labour, but we must also
constantly reduce our price to get them taken at all.
It will become, in the language of Mr. Balfour, first
" difficult," then " impossible," to obtain and pay for
our imports ; then will follow suffering, starvation,
and wholesale emigration, until little England is
reduced to a little fifth-rate, self-feeding state. All
these things will happen, says the deductive Protec-
tionist economist — must happen — have begun to
happen. Meanwhile the British capitalist manufac-
turer, excluded from his old markets, takes himself,
his capital, enterprise, and machinery to other
countries, where he flourishes greatly under the
shade of a tariff wall, when he has got to the right
side of it.
These in short, and as fairly as I can put them,
are the conclusions as applied to England the Pro-
tectionist deductive economist deduces from the
theory I have already explained.
SECTION II.
THE TWO THEORIES IN THEIR RELATION
TO GREAT BRITAIN, TESTED BY THE
EXPERIENCE OF SEVENTY YEARS.
A theory however plausible, and deductions from
it however apparently logical, must come to the test
of the facts of life. Can the Protectionist confirm
and prove his theory from the world of facts and
figures which are available for the purpose ? He
maintains that he can.
I. THE PROTECTIONIST CASE FROM EXPERIENCE.
The one great fact upon which all English
Protectionists base their whole case, which they force
Free Traders to face and answer if they can, is the
phenomenon of the rapid rise and growth, not only
of the total national product, but especially of the
manufactures, and still more of the export of the
manufactures of certain Protectionist countries
(particularly the United States and Germany), under
their systems of protective tariffs. The more ad-
vanced Protectionist countries have increased, not
only their production of their manufactures, but their
exports, in the last thirty years at a greater rate than
England, a Free Trade country, has done. What
more complete vindication of the tariff system
under which this has been effected can be desired ?
they ask. All the arguments of Tariff Reformers are
based upon this undeniable fact — are elaborations
and illustrations of it.
23
24
What is the significance of this striking
phenomenon ? We Free Traders must face this
question fairly, and show, if we can, that it is due
to other causes than the protective tariffs, under
which it has come into existence.
I decHne to consider America, for any conclusion
drawn from this fact in regard to America is useless
for any economic purpose. With such a raw material
as the best part of the richest of continents, that
of North America, not half developed, with its land,
its rivers, its mineral wealth, its immigrant labour,
it is beyond the power of human folly to arrest its
growth. Germany is a fair parallel, and may be
taken as the strongest case in point. The great
cause of the rapid rise of the manufactures of
Germany and other nations is not difficult to dis-
cover, for it is the most conspicuous phenomenon
affecting the human race in recent centuries. It is
what is known as the " Industrial Revolution." With
the forces of nature placed by modern science and
invention at the service of man, it is no longer
necessary that nearly the whole population of a
country should be employed on the land to raise
mere food, and in the primitive rural industries, and
a large proportion has transferred its labour from
agriculture and village handicraft to manufactures,
and removed from the country to towns.
Mr. E. Atkinson has calculated that under
favourable conditions, such as obtain on a great
wheat farm of Dakota or Manitoba, one man's work
for one year of 300 days will produce sufficient wheat
25
to feed 1,000 people for the year ; that it can be
carried through the flour mill and put into barrels,
including the labour of making the barrel, at the
equivalent of one other man's labour for one year ;
that it can be moved from the far West to a flour
mill in Minnesota, and thence to the city of New
York, and all the machinery of the farm, the mill,
and the railroad can also be kept in repair at the
equivalent of the labour of two more men ; " so that
the modern miracle is, that 1,000 barrels of flour, the
annual ration of 1,000 people, can be placed in the
city of New York, from a point 1,700 to 2,000 miles
distant, with the exertion of the human labour
equivalent to that of only four men, working one
year in producing, milling, and moving the wheat."
This is an extreme example of a universal move-
ment. As the agricultural population is liberated,
and the mechanical arts grow, new occupations are
necessary, new wants arise, new manufactures are
born. In this stage of social and economic develop-
ment, in this migration of the greater part of the
population from occupations immediately connected
with the cultivation of the soil to manufacturing and
other pursuits, which removed them from rural dis-
tricts and collected them in towns, we were a genera-
tion ahead of Germany and other countries. Thirty
years ago the revolution in this country was practic-
ally accomplished, while in Germany it had scarcely
begun. At the beginning of the last century 80 per
c^t. of the population of the countries which now
form the German Empire were engaged in agricul-
26
ture. In 1870 two-thirds of the population was
agricultural, while in England and Wales at the same
date the proportion employed on the soil was not
17 per cent. Since that date the proportion of the
population of Germany engaged in agriculture has
been reduced by one-half, the population inhabiting
large towns of more than 100,000 inhabitants" has in-
creased sixfold, that inhabiting medium-sized towns
of from 20,000 to 100,000 inhabitants has increased
nearly threefold. Germany has been drafting into
the cities a large half-employed, underfed, under-paid
rural population to found her new industries. We
had no longer this resource, it has been long practic-
ally dried up, our agricultural counties are to-day
underpeopled, and the land is crying out for labour.
The sufficiency of this explanation of the some-
what more rapid expansion of German manufactures
and exports than those of the United Kingdom must
be obvious to anyone who considers the importance
of the Industrial Revolution of the Nineteenth Cen-
tury in its effect on the conditions of human life in
Western countries. The movement to the towns in
Germany has doubtless been accelerated by her past
protective policy in favour of her manufactures, she
will now probably check it by her new " agrarian "
tariff. But the process itself is a natural and inevit-
able stage in the development of a modern nation
in modern conditions. It was inevitable under any
fiscal system, and was anticipated by every man of
reasonable foresight. That during its progress the
growth of German manufactures and exports should
27
have been more rapid than our own is a consequence
equally inevitable. It was the necessary result of
modern forces far more powerful than tariffs. That
the disparity was not greater during this period of
the absorption of a great supply of cheap labour is
not only a signal proof of our national efficiency, but
furnishes a strong presumption of the superiority of
our fiscal policy.
It is likely that in Germany, as in this country,
this movement of population has now almost spent
its force ; for, although the proportion of the popu-
lation engaged in agricultural pursuits remains
double that existing in the United Kingdom, it is no
longer excessive. The fact that the natural increase
of the population in Germany is double that of the
United Kingdom, that the birth rate is 25 per cent,
higher than our own, and nearly 30 per cent, higher
than that of the Colony of Victoria, will doubtless
tend towards maintaining the growth of her indus-
tries, and of the exports necessary to pay for her
increasing imports of food. On the other hand, the
effects of the new and distinctly Nationalistic tariff
on the condition of the manufacturing working
classes must tend both to decrease the birth rate and
revive emigration. An analysis of the conditions
which produced and accompanied the recent expan-
sion of her manufactures and exports leads to the
conclusion that the Protectionist policy of Germany
has been rather a disturbing than a governing factor
in her industrial evolution. It doubtless accelerated
its earlier stages, it has distorted its course of pro-
28
gress, and at present, under the new tariff, it retards
the natural manufacturing and commercial expansion
of the country in a manner approved by Professor
Wagner and other Nationalistic economists, and
doubtless intended by its " scientific " authors ; and
yet in the whole course of the fiscal controversy I
have not met with one argument by induction from
experience which was not based upon the erroneous
assumption that the rise of manufactures in foreign
Protectionist countries was almost entirely due to
their protective tariffs.
