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State aid and state Interference. 


3 1924 030 186 559 












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4. /{TV 36-^ 



London : 
R. Clay, Sons, and Tatlob., 



There come upon nations epochs when, rising 
superior to all experience, a blind dash is made in 
some unlooked-for direction. This is an infatuation 
of the national brain which destroys, in the brief 
period of its rage, the hard-won results of centuries 
of toil and progress. 

A nation comes into being and grows with sur- 
prising rapidity till it attains to great stature : it 
puts on and uses the strength of a Samson, But, 
in those days it not unfrequently happens that the 
nation suddenly sets itself to sap all the foundations 
of its greatness : to permit the cutting off of the 
seven locks of its mightiness. And the Delilah 
of its destruction is Government Interference. 

Has England, in these latter days, fallen under the 
glamour of such an influence ? Government Inter- 
ference can only enter where private judgment has 

vi Preface. 

been beguiled to place itself in the embrace of 
Authority. And in England, in recent years, 
Authority in Matters of Politics has striven, and 
striven with some effect, to supplant in the affections 
of the people that far more wholesome and beneficial 
faith which rested upon the teachings of Political 
Economy because these were based upon the sure 
and certain warranty of experience. 

But if Rationalism in Politics is thus flat heresy 
in the eyes of this Authority, is it so in the eyes 
of the great intelligent portion of the nation ? The 
answer is to be found in the fast-growing public 
appreciation of statistical information, and the wide- 
spread study of this science legislators are called 
upon to ignore. 

One of the most important of the problems dealt 
with by Political Economy is the question of the 
effect of State action. And it is by the analysis of 
achieved results that we can best tell whether, as a 
matter of fact, the State assists most or injures most ; 
whether its action is best described by the term Aid 
or the term Interference. 

The State, by direct action, influences the working 
of land and labour and education, and other matters 
of the first moment to Ireland and to Scotland and 
to England, as well as to all the world. But in this 

Preface. vii 

volume I limit myself to results that have been 
recorded of State action in regard to industries and 
to commerce. k 

In the first chapter I summarise the general 
conclusions to which the details of the succeeding 
chapters lead. 

Some of these detailed results I had already- 
published in the Nineteenth Century for July, 1881, 
and Fraser's Magazine for the same month ; and in 
the Fortnightly Review and the Westminster Beview. 
The Editors of these various reviews have very 
kindly granted me permission to republish these 
articles in this book, and I take this opportunity of 
recording my thanks for such permission. 

G. B. P. 

8, St. George's Place, London. 




State Aid and State Interfeeence 1 

§ 1. Political Economy and Ignorance 1 

§ 2. Tlie Duty of the State 6 

§ 3. The Kesults of Protection 9 

§ 4. Bounties 11 

§ 5. High Tariffs for Colonies 14 

§6. Ji;ee, Trade within the British Empire 15 

§ 7. Freedom for British Agriculture 18 

§ 8. Freedom for British Manufactures 22 

§ 9. State Interference with other States . , 25 


The Failure or Protection in the United States . . 30 

§ 1. The case of the United States Important 30 

§ 2. The Causes of their Prosperity 32 

§ 3. American Manufactures 37 

§ 4. Revenue from Customs Duties 48 

§ 5. Protection in each Case Hostile to Advance. Its 

Future ...-.•.■ 53 





Bounties 64 

§ 1. Bounties not likely to Sncceed 64 

§ 2. The Shipping Industries of the United States . • . 66 

§ 3. French Shipping Bounties 69 


SuGAK Bounties 73 

§1. Cane-growing in the Colonies continually Advancing 73 

§ 2. Beet-growing not due to Bounties 88 

§ 3. Beet-growing and Refining do not flourish in 

Bounty-giving Countries 94 

§~4. How to do away with Bounties 102 

§ 5. British Sugar Industries more Prosperous than any 

others 109 


Peotection in Young Communitibs 112 

§ 1. Parallel Cases of Victoria and New South "Wales . 112 

§ 2. The Promotion of Manufactures 121 

§ 3. The Ejiising of Revenue 124 

§ 4. The Promotion of General Prosperity 127 

§ 5. Value of this Test Case 135 


One-sided Free Trade 138 

§ 1. Supposed necessity for Customs Duties 138 

§ 2. Hong Kong advancing and prosperous with no 

Customs Duties 139 

§ 3. People Increasingly Employed in Arts of Civiliza- 
tion 141 

§ 4. Aniple Revenue Raised 144 

Contents. xi 



Low Tariffs fob the British Empire 147 

§ 1. Growtli of OUT Trade with our Colonies 147 

§ 2. Need for England to recognise tliis 153 

§ 3.. Most Nations maintain Free Trade within their own 

Frontiers , 156 

§ 4. All Colonies would Profit by Intra-National Free 

Trade 160 

§ 5. Spontaneous Agreement of Colonies Necessary . . 168 

§ 6. Low Tariffs secure the Highest Prosperity of all . . 171 


Foreign Competition in Agbicultusb 177 

§ 1. The British Isles are becoming more Manufacturing, 

more Well-to-do, and hss purely Agricultural . . 177 
§ 2. American Prairie Cropping must in a few years work 

itself out 182 

§ 3. The Price of American Wheat must Rise 186 

§ i. America becomes rapidly Popidated 194 

§ 5. Americans chiefly Compete with our other Foreign 

Purveyors 198 

§ 6. Canadian Wheat will not Permanently Lower Prices 203 
§ 7. English Wheat Growing has many Intrinsic and 

Local Advantages 205 

§ 8. Foreign Competition has roused English Agriculture 

to Improve itself 207 


Foreign Competition in Mantjfactukbs 213 

§ 1. What Foreigners are Doing and what they are 

asserted to be Doing 213 

§ 2. Modem Tendencies of Foreign Tariffs 214 

§ 3. Modem Tendencies of Colonial Tariffs 221 

§ 4. Pauperising Effects of High Tariffs 224 

§ 5, Foreign Exporters of Manufactures 230 




Foreign Competition in Manufactukbs 236 

§ 1. What we are Doing in England : our Home Market 

and Foreign Purveyors 236 

§ 2. Percentage of Manufactures to other Imports . . . 240 

§ 3. Particular Examples : Hardware, Silk, "Woollens . 241 

§ 4. English Labour Cheaper and Better 250 

§ 5. Failure, of Foreign Competition 255 


Interfbkenoe with othee Nations 258 

§ 1. Four General Principles of Foreign Commercial 

Policy ■ 258 

§ 2. Lowering Tariffs 263 

§ 3. Fighting Bounties 267 

§ 4. Commercial Treaties 273 

Index ■. 279 






§ 1. Political Economy and Ignorance. § 2. The Duty of the 
State. § 3. Protection in the United States. § 4. Bounties. 
§ 5. High Tariffii for Young Communities. § 6. Free Trade 
for the British Empire. § 7. Freedom for British Agriculture. 
§ 8. Freedom for British Manufactures. § 9. State Inter- 
ference with the Commerce and Industries of other States. 

§ 1. In these latter days signs are not wanting 
of tlie reappearance of an influence that has before 
now destroyed civilizations. It may be that in 
England the people are endowed with strength 
sufficient to combat and throw off this influence; 
but the struggle bids fair to be severe, even if 
there be no doubt as to the final result. 


State Aid and State Intfrferou-i 

Authority, in these latter days, is attempting, with 
daily increase of force, to usurp the sovereiguty ot 
liherty. And in England the evidence of this is 
seen in the growing tendency to set up individual 
men or individual ideas in the seats of power 
that should he occupied by the cultivated national 
opinion, or by personal knowledge of tacts. In 
England at the present moment the principles 
and creeds of sections of the community, that claim 
to be not the least advanced, degenei-ate in reahty 
on the one hand into an unquestioning acceptance 
and woi'ship of mere words, and on the other into 
an equally unquestioning and unthinking servitirde to 
men who are blindly supposed to embody some idea. 

There is e%'idence that an appreciable portion of 
the educated intellect of the nation may fall into 
this bondage of hero worship. If the result be 
of stifficient power to enable a Government to ride 
roughshod over all principles and experiences that 
would otherwise check some particular pohtical move, 
there is at once risk of an tmdoing of all that has 
been done ; of a loosening of the whole national 
fabric. The tui-ning into the road to ruin is made 
immediately Government undert;\kes to do what 
is, and has been, best left to private initiative. 

Popery in politics is the resource of nations or 

State Aid and State Interference. 

of individuals, of low intellectual calibre. Un- 
questioning surrender of the political conscience to 
some human high priest, is the refuge of the 
incapable and the ignorant. Authority, in the matter 
of politics, only becomes personal with those who 
lack power or energy to think for themselves. 
Authority may be well defined as "the allowing 
some one else to think for you." And in this sense 
it would appear, in these latter days. Division of 
Labour has been carried to a pernicious extreme. 
For instance, if Political Economy is banished by 
Authority to Saturn, many there are, and these 
passing for intellectual men, who have been found 
to bring their lips to say, " So much the worse for 
political economy." 

There is but one silver lining to this cloud of 
dependence on others. The cloud itself is some 
check on that yet more baneful tendency of the 
times — the tendency of educated ignorance to 
assert itself. Argument, snatched hurriedly from 
the skurry of modern life, is mistaken for fact ; 
second-hand and often interested explanations are 
mistaken for the occurrences they would explain; 
and this half-knowledge, which is altogether worse 
than no knowledge, is only too ready to pose before 
the world as knowledge, and to usurp the place of 

B 2 

4 State Aid and State Interference. 

teacher that of right belongs to experience. In 
reality, all this misleading mass of assumptions 
and vain theorisings is after all only formulated 
ignorance. It is thus possible even to welcome 
Authority in politics if only it prove to be some 
antidote to this other great political evil. But this 
welcome is altogether soured when we find the 
High Priest of this Authority himself suddenly 
discarding knowledge and experience, ridiculing the 
teachings of history, and telling us that the science 
which collects and explains all that is known of 
the results of human action, is no longer of any 
service in mundane affairs. Such ideas can only 
flourish where there prevails actual ignorance of 
the true nature of the science of political economy. 
The abstract principles of Political Economy are 
nothing more nor less than logical explanations of 
successful human work* The science is thus an 
exact science in so far as it collates the recorded 
results of such work. It can describe by analysis 
and abstraction each of the conditions which when 
co-existent make up necessarily a certain effect. 
It can tell us, with all the certainty of mathematics, 
that certain defined conditions existing together 
are a certain total or effect, for this effect is merely 
a bundle of conditions. 

State Aid and State Interference. 5 

Ask Political Economy, '' what is the cause of 
manufacturing prosperity ? " It will reply : Take any 
case of manufacturing prosperity and you will find 
you have a community enjoying, as much as, or 
more than, its possible rivals, a favourable climate, 
skill in the people, energy in the people, an adequate 
command of capital, an adequate command of raw 
material, and liberty to utilise all these conditions. 
Free Trade does not cause it: Protection does not 
cause it : for it is nothing more nor less than the 
realised co-existence of several conditions, each one 
of which can be seen by analysis to exist in all cases 
of manufacturing prosperity. 

Political Economy unties for inspection the bundle 
of conditions that, in its entirety, is some definite 
effect or fact. It describes each of these conditions, 
and it explains once and for all that if you take 
these several conditions and make them up together 
into a bundle you will have such and such a par- 
ticular effect. It is a necessary truth. It is this 
analysis of results which is the main function of 
the Political Economist. His chief duty is to 
explain economic experience. His " principles " are 
the constants he finds in circumstances; the sub 
stantial conditions which underKe circumstantial 
varieties. He does not explain on hypothesis; he 

6 State Aid and State Interference. 

simply draws up a list of the actual conditions which 
must be present together if we are to have any 
given effect. 

§ 2. So far as private acts go Political Economy 
has less to say than in the case of public acts ; and 
there is no more important problem to be explained 
by Political Economy than the question how far the 
common body politic — the State — is to do the 
thinking for the community, and interpose in the 
regulation of private acts. 

If we look to history we find that all prosperity 
is generated in freedom. Anything and everything 
that interferes with freedom generates a negation of 
prosperity. And the State, the expression of the 
unity of any community of men, has the one 
whole duty of securing the freedom of the indivi- 
duals who make up the community. But it is a 
community ; and the true freedom of the individual 
is liberty for the full play of his own energies 
limited by the precisely similar liberty for every one 
of his fellow-citizens. The guardianship of these 
liberties is the prime function of Government — the 
one great final cause of its existence. The State 
has to hold the true and just balance between 
the individual and collective liberties; and in the 
economic quite as much as in the moral or religious 

State Aid and State Interference. 7 

affairs of mankind, the State can do harm by 
letting alone, but it also can do harm by not .letting 
alone. In other words, there can be State Aid as 
well as State Interference. 

It might be said that it is the duty of Govern- 
ment to bring all previous experience of the human 
race to bear directly upon the particular con- 
ditions in which a nation may find itself, and so 
forestall much lengthy trial and consequent waste of 
energy. But it is often the case that Government 
itself is in error, and is more liable to act on wrong 
judgment than the private individual. And this is 
specially the case in industry and commerce, because 
these thrive best under the impulses, sacrifices, and 
knowledge of the individual. Before now. States, 
in their endeavour to promote some industry, have 
choked out of it all its life ; States have succeeded in 
setting up unprofitable industries ; States, in their 
endeavour to. hasten industrial development, have 
been known to foster industries by no means profit- 
able to the community at the sacrifice of those that 
were in reality the most profitable. All this is 
never possible if such development be left to in- 
dividual initiative. The individual best discovers 
what is profitable and what not : the individual 
best bears the losses incident to failure. It is of 

8 State Aid and State Interference. 

the first importance that every individual be left 
free, and neither encouraged to take up unprofitable 
nor hampered in the prosecution of profitable 
industries. It is folly to encourage a man to make 
hats when he might be more profitably employed 
growing wheat. It is folly to check his making 
hats when it no longer pays him to grow wheat. 

It is held to be an open question whether in 
actual life a man's acts are governed by reason 
as often as they are directed by unreason. This 
latter — this unreason — is the arch enemy of pro- 
gress — the subtle destroyer of systems of civilization. 
And as reason is founded on experience, so is un- 
reason founded on ignoring experience. And this 
experience is a knowledge of the several conditions 
that make up the bundle that is known as the 
effect. Unreason is the negation of experience, and 
thrives only under the supremacy of ignorance. 

Luckily at the present day ignorance has acquired 
the habit of formulating itself with as much exact- 
ness as knowledge; and we can cull from the 
popular arguments of the day the definite conten- 
tions advanced by this formulated ignorance, and 
compare them with actual fact. 

In analysing results it is right to go into detail ; 
to separate the sticks of each bundle ; to enter at 

State Aid and State Interference. 9 

length into the description of the many conditions 
we find combined into each result. And I sum- 
marise in this chapter the analysis of the bundles 
or effects which are analysed in detail in the 
succeeding chapters. 

In Industry and Commerce there is one great 
lever to State Interference, known to the world as 
" Protection." It is the interference by Govern- 
ment with what is imported into a country for the 
avowed purpose of securing certain ends for the 
home industries and commerce. It is thus that in- 
vestigations naturally group themselves round the 
problem — Is Protection, in the popular sense of the 
term. State Interference or State Aid ? Does it 
assist or impede wholesome natural development ? 

§ 3. Among the formulas that have become the 
stock-in-trade of this Ignorance none is more fre- 
quently met with than the pointing to the United 
States as an example contradidory of all that is 
credited to Free Trade. We are told. How is it, if 
all this be true about Free Trade, that the United 
States, with their stringent Protection; develop so 
fast, manufacture so much, and are generally so 
prosperous? The sum total of the answer is that 
in every point in which the United States do 
flourish and prosper it is in spite of, and no 

li> 8^l/f Aid ami StaU iMt^rrtrrrnff, 

beoauso of PrvMootium, The ohiof sources v>t' \w;xltl» 
ovor tho v;\s5 iutori^>r — tl»o fixxls 5\nd the raw 
matorials — ajv Iviujj Wv^rkoil iiniler iho stiuwlatiHsj 
ft^gis of al^sohlto Fn?o Trade, By the ivnstitmion 
of the United St:^tos it is strictly f^vrhidden for any 
one of tJie States to levy customs duties on ijVHxis 
entering fixan any otltex Slate. 

And the I'nitcil States ai>e as iitrv^v as Eniv^yx^ 
and as rich in all natural wealth. The high tariff 
can affeot this community in two ways. In tlie Jtrst 
plavv it aii\vt^ alone hy impt>rts ; and the jx^pttla- 
tion of the United States imports but 5/. per head 
as eomyv\i\\l with the 10/. j>er head imjx^rted in 
tlie United Kingvlom. In the se^xvird place, the 
high t^iriff is sup^v^e^i to \-ield ivvettvie, and so 
ivlieve llie n-itiou of other t;»xes. But if we look 
to i\H\ii\ls, we see that witliin the last ten years 
the customs revenue, from yielditig 10s, jvr head 
of popvilation, has fallen to vield only 11.'!, and that 
the actual bulk of the annual yield has deeivased 
ilo jwr ivnt. Thus the high tariti" fjxils to n^lieve 
the country of other taxation ; and at the sj^me 
time it presses compxratively lightly on a population 
that buys so little abiwtd. 

The iptestion ivmaius, What of the positive 
efteots I Frotection was iustitutcil to develop 

State Aid and State Interference. 11 

mamifactures, and yet the percentage of manu- 
factures to the rest of the commodities exported is 
not only insignificant in amount, biit d^Tindling 
year by year. Imported manufactures still hold 
their own in the American mai-ket ; aaid all that 
can be said in the summing up is that Protection 
has fostered the growth in America of manufactures 
that ai'e a dead loss to the community at large, 
and has stifled some industries that would have 
been of the highest national advantage. 

§ 4. Formulated ignorance sometimes shifts its 
ground. "It may be true, all this about Free 
Trade and Protection ; but Bounties, at all events. 
must be fought hy direct action.'' To understand 
this problem aright it is well to have before us 
the whole details of some typical case ; and there 
is no case more distinct, more recent, and more 
fully recorded than that of the Sugar Bounties. 
If we look into such details we at once find that 
Bounties in the result do more actual harm to 
the nations that give them than to the rivals thej' 
attempt to overthrow. A Bounty is a portion of 
the national wealth handed over by the State to 
an individual. It is a tax on the nation in favour 
of some individual. It is presented to the indi- 
vidual for carrying through some industry. If that 

12 State Aid and State Interference. 

industry be profitable in itself tbe Bounty is an 
entirely gratuitous gift. If that industry be unpro- 
fitable in itself the Bounty is merely a bonus on 
pursuing an industry which decreases the national 
wealth. A Bounty is thus a tax on the people, 
which is at best an altogether unnecessary drain 
on their resources, and which may be, and in many 
cases is, a direct encouragement of a waste of the 
nation's resources. A Bounty is indeed a political 
sop that many a dishonest Government has thrown 
with great " politician " effect. But in the end it 
brings ruin and loss. It either encourages an in- 
dustry that needs no encouraging, or it encourages 
an industry that should never be encouraged. 

In regard to Sugar Bounties we find that those 
countries which give no Boiinties possess the 
most flourishing sugar industries. It is usually 
found that where one industry or country receives a 
Bounty other industries and other countries clamour 
for them. The movement, like other Protective 
measures, tends more and more towards a drain on 
the popular wealth for the sake of a few individuals. 
It is distinctly against the general prosperity, and 
subversive of the conditions best for the particular 
industry itself. If the Shipping Bounty in France, for 
instance, proves a " success," it will be a new burden 

State Aid and State Interference. 13 

of taxation on the French people equivalent to an 
additional M. in an Income Tax. So long as the 
French ai-e willing to support this burden, so long 
do they handicap themselves in every industry to 
this extent against English competition. The same 
is the case with Sugar Bounties. We are told an 
Import duty of 2s. a cwt. on all sugar we import 
that has received any Bounty would countervail the 
effect of the Bounty. In other words, if the English 
taxpayer will kindly contribute a sum of 600,000^. 
the effect of the Bounties will be effectually 
neutralised. Because other nations handicap them- 
selves in their sugar industries. we axe asked to do 
so likewise. By their Bounties some nations send 
us refined sugar at a price lower than they could 
otherwise afford to sell at ; and other nations send 
us raw sugar at a similarly reduced price. Con- 
tinental taxpayers, in short, pay to the continental 
refiners and growers part of the price the English 
ought to pay for their sugar. This is the sum and 
effect of their Bounty giving. And we find on the 
continent a widespread and general outcry against 
these Bounties, chiefly based on the fact that Eng- 
land, the only country that has cut herself aloof from 
all such restrictions on industry, is the only country 
in which the sugar industries flourish and increase. 

14 State Aid and State Interference. 

§ 5. Formulated ignorance is fond of asserting 
that Protection, though altogether wrong for fully- 
grown communities, may yet he beneficial for young 
communities. Luckily recent history has provided 
us with a test case. Two of our own colonies, of 
sufficiently similar size and environments, have been 
racing together for ten years on the rival systems of 
Free Trade and Protection. The value of this test 
case has been fully acknowledged. Indeed the 
comparison of Victoria and New South Wales 
has recently become a commonplace with poli- 
tical economists. At the meeting of the British 
Association, in 1880, I first put forward some 
statistics of the ten years' progress of these two 
colonies. These figures I have since elaborated, 
and they have been extensively quoted. I set them 
out afresh in this book, as they prove conclusively 
that in all desirable growths, in the details of revenue 
raising and the promotion of manufactures, as well 
as in the general advance in prosperity, a low tariff 
does far more for a young community than a high 

Formulated ignorance is also fond of asserting that 
a country that keeps its own tariff low while other 
nations retain high tariffs is adopting a policy of 
one-sided Free Trade that must in brief space prove 

State Aid and State Interference. 15 

its ruin. la answer to this popular fallacy it is well 
to remember there are in this world Free-ports — 
communities that actually levy no customs duties 
whatever. If we look to Hong Kong, for instance, 
we find an island in close contiguity to a highly 
" Protected " populous and industrious continent. 
In Hong Kong there are no import duties whatever ; 
and yet here we have a community advancing fast 
in prosperity ; raising an abundant revenue ; and 
attracting a fast-growing population increasingly em- 
ployed in the arts of civilization. Those who object 
to a low tariff on the incomprehensible plea of 
" one-sided Free Trade " will do well to ponder over 
this instance of a country flourishing with no tariff 
at all. 

§ 6. Formulated ignorance has, in these latter 
years, become much enamoured of the idea of a Zoll- 
verein for the British Empire. Free Trade within 
the Empire to be extended to all foreign countries 
willing to afford reciprocal advantage, but with a 
rampart of protective duties against all others — this 
is the policy suggested. It is admitted that Free 
Trade is best ; and next, the definition of Free Trade 
is abandoned, and restrictions on commerce ad- 
vocated. Free Trade is the doing mvay with all that 
practically interferes with the free course of industry 

16 State Aid and State Interference. 

and commerce. We are told this is impossible over 
the whole world at the present — hut it is possible 
over the wide British Empire. Next, the assumption 
is made that all the Colonies are willing, provided only 
we hedge the Empire round about with a wall of 
protection. And we are told the whole of this grand 
effect is to be produced by the imposition of customs 
duties on certain commodities so long as they come 
from foreign countries unwilling to concede reciprocal 
trade advantages. 

That Free Trade is possible over the wide British 
Empire is perfectly true. Indeed, over the whole 
Empire there are only two fiscal authorities out of 
forty that are not at this moment pursuing the wise 
policy of Free Trade. The advocates of a Fair Trade 
Empire will find themselves grievously mistaken if 
they rely on the illusion that the Colonies are 
willing to join a Free Trade Bond, provided only it 
be surrounded with a wall of higher duties to out- 
siders. The Colonies understand their position too 
well. They trade largely with every nation under 
the sun. It is true they buy most of their manu- 
factures in England, but they send great proportions 
of their own produce to foreign nations, and by 
selling abroad they are enabled to buy in the 
mother country. All the Colonies wish for tariffs 

State Aid and State Interference. 17 

everywhere as low as possible. With true practical 
insight they will be found very averse to the 
provoking a general raising of tariffs. It must also be 
remembered that the imposition of customs duties in 
England on certain goods, if of foreign and not 
colonial origin, would be of no real effect. If such 
a measure were to have its appai'ent effect, it would 
enable the Colonies to send to England, for instance, 
all their wheat, and with the profits they would 
purchase the wheat they required for their own 
consumption from foreign nations. The same 
amount of wheat would be grown in the same 
places, but this interference with the free course of 
commerce would force it into different markets. 

The true foundation for a Free Trade Empire is 
the national conviction that low tariffs are most 
conducive to prosperity. This conviction is already 
widely held by the free congenital communities of the 
British Empire. The cases of Hong Kong and of 
Victoria and New South Wales are evidences that 
this conviction is sound and good. That the con- 
viction should increase in strength, and spread till it 
inspires the whole nation is dependent on the prob- 
lem whether Englishmen all the world over will 
shape their policies by the light of experience, or 
grope, as other nations have done to their ruin, in 

18 State Aid and State Interference. 

the darkness of fictions and fancies that are 
pleasurable at the instant, but have no foundation 
in fact. 

§ 7. Formulated ignorance is particularly strong 
in its assertion that the policy of one-sided Free 
Trade has at all events ruined the Industry of Agri- 
culture in England. We are told that no-w when 
lean years come the farmer gains no compensation in 
rise in price for shortness in quantity. It may be true 
that if we still levied a duty on foreign wheat, in 
lean years prices would rise somewhat more than 
they do in the absence of any duty. 

But the extent of their rising would be smaU. Our 
present surroundings force us and enable us to 
import more than half of the wheat we consume ; 
and the cost of production of these importations 
would have a corresponding effect on prices in 
England, duty or no duty. The enormous advance 
in facilities of transport has had far more effect on 
the wheat supply than any mere alteration of import 
duties in any one country. If duties kept prices of 
wheat high, it is perfectly obvious no duty-imposing 
country would care to sell its wheat in the low- 
priced English market. Supposing, however, a duty 
is placed on imported wheat, the question remains, 
would the farmer be better off ? Beyond all doubt 

State Aid and State Interference, 19 

he now-a-days obtains the " raw materials " of his in- 
dustry at far less cost. Oil-cake of every kind, 
Indian corn, and other foods ; manures ; implements, 
both as to variety and quality ; all these he obtains 
better and cheaper, because the supply is free from 
all State Interference. Of his land it cannot as yet 
be said that it is free from State Interference ; but 
even in this respect the Free Trade of his country 
has enabled him to acquire sufficient use of the soil 
at very low cost. Wealth, acquired in so many other 
ways than agriculture, seeks satisfaction in an owner- 
ship of the soil, which has no ulterior object in making 
use of the soil. Consequently it becomes true that 
if we look to all the agricultural requirements — to 
proximity to good markets, to fertility of soil, to 
climate, to supply of labour; and so forth, we find that 
it is in England the farmer pays least for the use of 
good agricultural soil. This is due to the general 
prosperity. And the farmer feels the effect not only in 
regard to land, but also in regard to labour. A very 
fragmentary rise in the prices of food and lodging and 
clothing would tell disastrously for the farmer in the 
price of labour. So far, then, as the "raw materials" 
of his industry are concerned, the absence of State 
Interference is an unmitigated blessing for the 

c 2 

20 State Aid and State Interference. 

There is the further important element of the 
prices he can obtain for what he produces. We 
hear frequently of the very low price of wheat. It 
has been low lately, but it has been lower in previous 
years, and there is compensation in the fact that 
barley and oats are higher. The average prices per 
quarter of wheat, barley, and oats for five year periods 
during the last forty years have been as follows : — 









Wheat ... 
Harley ... 
Oats ... 












Average i 
for all 1 
grain | 
crops J 









Wheat follows the general modern tendency 
towards lower prices in all things, but its price also 
exhibits a tendency to greater steadiness, the more 
its exchange is free. During the past forty years, 
for the four decades, the range of wheat prices was 
for the first decade, 25s. &d. ; for the second, 36s. 2cZ. ; 
for the third, 24s. 3d ; and for the last only 14s. lOd. 
Moreover, there is little doubt but that the very low 
cost of prairie grown wheat will soon be a thino' of 
the past. Rapid increase of population on the prairie 
itself has run up the value of the land. This at 

State Aid and State Interference. 21 

once makes it necessary to farm, and not merely to 
crop. Moreover, fifty millions of people will soon 
come to live on these prairies, and they will con- 
sume a large proportion of the wheat there produced. 
With the exception of this prairie cropping, wheat 
is produced in England as cheaply as anywhere ; 
and, with the prairie cropping at an end, there will 
be no further fall in prices, but every certainty of 
a moderate rise over the whole world. 

And all this while, with continued fall in the prices 
of his own " raw materials," the farmer has seen a 
continued rise in the price of meat. This will not be 
checked; for in all new lands meat will never be 
lower in price than it now is. 

So far as the great industry of Agriculture in 
England is concerned, its permanent success has 
proved that it flourishes, because instead of State 
Interference, it commands that State Aid which sets 
about abolishing any impediments to the free course 
of the industry. Here, indeed, there is grand scope 
for reform in England. Several recent laws have 
incidentally become unfair burdens on Agriculture ; 
many old laws have survived the time of their useful 
existence, and also grown to be burdens on Agricul- 
ture. In both cases reform is urgently necessary ; 
and in both cases Agriculture may look for very con- 

22 State Aid and State Interference. 

siderable relief and assistance if the State will only 
aid to abolish both new and old State Interference. 
And the country will have to look for such reform to 
some new party, for the agricultural legislation 
recently initiated by one great party in the State is 
marked not only by the banishing to Saturn of the 
teachings of experience, but also by fundamental 
ignorance of actual agricultural life. And as a 
consequence, however good in intention, it fails to 
achieve any practical end that is good. 

§ 8. "We are told Agriculture is the greatest of 
English industries, and we have seen that State 
Interference is its bane. We are told we are a 
nation of shopkeepers, and no one doubts but 
that a policy of Free Trade promotes commerce 
and exchange. We are told we are the work- 
shop of the world. But here formulated igno- 
rance steps in and tells us that the absence of State 
Aid for our manufactures is rapidly ruining the 
country in its capacity for manufacturing. We meet 
with a variety of formulas. We are told "foreign 
countries shut us out with increasingly hostile tariffs." 
We are told our Colonies do the same. And yet if 
we look round we find that, as a matter of fact, on 
the continent of Europe there has been for many 
years a growing tendency to lower tariffs, to reduce 

State Aid and State Interference. 23 

the number of items in tariffs, and to grant to us 
most favoured nation treatment. If we compare 
continental tariffs of 1880 with those of 1860 we 
.find that in fourteen out of the sixteen countries 
they have been lowered. In 1860 the average 
number of items on these tariffs was 140 ; in 1880 
it had fallen to 112. In 1860 seven out of the six- 
teen countries granted us most favoured nation 
treatment ; in 1880 fourteen granted us the favour, 
and the remaining two had expressed their willing- 
ness so to do. 

. And when we turn to our Colonies we find that 
only two out of forty maintain tariffs that can 
in any way be described as high or hostile. One of 
these instances is that of Canada, and here the high 
tariff was made to include English goods, not out of 
hostility to English manufactures, but because the 
Supreme Government of the Empire maintains the 
theory that no duties within the Empire are to be 
differential. Moreover, as a matter of fact, both 
these high tariff Colonies continue to import more 
and more of our manufactures. For instance, even 
in effect, there is no hostihty to British manu- 
factures in the records of Canadian trade : English 
imports are increasing and United States imports 
decreasing steadily. 

24 State Aid and State Interference. 

We are also told foreign countries are flooding us 
with their manufactures. But foreign countries are 
not increasing their export of manufactures so fast as 
England increases hers. If foreign countries are 
flooding England, England is flooding them in far 
greater proportion. It is also remarkable to notice 
that foreign countries increase their exports both in 
quantity and kind in proportion as their tariffs are 
low in the particular items exported. Nor is this 
contrary to reason. A protective or high tariff is 
only effective against goods that can be produced 
cheaper elsewhere. Consequently these goods will 
drive from all other markets similar goods made in 
the protected country. 

If foreigners were supplanting us as manufacturers, 
not only in our own markets but in foreign markets' 
we should at once see the effect in our imports and 
our exports. Now, as a matter of fact, the per- 
centage of manufactured articles to the rest of our 
imports is insignificant — only eight per cent., and it 
does not increase. And, on the other hand, as a 
matter of fact the percentage of our manufactures to 
the rest of our exports is very great — ninety-four per 
cent., and does not decrease. 

Other countries range through the whole gamut of 
State Aid from the negative pole of Free Trade to 

State Aid and State Interference. 25 

the most positive pole of Protection. But England 
continues steadily at the head of the list of manu- 
facturing peoples. Her supremacy seems to be 
assured. And this for the chief reason that the 
State sees the folly of attempts at Aid which are in 
reality nothing but hurtful Interference. Wisely in 
England the State confines itself to securing to 
every worker as a consumer the advantage of 
obtaining everything he uses or consumes at lowest 
possible cost, and as a- producer the security that to 
whatever industry or task he may devote his 
energies he may rest practically assured that his 
energies are not being misapplied, for they are 
applied under the searching influence of open com- 
petition with all the world. In such a free atmos- 
phere the risk of misapplication of energy is reduced 
to a minimum ; and, at the same time, advantage is 
taken of every facihty of production the wide world 

§ 9. But in these latter days the State has been 
asked to aid and to interfere, not only within its own 
frontiers, hut within tlie boundaries of foreign states. 
England has been asked by a section of her citizens 
to force foreign nations to lower their tariffs ; to 
force foreign nations to abolish the Bounty system ; 
and to bind foreign nations to admit English goods 

26 State Aid and State Interference. 

on certain terms by the aid of commercial treaties. 
The means that we are told are the only available 
means mark the unwisdom of any such policy. We 
declare that low tariffs are good and high tariffs bad ; 
and then, in order to prevail on other nations to 
lower their tariffs, we are to threaten to raise our 
own. We declare Bounties to be bad ; and then, in 
order to prevail on other nations to give up the 
system, we are to threaten we will injure ourselves 
to the exact amount that these Bounties injure the 
nations that give them. We declare there should 
be free exchange of commodities between all nations ; 
and then, in order to obtain this free exchange, we 
are to propose to bind ourselves to some particular 
nation by a treaty arrangement of "reciprocal 
advantages" specifically curtailing our freedom of 
exchange with third nations. These means are, on 
their very face, inconsistent with the attainment of 
the end desired. They are means that have invariably 
commended themselves to governments for many 
years. They are means' that have invariably failed. 
They are means that must be once for all discarded. 
The various States of the world are politically in- 
dependent of one another. Any agreements between 
them must be in the nature of free contracts. But 
these contracts have this fundamental distinction from 

State Aid and State Interference. 27 

contracts between individuals, in that there is no 
superior compelling power to enforce their fulfil- 
ment. War or necessity are the sole ultimate 
arbiters: Conference, arbitration, and agreement 
may be appealed to, but subject only to voluntary 
concession. To injure ourselves in order that others 
may not injure us is a course of policy neither wise 
nor useful. And yet such a principle is the basis 
of all these policies by which we are to interfere 
directly to reform other nations in regard to com- 
merce and industry. It is ultimately a waging of 
war. We know it will cost us much; we say we 
must go to war, for there are no other means of 
compelling nations to do what we wish them to do. 
If, however, we turn more thought into our con- 
sideration of the case, we discover that this kind 
of warfare has never been successful ; that it not 
only fails to attain its end, but that it necessarily 
costs more than any gains it can win. 