2. THE FREE TRADE CASE FROM EXPERIENCE.
The nature of the proof required.
In the days of Adam Smith the argument for
freedom of trade was necessarily a purely deductive
argument — that efficiency would be an effect of free-
dom, that the division of labour, which in the village
and the nation had so incalculably increased pro-
duction, would have a like effect if brought into
operation on an international scale — that inter-
national trade is in truth simply an exchange of
commodities, and that a " favourable " balance of
trade to be paid in gold cannot be maintained per-
manently, and, if it could be, would be futile. These
and other similar unanswerable propositions were
the arguments of Adam Smith, and the logical
deduction from them was Free Trade.
With two-thirds of a century of Free Trade
practice behind them, British Free Traders have now
so great an accumulation of experiences, which add
29
historical proof to inherent probabihty, that their
difficulty is how to focus it all so as to bring it
within the range of vision of the ordinary human
being.
The general arguments for British Free Trade
have thus altered in character ; the old deductive
argument has been supplemented and almost super-
seded in the arena of controversy by inductive
statistical reasoning. The argument from experience
has been added to the argument from reason, and
the whole general case is thus far stronger than it
was in Richard Cobden's days.
But the present-day Free Trader has to meet
another and more plausible, if not more formidable,
argument. It is that which I have endeavoured
fairly to put forward, and it may be re-stated in a
sentence thus : Cobden's forecast of a rapid universal
victory for Free Trade principles has not been
realised. The Nationalistic Theory has been adopted
by almost every civilised country but this country.
Whether it is a better theory or not than that of
universal Free Trade is not the question ; as put to
us now, the practical question for us is. Can we trade
on Free Trade principles with nations who trade
with us on Nationalistic Protective principles ? Can
one-sided Free Trade go on for ever .-' Peel and
Cobden answered this question, which, it must be
admitted, they believed would never become the
practical question it is to-day, by abstract deductive
reasoning in the affirmative. " Hostile tariffs are
best met by free imports," they said. After sixty
30
years of experience we have now to ask ourselves
the question, Does this experience confirm their
dogma ? Does the present position of British trade,
do the indications of the future, do the hnes of the
development of contemporary international com-
merce enable us to supplement Peel's dogmatic
affirmation, by induction from the ample material
available ? This is the task the Free Trader must
fairly face to-day.
I shall endeavour to state the case of the British
Free Trader, first, in its Static aspect, by examining
the position to which two generations of Free Trade
practice has brought us — the absolute and relative
position of the international trade of this country
to-day ; second, in its Dynamic aspect, by consider-
ing its relation to the contemporary movements and
the lines of development of international trade ; how
far a policy which may have been wise and successful
in the past is likely to continue to succeed in a world
which I assume, for the purpose of this argument, to
be definitely committed to a Nationalistic policy.
The British Free Trade Case : (I.) Static.
Tariff Reformers assume as self-evident that this
rise and growth of foreign manufactures has been at
our expense, to our loss. Is it not a fact, they
inquire, that sixty years ago England was the work-
shop of the world ; we were not only first but alone
in the production and export of the new manufac-
tures ? Now other, and Protectionist, nations have
approached, and m some respects passed us, and
31
notably in the production of iron we have fallen
back to the third place. Is not this in itself a
sufficient proof of the error of our policy?
The dogma that as England was once the sole
workshop of the world, she should have retained the
trade of the world in its infinite expansion — in other
words, that the world should cut its coat according to
England's cloth — is a proposition too absurd to
require serious refutation. Yet it is an argument
constantly in the mouths of our Protectionists,
notably in that of Mr. Deakin, who appears to com-
bine a belief in it with a determination that the
Commonwealth of Australia shall be an exception.
We could not, of course, keep the whole, and the
only useful question is, What have we kept, and how
does it compare to-day with the new manufactures
of foreign countries and their exports, the conditions
under which these goods are made, and the condition
of the people who make them ? Any competent
examination of the general production of the various
manufacturing countries and their exports of manu-
factures will show three things : —
{a) We are keeping the first call on the trade of
the world.
(b) We are keeping the best of the trade.
(<:) We are keeping as much as we can do
in good times.
And this position we maintain with a higher level
of nominal wages, a still higher level of real wages,
and shorter hours of labour than any of our Conti-
nental neighbours.
32
(a) We are keeping the first call upon the trade oj
the ivorla.
That we are keeping the first call upon the
trade of the world is a broad, and perhaps a bold,
general proposition to state. It can only be tested by
a broad survey of the courses of the main streams of
international trade, the significance of which, persons
who are unable to extend their vision beyond an
import of window frames, or a contract for foreign
horse shoes, are incapable of estimating. Such a
comparison of the main streams of the distribu-
tion of our exports, with those of other and compet-
ing exporting countries, shows that the first call of
the world is for British goods produced under Free
Trade conditions ; and that in foreign markets of all
kinds we maintain our supremacy —
I. In the neutral markets of the world, i.e., in
those countries in which the import duties do not
aim at the protection of native industries, as in
China, India, and Turkey. Countries of this class
send their exports largely to the Protectionist
countries ; they receive payment for them principally
in British manufactures. In consequence, our exports
to these countries greatly exceed our imports from
them, and the nations receiving the produce of these
countries have to settle the international account
with us. Thus, China exports goods to the conti-
nent of Europe to more than double the value of
her exports to Great Britain, but she imports from
Great Britain goods to more than double the value
of her imports from the continent of Europe. The
33
exports of India (by sea) to all foreign countries
amount to almost double the value of her exports to
Great Britain, but her imports from Great Britain
are of more than three times the value of her imports
from all foreign countries.
2. In the markets of the newer countries in which
a deliberately adopted protective policy has not yet
worked out its full results — as in our Australian
Colonies and such countries as the Argentine Re-
public. In these countries the position is very much
the same as in the neutral markets — the imports of
British goods into the ports of the Argentine exceed
the exports of Argentine produce to Great Britain
by more than 50 per cent., while their imports from
all other countries than Great Britain do not amount
to half the value of the exports of Argentine produce
to these countries.
That the great export of Australian wool to the
continent of Europe is paid for by the export (with-
out any preference) of British manufactures, is
shown by the fact that the total Australian exports
to other countries than Great Britain exceed those
to Great Britain by a very considerable amount
(13 per cent.), while the imports from those countries
fall short of the imports from Great Britain to a
still more considerable extent (about 50 per cent.).