And all the while we forget that to keep the 
peace will induce the very results we vainly seek 
to bring about by war. We wish for freedom for 
commerce and industry. We wish to see this 
freedom prevailing in every State. We wish to see 
no one state, by its individual action, curtailing this 
freedom in all other states. We, and other nations. 

28 State Aid and State Interference. 

have tried war for many years. We have endea- 
voured to secure this freedom for all by denying it 
to ourselves. Other nations, all the world over, 
have done the same. More recently England has 
turned back from these illogical courses. England 
has said, " So far as in me lies I will commence by 
giving myself this freedom. If it is this great good 
we all conceive it to be, results will soon prove that 
I am right." And results are conclusively proving 
the wisdom of the new English policy. Other Euro- 
pean nations are now beginning to ask how it is 
that England and Belgium and Holland and Swit- 
zerland are drawing right ahead of all others as 
commercial and industrial nations. The Australian 
colonies are asking why is it that New Zealand 
and New South "Wales are outrunning Victoria. 
The United States are asking why is it that un- 
protected England floods American markets with 
her manufactures, and also drives American goods 
out of neutral markets. The high-tariffed States 
of South America are asking, " Why is it we have 
to go to free-trading England for our manufactures 
no less than for our capital ? " These results must 
tell, and are telling. It is the force of successful 
example which will lead other states to set them- 
selves up free in commerce and industry. It is to 

State Aid and State Interference. 29 

this teaching we must trust for a coming emancipa- 
tion of nations from State Interference. The means 
to this end is the spread of knowledge. Ignorance 
is the arch enemy to the spread of commercial 
freedom. Cynics may ask whether the printing 
press has in the sum total done more to disseminate 
and give authority to ignorance than to knowledge ; 
whether it has estahlished in the puhlic mind more 
untruths than truths. At all events, the printing 
press may be made the vehicle of facts. And it is 
to the wide, universal publishing of recorded facts 
we must look for restoring to experience a measure 
of its lost influence in public affairs. A public 
opinion ignorant of and despising experience is the 
canker that eats the heart out of a nation and 
thereby brings about the ruin of its civilisation. 

And experience tells us that in order to secure 
the highest and most lasting prosperity for com- 
merce and industry, State Aid should be invoked 
or utilised for the sole purpose of disestablishing 
State Interference. 

^Tlf Aiel and Shift' Ji»fe»5%r«w. 



iix-izr.-i; — Its Fa^r:;;;^. 

§1. Theke an? Frt>;-craiers and Frve--rrt.vUr^. 
5-;nie men are FKir-trsider? because tbej" know 
Fiee Trade to be bts' ; niv«e Hieii are so beeav^e 
ther rhink k co be ttst ; cicst men are so le»sftee 
raey believe ia rheir clK^een rescters. These twv> 
latte- classes are, iudeed. i-iib«e«i to che Vadtboo? 
wirb. the iiea tkat Free Trade meaas weahii aad 
pm)SferitT; b,i: at eeattaia sess-jiis ther beeotae the 
tirL^"'Tij viotims »tf mout a^wsivi »iitesci:riiru::s 
Kth. firaau \ntluii and with»>at. ^ileinbers of Piar- 
Kament beea fimud to ask sttca questiens : and, 
in the Tiw,^. a ^ Letter firoim itr. J. Bri^rht oaa Ptotee- 

Failure of Protection in United States. 31 

tion " figures with strange frequency. These letters 
are almost invariably in answer to the evident, 
if cleverly concealed question, " If Free Trade be all 
you say, how is it that the United States flourish 
so under a regime of Protection?" This question 
imphes either a sad lack of detailed knowledge 
on the part of the interrogator, or a' criminal ex- 
pectation of such a faihng on the part of his 
victim. It is my present purpose to put forward 
the plain matter-of-fact rejoinder to this specious 

Such an investigation has a present and particular 
value in that incidentally it elucidates problems of 
the first importance to our own farmers and land- 
owners, no less than to our manufacturers and ex- 
porters. The supply of the English market with 
wheat and meat ; the supply of the United States 
market (a vast market, embracing such items as 
the construction and maintenance of the one hun- 
dred thousand miles of rails that will soon be "in 
work " in the States) ; the existence and growth 
of manufactories of various kinds on the other 
side of the Atlantic — these and others axe all pro- 
blems closely connected with this investigation, and 
problems of the first moment to all thinking 

32 State Aid and State Interference. 

§ 2. These inquiries range themselves under 
several heads : (i.) How far is the prosperity of the 
United States connected with the prevailing policy 
of Protection? (ii.) How far has Protection 
succeeded in setting up native manufactures? 
(iii.) How far has Protection succeeded in supply- 
ing funds to the revenue? (iv.) How about this 
Protection in the future ? 

How far is the Prosperity of the United States 
connected with the Policy of Protection ? — This first 
question lands us at once atnong the circumstances 
that combine to bring prosperity to the United 
States ; and if we look in vain among these for the 
influence of Protection, it may surprise the thought- 
less into attention to facts, but it will in no wise 
run coiinter to the convictions of those who know. 

Protection may be defined as the interference by 
a Government with the influx of commodities pro- 
duced in other States in order to serve certain ends 
in regard to its own industries. It is obvious, then, 
that Protection affects a country by the means of 
its imports ; and in judging of the causes of pros- 
perity in different States, Protection will avail as 
a factor in proportion to the comparative importance 
of the imports. For instance, the British Isles 
import annually an equivalent of 111. per head of 

Failure of Protection in United States. 33 

population; the United States import annually but 
2/. per head. Thus, it may be said that in the 
United States the direct effect of a policy of Pro- 
tection on prosperity (for or against) is only one- 
fifth what it would be in England. 

But this minimised influence of Protection is 
further lessened by the fact that the United States 
is eminently an underpeopled, undeveloped country. 
This fact, it will be seen, is at once the basis of the 
national prosperity and the more than sufficient 
antidote to the action of Protection. 

Evidence of this is seen in the recent high-pres- 
sure development of the industry of supplying food 
to Europe. For some years past this tillage and 
pasturage of the prairie has produced an enormous 
surplus of food supplies. These would have been 
mere valueless commodities, or rather would not 
have been produced at all in such quantities, but 
for the fact that cheap means of transit happened to 
coexist to convey this surplus to European and other 
markets. Thus it became wealth ; and was used in 
great measure to repay other nations some of the 
capital they had advanced to render such things 
possible. Of the total annual exports from the 
United States nearly one-half consists of this food 
surplus. It is thus evident that this production 


34 State Aid and State Interference. 

alone of food from virgin soil — supplying as it does 
the first necessaries of the large home market, and 
paying for two-thirds of what the nation buys abroad 
— is accountable for a major portion of the pros- 
perity enjoyed by the United States. 

But if to this food surplus we add the exports 
of " raw-materials " — of cotton, minerals, and so forth 
— we shall account for at least eighty per cent, of 
the total annual exports from the United States 
without trenching in the least on the domain "fos- 
tered" by Protection. It is then not difficult to 
see that the prosperity of the United States depends 
on industries that have no cavise whatever to thank 

These industries, however, are rapidly discovering 
cause for curses and not thanks. Farmers find the 
high tariff raise the prices of all agricultural tools 
and implements; millers complain of the high cost 
of machinery for mills; carriers of the high prices 
of the metal-work for elevators and for railways. 
Experience is proving that duties which protect one 
class necessarily injure all others. The train of 
cause and effect runs in the well-known circle. 
Each manufacturer finds that, though the duties 
that protect him are said to be ultimately paid by 
the consumer, nevertheless the consumer has his 

Failure of Protection in United States. S5 

natural revenge in that everything the manufac- 
turer uses or consumes in the process is enhanced 
in price. 

It is no long task to show that the prosperity of 
the United States exists in spite of, and not because 
of. Protection. And this is so even when no men- 
tion has been made of the most important fact in 
connection with this prosperity. Too seldom do we 
remember that absolute Free Trade has been long 
and firmly established throughout the United States, 
and that it exerts an influence many many times 
greater than that exerted by Protection. Free Trade 
reigns absolute and supreme within the frontiers of 
the United States. This is a fact writers and 
speakers on both sides the Atlantic are too apt to 
overlook. The full import of this fact is seen when 
we remember that the rapidly increasing population, 
already numbering fifty millions, only imports from 
abroad one quarter of the value of goods that the 
thirty-three millions of the British Isles import. 
And the vast and important home market of so very 
large and so very self-dependent a population is regu- 
lated entirely on principles of absolute Free Trade. 

The importance of this fact is all the more evi- 
dent if we remember that the United States is 
about as large as Europe, but with only one-seventh 

D 2 

36 State Aid and State Interference. 

of the population. We have indeed a territory 
equalling Europe in extent and in variety of soil, 
climate, and product. But properly to picture the 
case we must sweep out of Europe all the English, 
Dutch, Danes, Swedes, Germans, Russians, Austrians, 
Italians, Swiss, Spaniards, Portuguese, and Turks, 
and then distribute and settle over the whole area 
of Europe the population of France and Belgium 
only. The British Isles would proportionally receive 
about the population of London to work up their 
prolific resources, their mines; their pastures, their 
fertile soils, their ores, their fisheries, and so forth. 
Then, if we add to such distribution of population 
perfect freedom of interchange of products all over 
this Europe, we have a picture of the condition of 
the United States at the present day. It has been 
the dream of Cobden's disciples to extend Free 
Trade over Europe. Our American cousins have long 
ago and definitively established Free Trade over an 
area equalling that of Eurojie. 

It will be immediately evident that the prosperity 
that ensues in the United States will be due to this 
freedom of exchange and this comparative paucity 
of people engaged in the highly profitable task of 
developing vast virgin resources. Of a truth, so far 
as its prosperity is concerned, the United States is 

Failure o/ Protection in United States. 37 

a glaring instance of the high economic value of 
Free Trade. In the United States we have a group 
of communities, large and small, young and old, 
under-peopled and fully-peopled, and with every 
variety of human and natural forces, all bound one 
to another in the fertilising bonds of Free Trade. 

Such is the prosperity of the United States ; such 
the foundations of this prosperity. Protection, in- 
fluencing only by means of a comparatively insig- 
nificant import trade, is but a weakly drag on this 
prosperity, which thus rests in reality, both in 
regard to home consumption and to export, on 
Adam Smith's "plenty and cheapness of good land," 
coupled with perfect freedom of exchange over the 
length and breadth of this good land. Protection, 
in the United States occupies an altogether subor- 
dinate position as a direct factor for or against this 
prosperity ; and there is force enough at the present, 
in the development of the splendid virgin resources 
of this partially-peopled Free Trade continent, to 
induce prosperity in spite of, but not in consequence 
of. Protection. 

§ 3. Mow far has Protection succeeded in developing 
Native Manufactures ? — In disposing of this second 
question we are faced at the very threshold by the 
fact that the genesis of manufactures in the United 

38 State Aid and State Interference. 

States occurred under exceptionally favourable 
auspices. Gold and other populating magnets had 
attracted across the Atlantic swarms of emigrants 
from Europe. A very large percentage of these 
were skilled mechanics and manufacturing hands, 
and these were, frequently, the men of highest spirit 
and energy in their various callings. Thus the 
States had simply to utilise, and not to create or even 
to introduce, the best skill, traditions, and experience 
of the old-world manufactures. And there soon 
came about a general willingness on the part of 
these immigrants to revert to their old callings as 
opportunity offered ; for the new toils of unwonted 
agriculture, or the disheartening failures on multi- 
tudinous dummy gold-fields, gave fresh prominence 
to memories of former more lucrative and more 
satisfactory work. Manufactures were engrained in 
the people before arrival. These habits and tradi- 
tions of work needed only time for their reappear- 
ance ; but it was sought to hasten this reappearance 
by the curious self-sacrifice of all other interests in 
favour of these manufacturers. 

And yet, if we look to the surroundings of the 
manufactories of the United States, we see at once 
that their very life is closely bound up with the 
existence of undeveloped virgin resources. When 

Failure of Protection in United States. 39 

bad times come and consumptive demand wanes, 
then short time or stoppage of mills, and so forth, 
merely throws more human energy into the opening 
up of unbroken agricultural areas. A great increase 
in agricultural output is the result, and, provided a 
market be found for this, a recuperative force is at 
once set in motion which shrouds the fact that 
many of these artificially supported mills and 
factories are not in unison with the true life of the 
community. And, in addition, the ready supply of 
food offered by virgin soil does away with any risk 
of actual starvation. 

In spite of these manifest " natural " advantages, 
we nevertheless cannot be blind to the notorious 
fact that in bad times there is more actual distress 
in the manufacturing districts of the States than 
in those of crowded but Free-trade England. The 
special reason of this is that bad times prevent 
production at profits ; and that although man can 
cease being a producer for a time, he can only cease 
being a consumer by leaving this world. And it is 
on man as a consumer that Protection presses with 
so heavy a hand. So far as Protection has any effect 
in America, it enhances the price of everything to 
the consumer, and this forces the manufacturer, 
capitalist, and workman alike to suffer more than 

40 State Aid and State Interference. 

need be when bad times force him to stand by in 
idleness as a producer. 

And again, in prosperous times American manu- 
facturers enjoy very considerable advantages — not 
because of Protection, but because of this wealth 
of virgin resources. A great store of provisions and 
of raw material is readily amassed ; and the demand 
of prosperous times readily converts this into wealth. 
The workers on this raw material reinforce willingly 
that class of consumers who are lavish and extrava- 
gant in their expenditure. This style of improvident 
consumption has, as a matter of fact, become a 
marked feature in the United States whenever eras 
of prosperity set in ; and it is a style which is 
always above paying heed to the fact that prices 
are so greatly enhanced by the incubus of any par- 
ticular commercial policy. Home consumption 
becomes thus specially brisk, even to the extent 
of causing a decrease in exports. And so an 
important but artificial and unwholesome stimulus 
is given to the protected industries which completely 
shrouds the evil resxilts, to the consumer, of pro- 
tective duties. This unnatural vitality is the certain 
precursor of a crash such as that which fell upon the 
American people in 1873. This wealth of virgin 
resources at once nourishes and conceals that 

Failure of Protection in United States. 41 

diseased condition of the body of manufacture which 
is induced by Protection. 

It is well also to consider the influence of this 
protection of manufacture in the United States on 
the supply of the home and the foreign markets. 
In the first place, in the United States it has been 
estimated that only one-tenth of the whole popula- 
tion are even connected with manufactures. Such a 
percentage, if we regard the records of other com- 
munities, may fairly be set down as the unaided 
issue of mere concentration of population : it certainly 
shows that Protection has failed in any appreciable 
manner to divert human exertion from its natural 
channels. The attractions of an underpeopled soil 
are too great to allow of the population heing forced 
to other labour. 

Evidence of this is found in the failure of the 
American manufacturers to supply their own home 
market even with wares for which they enjoy special 
facilities. This result is greatly aided by the fact 
that high prices of American made goods consequent 
on the high tariff act as an antidote to that tariff 
so far as foreigners are concerned. English cutlery, 
for instance, in normally prosperous times success- 
fully competes with American even in the Western 
States. Of Sheffield cutlery the States imported 

42 State Aid and State Interference. 

74,000/. wortli in 1880, as compared with 50,000Z. 
in 1879. The revival of trade last year immediately 
douhled the importation of iron and steel from 
England. It is a curious sight to see free Americans 
submitting to the fact that English iron and steel, 
burdened with cost of transit and a 40 per cent, 
duty, can yet undersell American steel in the 
American market. When the railway system of 
the States is completed there will be about 100,000 
miles of rails laid. The mere maintenance and 
necessary renewals over these lines implies an 
enormous and persistent demand for rails. English 
makers continue to hold their own in this division of 
the American market, and it is satisfactory to 
remember that the low price at which their Free- 
trade opportunities enable them to supply these 
rails adds to the wealth-producing and purchasing 
power of our friends the consumers of the United 

Increase of population creates new markets, which 
the population naturally endeavours of itself to supply. 
And wherever population congregates in sufficient 
numbers, there the necessary industries arise — if 
they can. In America the manufacture of iron and 
steel has struggled into existence, but as yet it has 
only so far succeeded as to compete as it were on 

Failure of Protection in United States. 43 

sufferance with the supplies sent all the way from 
England. Protection keeps the prices of labour and 
of living so high, that the " prohibitive " duty on 
English supplies, instead of keeping them out of the 
market, simply becomes a bounty paid by the 
inhabitants to enable the English manufactuer to 
penetrate into the market. Meanwhile no one 
knows whether the free manufacture of iron and 
steel can be carried on in the States cheaper than 
the importation of foreign iron and steel. If it can, 
the Americans are buying their iron and steel now 
at a dead loss to themselves. If it cannot, they are 
paying to their manufacturers the annual losses on a 
process of manufacture that does not pay. That 
they lose hy the transaction is evident ; the only ques- 
tion is as to the greater or lesser amount of their 

Thus Protection resolutely prevents the Americans 
from obtaining the command of their own home 
market even in those wares for which the country 
may possess special aptitudes ; and at the same time 
it prevents the Americans from finding out which 
manufactures pay, and which do not. The great 
fact remains that the high prices consequent on 
Protection do actually act as a powerful antidote to 
the high tariff, and pay for foreign manufactures the 

44 State Aid and State Interference. 

entrance fees into the American market -whicli 
Protection extorts. 

In regard to the supplying foreign markets, it is 
but logical to suppose that if Protection have its 
claimed success in starting within a community in- 
dustries specially suitable to the circumstances of 
the community, there will be some surplus products 
of those industries for expoit. How do the manu- 
facturers of the United States fare in foreign and 
neutral markets ? That they penetrate to them is 
not to be gainsaid. But that they penetrate in 
insignificant quantities is seen from the fact that 
only one-tenth at the most of the exports of the 
United States are articles manufactured in the 
States. And even this export trade is manifestly 
a mere result of the peculiar conditions surrounding 
manufacture in the States. Americans have deve- 
loped an extraordinary ingenuity of invention ; 
they have also developed a tendency to " do things 
big." If the opportunity is favourable they thus 
manufacture large stocks of articles whose novelty 
and neatness is often their chief recommendation. 
But for the present the export of many such articles, 
often the mere realisation of some gigantic scheme 
of advertisement, or the getting rid of articles 
for which there is absolutely no sale in the home 

Failure of Protection in United States. 45 

market, is because of depression in the States. It 
is clearly recorded that American drills and sheetings 
only appear in the great China market when periods 
of severe depression exist in American manufactur- 
ing centres. The cost of production in normally 
prosperous times is too high to favour export. The 
stocks that even then accumulate become unsaleable 
when good times return ; these are added to the 
stock manufactured under the cheapening pressure 
of depression ; and the whole " lot " is eventually to 
be got rid of at abnormally low prices. 

As a general result it has been noticed that just 
now in the United States with prosperous years the 
imports increase and the exports decrease ; whereas 
the contrary seems to be the case in years of 
depression. Protection increases cost of living; it 
raises prices all round ; wages come to be normally 
at abnormal heights. In prosperous years the local 
manufacturers having to pay higher wages can only 
sell at excessive prices. Americans are asked to _ 
pay these prices ; and they do so in prosperous times. 
But these same high prices, instead of fostering local 
industries, simply enable the less costly foreign 
commodity to enter the market even though saddled 
with the extravagant duty Protection imposes. The 
result is that imports increase and the local manu - 

46 State Aid and State Interference. 

facturers cease exporting. But they also cease 
selling, even in the home market. 

However, with times of depression these things 
alter. Americans no longer buy. Prices are too 
high. In their own phrase, they " scrape through " 
till times mend. Imports decrease. Local manu- 
facturers have stock in hand they are unable to 
get rid of in the home market ; they also find 
labour willing to put up with lower wages, and 
it comes to be possible to export that for which 
there is no sale whatever at home. Exports increase. 
American manufacturers once more appear in foreign 

It is necessary to remember, in this connection, 
that in England, if industrial energy cannot find 
vent in the creation of a margin at least of ex- 
portable wealth, industrial pauperism must result. 
In the United States, on the contrary, this 
energy is not so confined; it can and does seek 
profit from the appropriation and development 
of virgin resources. Labour and capital find 
their natural field in the prairie and not in the 
factory. It is only in abnormal times of severe 
depression that these natural conditions are tem- 
porarily suspended and industrial energy creates 
any margin for export. Manufacturing enterprise 

Failure of Protection in United States. 47 

thus harassed will never achieve any palpable place 
in foreign markets till the United States become 
fully peopled up. It "would seem only natural 
that, for the present, the export trade of this large 
population should be almost all made up of the 
crude products of the soil— cotton, minerals (solid 
and liquid), and food — all endeavours of Protection 
to the contrary notwithstanding. 

This tendency is amply verified by records. The 
United States Government publish what they term 
a "percentage of agricultural products (including 
products of the forest) to total of domestic products 
exported every year." It is well, in order to elimi- 
nate temporary influences,- to take the average 
annual percentage for four-year periods. For the 
past sixteen years these averages have been -68, 
•74, -76 and '79 per cent. Records show there 
has been a steady rise of this percentage all the 
while that stringent Protection has been endeavour- 
ing to decrease this percentage. These are facts, 
not fancies. 

On the whole, then. Protection in the United 
States, so far from encouraging and fostering the 
growth of manufactures, seems, if we look to re- 
sults, only to hamper and harass those to which 
concentration of population has given legitimate 

48 State AM ami State Interfererux. 

birth ; aud at the same time to ByiieU othern which 
have hut dcmhtful claims to legitiTfiacy. It fihields 
tliem from a justified death ouly with the aBtaBtance 
of forced contrihutioiui levied as black rriail from 
a heedless and unthinking piople. TFjere may not 
be conBciouKuesB of this iu those who work these 
industries; but, they are the chiefs in the ranks 
ttiat opjjose P ree Trade ; and their impelling motive 
is the sacred motive of self-preservation, 

§4. 17<^ JievenvA Argume'nt. — Protection in 
America finds much poJitical Bupi>ort in the plea 
that money must he raised for carrying on the 
^ovenji/jeut of the country. General Harjcock'sceJe- 
bratefi " Tariff letter," during the late Presidential 
election, summarioes this question in the words — 

"The necefcsity of rainin;/ money for the admin- 
istration of the government will continue bo long 
as human nature lasts. All parties agree tliat the 
V>est way for us to raise revenue is largely by the 
tariff. So far as we are coneerTjed, therefore, aU 
talk about Free Trade is folly.'' 

It is, at the least, remarkable to find such 
language uttered by a prospective head of the 
iJemocratic party; but the sentence is a fair sample 
of the plea put forward, even by tlje ^renuine 
Protectionist, in favour of high tarilfs. Americans, 

Failure of Prohrtioii hi United States. -iO 

as ;i matter of fact, have exhibited marked distrust 
of direct taxation. To escape that method they 
seem to be content to make large sacrifices. They 
are told with truth that much rereuue may be 
raised by customs duties. But to argue thence to 
the conclusion that therefore "all talk about Free 
Ti-ade is folly,'" is to miss the point of the argu- 
ment. The interested manufacturers contrive ^vith 
ease to fan this pilea into the flame of stringent 
Protection to their own special manufactures. With 
ease they lead their fellow-countrymen — who in the 
vast majority have httle direct connection with ex- 
ternal commerce — to the conclusion that if revenue 
is to come of customs duties, the higher the duties 
the greater the revenue. 

This revenue argument has been urged by Prince 
Bismarck in Germany, as well as by Americans, and 
it is above all the one p>lea on which this i-etrogTade 
policy has now and then commended itself to the 
practical British Colonist. " Theoretical ' econo- 
mists, indeed, point out that to tax your trade is to 
destroy your trade ; that " where Protection begins 
there revenue ends;" that to hamper the entry 
of ooods into your market by heavy duties is to 
stiirve the goose that is to lay the golden egg-s of 
revenue. More practical economists will hold that 


50 State Aid and State Interference. 

it is a mere question of balances ; and that it is 
conceivable that the duties may be so cunningly 
adjusted, that -while inevitably destroying some of 
the trade incident to the smaller duties, they yet 
suck more actual revenue out of what remains. 

The question is really solved only by appeal to 
experience. The United States, with all the 
acknowledged evils of a high tariff, extract a revenue 
of 27,000,000/. out of the trade of a population 
of fifty millions. The United Kingdom, enjoying 
the manifold benefits of a low tariff, extracts a 
revenue of 20,000,000/. out of the trade of a popu- 
lation of thirty-five millions. In either case the 
populations contribute revenue through the customs 
to the annual amount per head of eleven shillings. 
But the English population enjoys in addition all 
the pecuniary benefit of a trade three times that 
of the Americans. 

Besides this, if we compare the customs revenues 
of England and the United States for even the 
last ten years, we see that the English receipts 
maintain a steady level of 20,000,000/. per annum, 
while those of the United States have fallen steadily 
from 37,000,000^. in 1869 to 27,000,000/. in 1879. 
During this period the English population increased 
by four millions; but no less than ten millions 

Failure of Protection in United States. 51 

more human beings have come to live in the United 
States. In other words, by looking to these records 
of what has been, we find that with a low tariif a 
population contributes far more revenue through the 
means of customs duties than with a high tariff. 
The high oustoms duties in the United States have 
failed altogether to provide that steady uniform 
contribution to the revenue that the low English 
duties have provided. They have in ten years 
rendered this particular source of revenue 25 per 
cent, less profitable, though population has increased 
30 per cent. 

This result is no doubt partly due to the fact 
that high duties inevitably give birth to manifold 
methods of evasion. It would be an interesting 
calculation to discover how much the signal decrease 
in American customs' receipts is due to this cause. 
Smuggling only finds sufficient inducement under 
high tariffs. And smuggling is nowadays of ex- 
tensive variety, ranging from the simple landing 
of a cask of spirits while the eyes of the revenue 
are turned the other way, to the elaborate machinery 
of dishonest middlemen who thrive by false pack- 
ing and false " declarations." By this means silk 
has been known to " pass " in casks " declared " as 
bottled beer. And the extreme is reached in the 

E 2 

52 State Aid and State Interference. 

brazen-faced bribery which is so well known in 
sundry of the more backward European ports, even 
though we refuse to credit the tales of travellers 
as to its existence in some of the landing places of 
the most advanced community of this age of pro- 
gress. These widespread systems of fraud can only 
exist in the atmosphere of high duties ; but in that 
they flourish to artistic perfection. We hear, for 
instance, of men who will buy steel rails in Europe, 
" lay '' them, run an engine and two trucks over 
them, take them up again, and pass them through 
any " amenable " custom-house as " old '" or " scrap 
iron," thereby reducing the duty by three-fourths. 
These things may be possible under the paramount 
influence of railway " rings " ; or they may be facili- 
tated by cases (however singular and rare) of guilty 
connivance in the custom house. The importers 
do not, probably, pocket the whole of the duty 
evaded ; some of it, no doubt, disappears elsewhere ; 
it is a tax on their trade, but it is a tax which 
fails to swell the revenue. 

Altogether it is found by the actual experience 
of both methods that the contention of raising 
revenue is altogether in favour of low tariffs. High 
tariffs destroy the trade, and breed methods of 
evasion. These methods reap no profits under low 

Failure of Protection in United States. 53 

tariffs, while trade by low tariffs increases fast. 
This question of revenue is settled no sooner than an 
appeal is made to experience; but hitherto in the 
United States the great majority have confided 
in the interested minority, and have failed to 
satisfy themselves that high tariffs in any way 
contribute to the revenue in proportion to the 
asserted ratio. 

§ 5. The Future of this Protection. — In conclusion, 
it remains briefly to consider the future of Pro- 
tection in the United States. We are met on the 
threshold of this inquiry by the pertinent question, 
How is it that, in- the face of the proverbial 
" Yankee 'cuteness," such a state of affairs should 
be permitted in the United States ? It is, in truth, 
not a little astounding that Protection should be 
for one moment tolerated in States whose original 
and grand historical claim to independence was 
liberation from bondage to the mercantile theory. 
It is a strange contradiction to have to recognise 
the high intelligence of the citizens of the United 
States, and in the same breath to detail the follies 
and evils of the commercial policy which they have 
adopted in their dealings with foreigners. It is a 
strange contradiction (and one that has been pub- 
lished in the States) to find the shrewd American. 

54 State Aid and State Interference. 

citizen allowing himself to be governed by men 
who said some years ago, " You must not trade 
with Texas — it is not national territory ; '' and who 
this year say, " No impediment whatever shall be 
allowed in the way of your trading with Texas ; 
it is now national territory." 

The primary explanation of this paradox is that 
all evidences of evil are, as it were, gilded over by 
the flood of wealth that overflows from the opening 
up of new resources. It is true the high tariff 
simply lessens, pro rata, the savings or profits which 
naturally accrue from the employment of capital 
and labour. But in a new country (and a country 
whose soil yields annually some 10,000,000^. of 
gold, besides abundance of other minerals and 
endless agricultural products) these profits accu- 
mulate with a rapidity altogether unknown in 
fully developed lands : and the incidental loss 
passes unheeded. 

Again, in a land of unbounded virgin resources, 
food, or the possibility of its acquisition, is ready to 
the hand of every man. In such a land a number 
of even useless manufacturers are supported with- 
out complaint, for the stomachs of the people do 
not feel the sacrifice. And it is an old tale that 
when the more animal portions of the human 

Failure of Protection in United States, 55 

body are in comfortable circumstance, the head is 
inclined to deal indulgently by objectionable concerns 
with which it has no palpable or immediate 

These conditions account in great measure for the 
fact that a large nation, ever clamorous for the post 
of guardian of human freedom, should voluntarily 
place itself in the bondage of Protection. Each 
free American citizen at the present moment is in 
the toils of a villeinage to his superior lord, the 
fostered manufacturer ; week by week he hands over 
to him, under the guise of increased prices, so much 
of the earnings of his labour, or of the profits of 
his capital. ' But he heeds not his position, because 
his opportunities bless him with abnormally good 
earnings and high profits. 

The conditions under which Protection exists in the 
United States may be grouped in four categories : — 
(1) plenty and cheapness of virgin resources ; (2) 
the inflow of foreign capital; (3) ultimate govern- 
ment by manhood suflfrage ; (4) vested interests 
fostered by Protection. How long will these con- 
ditions remain in effective co-existence ? 

(1) The first of these groups will for years to come 
divert the major portion of the national energies to 
work that has little or no direct connection with 

56 State Aid and State Interference. 

the foreign import trade. The' farmers and miners 
of the west and north, and the growers of cotton 
and breeders of cattle in the west and south, will, 
for years to come, have little personal feeling in the 
matter of a policy directly affecting only the manu- 
facturers of the east. But as population increases — 
and the process gives every sign of high-pressure 
speed — these now outlying districts will become 
central ; and to their inhabitants will become obvious 
and palpable the burden of a high tariff. Indeed 
the farmers of the west are already complaining of 
the high cost of the implements necessary to their 
peculiar system of husbandry. And as population 
increases, the inevitable increase in output of com- 
modities will demand not only an outlet, but 
some equivalent return trade. Already western 
farmers are prognosticating a day when England 
will be purchasing her wheat where she can pay for 
it with her manufactures. This result will ensue 
-whenever a rise in the cost of American wheat raises 
it to the same price in the English market as 
Continental or Eastern wheat. 

The Census of the United States, taken on June 1, 
1880, tells a significant tale. During the last decade 
there has been added to the population 10,000,000 
souls. One quarter of this increase is due to immi- 

Failure of Protection in United States. 57 

gration, and three quarters to national growth. In 
the north-east, in the older, more fidly peopled and 
manufacturing States, there has been the least 
increase, amounting only to 15 per cent. In the 
south-east, among the older agricultural districts, 
the increase is greater. But in the whole of the 
wilder west, where m^anufactories are conspicuous- by 
their absence, there the populations have doubled in 
many instances, trebled in Kansas, and actually 
quadrupled in Nebraska and Colorado. Mining and 
agriculture may be said to have absorbed eight out of 
the new ten millions of inhabitants. This forebodes a 
coming alteration in the balance of the forces that 
naturally regulate external commercial policy. 

(2) This rapid development of virgin lesources is 
assisted in its tendency to upset high tariffs by the 
gradual cessation in the inflow of foreign capital and 
the concomitant growth of the investment of 
American capital abroad. This change in the tide of 
capital has already set in. Protection has of late years 
largely prevented repayment in kind. The foreigner 
wishing to trade has had to finance :— funds, securi- 
ties, shares, have passed to American ownership. It 
will thus come to pass, that if Americans wish to 
export (and this wish will be largely stimulated as 
their country becomes opened up) they will be 

58 State Aid and State Interference. 

forced to import by way of repayment. This will be 
possible only with a less prohibitive tariff. 

(3) These tendencies towards Free Trade will have 
a severe struggle with the two last of our four 
groups. It has been said that wise men learn from 
the experiences of others, but that fools can only 
learn from their own. At the present time ultimate 
political power in the States is largely in the hands 
of those who ignore knowledge of ascertained human 
experiences ; and who at the same time fail to 
win the guidance of those possessed, aud disinter- 
estedly possessed, of such knowledge. These masses, 
it would seem, must in a measure await the teaching 
of their own experience — though the spread of 
education will hasten their due recognition of the 
experiences of others. But their present prospects 
of good guiding are far from hopeful. Facts tell us 
that they become the ready instruments in the hands 
of those who trade upon their ignorance and upon 
the essential human tendency to lend willing ear to 
all that flatters innate selfishness. Thus, to win the 
votes of wage-earners in America no more powerful 
political cry has been devised than that of " pre- 
serving Americans from the competition of the 
underpaid labour of Europe." 