It appears fair to conclude that in the two classes
of markets, the neutral and the imperfectly protected
markets, the superiority of British organisation and
enterprise, and the superiority of the British articles
of export in quality and price, enable us to retain
34
the first call upon the trade, and lead to an enormous
increase (in the neutral markets I may say the
doubling) of what our export trade with these
countries would be were it confined to a direct inter-
change of commodities.
It remains to consider the fully protected
markets, that is to say, the countries in which a
complete system of protection has been in force
for a sufficient number of years to enable it to pro-
duce all the effect in restraint of international trade
which it is capable of producing ; such nations are
Germany, France, and the United States. Year by
year these countries find themselves enormously in
our debt ; first, for our purchasing for them in the way
I have shown a great part of their requirements
from the outer world ; secondly, for our shipping
services (we carry more goods for the group of the
ten protected countries than we do for ourselves —
that is, to and from the ports of Great Britain) ; and
thirdly, for the gold they require for the renewal
and expansion of their circulation, and for the arts
— that is, for gold considered as a commodity,
annually produced, distributed, and, in part, con-
sumed. This gold they procure in great part through
Great Britain. To keep straight with the world, and
especially with us, they must export ; they, conse-
quently, do export to us considerably more than
they directly receive from us. But they cannot force
us to take anything we do not want ; and the condi-
tions under which they produce their export goods —
their longer hours of labour, their lower wages — are
35
an indication, and in part a measure of the relatively
greater effort necessary to bring their export goods
into effective competition in the markets of this
country and of the world. The practice of dumping,
so far as it is practised, is itself an evidence of the
shortage of a healtliy and remunerative demand, and
at the same time of the presence of economic forces
of which the human agents are probably unconscious,
and which demand exports to balance international
accounts. This very short analysis of the main
courses of international trade, so far as they affect
N
this country, I think is sufficient to show that we
hold, under our present Free Trade conditions, the
first call on the trade of the world.
(b) We are keeting the best of the trade of the world.
That we are keeping the best of the trade of
the world is undeniable, if we are considered as what
we are and must be, a manufacturing and commercial
people. Whether it is a better or happier lot to pro-
duce and export agricultural and pastoral produce,
I am not prepared to maintain ; I can only express
my surprise that so many nations of the world are
so anxious to escape from this Arcadian state. But
for us this is impossible, and we must compare like
with like. The proposition that, as a manufacturing
and commercial people, we are keeping the best of
the trade of the world can be proved by a detailed
comparative examination of that portion of our
exports which passes through our Custom houses,
and is published monthly in the Board of Trade
36
returns, and annually iu the Statistical Abstracts of
this and foreign countries, which my readers can
consult for themselves. They show that our exports
are of the most desirable kind, in the main the pro-
duce of our most skilled and best-paid labour. But
it is shown to a still greater extent in the character
of what is called our " invisible " exports — that is
our shipping and other services, which are of a still
more desirable character than even our material
exports, and are of a nature in which we maintain a
lead in many cases amounting to a virtual monopoly.
(The question of this section is more largely dis-
cussed in a later section, that under the heading,
" Is Our Trade Degenerating in Kind .-' ")
(c) We are keeping as much as we can do of the trade 0/
the world in good times.
That we are keeping as much as w^e can do of
the trade of the world in good times, which is my
third statical proposition, will probably not be
accepted by Protectionists so readily as the two
former arguments, but the experience of the late
seasons of prosperity and " booms " in trade amply
prove it — that in good times we are keeping as much
as we can do. The Protectionist at this point asks,
" Is not the German taking our trade and throwing
our people out of employment .-' What about the
unemployed millions in this country, robbed of their
work by foreign competition } " The answer to this
persistently reiterated query is simple and direct.
There are no unemployed millions of workers ; they
simply do not exist. We have to-day no available
2,7
reserve of unemployed for our ordinary industrial
purposes. We are a fully employed nation, our
existing industries are sufficient to absorb all avail-
able and willing workers in good times. Take the
year 1899, or, to almost the same extent, the year
1906 and the greater part of 1907, as examples of
good times. The comparative stagnation of the
building trade in the latter j'ears renders the former
year the better for the purpose of illustration. It
was a year of peace and booming trade ; at that
time our prosperity reached saturation point, v^'e had
as much as we could hold ; we all know every mill,
factory, mine, and ship, and every man had the
choice of two jobs. Orders of all kinds were refused
by our manufacturers, as I know by my own experi-
ence, both in my own business and as a railway
director — orders which overflowed to the foreigner
because we could not take them. It was the year
in which the official statistics of unemployment
reached their lowest recorded level — 2.2 per cent. —
of that part of the working population covered by
the returns. It is frequently objected to the use of
these figures of unemployment that they apply only
to skilled workmen, members of the trade unions
which make the returns. This is true, and it is doubt-
less also true, although we have no statistics to prove
it, that, in times of depression, the proportion of
the unemployment among the unskilled workers is
greater than among the skilled. But in the good
times of abounding trade the opposite is the case ;
again I speak from pretty extensive observation and
» »t )i'*/r\t^Mi>
38
in the absence of official statistics — and I think it
cannot be denied that in iSqq every unskilled able
and willing worker in the country had a choice of
onijiloyments. That 2.2 per cent, of the skilled men
were out of employment is no indication that the
total supply of skilled labour exceeded the total
demand by 2.2 per cent. These unemployed men
belonged to trades which, for some special cause,
such as changes in manufacturing methods or
fashion, had been left out of the movement. They
could have been absorbed over and over again by
the trades in which operations were limited by
deficiency of labour, had they been fit and willing
to undertake the work which there were not men
enough to do. And yet this is a period in which
notably German and American exports expanded
more than our own, and the Tariff Reformers tell
us this was at our expense. If this were so, they
are bound to tell us how wc could have taken them
on, what we could have done more than we did,
or what we could have done better than we did.
" If a man were Ferdinando,
He can do no more than he can do,
And he who more than this expects,
Is wanting in his intellects."
IIUDIBRAS.
It may be accepted as proved by the experience
of good times that our industrial organisation is
thus equal to the powers of our working population,
and in such times to foster and stimulate one in-
dustry by Protection could not add to the sum of
39
employment, but would be at the expense of some
other more deserving industries, and at the expense
of the consuming community in addition.
Tk& Pheno7nenon of Unemployment.
Whence, then, appears the phenomenon of un-
employment of the fit and willing workers? It is
necessary to distinguish this from the great general
problem of poverty, that of the aged, and the widows
and fatherless children, the sick and disabled, and
the unemployable. The unemployment of the will-
ing and fit is a much smaller question ; it is doubt-
less in part due to the waste by industrial friction,
to the supersession of one trade by another, and
one class of workers by another, due to the intro-
duction of machinery, changes of processes or to
changes of fashion. It is thus the few chronically
unemployed fit and willing workers are produced.