It appears for the present hopeless to point out 

Failure of Protection in United States. 59 

that, as a matter of fact, Protection does not accom- 
plish this end. The wage-earner in the manufac- 
turing districts is by no means so well off as he 
would be in the manufacturing districts in England. 
It has over and over again been pointed out how 
well the American politician knows the electioneer- 
ing value of appealing to the nominal rates of wages, 
but carefully omitting all reference to relative pur- 
chasing powers. The American wage-earner may be 
sure of one point : whatever work Protection brings 
him, whatever work he gets and would not get if 
competition were free, has to be paid for by him out 
of the wages he gets for doing it. Five cents per 
yard on cotton prints is the duty charged to counter- 
vail English facilities of production. The American 
manufacturer thus charges four cents more per yard 
for the cotton prints he makes. This protection 
enables him to make cotton prints and employ 
people in the factory. But the wage-earners so 
employed have to pay four cents more for every yard 
of cotton they buy. And, not only so, but, while they 
get wages from one industry only, Protection influ- 
ences many others as well, and all prices are enhanced 
above what they otherwise would be. ITiis extra 
charge on all he buys is the direct effect of the com- 
petition of the " underpaid " labour of Europe. 

60 State Aid and State Interference. 

Protection is powerless to prevent the effect. All 
Protection does is to shift the charge from the pro- 
ducer to the consumer; and the wage-earner, if 
a producer in the factory, is all the more a con- 
sumer at home. Manhood suffrage in the less 
settled districts is not yet sufficiently boiind up 
with the foreign trade to care to busy itself 
with foreign policy ; manhood suffrage in the 
more settled districts awaits the spread of know- 
ledge to force on it a due appreciation of its real 

(4) For the present, the most serious and distinct 
obstacle is the powerful one of vested interests. The 
manufacturers, chiefly located in the eastern States, 
derive most benefit and relief from protective duties. 
These duties are paid by the nation at large, and a 
major portion of the contributions come from other 
distant districts. These manufacturers thus thrive 
on the contributions they levy of their heedless dis- 
tant countrymen. Protection institutes rates for 
the support of two classes of persons — the one class 
consisting of those who could live, and live better, 
without this aid : the other class consisting of 
those who, without this aid, would have to turn to 
other modes of livelihood which would be a gain, 
and not a loss, to the nation at large. Industries 

Failure of Protection in United States. 61 

involving legitimate national superiorities would 
flourish all the better without Protection. But 
industries of the illegitimate kind, whose works are 
so much waste of energy, inasmuch as they make 
goods that can he made cheaper elsewhere at the pre- 
sent ; industries which will come into being unaided 
when times are ripe for them — these would perish in 
the absence of Protection. Such manufacturers owe 
their all to Protection ; of this they are well aware, 
and they accordingly put forth every nerve to keep 
their hold on a system, in the absence of which they 
must devote their energies to other work. The 
vested interests, of a type altogether pernicious to 
the general well-being, thus exert their influence in 
exact proportion to the harm they do to the State 
as a whole. 

Their power was exhibited in the late Presidential 
election ; the Democratic candidate was forced to woo 
their favour by a partial recantation of the wise 
doctrine adopted by the Democratic party, that the 
tariff should be arranged with a view to revenue 
only. The sop of " incidental Protection " was 
thrown, though without effect. These particular 
vested interests know they stand or fall with full- 
bodied Protection, and their present power is well 
exemplified in this violent political endeavour to 

62 State Aid and State Interference. 

win tbeir favour by the surrender of an important 

This necessarily cursory view of the facts of the 
case brings us, then, to four conclusions : — 

(i.) The prosperity of the United States is due to 
plenty of fertile virgin soil, to great mineral and 
natural resources, and, above all, to the strict free- 
dom of trade over the whole United States continent. 
The protective tariff simply impedes this prosperity. 

(ii.) In regard to the setting up of manufactures, 
the high tariff succeeds in hampering those to which 
concentration of population gives legitimate birth : 
and in upholding those which are, at all events for 
the present, a dead loss to the community at large. 

(iii.) American (and other) politicians maintain 
that the high tariff is a good method of raising 
revenue ; but facts show us that even within the 
last ten years this high tariff (in a variety of ways) 
has cut down by nearly one-third the actual amount 
of revenue formerly derived from custorcs duties, 
and which, in a more healthy condition of things, 
must have in some measure kept pace with an 
increase of population during the same period of 
more than one-third. 

(iv.) The intelligent American citizen puts up with 

Failure of Protection in United States. 63 

Protection because it affects him but little in his 
absorbing occupation of opening up the vast interior. 
The assured success of this internal development, 
coupled with the ebb of foreign capital, will gradually 
overcome both the heedless vis inertice of manhood 
suffrage and the knowing vis motiva of vested 

64 State Aid and State Interference. 



§1. Bounties never likely to succeed. §2. Attempts to revive 
Shipping Trade in the United States. § 3. Similar attempts 
in France. 

§ 1. In Bounties, above all other schemes and 
policies, State interference assumes most cunningly 
and most successfully the trappings and outside 
semblance of State aid. Under the guise of assist- 
ance to the native and discouragement to the' foreign 
producer of a given article, many a Government has 
won popularity for itself from an ignorant and 
thoughtless people by the simple device of insti_ 
tuting a Bounty system. And the more their 
ignorance of their own trades, the more their 
innocence of their own true interests, the more 
these fostered classes admire and support a Govern- 
ment which promises to protect them by Bounties 
against foreign competition. 

Bounties. 65 

Happily in England most of us feel strongly that 
Bounty-giving is nothing more nor less than taking 
money from the great body of taxpayers and handing 
it over to a few privileged individuals, in order 
that these latter may carry on industries that might 
not otherwise pay. Even supposing that Bounties 
give artificial advantage to any special industry, 
yet this artificial advantage all comes out of the 
pockets of the people at large. Bounties may for 
a time give an artificial and temporary stimulus 
to a trade, but such stimulus seems invariably to 
suck the life out of the community, and to leave 
the field eventually in possession of those foreign 
rivals who have preferred the wholesome food 
of free enterprise ajid the bracing air of open 

Bounties are pleasing to the sense of self-interest, 
to the selfishness of the class in whose favour they 
are imposed. But this means, that if once you 
allow or adopt the principle of Bounty-giving, the 
granting a Bounty to one trade or industry simply 
provokes other trades and industries to claim similar 
treatment. The State which grants Bounties to 
sugar-refiners soon finds itself compelled in very 
fairness to grant Bounties to shipbuilders. And 
the future looms dark with the forms of all other 


^^/.j/<' AhI ami Stott 7M/r»:rhv«ry, 

iiK^ustrus, jxvssible and i^fl}x^ss^iWo, hovoriiii; refund 
to claim their ?h:viv in tho gviunvus iHsiribnnon 
ot" iho public monevs. 

And lor sdmih^r iwisons siicli a jv>lio\ adv^pttxl 
by one Stnto jAroAvkos other Sickles to similar action. 
St;nos nro wry apt to follow one anotborV Wind 
loadings. Sngivr Botnuios have Ivcii institnl^xl now 
in soYonil Kmvjvan conntrios, Mmply by roa^Mi of 
tbo str.ingv idea that if Bounties aiv gi\on to 
foroignors Bounties iinisi lx> given to natives as 
a proteetiou. And when this plea of "fiurness" 
once steps in, uotlung more is heanl of the fact 
that Bounties do tnoiv harm th;sn g-vxl to the 
tnule aitd to the ee\iutrY which tlie Oovenunent 
seeks by their aj^vncy to aid. People t"orv.;vt that 
Beiinties Cvune eventnally out of the pockets of 
the taxjviYCfs; and they for^gvt what is of yet more 
direct imjwrtance, that Ko\inties have never yet 
succeedixl in wiitning a victory aj:;-ainst those cenunu- 
nities which refuse to have anything to do with their 
snspieiotis aid. In this and the following chapter 
I wish briefly to celleet certain recoixled results of 
two ilhistKxtive classes of Benniies — these civcu to 
pron>ete shipping and s\ig-;\r industries res}vetivelv. 

§'2. It is pivlmble that in few States have uua\> 
stringent measures boon taken to fester a shippiiig 

Bonntlcs. 67 

trade than iu the United States. It is certain 
that in no States has there ever been a greater 
collapse of the shipping trade than in the United 
States. The facts of this collapse are the " common- 
places " of all literature dealing with such subjects. 
Here again th-ere crops in and acts as a chief 
element the necessaiy evil of aU such State inter- 
ference. With shipping, as -with sugar and all 
other industries, there are two distinct industrial 
phases or divisions : said they are, in their very 
nature,' ant-agonistic to one another if once they 
are to be " fostered " out of any common funds. 
These two phases ai-e those of production and of 
use. If you protect the production of ships, in so 
far vou limit their use ; and if you protect the 
use of sliips, in so far you limit their production. 
In tl\e United States it was -sought to encourage 
shipbuilding in the country by prohibiting the 
importation of ships and by encouraging the native 
building of ships. Immediately the shipowners found 
they were hampered in the supply of ships. Ships 
cost American more than they cost English ownei-s. 
American ships were no longer purchased, and 
then, as a consequence, they were no longer built. 
At the same time the shipbuildei-s had been pro- 
tected, and so could not object that other industries 

F -2 

68 State Aid and State Interference. 

should be protected likewise. And shipbuilders 
found, to their cost, that they had to pay for their 
material and for their labour far more than ship- 
builders in other countries that had no protection- 
And now all the American seaboard is crying out 
for the remission of all duties on the materials 
employed in shipbuilding, and for the removal of 
all the burdens that Protection imposes on the 

Meanwhile American shipowning has died down, 
and shrunk to comparatively nothing from its* former 
dimensions. The Great "War no doubt had consider- 
able effect, but that effect should be past and gone 
before now ; and the Americans must often sit down 
and look at the flags flying thick in New York 
harbour, and ask themselves how it is that they 
are nearly all those of a nation which makes every 
endeavour to free all its industries of all State 
trammels, of all so-called State support. No doubt 
England has unrivalled capacity for production in 
her readily available stores of coal and iron, but 
America also yields large quantities of coal and 
iron, and her woods are at least as good and as 
plentiful as those of the British Isles. Her sea- 
board is long, her harbours numerous, and her 
population much given to maritime pursuits; and 

Bounties. 69 

yet her shipping industries cannot do more than 
struggle to maintain a precarious existence, clogged 
and handicapped by vigorous State support, and 
altogether unable to compete against the free 
and altogether private enterprise of the shipping 
industries of the United Kingdom. 

§ 3. With this clear example before her we find 
France, already with a very respectable marine, never- 
theless deliberately devising a new scheme of bounty 
protection to her shipping trades. As with all such 
State interference so with this ; so great is the 
number of technical and legal formalities, that the 
effective operation of the law is serioiisly impaired. 
However, after overcoming these, the French Go- 
vernment offers definite money Bounties to those 
who build vessels in France or to those Frenchmen 
who own seagoing vessels. The Bounties are not 
given to Lines otherwise subsidised by Government. 
They are given on tonnage built in France and on 
the number of miles run at sea by French-owned 
vessels. It is at once evident there is considerable 
contradiction involved. France pays nearly 1,000,000^. 
per annum in subsidies to steamers for carrying 
mails. By this new law a steamer, provided she does 
not carry mails, becomes entitled to a subsidy or 
Bounty. And then again a Bounty is given for 

70 State Aid and State Interference. 

making long and numerous voyages. This bounty 
is If. 50c. per ton per 1,000 miles. For a trip across 
the Atlantic and back a French-bnilt steamer of 
3,000 tons receives 1,000?., provided she carry no 
mails. If she be English-built she receives 500/. It 
becomes a question of relative cost of English-built 
and French-built ships. If the Bounty on building fail 
to make good this difference, then the French ship- 
owner may profit most by using English-built ships. 

But suppose that this act succeeds to the full ra 
its purpose. Suppose it doubles the French mer- 
cantile marine by adding one million tons of French- 
built shipping, and sends this million tons voyaging 
over the seas, at average voyaging pace. Suppose this 
continues for five years. Then the French taxpayers 
will have to provide say 15,000,000?., or, in other 
words, pay to Frendi shipbuilders and shipowners 
3,000,000/. per annum for doing nothing but mind 
their own business. And this payment includes 
measures for defeating its o"wn end, because it 
includes the enabhng French owners to purchase 
loreign-buUt ships even when these are dearer than 
French-built ships. As we have seen in the Atlantic 
trade, an owner may run an Enghsh-built steamer 
for a year against French-built mail steamers on 
equal terms, because he wiU obtain a Bounty which 

Bounties. 71 

they will not obtain. If this Bounty-law were to 
raise French shipping to anything equalling that of 
English shipping at the present moment, the French 
taxpayer would find himself at least one hundred and 
fifty millions sterhng out of pocket. The question 
remains, would there be any possibility of recouping 
this sum out of any trade that could be developed ? 
The chances are that the question will never be put 
to the test, because there will be severe foreign 
competition. France need not fear the kind of 
competition threatened by Prince Bismarck — a 
competition in kind — a retaliatoiy imposition of 
countervailing Bounties by Germany. But France 
wUl find competition very severe and hopeless with 
England. It is not by making the nation as a 
whole pay for national shortcomings that any par- 
ticular industry can be made successfully to compete 
with countries enjoying greater natural facilities. 
Shipbuilding has grown to be a great industry in 
the British Isles, partly because of a natural wealth 
in coal and iron; partly because of a maritime 
genius fostered both by geographical position and 
by great and world-wide trading propensities; 
partly because of the poHcy of Free Trade, which 
enables the shipbuilder to obtain aU the materials he 
uses at the lowest possible cost. Other countries cut 

72 State Aid and State Interference. 

themselves off from those of these advantages that 
can be acquired, and they are thus the less able duly 
to utilise such of those advantages as they may 
enjoy by the bounty of nature. If the French or 
the United States wish to develop a profitable 
mercantile marine, the only road is to reduce and 
simplify their tariffs, and then see whether in the 
consequent free course of commerce and industry 
the shipping trade arise of itself or not. In other 
ways they may give artificial fillips, but to the 
nation at large the balance will be on the wrong 
side ; the industry will be fostered at the expense of 
the community ; money will be transferred from the 
pockets of the people to those of a few individuals ; 
French shipowners may buy more of English ship- 
builders, and English shipbuilders may start yards 
in France and gather in a harvest of French 
Bounties ; but in the long run the French people 
will find the millions they may spend disappear into 
the pockets of builders and owners, and leave France 
with no greater increase in her mercantile marine 
than has come of all the strenuous efforts to 
increase that of the United States. 

Sugar Bounties. 73 



§ 1 . Cane-growing in the Colonies continually advancing. § 2. Beet- 
growing not due to Bounties. § 3. Neither Beet-growing nor 
Refining flourish in Bounty-giving countries. § 4. How to do 
away with Bounties. § 5. British Sugar Industries more 
prosperous than any others. 

§ 1. The most remarkable case in regard to 
Bounties is that of the Sugar Bounties. It is a case 
which has all the advantages of having been well 
ventilated. Its details have in every respect been 
worked out and tabulated : and its value and im- 
portance are best attested by the virulence of the 
controversy to which it has given rise. There are 
few results recorded in economic history that yield 
such distinct and clear lessons. 

It may be well to quote these results as I sum- 

r* Statr' Aid ami State /M#eiywY«<r. 

Bcrifw : — 

" Mr, Ritduo's Oommitt«>o was appomt«>d ' to uj- 
quiro into the offoots upon t.ho Home suid Colonial 
Sugar Industvios of tins iHwi^try by the syst<^n\ v^f 
taxations, dmwbaoks, and bounties on tbo exixvtation 
of sugar now in force in \-;mous fowign wuntrios.' 
It is our pn^sent purjH^so to det\l spooially witli the 
second of those two prwvincv^s of inquiry. 

But tliere seems to be soiue strange fsvtality that 
appoars to haunt the very term ' OoUmies,' No 
sooner is tMs term used tlian tbe affiiirs tivate^l of fail 
of just appivoiation, not only heiv in England, bat 
even in the Colonies themselves. The very n^en who 
sliould know most, ai\> often misKxi themselvv^s into 
st!\teiuej\t* that are haixl to ivconcile with th« iveords 
upon ■wliidi they themselves found these statements. 
In the reconis of this partieular eon\u\ittee there 
oeeur iust*tnees of this ; and instanees, moivover, 
diivetly eon\pomising the most in\porta.nt point«^ 
involveii For instanee, in his answer to question 
8,SoS, one of our most trusted a\itluirities on West 
Indian mattea-s tells ns tliat the • dirainislied priv 
duction (of sugai* in tl\e West Indies) eiunn\enwd in 
1S7:J.' But tlio %ui'es of sugar exported ivewxled 

Sugar Bounties. 


in the tables provided by this same authority are as 
follows : — 

Sugar Exporthd trqh the British West Indies in Toira. 

1 IS71. 







British Guiaua S9,000 

West Indian . 
Islands 1 -".""O 




S0,000 102,000 
■:37.00(l 214,000 


Totals...' SOO.COO 


279.000 272,000 

317,000 1 316,000 


The ' diminished production that commenced in 
lS7i ' did not continue even till the following 

Again, the same high authority tells us (3,960) — 

' I think that in, say, ten years, half the pro- 
duction of the West Indies would be knocked on 
the head altogether ; in fact it has begun already. 
I do not think I should be outside the mark if I 
stated that nearly fifty estates are in course of 
abandonment now (1879). I think about fifty have 
come under my own knowledge, principally in 
Jamaica ; about six or eight months ago, so far as 
my recollection goes, twenty-six estates were 
advei-tised for sale without any buyer.' 