But this class is very small, and the problem of
dealing with it is one well within the power of
organised effort, without having recourse to heroic
remedies. This class of unemployment exists in all
countries, Free Trade and Protectionist alike, and
no sensible Protectionist would seek to abolish it
by Protection, for this would be to protect his
country against the introduction of new industries
and superior processes.
But bad times succeed good, and with bad times
appears really extensive, but not chronic, unemploy-
ment in the best employed State and in the best
regulated trades. In both Protectionist America and
40
Protectionist Germany the swing of the industrial
pendulum appears to be greater than in this country,
and greatest in their most protected industries ;
and it is the backward swing which is the great
cause of the unemployment of the fit and willing
worker. The problem is almost entirely that of
mitigating and tiding over bad times. It must be
remembered that under these alternations every trade
produces its own employment, and as a consequence
its own unemployment in bad times, and it is quite
obvious that as the substitution of fostered and
protected industries for healthy and natural indus-
tries cannot add to the sum of employment in good
times in a nation already fully employed, so it can-
not diminish the sum of employment in the bad
times which follow. For, I repeat, it is a fact too
often overlooked that every trade produces not only
its own employment, but its own unemployment, and
to import a trade by tariffs and taxes is not a measure
that will absorb the unemployed in bad times ; it is
to import unemployment as well as employment.
This the Americans found when, at an enormous
cost to other unprotected industries, they violently
imported a tin-plate manufacture. That I might
read a full report of Mr. Chamberlain's speech in
South Wales, in which he gave this as a striking
example of pure profit to America and pure loss to
us, I bought a Cardiff newspaper, and in the very
same issue that recorded his speech I read these
words in their market reports : " The condition of
the American tin-plate industry is most unsatisfac-
41
tory, over half the mills being closed down, and the
American Tinplate Company has reduced its quota-
tion for plates by 20 cents on the loo-lb. box. Little
business is said to be coming in from canners. Inde-
pendent sheet mill owners have secured a reduction
of 20 per cent, in wages." No such state of affairs
at that time or since has existed in South Wales.
America had imported this unemployment, and her
unemployment is always greatest in her projected
industries. It is obvious the problem of the unemployed
must be attacked by other methods than tariffs.
It is equally obvious that until some method
is found of equalising employment and eliminating
the lean years, the test of a nation's industrial
employment can only be the degree to which it is
employed in good times, and the amount the average
of employment from year to year falls below this
maximum. The application of the first test shows
that our existing industries absorb all our available
labour in good times ; that of the second, that they
possess greater stability and show less fluctuations
of employment than those of protected countries.
Summary of the Case {Static).
From a survey of the present condition of the
British manufacturing and export trades statically,
that is to say, of the position in which our Free
Trade policy has placed us to-day, we cannot avoid
coming to the following conclusions.
First, that in the infinite expansion of the con-
sumption of the world it was a physical impossi-
42
bility under any tariff system, or under a system of
universal Free Trade, that England should remain the
sole workshop of the world, and that the rise of
other manufacturing nations was inevitable, and has
been beneficial both to themselves and to the world.
Second, that this expansion of industry has not
been at our expense, for, as a matter of fact, which
can be observed and proved — (i) We are keeping
the first call on the trade of the world ; (2) we are
keeping the best of the trade ; (3) we are keeping
as much as we can do in good times.
Third, that owing to the low price at v/hich her
policy of free imports enables her to buy what she
requires for her work and life, and to the general
efficiency of her working population, England is able
to retain this position while paying higher nominal
wages, and much higher real wages, with shorter
working hours, than her Continental neighbours.
Fourth, that tTie problem of unemployment of
fit and willing workers is common to all countries,
and is a malady to be treated by other means than
tariffs ; that the importation of new industries by
protective duties means the importation of unem-
ployment as well as of employment ; and that our
Free Trade policy has to some extent moderated the
alternation of good and bad times, which is the main
cause of unemployment, and mitigated the severity of
the effects of bad times on our industrial population.
Thus we reach the conclusion by induction from
the ample experience of sixty years, which Peel and
Cobden had reached by abstract reasoning. We have
43
found it true that the best way to meet hostile
tariffs is by a policy of free imports.
The British Free Trade Case: (II.) Dynamic.
There are Tariff Reformers who will admit the
main part of the statical case. They will admit that
Free Trade has up to the present, or rather almost
up to the present, been our best policy. But they
point out that conditions are changing and have
changed. The nations of the world who have
adopted nationalistic protective systems are one by
one realising their national aims, they are becoming
independent of us and our goods. Accepting this as
their general proposition, they deduce the following
" logical conclusions " as the consequences which
must " necessarily " befall, and are now befalling,
solitary, undefended. Free Trade England.
(<f) That our markets are contracting, and we
are trading at a constantly increasing disadvantage.
{U) That our trade, if not yet diminishing, is
degenerating in kind.
(c) That British capital and British labour are
flying to the protected countries, and will inevitably
do so to an increasing extent.
These three conclusions, deduced as " necessary "
and " inevitable " consequences of the general state-
ment of the fact (quite undisputed) that almost all
nations of the world except England have adopted
the system of nationalistic protection, can also be
examined inductively in the daylight of present-
day facts.
44
(n) That our markets are contracting^ ana xve are
trading at a constantly-growing disadvayitage.
In the light of the trade returns of the last three
years, the statements with which the Tariff Re-
formers began their propaganda, that the exports of
our manufactures were actually stationary or
decreasing, has become too ludicrous to be noticed,
except as a curious example of the power of a theory
to distort an investigation of facts. But the theory
they still hold, and it was best stated by Mr. Balfour
in his " Economic Notes." It may fairly be put thus :
As the area of national protection grows, so our
accessible markets contract in number and area ;
although our exports may not yet show signs of
diminishing, they must " inevitably " do so in the
near future. Our imports are " necessities " to us, and
are becoming 5''ear by year more necessary ; our
exports are not " necessities " to other countries, and
are becoming year by year less necessary. There-
fore, " necessarily," we can only induce other
countries to accept our exports, which is our only
way of paying for our imports, by constantly reduc-
ing our prices ; tTiat, in consequence, our exports
will become, first, " difficult," then " impossible," and
our imports, first, " costly," then " unattainable."
These assumptions, if accurate, would by this
time be susceptible of historical proof. They have,
on the contrary, received disproof, as I have shown
in the previous section, in which British trade is
considered statically.
That we are not reducing our prices ruinously in
45
order to get our exports " accepted at all " is proved
by the figures given by the President of the Board
of Trade in answer to a question I put to him on
February 3rd of this year (1908), showing that,
although the prices of our exports and imports have
greatly decreased since 1873 — they have decreased
almost to an equal extent — we have reduced the
prices of our articles of exports by 44.3 per cent.,
while the foreigner has reduced his prices to us by
44.5 per cent. We are therefore getting rather
more, and not less, foreign goods for our goods.
However clear it may be to the Protectionist
theory that our markets ought to be contracting, and
that our foreign exchange of products ought to be
more and more disadvantageous, it is even more
clear to the candid inquirer that what ought to
happen and " must happen " does not " come off "
according to the logical programme.
(Zi) That our export trade^ if not yet shrinking in
quantity^ is degeneratitig in kind.
We are being " engineered " by foreign tariffs, to
use Mr. Balfour's phrase, out of our good old " staple "
export trades into other and "necessarily" inferior
trades. The Tariff Reform Commission point out
that whereas in former times we used to make iron
for the world, now both America and Germany have
passed us in the production of pig-iron, and that our
exports of that article of one of our greatest staple
trades is insignificant. Professor Ashley says,
" England is turnmg apparently more and more to
46
exports, the products of cheap, low-grade, and
docile labour. Let us see," he continues, " what are
the comparatively new exports which are taking the
place of the old ? Coal and unmanufactured clay,
apparel and slops, pickles, vinegar, and preserved
fruits, oil and floor cloth, caoutchouc manufactures,
soap, furniture, cabinet and upholstery wares, cord-
age and twine. Now, I believe that all these are
cases in which the bulk of the labour employed is
cheap and unskilled."
What is our reply to these criticisms ? It is that
most satisfactory of all possible replies to a disagree-
able proposition — a flat denial. Our exports are not
inferior, the examples the Tariff Reformers give do
not prove it, the examples they do not give prove
the contrary. They complain that we no longer
make pig-iron for the world as we did when our
railways were the most extensive system in the
world, and we were teaching other nations how to
develop their own. This is their favourite example
of our decline. To anyone who has the most super-
ficial knowledge of our slender resources, both of
iron ores and furnace coking coals, in comparison
with the United States, a country which has now a
railway mileage ten times as great as our own, this
complaint will appear the complaint of ignorance.
Instead of supplying the world, as in the old days,
America, Germany, and England, the three great
iron-producing countries, each produces about the
quantity of this raw material it is able to work up,
and this seems to me to be a satisfactory arrange-
47
ment of this particular trade. To make pig-iron for
the world is not my ideal destiny for this country ;
that the Black Country should extend south from
Birmingham as it extends north, until it fills the
rich and happy garden valley of Evesham, now
devoted to Professor Ashley's pickles and jams and
preserved fruits, for example, would be to sacrifice
the better for the inferior industry.
Of Professor Ashley's list of the inferior
export trades into which he states we have been
" engineered " by foreign tariffs, I have only three
remarks to make. In the first place, they are very
small, in the second place, they are not inferior to
our old staple trades, and, in the third place, we
are not being " engineered " into them. I exclude
the export of coal, for with expert knowledge I differ
from Professor Ashley on this point, and I regard
this as one of our best exports. It forms the basis
of our exchange in bulk for our bulky imports.
More than half is sent abroad for navigation pur-
poses, and more than half is for British consumption
abroad. In his first two trades, apparel and slops,
our exports have not increased at all, but largely
decreased during the years of the fiscal controversy,
since 1902 ; in his next five trades, pickles, vinegar,
confectionery, jams, and preserved fruits, there has
certainly been considerable expansion, but surely
these are healthy and desirable trades ; in all the
other trades he enumerates in the same four years
the increase does not amount to two millions in the
same period, or 28 per cent., while our total export
48
trade in British goods has increased by more than
50 per cent. An examination into the figures of the
exports of the trades selected by Professor Ashley as
examples of inferior and undesirable trades to which
" we are turning more and more," proves that we are,
in fact, turning to them less and less. I apologise
for troubling my readers with these petty figures ; I
do so to show to what shifts our deductive Protec-
tionist economists are put when they leave their
general conclusions, that such things must "neces-
sarily " be, to examine the facts as they are.
All his examples are trifling when set beside our
greatest new trade, and greatest new export — our
shipping trade. I say new, for our supremacy in
shipping dates only from our adoption of Free
Trade, and is by universal consent a product of that
policy. Its gross revenue is quite equal to that of
all our home railways put together, which amount
to about no millions. I will not trouble my readers
with detailed figures, but a few main facts about
this trade are easily remembered, and worth remem-
bering. Vast as our foreign trade is, it is only one-
sixth of the international trade of the world, but
our ships carry, not one-sixth, but one-half of the
trade of the world. We carry more goods from
foreign port to foreign port — trade v/hich never
touches this country at all — than all our British trade
amounts to, we carry more for the celebrated group
of the ten Protectionist countries alone than we do
for ourselves. To compare any other nation with us
in this trade is ludicrous ; to compare all other
49
nations put together with us is to compare the in-
ferior in value and efficiency, if not in tonnage, with
the superior. That we have been " engineered " into
this lonely pre-eminence in this trade partly by our
own Free Trade policy, and still more by the Protec-
tionist policy of other nations, no person who is
qualified to have an opinion at all doubts. The
nations who, by their tariffs, restrict exports of our
" staple " manufactures to their shores, are forced
by the natural law from which commerce cannot
escape to accept tlie payments for their exports to
us largely in the form of our shipping services. Is
this a decline from higher trades to a lower one ?
Mr. Chamberlain says it is. At Preston he said,
" What does the working man get out of these in-
visible exports — out of the freights of ships ? He
gets very little. The wages in the shipping trade
are, I am sorry to say, a small and diminishing
quantity." I wish to speak respectfully of Mr.
Chamberlain, so I will only say by way of criticism
that, as a piece of economic analysis, this appears to
be — incomplete. The shipping trade gets over lOO
millions a year into its pocket. The railway com-
panies get a similar amount, and pay nearly half of
it to their shareholders ; the cotton trade gets
as much, but it has to pay 40 millions to the
foreigner for its raw material. The shipowners
work on a capital of less than one-seventh of that
of the railways, and what their shareholders get is
a minute portion of their gross receipts ; the rest,
less a small sum for foreign port charges, is all dis-
D
so
tributed to pay the best class of British labour.
Their ships are built and engined, re-fitted, and re-
paired in British yards and British engine works of
British material, officered and engineered, and
mostly manned by British subjects, provisioned in
British ports, insured in British offices, and coaled
with British coal. No other British industry gives
so great an amount of employment to British labour
of the highest class. To an island people our most
necessary trade, politically our most imperial and
coveted trade, economically our largest trade, and
industrially our best trade, is our shipping trade.
It shows no signs of losing its lead or any portion
of its lead. In the last year of which we have the
returns — 1906 — we added to our shipping tonnage
ten times as much as Germany added to hers, and
Germany is the only nation, except Japan, with a
growing mercantile marine. Our shipping trade has
only two things to fear — any departure from a Free
Trade policy by England, or the abandonment of
Protection by America and other countries. This
is the great example of the success of foreign Pro-
tectionist tariffs in " engineering " us out of some
old trades into other new trades. They have
succeeded in " engineering " us out of some portion
of our old staple trades, but they have " engineered "
us into a better trade.