This latter sentence somewhat qualifies the 
former ; but if we turn to the Jamaica Bluebook 

76 State Aid and State Interference. 

itself, we find recorded in dry and hard official columns 
that only four estates were abandoned during the 
year 1879. And it is further to be noticed that these 
four were of very small size, making altogether only 
323 hogsheads of sugar, in an island which exports 
annually over 30,000 hogsheads. Moreover, there 
is, in the opposite column, the very significant entry 
of one ' abandoned ' estate brought back into culti- 

It is indeed high time that more attention was 
paid to the actual condition and the actual prospects 
of this sugar growing in the West Indies. We shall 
here briefly lay out the facts of the case, collating 
all by the aid of recent personal experience in almost 
every West Indian island. We shall confine our 
exposition, in the main, to these islands ; they yield 
us three-quarters of our own colonial supply. 
Sugar that is grown in the Mauritius and the East 
Indies, in Natal and in Queensland, finds its chief 
market in the Eastern Hemisphere. It may be 
noticed incidentally that the local demand in South 
Africa and in Australia is increasing rapidly, but it 
is increasing out of all proportion to the increase of 
sugar planting in these large colonies. In Australia, 
at the beginning of this century, there was no 
market for sugar. Now, in the Australias there 

Sugar Bounties. 77 

has come to exist a rapidly increasing population 
of nearly 3,000,000, and all great consumers of 
sugar. Over the vast interior of the 'island con- 
tinent ' sugar is among the most important of the 
' rations,' which form part of the pay of shepherds, 
stockmen, and others ; and in the cities, that are 
appearing with such rapidity, well-to-do communi- 
ties of Englishmen are vying with the mother 
country in their large consumption of sugar per 
head. But these West Indies — these ' tropical 
farms of the British Isles,' as they have been termed 
— are the English sugar colonies in most direct con- 
nection with the English market, and therefore the 
group of colonies most typical of our colonial sugar 
industries, so far as they are influenced by European 

At the very threshold we must notice that there 
is one great fact persistent throughout the history 
of West Indian sugar-planting, and that is the fact 
of the perpetual plaint that all is going wrong. 
The ' groans of the planters,' that made so great 
a stir in 1670, have never ceased since then to 
burden the atmosphere. This is, indeed, fresh 
evidence in support of the plausible theory that 
the secret of Englishmen's success is their native 
propensity to grumble. West Indian planters, like 

78 State Aid and State Interference. 

their fellow-agriculturists in England, are never 
satisfied ; and it is well they are not. They will 
have it that what they attempt is done better 
elsewhere, and the consequence is that they do 
things better than they are done elsewhere. They 
grumble that the French have tramways in Guada- 
loupe, and with this grumbling they introduce 
better trams on their own estates. 

The outrageous assertions of the present evil 
effect of the Bounties do not surpass the frantic 
anticipations of evil which centred, in days gone 
by, respectively round the abolition of slave labour, 
the competition of slave versus free-grown sugar, 
and, more lately, the extinction of the sugar duties 
in England. Forebodings just as dismal, arrays of 
figures just as curious, arguments just as little 
founded on fact, cropped up in these episodes, and 
with the same urgency and the same need of ex- 
planation as in this last. But the sugar-growing 
industry has managed to survive. It may be it 
has changed ; it may be it is destined to yet further 
change ; but its destruction would seem to be as 
far off as ever. . . '. . 

The English public that abolished slavery and 
the sugar duties, offered speedy compensation in 
the greatly increased consumption of sugar in Eng- 

Sugar Bounties. 79 

land that followed on each of these high-principled 
acts. In 1840 the total sugar consumed in Eng- 
land was 4,500,000 cwt., its value was about 
£10,000,000, and the consumption at the rate of 
15 lbs. per head. In 1873 the consumption had 
risen to 51 lbs. per head. The duties were finally 
abolished in 1874, and for the year 1879 the total 
of consumption was at the rate of 65 lbs. per head, 
representing a total of 20,000,000 cwt., for which 
no less than £27,000,000 was paid. 

We are now face to face with the latest phase 
of these complaints. We are told that the abolition 
of these duties injured West India sugar-growing 
by allowing unbridled play to the baneful effects of 
Bounties that are given in sundry foreign countries 
on the export of sugar. Incidentally, however, it 
will be remarked that these very Bounties them- 
selves only exist in countries where sugar duties 
continue to be levied ; and the abolition of these 
duties in England set up England herself as a most 
successful example of a country thriving in an 
atmosphere where Bounties are impossibilities, and 
where the market for cane sugar is free of access. 
That this example has not been without effect we 
see in the fact that the French and other Bounty- 
yielding countries, are already exclaiming they can 

80 Stale Aid and State Interference. 

no longer compete with English refiners, or with 
colonial growers of sugar. Thus this much-com- 
plained of aholition of sugar duties has in itself 
come to be one of the most powerful arguments 
towards the destruction of these very Bounties 
that are regarded with such pious and unfeigned 

Before considering the Bounties themselves, the 
real measure of their effect, and the best means to 
their removal, it is well briefly to examine, by the 
light of recent local knowledge, the present condition 
of the industry of sugar growing in our West Indian 
colonies. We shall at once find that these colonies 
have, during the present century, passed through 
three periods — the one, of corruption and collapse 
culminating in the abolition of slavery in 1838 ; the 
second, of mismanagement and uncertainty, lasting 
up to some ten or twelve years ago, when matters 
became more settled ; the third period that has since 
set in is of steady progress, and of a far more healthy 
and hopeful tone generally of enterprise and man- 
agement. The most significant feature of the middle 
or transition period was the odd reluctance with 
which those most concerned came to recognise the 
dawn of new and more favourable conditions. It 
has always been common to confine causes to the 

Sugar Bounties. 81 

single influence of slavery and emancipation. And 
this common error is rarely rectified by the alto- 
gether necessary, if forgotten addition of the fact, 
that prices of sugar have seen as great changes as 
this labour question. In the world's market, from 
causes quite extrinsic to the West Indies, the price 
of sugar has since the period of emancipation fallen 
from 50^. to 201. a ton. It is, that here again 
the vast increase in consumption which England's 
free trade policy has enabled her to enter upon, has 
in great measure compensated this enormous fall in 
prices. Prices may have fallen to one-third of what 
they were, but the Englishman consumes just three 
times as much as he used to do. This would be 
very palpable compensation, but for the fact that the 
West Indian growers do not provide him with the 
extra supply he now consumes. And this is in great 
measure the fault of the West Indian grower him- 
self: but it is a fault he is fast remedying. His chief 
obstacle has, hitherto, been his being trammelled at 
every step by the traditions and the arrangements 
created by and for a state of affairs that has passed 
away. And the dying voice of this old dispensation 
is the present persistent outcry that Bounties are 
creating much loss, suffering, and injury to our West 
Indian sugar-growers. 


82 State Aid and State Interference. 

As a matter of fact the West Indian colonies, 
even under present arrangements, seem capable of 
producing sugar cheaper than it can be produced 
elsewhere, or from other plants. Mr. Quintin Hogg 
pointed out (Ques. 3871) : ' You get in saccharine 
matter four times as much to the acre in Demerara 
as you would get in France.' Any one conversant 
\yith the West Indies will acknowledge that the 
actual cost of growing and manufacturing sugar 
ranges from 9Z. to 12Z. per hogshead. The cost of 
putting this sugar in the English market ought not 
to exceed 3^. or M. a hogshead. European beet-root 
growers and manufacturers universally declare that 
a price of 18^. a ton is a price that will, if per- 
manent, destroy their industry altogether. The 
limit that will destroy beet-growing will only curtail 
profit in cane-growing as at present carried on in 
the West Indies. This fact should suffice to show 
Bounty-giving countries the prompt necessity of a 
reform of their ways. The boasted effect of these 
Bounties is to lower prices in the great English 
market ; but this, in the end, is to abolish Bounties, 
by rendering impossible the industry they were insti- 
tuted to support. The ' bounty-fed ' refiners already 
cry out. M. L^on Say himself complains : ' Ce qui 
est certain, dans tous les cas, c'est qu'^ I'in verse de 

Sugar Bounties. 83 

ce qui existe pour les rafBneurs Frangais, les raffi- 
neurs Anglais peuvent obtenir leur matik'e premiere 
a un prix inferieur k ce qui devrait etre son prix 

Growers are also discovering their error. In his 
Report for Mr. Ritchie's Committee on the sugar 
industry in Germany, our Secretary to the Embassy 
tells us, 'the average cost of manufacturing raw 
sugar from beet would be about thirty marks (30s.) 
a cwt.' And at the present, whatever the actual 
cost of production on the spot, the governments of 
these countries allow the general public to sub- 
scribe to make good any losses the refiners and 
growers may become subject to, owing to the low 
prices forced upon the market. How far, and for 
how long, a confiding public will thus continue 
this thankless and baneful charity time only can 

It is well worth putting on record the figures 
supplied to Mr. Ritchie's Committee by Mr. Hogg 
of the export of sugar from the British West Indies. 
They exhibit a marked, sustained, and definite in- 
crease. They, of course, vary from year to year. 
There are few crops more variable than the cane 
crop. It will therefore be well to record the totals 
for four-year periods, and so eliminate this element 

G 2 

84 State Aid and State Interference. 

of uncertainty, and better fit the figures for general 

Export of Sugak feom the British West Indies. 


Totals per four-year 
periods, in Tous. 



















From 1844 to 1865 — for twenty-one years — the 
actual annual total never reached 200,000. Since 
1865— for sixteen years — the annual total has never 
been below 200,000, except in the two years 1869 
and 1872. It will be observed, also, that in the 
period 1872-75 there is a falling off, slight indeed, 
but still not an increase. This is worth noticing, in 
spite of the more than compensating increase in the 
next period, 1876-79 ; this latter great increase, it 
will be remembered, comes immediately after the 
abolition of sugar duties when Bounties were said 
to be of most effect. That this abnormal decrease 
was the effect of seasons alone, we know when we 
see that the crops of 1872 and 1873 were very much 
below the average (amounting but to 400,000 for the 

Sugar Bounties. 85 

two years) ; and there is further proof in the fact 
that for those two years the prices of sugar were, 
in the words of the Report of the Committee, 
' abnormally high.' 

It is well to notice parenthetically, that, though 
the present condition of the industry of sugar 
growing in our West Indian colonies is in a con- 
dition which enables it to contemplate without 
anxiety the competition of beet-root in the future, 
it is in a condition, nevertheless, which is itself 
capable of vast improvement. Those concerned with 
the West Indian industries themselves give palpable 
proof of this in the vast sums annually expended 
in machinery, and the introduction of improved 
methods of cultivation and manufacture. In Bar- 
bados, for instance, sugar land fetches nearly 1001. 
an acre at this day. These prices would not be 
maintained in a despairing community. 

It has been remarked that the sight, not uncom- 
mon in Jamaica, of a ruined windmill or watermill 
is a welcome sight, inasmuch as it tells a tale, not 
of relapse, but of advance ; a tale of the fertilizing 
introduction of steam power and fresh skill and fresh 
capital ; and, in a similar sense, it is true that of late 
years the records of estates abandoned, and of estates 
sold for what they would fetch, are signs, not of 

86 State Aid and State Interference. 

demise, but of fresh life. In the days of slavery 
and of high prices estates were started over large 
areas ; in the course of years most of these became 
encumbered with jointures and charges. In the 
days of collapse that ensued, both in regard to 
the labour question and in regard to price, the 
absentee proprietors of these charges and encum- 
brances let matters ' drift ' in the hope of better 
times ; they looked to the future to solve both the 
labour and the price troubles. In most cases these 
estates were owned in groups, and the very favour- 
ably situated paid sufficient profit to cover, for the 
time, the losses on the badly situated. By degrees 
that were altogether too slow, estates were one by 
one put out of cultivation or sold ; and it is one 
great advantage of low prices that they considerably 
accelerate this salutary process. There were many 
estates continued in working that had yielded profits 
when sugar was at 50?., but which had no chance 
of doing so with sugar at 20/. There were many 
estates that could well yield profits sufficient for one 
or two incomes, even when prices had so fallen ; but 
such estates only too often remained charged with 
the supply of the five or six private incomes that 
had of old easily been yielded by the higher prices. 
It is, then, a gain to all to find the one class of estate 

Sugar Bounties. 87 

absolutely put out of cultivation, and to find the 
other sold for what it will fetch ; and sold, moreover, 
to new owners who, no longer burdened with the old 
charges and jointures, may proceed forthwith to 
make excellent commercial profit out of the legiti- 
mate advantages the West Indies undoubtedly 
possess over most other countries in this matter of 
sugar growing. 

These high prices also helped to maintain among 
many planters a proud abstention from attempting to 
remedy the losses and difficulties that had come of 
the abolition of slavery. There arose, not unnatu- 
rally, a bitter class feeling, brooding over the fact 
that in order to achieve a national object the indi- 
vidual had been made to suffer ; there had been an 
apparent breach of justice, and the injured class sat 
down on their estates, and when things went wrong, 
enjoyed an uncouth and baneful satisfaction in 
proving to the world that the injury done was 
material. These ideas are not yet completely 
eradicated, and they are partly to blame for a 
slowness, apparent most in Jamaica, among planters 
to improve their cultivation. Already, however, 
sufficient has been done to prove at once the actual 
value of these improvements and spread the know- 
ledge that they are possible. Ploughing, weeding, 

88 State Aid and State Interference. 

manuring, and irrigation, have been proved to 
greatly increase the quantity of cane to the acre. 
Better breeding, better care, and better handhng of 
the ' working oxen,' have curtailed largely the 
expenses of 'hauling' or taking the cane to the 
mill. Tramways, and ' wire railways ' for ravines, 
have been introduced with similar effect. The 
' Usine ' system will probably pay in certain dis- 
tricts when introduced. The railway extensions, and 
new coastwise steamers, will largely relieve many 
districts of their heavy expenditure in the matter of 
the carriage of the sugar to the port of shipment. 
Altogether, there are many prospects of considerably 
cheapening the present cost of production. 

It will be seen then, that, so far as facts sro, the 
West Indian sugar industry is in a far better and 
far healthier plight than it has ever been before. 
This industry has, indeed, suffered from two causes 
— natural and 'human.' Adverse seasons in the 
one case, and our own widespread commercial de- 
pression in the other, have acted most deleteriously 
on production and on consumption. 

§ 2. These two ^classes of causes have, however, in 
recent investigations, been ignored in favour of one 
small species of a third genus — the political. And 
yet it is difficult — eminently difficult — to trace any 

Sugar Bounties. 89 

real efltect of any magnitude directly to this parti- 
cular division. The centre of the argument, at 
which we have now arrived, is the fact that certain 
foreign countries give Bounties on the export of 
sugar. We pass, then, to ascertain the real measure 
of this effect, and the best means for the removal of 
these Bounties. 

The battle waged round these Bounties may be 
well likened to some mediaeval struggle for a 
standard, wherein leading knights find themselves 
suddenly the cynosure of all eyes ; and when the 
real contests and material combats of the rest of 
the field are forthwith hushed and suspended, as if 
by mutual consent, in order that all eyes may feast 
on an intrinsically insignificant incident that has 
now become the centre and point of all effort. The 
possession of the standard in itself is of little value 
— so much wood and linen, or, it may be, silk. So 
with these Bounties; all other arguments seem 
suspended, and the contest centres itself on a some- 
thing, which, the more we look into it, the less does 
it prove to be of material value or influence. As 
with the military standard, so these Bounties are 
fought over with such fierce excitement that all 
inquiry is for the time ignored as to the intrinsic 
value of the Bounty itself. Many men rush to the 

90 State Aid and State Interference. 

attack with the battle-cry, ' Bounties lower prices ; ' 
they heed not, neither do they require proof of the 
measure of this asserted influence, or of the con- 
nection of the result with the asserted cause. 

The whole influence of these Bounties needs to 
be set out clearly. Many of those interested in the 
trade have of late years sought to impress the 
outside public with the idea that Bounties are the 
cause of all these ills. The instinct of the outside 
public has, as yet, refused to credit all this ; and it is 
well, in the interests both of those concerned in the 
trade as well as of the general consuming public, to 
seek out the grounds on which, this instinctive 
reasoning is based. 

The Bounties, in the first place, are supposed 
greatly to encourage the production of sugar from 
beet-root. Granting that this be so, it is obvious 
the cane-grower cannot complain, unless this action 
lowers prices. From some of the Tables in the 
Appendix to this Report we can cull most apposite 
figures, even though we regret that these tables fail 
to bring results further than the year 1874. 

Years— 1S64. 1865. 1866. 1867. 1868. 1869. 

». d. s. d. s. d. s. d. s. d. s. d. 

Prices of cane sugar ... 28 11 ... 23 8 ... 22 2 ... 22 5 ... 24 1 ... 25 10 

Hundreds of ( °"f ' } 4 5 6 7 7 8 

thousands of ^?8'"^„< 
tons grown [ sugS } " l-l 15 14 16 16 

Sugar Bounties. 91 

Years (coK,Knucd)—18YO. 1871. 1872. 1873. 1874. 

s. d. s. d. s. d. s. d. s. d. 