But there are other examples. Time would fail
to describe the economic process by which the Pro-
tectionist policy of other nations has secured the
supremacy of the " Land of free imports " in the
51
business of merchants, textile spinners and manufac-
turers, engineers and machine makers, distributors,
brokers, bankers, and insurance. To say that we are
being " engineered " into inferior trades is to say
that bankers, merchants, brokers, shipowners, and
officers and crews, skilled engineers and machine
makers, are inferior to the old furnace men and
puddlers, or the naked and parboiled men I remem-
ber in the sugar houses in my boyhood. No, British
trade is neither decreasing nor degenerating.
(c) That British capital and labour are flying to
Protected countries, and will ijievitably do
so to an increasing extent.
This phenomenon, while only half understood,
has furnished perhaps the most telling argument of
the British Protectionist. The British manufacturer,
he says, shut out of a foreign country by a tariff,
takes himself, his capital, his machinery, and some-
times his men, and flourishes mightily abroad, in-
stead of starving at home, to our national loss. The
fact that these emigrations of capital have taken
place cannot be denied, but they are not so frequent
now as they were in the early days of American
Protection. But notice what follows to the Pro-
tected State. Notice how retribution follows, and in
the end restitution, too. When its protected infant
industries have grown to be protected giants, when
they aspire to an export trade — a " world trade " —
they find that, on the whole, the best results in pro-
duct for a given expenditure can be obtained in the
52
" Land of free imports," and one after another they
establish their works in England. They bring their
German education, their American enterprise and
organising power, and their capital to this country,
when they establish themselves on British soil, pay
British taxes, and employ the highest and best paid
of our working population.
There can be no doubt that, during the last few
years, the tide has turned, and this immigration of
capitalist aliens has much exceeded the flight of
British manufacturing capital to protected areas. It
is one of the most conspicuous of the developments
of English trade. And, observe, it is the very best
firms who feel most strongly the attractive force of
the Free Trade country. It is the largest maker of
electric machinery in the world which has come from
America to establish itself at Rugby ; it is the largest
maker of mining machinery in the world which has
come from Chicago and San Francisco to start near
London ; it is the largest sewing machine maker
in the world who has established his immense works
at Glasgow. Finding their European trade hampered
by retaliatory tariffs, there is a growing disposition
among the most wealthy and progressive American
manufacturers, especially those who are cultivating
and depending more and more upon an export trade,
to look forward to the establishment of works in
England, by which they would not only manufacture
more cheaply, but their products would receive the
benefit of the " most-favoured-nation " clauses in the
commercial treaties of this country. It may thus be
53
seen that the establishment of exotic industries can
be due to two causes, which, though entirely oppo-
site, exercise the same effect. There are many
examples of English industries established in pro-
tected countries, to which it was found impossible to
export at a profit in consequence of their high tariffs.
We now see similar foreign industries founded in
this country as the direct result of our Free Trade
policy. We English have many commercial de-
ficiencies, we commit many commercial errors. We
neglect our secondary and technical education, we
despise foreign languages, our consular services do
little for trade, we maintain our antiquated system
of coinage and weights and measures, our ports are
not encouraged, and our canals are allowed to perish ;
but our Free Trade policy, like a beneficent fairy,
interposes between our faults and their punishment.
It brings to our shores and our service the finest pro-
ducts of German education and training, and attracts
the best enterprise and most highly specialised skill
and capital of America, to work out its full develop-
ment in the " Land of free imports."
After a fair review of the condition of British
trade dynamically as well as statically, not only what
it is, but what it is becoming, it is impossible to
maintain that our markets are contracting, and that
we are trading at an increasing disadvantage ; that
our trade is degenerating in kind ; or that England is
losing her position as economically the best seat for
manufacturing industries.
GENERAL CONCLUSIONS.
FAILURE OF PROTECTIONIST THEORY AND
PRACTICE.
During the past generation we have seen the
National Protectionist Theory of Taxation of Im-
ports applied to new countries and old, to young and
small communities, such as our colonies, and to great
continental states, such as America and Russia ; and
we have seen Great Britain alone steadily adhering
to her policy of Free Trade. The experience of
two generations in which these two great opposing
policies have been put into practice side by side,
surely furnishes sufficient data for testing the two
theories in the light of that experience. Adam
Smith and Friedrich List each in his own day pro-
pounded his theory academically, and enforced it
by purely deductive arguments, based on certain
generally-admitted principles of human action. The
recent fiscal controversy has rightly proceeded on
entirely different lines — it has been in the main an
attempt on both sides to reason by inductive pro-
cess from the mass of available statistics and
experience.
I have endeavoured in these pages, without enter-
ing into the statistical argument in detail, to follow
the latter method, to state what appears to me
to be the broader general conclusions which may be
accepted, in particular as regards the United King-
dom, as demonstrated by the logic of experience, and
54
55
as shown in the statistical case presented by the
advocates of Free Trade in the fiscal controversy ;
and to consider these conclusions in their relation
to the " a priori " theories and deductive arguments
of the two great opposing masters of this branch
of economic science.
The phenomena which emerge most conspicu-
ously from this inquiry are two : —
First: The complete failure of the States which
pursue the policy of national protection to realise
their ideal — the self-sufficing State.
Second : The extraordinary vitality of the indus-
tries and commerce of this country, which in many
cases appear to turn to their profit, and to thrive
on the very measures taken to injure them.
First — Failure to Benefit Protectionist
Countries.
It must be admitted that the very statistics of
the growth of international trade throughout the
world, selected by Protectionists to prove their case,
prove that the economic policy intended to sub-
stitute internal exchange for international exchange
— to import nothing which can be produced at home
— has met with scanty success, and that the more
advanced Protectionist nations pass through pre-
cisely the same stages of industrial evolution we
have passed and are passing through. Germany
takes to manufacturing industries, she constructs a
tariff framed to stimulate their growth and export,
and nevertheless she suffers the " melancholy " fate
56
of all prosperous nations — an excess of visible im-
ports ; and now she is experiencing a growing de-
pendence on the foreigner for her food supply.
(Meanwhile she has grown to be our best customer
except India.)
America, in her determination to be economically
"national," perpetrates a McKinley tariff. At first
she succeeds in reducing her visible purchases from
us by 15 millions, or by 33 per cent, but the figure
starts growing again ; six years later she repeats the
operation by the Dingley revision of the tariff with
the same results, and now her visible imports from
this country amount to 58 millions in value, or 11
millions more than the pre-McKinley maximum.
Meanwhile her invisible imports from us leap for-
ward continuously by tens of millions (see Note,
page 9).
It is seldom realised by Protectionists how few
people in the best protected countries directly or in-
directly benefit by Protection.
America, with its high and all-round tariff, is,
perhaps, the best example. In the United States,
Mr. Edmund Atkinson has made a careful analysis
of the very complete Census returns made in that
country, and he finds that out of 29 millions of male
and female persons " occupied for gain," only
600,000 benefit directly or indirectly in their busi-
ness by the tariff ; and the 28,400,000 who get
nothing pay for it. The employment of these
600,000 persons may have been created by the tariff,
but it cannot be supposed that they are a clear
57
addition to the sum of the population and employ-
ment of the country, when it is remembered that the
same tariff, which created them among innumerable
other similar achievements, incidentally destroyed
American shipping and the shipbuilding trade. In
advanced countries the proportion of the population
engaged in manufactures of some kind would prob-
ably be little affected by universal Free Trade ; the
manufactures would to some extent be different
manufactures, in all cases the alteration would be
to better manufactures for the particular country,
the product would be sold for less money, the con-
sumers — that is, the whole population — would have
easier lives, and the national income would be greatly
increased. But the proportion of national industrial
energy liberated from primary rural industries, and
devoted to manufactures, which it is the whole policy
of national protection to regulate, would probably
be scarcely affected in advanced countries.
Experience gives no confirmation to the argu-
ment so frequently, and apparently so successfully,
used by American Protectionists, that their pro-
tection is in any sense a protection of the wages of
the working classes. Seeing that no direct protection
is given to labour unless it be imported from China
or Japan, and that low-class immigrant labour flows
freely into the country at the rate of a million per-
sons per annum, no deductive theorist could argue
that it could do so ; and recent statistical investiga-
tion has shown that, not only are the wages of labour
no higher in the protected industries than in those
D*
58
in the same country which enjoy no protection, but
employment in these industries is less secure, and
that, in all, the increase in the cost of living, due
chiefly to the Protectionist tariff, has more than kept
pace with the increase in wages, while the contrary
has been the case in this country. The whole of the
enhanced cost due to protective duties represents
in part a net economic loss due to the perversion of
the national industry, and in part the swollen profits
of a very small body of extremely wealthy capitalists,
generally united in the form of a Kartel or Trust, but
no part of it appears to reach the pockets of the
working populations.
Doubtless the total effect of the Protection of the
Protectionist nations has been vastly to diminish
the total volume of international trade. Its cost
to the people, especially to the poor portion of the
population, has been beyond estimate, and has en-
tailed a lower standard of living, dearer food in
most countries, dearer clothing, and fewer comforts
and luxuries in all countries ; but it has not fulfilled
either of its two great purposes in any country, it has
not built up a self-sufficing State, and it has not been
the means of the building up of the great manufac-
turing powers of the advanced nations to anything
like the extent commonly supposed either by
Nationalist Protectionists or by Free Traders.
The nations of the world which have put into
practice the national theory of Protection have thus
found that it will not work in the modern world.
They have paid the price, but they have not achieved
59
the blessed equiliBrium desired by List — the " pro-
portionate development of their agriculture, manu-
factures, commerce, and navigation." On the
contrary, their foreign trades, import and export
together, have grown for a period even more rapidly
than our own, and the dependence of each on other
nations is constantly increasing. We find that every-
thing which ought to happen and must happen does
not " come off " according to the logical programme,
and we begin to suspect there are other forces and
principles in the world of modern trade than enter
into the Protectionist's philosophy.
Second — Failure to Injtire Great Britain.
But how are we to explain the surprising fact
that after forty years of severe Protection in
America, after thirty years of growing Protection
in France, Germany, and other countries, after the
unanimous adoption of rigorous Nationalistic Pro-
tection in the narrowest sense by our Colonies, we,
against whom alone these measures have been taken,
remain with a prosperous industrial organisation
equal to the employment of our whole available
population ; that we pay the highest nominal and
real wages, and work under the best conditions ;
that we keep the first call on the trade of the world ;
that we keep the best of the trade ; that we keep as
much as we can do in good times ? What is the
explanation of this surprising phenomenon ?
The explanation is, that the National Theory of
Protection is foredoomed to failure, for it is directed
6o
against modern forces far stronger than any that
tariffs can control.
The forces of civilisation and contemporary in-
dustrial progress forbid national isolation. These
forces, the growth of communications, the quicken-
ing and cheapening of carriage by sea and land, the
increase of commercial intercourse and information,
the rapidly-growing habit of travel, are all bringing
the nations together, favour international trade and
interdependence, and make for international friend-
ship and peace. These forces create new inter-
national industries and services, and higher industries
and services faster than tariffs can check the old
ones.
We have seen that these higher and new indus-
tries gravitate to England, and thus it is that Free
Trade England, dominated by the " demon of cheap-
ness," instead of being isolated, extinguished,
starved out, as the Protectionist theorist says she
should, and must be, is able to secure not only as
large a share as she can take, but is able to secure
to herself the best of the trade. And thus the
nation which holds and follows the morally higher
theory of trade has its reward even in this world.
THE FUTURE.
Before concluding my argument on the purely
economic aspect of the development of our Foreign
Trade, I must in a few sentences give my forecast of
its probable future. It is, in my opinion, not only
unlikely, but impossible, that the phenomenal growth
6i
of our exports and imports we have witnessed
during the last four years can be maintained, and,
further, it is not desirable that it should be main-
tained. Doubtless, foreign trade will grow at a
slower rate. But, as a nation progresses in indus-
trial development, a constantly decreasing proportion
of its energy is necessarily directed to the produc-
tion of material goods suitable for foreign exchange.
A primitive people must expend all its energy in
catching and growing food to live. An advanced
people expends a small portion of its energy in
the production of food, and a constantly decreasing
proportion of its energy in its old primitive " staple "
trades. It advances to more specialised products
for more elaborated and specialised needs — from the
bread-and-meat it advances to the " pickles-and-
jam " stage. Its increase is in quality rather than
quantity, for when a nation has enough in quantity
it does not require more things — it requires better
things. And these better things are not the material
of foreign trade, they are better houses, better cities,
better communications, better education, better
amusements. Study the last Census returns, and you
will see a constantly increasing proportion of our
people engaged on these better things: in transport
and distribution, in Government and public works
and service, in the fine arts and the applied arts
and crafts, in education, and in recreation and amuse-
ments. As we advance in prosperity this process
will go on, and these newer occupations are not the
production of the material goods suitable for foreign
62
trade. It is even probable we shall pay for our
imports in an increasing degree by our services,
and in a less degree by our goods. But our produc-
tion of material and non-material wealth may then be
much greater than it is now — its distribution may be
better, our national income, our comfort, our pros-
perity may be greater, and our standard of living
higher. And this brings me back to the point at
which I started, that our foreign trade is no measure
of our whole trade, and our imports and exports are
no measure of our national income ; and that our
course of industrial and social progress in the future
lies on lines for the most part distinct from foreign
trade.
In my vision of both present and future you may
consider me an optimist. Mr. Chamberlain calls
himself an optimist — " an incorrigible" optimist.