Prices of cane sugar ... 24 1 ... 26 3 ... 26 11 ... 23 2 ... 22 4 


Hundreds of f »* ^eet ) . 
thousands of ™g" J 
tons grown [ "J^^^^ | j,, ^^ ^^ jg ^^ 

We see there is a sustained increase, year by 
year, in both crops till 1874, in which year there 
is a slight falling off in both — largest proportionately 
in the beet crop. We see also that beet increases 
far faster than cane ; and, in the ten years under 
review, beet, from monopolizing in the first year 
about 2-9ths of the supply, comes in the last year 
to monopolize over 3-9ths. But it will be noticed 
that prices show no tendency whatever of ieing 
affected hy the alterations in the proportions of 
heet and cane supplies. Commencing at a high 
figure, prices fall rapidly; but only to rise again 
nearly to the same height, and then again to 

And this relation of price to this beet v. cane 
argument is further illustrated by a table supplied 
by Mr. Lubbock. In this Mr. Lubbock gives most 
interesting data in regard to the effect of the 
detailed growth of the beet crop on detailed prices 
of cane sugar, and the results are most sig- 

92 State Aid and State Interference. 

Tears :- 



1867. 1868. 



s. d. 

s. d. 

s. d. s. d. 

s. d. 

s. d. 

Prices of cane (Trinidad) 

21 6 . 

.. IS 8 ... 

20 10 ... 22 6 

... 22 11 , 

... 19 8 

Beet crop ; increase or \ 
decrease per cent. 1 
over previous year's ( 
crop. j 

+ 34 


+ 4 +li 

+ 27 

+ 11 

Tears (continued] ;- 

s. d. 

s. d. 

s. d. 

if. d. 

s. d. 

Prices of cane (Trinidad) 

23 4 

... 24 10 

... 20 1 ... 

19 7 ... 

18 4 

Beet crop ; increase or 
decrease pt-r cent, 
over previous year's 

- r 

+ 31 

- 3 

- 5 

+ 20 

According to these figures, it would strangely 
appear, increase in the price of cane sugar is usually 
accompanied ty increase in the aTnount of heet pro- 
duced ; whereas, in two of the only three cases 
when the crop of beet was less than the previous 
year, there is a decided fall in price over that of the 
previous year; and in the remaining case there 
is a decided rise in price in the following year, 
though the production of beet showed an increase 
of no less than 30 per cent. We have seen that 
the consumption of sugar in the world increased 
during this same period from 18 to 27 ; that of these 
proportions, cane supplied respectively 14 and 17, 
while beet, supplying 4 in the first instance, came 
to supply no less than 10 in the latter. Beet has 
thus monopolized the supply of a great proportion 
of this increased demand ; but the figures have yet 
to be produced, it seems, which shall prove that this 

Sugar Bounties. 93 

new supply is in direct connection with any definite 
fall in price. Indeed, in the evidence before Mr. 
Ritchie's Committee, the West Indian planters over 
and over again assert their confidence in their 
ability successfully to cope with beet-root competi- 
tion, ' provided bounties be done away with,' and 
the two methods be left to unrestricted competition. 
It would seem, then, that heet-growing in itself has 
little to do with this lowering of prices. The question 
remains — do the Bounties affect these prices ; and 
if so, to what extent ? 

When one's own case is good, it is often well to 
assume, for the sake of argument, the correctness 
of the evidence brought forward by one's opponent ; 
and in this present case we may even admit, with 
the most eager opponent of Bounties, that a duty 
of 2s. on every sort of sugar imported from Bounty- 
giving countries would effectually ' countervail ' 
the effects of this Bounty. But we must in that 
case also make it clear that, as at most only one- 
third of our sugar supply comes from Bounty-giving 
countries, the actual effect of the Bounties, so far 
as growers are concerned, is not 2,s., but only 8d. 
a cwt. Again, we see that if sugar (as was stated 
in answer to question 6028) at the price of I85. Qd. 
was being grown 3s. below its cost price. Bounties 

94 State Aid and State Interference. 

at their best, must be merely partial causes of this 
effect, even when we allow them the full influence 
attributed to them by their most ardent opponents. 
And the advocates of this countervailing duty will 
have to devise some remedy to correct this larger 
class of influences, double the effect of the Bounties, 
which, if true and lasting, must absolutely drive all 
sugar out of cultivation." 

§ 3. But there are other matters in connection with 
this asserted effect of Bounties which merit more 
attention than they have received. If we look to 
the condition of the indtcstries in the Bounty-giving 
countries themselves, we find much to countenance 
Sir L. Mallet's opinion : — 

' Ques. 6344. — I myself greatly doubt whether 
the effect of this Bounty is such as to enable the 
receivers of the Bounty to sell their produce at a 
very much lower rate than they would be able to sell 
it without the Bounty.' 

One thing is certain, that even the keen desire 
to do away with Bounties exhibited by English 
refiners and importers, is no whit keener than that 
shown by Frenchmen, at all events, who are inter- 
ested in sugar. And these Frenchmen have reason 
for their keenness. Among others, they complain of 

Sugar Bounties. 95 

the fact that the English refiner can, and the French 
refiner cannot, avail himself of the Austrian Bounty 
on raw sugar ; indeed, French statesmen have already 
asserted that the Bounty given to French refiners 
may be defended as the duty that countervails the 
advantages reaped by the English refiners in 
obtaining Austrian Bounty-fed raw sugar free of 

The French authorities gave valuable evidence 
before the Committee. M. F. Georges described 
the position of the industry of growing beet for 
sugar as, ' extremely critical.' The fabricants, he 
declares, ' are almost at the last gasp, and if they 
lower the prices of beet the farmers will entirely 
leave off growing led'. West Indian planters should 
notice that, even while the dreaded Bounty system 
lasts, prices are now so low that a fall, even frac- 
tional, will prevent beet-growing altogether. Prices, 
so far as beet-competition, is concerned, are at their 
lowest ebb. But the cultivation and manufacture 
of beet is at its highest perfection. Neither of these 
assertions can be made of sugar-cane growing in 
the West Indies. 

M. F. Georges also gives evidence to the effect 
that sugar-beet production in France is even 
diminishing, and certainly not increasing. West 

93 State Aid and State Interference. 

Indian growers should pay attention to question 
6074 :— 

' Ques. — I understand, to summarize your evi- 
dence, you believe that Austrian and other Bounties, 
if they continue, will greatly damage the French 
growers of sugar ? ' 

' Ans. — It will destroy the French manufactures 
entirely in a certain number of years ; that is to 
say, that the productions will be reduced to a certain 
extent every year. I would add that, if the price 
of beet were to be lowered, the farmers would not 
be able to grow it any more.' 

This means the lapse of 400,000 tons of sugar 
now grown annually, and whether the French re- 
finers are to continue to refine by importing cane 
sugar (and probably to abolish import duties on 
it), or whether France has to buy her sugar else- 
where — either way cane growing would be largely 

This is a most useful example of the com- 
plexities and intricacies that come of State inter- 
ference with production. If we abolish the Austrian 
Bounties, French refiners and French growers con- 
tinue as now ; if we do not abolish the Austrian 

Sugar Bounties. 97 

Bounties, English growers and English refiners both 
prosper over French. 

And another French authority, M. Fouquet, gives 
it as his opinion : ' If all the Powers, Austria, 
Germany, and Belgium, continue to have Bounties, 
we shall be in a very short time obliged to leave off 
entirely mahing sugar in France^ 

And M. L. de Mot, on being asked — 

'Why should the production fall off so much 
in France while the home consumption is so large 
as it is at present,' replied, ' Because of the actual 
price. "We sell under cost price actually ; and there 
is no doubt that, if things are to go on as they are, 

in two or three years production will diminish 

We expect, if things go on as they are, that, next 
year at least, probably 40 factories will he closed.' 

From Belgium, the Secretary of Legation re- 
ports : — ' Very small advantages indeed must have 
been derived by Belgian refiners from the surpluses 
(Bounties) they obtain, judging from the fact that 
for the last fifteen years sugar refining has steadily 
diminished in Belgium! It is not surprising to find 
Belgium, as a Bounty-yielding country, eager to 
abolish Bounties; they do her no good, for she 
imports but little sugar. From the Hague comes 


98 State Aid and State Interference. 

the same tale of diminishing exports, in spite of 
the Bounty which exporters can secure by means of 
the drawback. In Italy there is great dread of 
Bounties; and both Government and Legislature 
recommend 'that no time should be lost by the 
Government in entering into negotiations with other 
States interested in the sugar question, with a view 
to taking measures for guarding against the con- 
version of drawbacks into Bounties.' In Germany, 
as the industries, both of sugar growing and of 
refining increase, so does the revenue derived from 
sugar fall off, because incidentally the exports in- 
crease and take so much the more in drawbacks. 
And the German refiners themselves make an in- 
teresting complaint. They say, concerning ' moist ' 

' Nor can the German refining industry compete 
in these products with English refiners drawing 
their supplies of German raw sugars from Germany, 
inasmuch as Germany pays a larger drawback of 
duty on the export of raw sugar than would be 
paid proportionally on the export of the refined 
sugar produced from it.' And their report pro- 
ceeds : ' The German refineries buy duty-paid raw 
sugars. . . . The German refining industry employs, 

Sugar Bounties. 99 

spread over upwards of fifty establishments, a large 
capital (3,000,000 florins), invested in buildings, 
fixtures, and stock. The sad results ohtained on 
an average from these institutions during the last 
few years, threaten this capital with annihilation.' 
And again, further on : ' The condition of German 
sugar refineries has been for a long time, not only 
an unfavourable one, but, indeed, has declined from 
year to year' 

Lastly, we come to Austria. Our Secretary, 
Mr. Jemingham, reports : ' The drawbacks allowed 
hitherto, instead of remaining that which they 
were intended, viz., a true return of the excise 
duties, have in reality proved Bounties to the 
manufacturers ; and the history of sugar taxation is 
that of the struggle of the Government to remedy 
this.' The system of assessment was necessarily 
at fault, and encouraged fraudulent practices. 
Matters came to a crisis in 1876, when it was 
discovered that on the system in vogue. Govern- 
ment paid 947,000 florins in drawbacks on sugar 
exported, and which had only paid 931,000 florins 
duty and taxes. Government has consequently 
interfered in self-defence of its own revenue, and 
ordained that eventually sugar is to pay annually 

H 2 

100 State Aid and State Interference. 

a contribution to the revenue of 10,000,000 florins. 
This revenue argument is thus one of im- 
mense cogency. The Belgian Government have 
similar experience ; they know that some two 
million francs more revenue ought and could be 
obtained from sugar, but that this now finds its 
way into the pockets of the growers, because of 
the insuperable difficulties of collection wherever 
sugar is concerned. Russia is in similar evil 

But the success of the Austrian gi-owers and 
refiners at the expense of their country, has in its 
course roused and frightened other nations. Thus, 
M. Jacquemont, speaking on behalf of French 
sugar manufacturers, after describing these results 
in Austria, recommends, on behalf of France, 
'That in all treaties of commerce which may be 
negotiated, measures be taken to suppress Bounties 
on export generally. If not, we may expect to see 
our great agricultural industry succumb in this 
struggle, so strangely unequal, which it sustains, 
not only against rival industries, but against the 
revenues of the different European States.' 

And it may be noted incidentally that this 
action of the Austrian Government will have the 
effect of almost doing away with the asserted 

Sugar Bounties. 101 

outside effect of the Bounty ; for, if we judge by 
the present state of the industry as pointed out 
by M. Jacquemont, ' If the proportion of the 
exportation to the total production should diminish, 
the Bounty would increase ; if, on the contrary, 
the proportion should increase to 60 or 70 per 
cent, of the total production, the Bounties would 
decrease.' Thus, the case in Austria is at the 
present moment eminently favourable to English 
refiners and growers. 

It would thus appear that in one and all the 
countries that now give Bounties there is a strong 
desire, on the part both of Government and of 
manufacturers, to abolish any Bounties on the ex- 
portation of sugar, whether raw or refined. 

It is remarkable to trace in the history of the 
negotiations to put an end to Bounties that have 
already taken place between the Governments 
interested, that they have invariably originated 
in the desire of these Governments to remedy 
defects in their own financial arrangements. The 
advantage to the sugar industries was merely in- 
cidental, and, indeed, only brought to the light 
of day by the sugar manufacturers and refiners 

It is also remarkable to notice that in all these 

102 State Aid and State Interference. 

countries where Bounties are gained, the sugar in- 
dustries are in a precarious condition; refining 
dwindles where Bounties exist, while it is on the 
increase in England. Growers of beet all the Con- 
tinent over declare themselves ruined by the Bounty- 
fed competition of each other. It is, therefore, 
exceedingly remarkable to find so many of the wit- 
nesses before the Commission, ' interested in sugar,' 
so persistently, in the face of the figures they have 
themselves produced, declaring that refining must 
die out in England. It was shown them that, 
on their own calculations, the Bounties received 
annually in England was so many million pounds 
sterling ; that every few years these Bounties paid 
into England as much capital as all that invested 
in English sugar industries : that thus, even sup- 
posiug the Bounties did destroy the industry, never- 
theless they would have paid for both capital and 
' good-will ' over and over again. 

§ 4. It is, then, evident that all the countries in- 
terested are anxious to do away with these Bounties. 
There are but two methods of procedure desirable. 
The one is the freeing of sugar from all connection 
with the Exchequer. This has been accomplished in 
England ; but it is not within the range of ' practical 
politics ' that this should be accomplished in many. 

Sugar Bounties. 103 

still less in all, of the States that at present, in spite 
of themselves, grant Bounties. 

We axe compelled, then, to fall back upon the 
second and less satisfactory of the two desirable 
methods — that of manufacturing and refining in 
bond. Here again we find much happy unanimity 
arising among the various Governments interested. 
When this remedy was broached years ago there 
were many more or less idealistic objections put 
forward, on the score of the evils of direct Govern- 
ment interference in industrial details. Some evils 
are, however, necessary evils. Taxation itself is one 
of these ; and it is not altogether illogical to infer 
that the collection of taxes should follow suit in this 
respect. But even in France refiners themselves 
have withdrawn their objections, and chiefly by 
reason of the experience there gained since 1852 by 
the manufacturing in bond of beet sugar. On this 
point the authorised evidence of M. Georges is 
conclusive : — 

' Ques. 4047.— In the opinion of the fabricants in 
France is the refining in bond the only efficient mode 
of abolishing bounties ? ' ' Yes ; it is the sole one, in 
their opinion. For ten years past they have been 
soHciting this measure. At the Trade Congress, at 

104 State Aid and State Interference. 

Brussels, they passed a resolution that refining in 
bond was the only means of abolishing bounties.' 

M. Fouquet handed in to the Committee the 
joint agreement entered into by the refiners and 
the fabricants of France advocating refining in 
bond. Already, in Austria, the excise authorities 
test sugar, supervise in the factories, and examine 
books. The factory-owner is required by law to 
provide accommodation for these ofiicers. The 
Austrian Government and the fabricants are thus 
already working without trouble a system of Govern- 
ment inspection, which involves more interfering 
than even the refining in bond calls for. But after 
all has been said to show the desirability of re- 
fining in bond, there remains the difficult task of 
realizing the proposal. And the apparent difiiculty 
hinges on the desire or demand that any action in 
the matter must be action accepted and joined in 
by all the sugar-growing States. Here again crops 
up the great difficulty of all general international 
action — the absence of what in law would be 
termed the sanction. There is need of a common 
compelling power. 

The decision has now been come to that a 
Conference of the Powers interested will have no 

Sugar Bounties. 105 

good issue, unless they meet on the understanding 
that they will create some sanction as a common 
defence of themselves against those who may elect 
not to join such a convention as may be agreed 
upon. It has, therefore, been suggested that the 
Powers joining such a Conference shall agree 
beforehand to the insertion of a 'Penal Clause.' 

Of what nature is this clause to be ? The 
French Government maintains that it should im- 
pose a specific duty on any sugar imported from 
the recalcitrant country or countries. It has, 
indeed, been held that the mere insertion, or even 
intention to insert such a clause, will accomplish 
the desired effect, and scare all the Powers inter- 
ested into joining the Convention. For an English 
Government, however, to assent to such a clause 
is simply impossible in the present temper of the 
English people. They will not impose fresh import 
duties for any other than revenue purposes. The 
English people are happily well aware of the 
prosperity and growth that has followed on their 
definite adoption of free trade principles; and to 
go back to interferences with trade for industrial 
purposes is a retrograde step that is happily an 
impossibility in the England of to-day. 

There is another penal clause that is worthy 

106 State Aid and State Interference. 

of mention, and that is the declining to receive 
sugar from the erring State. This would be a 
specially powerful weapon in the hands of Eng- 
land. It would encounter many difficulties — such 
as those that cluster round ' certificates of origin ' ; 
— but both as a threat and' as a check it would 
in all probability have much direct success. Con- 
cerning the principles on which it is founded, it 
is no doubt an interference with the free course 
of trade, but we are working for concert with 
Powers that follow a policy of protection. We 
do not levy a duty ; we do not seek or obtain 
revenue; there is nothing fiscal in the whole ar- 
rangement ; it is merely, as it were, joining in the 
concerted blockade of a nation that is generally 
felt to be acting contrary to the best interests of 
all. Such a clause has the merit of assured effi- 
cacy, if of nothing else. But it is a measure of 
warfare and not of peace. 