Well, if he is an optimist, so were Jonah and Jere-
miah. But one who believes in the truth, the present
profit, and final triumph of Free Trade, must be an
optimist.
THE ETHICAL CASE.
NATIONAL AND INTERNATIONAL.
In the foregoing pages, and in fact in the whole
literature of the fiscal controversy, the case of Free
Trade versus Protection has been treated as a purely
economic question, a sordid business " proposition,"
which each nation must solve for itself according
to its own view of its immediate industrial and
commercial interests in the narrowest national sense.
That it has a deeper and wider significance, that
it is a battle not only between truth and error, but
between light and darkness ; that, in the realm of
trade, it is a constant struggle of honest industry and
intelligent enterprise against corruption and in-
trigue ; and, in the realm of political life, a struggle
of the greatest influence for " peace and goodwill
among nations " against international jealousy and
strife, is an aspect of the question scarcely noticed
in the din of the controversy. And the reason of this
is clear, it is that on the ethical plane there are no
two sides to the question.
To the Protectionist nation itself the economic
loss is of a var3ang and uncertain nature, but where
it is greatest it is of far less importance to the
community than the deterioration of the moral stan-
dard both of commerce and politics. The inner
history of every modern protective tariff is a his-
tory of commercial and political corruption. When
once it has been established in a democratic State,
the minute minority of protected capitalists, in alli-
63
64
ance in some cases with an agrarian party, always
manage to rule the community in their own interests.
Whatever may be the momentary subject of poHtical
controversy, whatever may be the issue of which
the voters are conscious at a general election, at the
back stand the financial potentates and monopolists
to guard the tariff by which they live and were
brought into being. If public opinion is becoming
rebellious, public opinion is found to be an article
which can be manufactured at a cost — newspapers
are started or captured and subsidised, universities
are endowed, the springs of truth and knowledge are
poisoned, the fountain of justice itself is con-
taminated. Above all, the organisations of political
parties are made secure, party funds are always in-
sufficient, the " sinews of war " decide the event, and
pensioners inevitably become tools.
These are the occult forces which strangle free-
dom in a free country — forces described in the (at
present) Protectionist Times as " the forces which
are sapping the life of the United States, the forces
of greed, of corruption, and of wealth, organised
more perfectly than ever before in the history of
the world." In England we have in the long run
" government of the people by the people for the
people." It is an American v/ho has said that in
America they have " government of the people by
the machine for the trusts."
But it is not so much in its national as in its
international aspect that the strength of the ethical
case for Free Trade lies. List himself speaks of
6s
Free Trade in its ethical aspect aa " commended
both by common sense and rehgion." The vision
which inspired Cobden was of a world of nations
in which growing international trade would bear the
fruit of better mutual knowledge and greater mutual
sympathy, and these together would weave a web
to bind peoples together of such infinite complexity
that a war would become both a moral and an
economic impossibility. This great moral end
he believed could be gained by economic
means.
The end in view of the nationalistic Protec-
tionist, on the other hand, is not peace, but war and
efficiency in war, and its method is the " method of
barbarism," a perpetual state of economic warfare.
The ideal State of List is the economic unit which
can gather its internal resources together, and find
within itself all that is necessary to enable it to fight
its neighbours, and to attain this desirable condition
he did not scruple to say Germany will have to annex
Holland and Denmark. His successors to-day say
Germany must have a colonial empire to provide
an outlet for her surplus population, and food for
her people at home.
The higher moral standard of Richard Cobden's
theory and policy all Protectionists, as well as Free
Traders, must allow, but it is their custom to cast
ridicule upon the great Free Trade politician as a
visionary and a convicted false prophet, and to speak
of the great exponent of the national economic sys-
tem as " scientific."
66
Here again we may appeal to the experience of
sixty years, not to assist our moral judgment, but
to survey the progress of the conflict between the
admittedly higher and admittedly lower — between
the economics of peace and the economics of war.
It cannot be denied that although all the nations of
the world except ourselves have deliberately adopted
the national system of tariffs, it has become not less
difficult, but infinitely more difficult for them to pre-
pare for and maintain a state of warfare on a scale
which would engage the full strength of their mili-
tary organisations. At the edge of the world, in
Manchuria or South Africa it may still be possible,
with infinite difficulty, to wage a war on a consider-
able scale, but those who have most closely con-
sidered the question are most strongly of opinion
that a great European war, in which naval as well
as military powers were engaged, in which the cus-
tomary channels of international intercourse,
material and financial, were stopped or paralysed,
would collapse by the utter economic and industrial
breakdown of the countries concerned, and could
never be fought out to a finish by the armies and
fleets of the nations engaged. If this be true, and
personally I have no doubt it is true, is it too much
to say that when Cobden prophesied that the increase
of international communications would end warfare
between civilised States, he prophesied even better
than he knew, and that the rival system of List,
which aimed at the creation of the self-contained
State, self-sufficing for war, has broken down in its
67
attempts to realise its anti-ethical ideal as completely
as its economic ideal ?
Doubtless, the ethical standard of international
relations — the standard of war and diplomacy, is as
yet of a primitive and barbarous character ; but still
it slowly improves. Civilised peoples have long left
behind them the stages of wars of pure rapine, wars
for cows, and wives, and slaves ; wars of extermina-
tion for conquest of land. A dynastic or a religious
war between civilised peoples is inconceivable in
these days. The sources of international strife are
now, at bottom, almost invariably economic. Is it
the dream of a fanatic to believe that when nations
once realise the complete futility of their national-
istic economic aims, this last cause of war may also
disappear ?
" But what about the meanwhile," the average
worldly man may ask, " we are living in a world
which still believes in wars, and if occasion arises will
rush into one .? Admitting the possibility of uni-
versal collapse of the material organisation of civili-
sation under the strain, will it not then be worse for
us than for others .-' Has our path of peace been the
path of relative safety ? Have we not more exten-
sive international relations than others, and are we
not, therefore, more dependent on the foreigner than
they ? " Here again we can prove that the higher
path has been not only the most profitable, but the
most secure. The Report of the recent Royal Com-
mission on Food Supply in Time of War proves by
the unanimous testimony of the most experienced
68
naval and commercial experts that, with our great
Free Trade industries, with our merchants, and our
ships, drawing our food and raw material from all
parts of the earth, added to our naval power, our
supplies are rendered more, and not less, secure by
the very extent and variety of our operations, and
are placed beyond the possibility of serious inter-
ruption by any enemy.
And thus Free Trade stands justified. In the
sphere of ethics it is the path of humanity, honesty,
and commercial purity, but no less in the sphere of
politics is it the path of safety and in the sphere
of economics is it the path of profit.
Protectionist nations have chosen the spirit and
the methods of war to govern their commercial
policy. We have chosen the higher path, and we
have proved the old word true, that " Whosoever will
save his life shall lose it, but whosoever shall lose
his life, the same shall save it."
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