The question remains, what have we left we 
can trust to in the absence of a penal clause 1 We 
have, on the one hand, the welcome fact that all 
the nations interested are in favour of establish- 
ing the manufacture and refining in bond. The 
history of previous sugar conferences is the history 
of the elimination of objections to such united 

Sugar Bounties. 107* 

action. In 1862 attention was drawn to the fact 
that the various arrangements of drawbacks and 
duties on sugar were practically Bounties. Each 
country soon saw the error of its ways, and ex- 
pressed its intention to do away with Bounties. 
But the one great obstacle was the fact that other 
countries might continue in their independence. 
The Conference in 1862-1863, was occupied in the 
main on the futile search for some method of ex- 
actly measuring percentages of sugar, either raw or 
refined. The standard of colour was adopted ; and 
the consequent greater exactness certainly reduced 
the effect of the Bounty system. But it was soon 
seen that colour was no reliable test of strength ; 
not only was it liable to ' manipulation,' fraudulent 
or otherwise, but sugars from different countries 
and of the same strength are often differently col- 
oured; and again, sugars of the same colour are 
often of different strengths. 

These, and other practical obstacles arose, and 
gave rise to fresh Conferences — each of them a 
step in the right direction. By the year 1872 a 
fresh Conference was proposed, in which the British 
delegates were instructed to ask for refining in 
bond. Nothing came of that Conference save a 
recommendation for further investigation. 

108 State Aid and State Interfereiice. 

The following year, 1873, another Conference 
was held ; and at this, ' saccharimetry ' of a highly 
scientific type was proposed as a method of deter- 
mining with all-sufficient accuracy the relative per- 
centage of sugar in the raw material. England 
this time withheld her consent. 

The Conference in 1875 led to the Convention 
of that year which was to establish refining in 
bond in France and Holland. Holland withdrew 
on the plea of a misunderstanding as to her re- 
tention of her liberty at any time to abolish her 
sugar duties altogether. France then defended 
herself by establishing Saccharimetry. 

Next followed the Paris Conference of 1876. 
At this conference Saccharimetry was carefully 
inquired into and declared finally to be a failure. 
The Conference eventually suspended its sittings 
without any agreement having been arrived at, in 
order to report to the respective Governments, with 
a view to the subsequent resumption of the Con- 
ference, to which it was proposed to invite Austria, 
Germany, and Italy. This Conference was resumed, 
but the three new States declined to send dele- 
gates : and eventually, after the fashion of its pre- 
decessors, it separated without visible effect. 

During these eighteen years of effort much 

Siiga/r Bounties. 109 

advance was, however, made. The Dutch and the 
French Governments declared in favour of refining 
m bond, and the other sugar-producing countries 
were invited to join. Moreover, the first motion 
was then made towards discussing Bounties on raw 
as well as on refined sugar. The Governments 
of Italy and of Austria are in favour of abolishing 
Bounties. These are new developments ; and yet 
there still remains the hard task of prevailing on 
these various States to carry out in combination 
what each one individually desires to see realized. 

§ 5. England comes to a new Conference with clean 
hands. She has taken what is admittedly the very 
best course ; she has suppressed sugar duties alto- 
gether. And in her hands she wields the powerful 
lever of the recorded success attending on this 
move. Our very sugar refiners, despite the real 
effects of bad times and low prices, and despite 
the more supposititious effects of Bounties, are doing 
far better than the refiners of these Bounty-pro- 
tected States. We continue to make use of more 
and more raw sugar, to consume more and more 
sugar. But we also export more and more re- 
fined sugar ; and we also import less and less 
refined sugar. The very latest figures are those 
for the first five months of 1881 ; it is well to 

110 State Aid and State Interference. 

put these side by side with those of the last two 
years : — 

The first five Months in 
18V9. 1880. ISSl. 

''fromlhfStS^^}™.""^ - «1^.»00 ... 576,000= - 148,000 tons, 

"• To"n.'Fr'anlf ..!!'.^.?*'!} ^^.000 ... 31.000... 28.000=- 19.000 „ 

iii. Refined Sugar Exported ),,.- „„„ ,„„nft,^ «„„„„„ 

from England j 187,000 ... 167.000 ... 203,000 = + 6,000 „ 

French refiners in these respects are stationary, 
and Dutch and Belgian actually retrogressing. Our 
"West Indian producers also continue to increase 
their output ; and these facts give the lie to the 
supposition that Bounty-fed beet-growing is or can 
be in any way successful in supplanting the cane- 
growing of the tropics. 

It is in these facts that England has her most 
powerful argument — her one great lever. We 
could even contemplate the substitution for the 
troublesome penal clause, in a convention of this 
example, of the pre-eminent success of England's 
freed production of sugar, both raw and refined. 
So may England, in years to come, bring the 
Bounty-giving States to see that, while they dis- 
cover that Bounties injure their own native indus- 
tries, and become a terrible drag on their own 
exchequers, yet that these Bounties are quite 
incapable of making anything like a 'disastrous 

Sugar Bounties. Ill 

impression' on the 'Home and Colonial Sugar In- 
dustries of this Country,' for the reason that these 
industries in the British Empire are free of the 
baneful incubus of the Bounty system. "With these 
facts in our pockets we may safely face negotia- 
tions for a new convention ; we may trust, even if 
with hope rather than with confidence, that other 
Governments will in due course pay heed to their 
experience in their own exchequers, and to the 
unanimous opinions of their own sugar growers 
and refiners, as to the deleterious influence of the 
Bounty system, and that they will follow the 
successful lead of England in removing all that in 
any way directs or restricts industrial energy and 
deprives it of its essential liberty to follow its 
natiiral bent. 

112 State Aid and State Interference. 



§ 1. Parallel cases of Victoria and New South "Wales. § 2. The 
Promotion of Manufactures. § 3. The Raising of Revenue. 
§ 4. The Promotion of General Prosperity. § 5. Value of 
this test case. 

§ 1. John Stuart Mill has told us that Protec- 
tion, altogether demolished as a general principle, 
might be found under certain conditions economically 
defensible in a young community. This hypothetical 
concession on Mill's part has had a direct and 
practical effect on the commercial policies adopted 
in some States — notably in one or two of our own 
Colonies and in the United States. But Mill in this 
argument expressly declares he is only dealing with 
what might be, and that the whole argument only 
applies, provided certain conditions come to be 
realized. Professor Sumner, of Yale, one of the 

Protection in Young Communities. 113 

ablest economists in the United States, well sums 
up the point in the words, " In these, as in other 
matters, we cannot argue with certainty from what 
might have been." Both he and Mill regret the 
absence of recorded facts on this point of Protection 
in Young Communities. 

Recent experiences enable me in some measure to 
make good this deficiency, and to fill up this gap in 
the experiential foundations of Political Economy, 
with what, for all practical purposes, is a test case. 
For this purpose I simply summarise facts recorded 
in authoritative official records. 

The history for the past ten years of our two great 
Colonies of Victoria and New South Wales provides 
us with the necessary records. This is the first time 
in history that we meet with the story, told in the 
details of actual fact, of two young communities 
growing up side by side with practically similar eco- 
nomic environments and opportunities, but pursuing 
the one a Free Trade and the other a Protectionist 
policy. In Victoria, in the year 1865, Sir J. Mac- 
Culloch introduced a modified form of Protection, 
and since 1871 there has prevailed that very inten- 
sified form of which the late Premier, Mr. Graham 
Berry, has been the persistent advocate. Over this 
same period, and more especially since 1874, New 

114 State Aid and State Interference. 

South Wales has followed an essentially Free Trade 

It may be added that I had the good fortune to 
sojourn in these Colonies in the year 1870, and 
again in the year 1878. This implies the advantage 
of personal and local experience of the two Colonies, 
and of the two Colonies at two periods separated by 
an appropriate interval of eight years. 

So far as the purpose in hand is concerned, these 
two Colonies were in the year 1870 suflScient 
counterparts of each other in regard to economic 
environments and opportunities. Either community 
may be described as a pioneer band of the great 
English nation, engaged in opening up virgin lands 
rich in all natural wealth. Our fellow-countrymen 
in Victoria and in New South Wales had provided for 
themselves all the aids and advantages our present 
civilisation offers. Eoads, railways, telegraphs, postal 
arrangements, sea communications, education, and so 
forth, were all in a high state of perfection. All the 
facilities of life under the care of energetic adminis- 
trations had developed with marked rapidity. At 
the same time these two Colonies yield to no country 
in the world in the richness of their natural endow- 
ments. Both above and below ground the soil is 
pregnant with wealth ; and the climate is all 

Protection in Young Communities- 115 

Englishmen can desire for the due exertion of their 
productive energies. Thus in these two Colonies 
the scientific industry of this nineteenth century- 
had found its most favourable opportunities. 

In the nature of things, these two Colonies are, for 
the present, producers mainly of raw material which 
they exchange for the manufactured products of more 
populous centres. Thus we find the inhabitants ot 
these Colonies import twice as much value per head 
as the inhabitants of the British Islands. This is a 
fact of much value to our present purpose. The 
United States have been perpetually put forward in 
the Free Trade controversy. But the United States 
only import a value of '2,1. per head of population 
per annum. We in these British Islands import, 
say, lOZ. per head. But in these two Colonies the 
imports are, in value, 20Z. per head of population 
per annum. Consequently, the direct effect of high 
or low tariffs is ten times as great in these instances 
as in that of the United States, and the value of 
these instances ten times as great to the economist. 

The necessary starting-point of the comparison is 
the determination that at the beginning of the 
decade these two young communities were the 
sufficient counterparts of each other in regard to 
economic environments and opportunities. The 

116 8tate Aid and State Interference. 

Protectionists of Victoria offer justification or 
apology for their swerving from the straight course 
pursued by New South Wales on the three pleas 
of lesser extent of territory, larger population, and 
absence of coal. 

In regard to this lesser extent of territory, we find 
that Victoria has sold 11,000,000 acres, and has 
45,000,000 still unsold ; and that New South Wales 
has sold 33,000,000 acres, and has still 165,000,000 
acres unsold. In each case the State has sold, or 
in other words has settled, from one-fourth to one- 
fifth of its area. In each case there remain over 
three-fourths of the area open for settlement. At 
present the population to the square mile in Victoria 
is ten persons, and in New South Wales three 
persons. In the United Kingdom the proportion 
is 270. Both Colonies are thus only on the 
threshold of their career as populated and developed 
countries. There is the real difference that the 
future capabilities of New South Wales are greater. 
But the present case refers solely to the past ten 
years. And during that decade the extent of the 
unoccupied lands is not so much to the point as 
the fact that in either case there are three-fourths 
of the soil of the Colony still open for settlement. 
In each Colony men are pushing on with their 

Protection in Young Communities. 117 

flocks and their herds to occupy new areas of 
virgin soil, and the plough follows in their track 
to pioneer agricultural settlement. In neither 
case has this operation as yet advanced over the 
whole. That is the condition at the present ; and 
we are dealing with the past, and not with the 

In regard to the larger population of Victoria, 
that also is a relative matter. Each Colony is but 
sparsely populated. Victoria, the size of England, 
Wales, and Scotland combined, is at the present 
peopled by a population equalling that of Kent 
only. New South Wales is about three times the 
size of Victoria, with a somewhat smaller population. 
In either case, after deducting the quarter of the 
population that congregates in the capital of each 
Colony, we have but a very sparse and scattered 
population over the interior. It must be conceded, 
however, that in so far as the population of Victoria 
is relatively denser than that of New South Wales, 
in so far manufactures, or revenue, or prosperity, or 
growth should develop with greater natural speed 
in Victoria than " in New South Wales ; in so far 
as Victoria had a larger or a denser population than 
New South Wales, in so far Victoria started with 
superior natural or inherent advantages in those 

118 State Aid and State Interference. 

Yeij objects to foster ■which. Victorians instituted 
their policy of Protection. 

In regard to the great superiority of New South 
Wales in the production of coal, it is well to re- 
member that this coal is produced on the Hunter 
River, and has to be carried thence by sea to 
Sydney, which is the centre of manufacturing 
enterprise. It is well known that when once coal 
has to be shipped the difference in length of voyage 
of one day to Sydney or three days to Melbourne 
makes but little difference in actual cost. So that 
in the question of fuel for manufacturers there is 
little practical difference in regard to coal supply 
in the two Colonies. As a wealth-yielding force 
against the coal of New South Wales must be set 
off the great superiority of Victoria in the produc- 
tion of ffold. It is true that the gold industry has 
declined rapidly in Victoria in output, and in 
number of men employed. But we must 
remember there is also a gold-mining industry in 
New South Wales which has also declined. This 
decline is due to the fact that gold was first dis- 
covered in alluvial soil, disintegrated from the quartz 
by the action of nature. Alluvial diggings provided 
a rich harvest ; but they soon became exhausted, 
and miners had to turn to extracting the gold from 

Protection in Young Communities. 119 

the primeval envelope of quartz. This led to a 
complete revolution in the mining industry. The 
falling off of the output in gold consequent on this 
revolution was not the annihilation of capital, nor 
was it the forcing labour to leave the Colony in 
search of employment. The city of Ballarat survived 
and continued to thrive as the great centre of the 
investment of capital in mining, -which had super- 
seded 'digging.' Quartz reefs had to be attacked 
instead of alluvial plains, and this change involved 
investment of more capital : powerful engines, 
colossal stamping machinery, and miles of tunnelled 
galleries and shafts had become necessary, and gold 
mining needed and absorbed a far greater amount of 
capital than in the old days when picks and shovels 
and wooden cradles were all the plant and imple- 
ments requisite. Much of the very capital that the 
rich gold ' diggings ' had yielded was at once in- 
vested in these new works. But there remained 
over much capital so accumulated which was not 
thus utilised, and which was there ready to start or 
promote any new industries. 

Labour, too, was set free. In 1871 there were over 
57,000 gold-miners in Victoria. By the year 1878 
the number had dwindled to 37,000. This had set 
free in Victoria some 20,000 men of the artisan and 

120 State Aid and State Interference. 

mechanic class — of a class, too, which was originally- 
recruited very largely from the manufacturing dis- 
tricts of the Old Country. There was thus provided 
during this decade, labour of a very applicable type 
for those very manufactories which were now to be 
fostered by Protection. Thus in this respect, in this 
very failure of the gold industry, Victoria gained 
over New South Wales in this supply of capital and 
of appropriate labour for those purposes for which 
the high tariff was imposed. 

Besides this, the greater amount of gold obtained 
in Victoria had attracted at once a far larger popula- 
tion, and yielded forthwith much capital. This led 
to the fact that in Victoria, at the beginning of the 
decade under review, the railway system, and indeed 
all the facilities of Ufe, had reached a higher stage of 
development than those of New South Wales. In 
every respect, then, we see that if there was any 
difference between the two Colonies ten years ago, it 
was a difference in favour of Victoria, so far as the 
starting manfactories, the affording revenue, or the 
promoting the general growth of prosperity were 
concerned. And these were the objects for which 
the high tariff was imposed. 

In 1870, then, such were the relative economic 
positions of Victoria and New South Wales. What 

Protection in Young Communities. 121 

happened during the succeeding decade is set out in 
a variety of official documents and records, in greater 
part issued by the Victorian Government. These 
results range themselves conveniently under the 
heads — ^Manufactures, Eevenue, General Prosperity 
and Growth. 

§ 2. Manufactures. — When Protection speaks of 
fostering manufactures it speaks of fostering those 
industries which result in the production of commo- 
dities other than food and raw materials. And the 
plea is that, except for such fostering, these industries 
wiU be slow to arise in the community. Do we find 
justification of this in fact? The evidences are to 
be seen in the employments of the people and of 
capital ; in the output of manufactured articles ; and 
in the number and kind of manufactures developed. 

In regard to the employment of the people, we 
find that at the end of the decade there were 25,000 
persons making their Hving in manufactories in New 
South Wales, equivalent to 3-7 per cent, of the total 
population. In Victoria there were 28,000 persons 
so employed, equivalent to 3-2 per cent, of the larger 
population of that Colony. This so far disposes of the 
argument so often advanced that Protection pro- 
motes civilisation by providing civihsed employment 
for the people in a new community. 

122 State Aid and State Interference. 

Again, in Victoria during the decade, population had 
increased by one-eighth ; but the number of hands 
employed in manufactures had increased one-third. 
Side by side with this we remember the very pertinent 
fact that the greater falling off in gold-mining had 
set free a large body of appropriate labour. There 
was this transference from one congenial occupation 
to another, but no development of any new class of 
operatives. By this transference of forces Victorian 
manufactures received an impetus totally uncon- 
nected with any fiscal or commercial policy. 

Unfortunately the official records are in number of 
manufactories, and they afford no evidence of the size 
of the units so recorded. The number of foundries, 
clothing manufactories, agricultural implement and 
other works, has largely increased in both Colonies. 
So far as kind goes we find that as great a variety 
of manufactures has come into being under the 
low as under the high tariff. In either case the 
development as compared with the great natural 
industries of the country is insignificant. In 
one or two instances such industries have as- 
sumed larger dimensions in Victoria than in New 
South Wales. There are now, for instance, 
750 hands employed in woollen manufacture in 
Victoria as compared with the 300 in New South 

Protection in Young Communities. 123 

Wales. But then, to counterbalance this, we find one 
manufacturing industry which has grown up in the 
Free Trade and dwindled in the Protectionist Colony, 
and that is the important industry of shipbuilding. 
Ten years ago Victoria built 800 tons of shipping, and 
New South Wales built 1,800 tons. Now the annual 
output is only 400 tons for Victoria, while it has risen 
to 3,000 in New South Wales. Under the low tariff 
this important industry has doubled itself; under 
the high tariff it has diminished by one- half 

As an example of what is at present proceeding we 
have a report of its committee to the Association of 
the protected bootmakers at Melbourne, in which the 
following passage occurs : — " Our travellers report to 
us that they find very great difficulty in placing our 
goods on the neighbouring markets, priTicipally 
through the competition of Sydney with their own 
manufacture, and European imported, sold suffi- 
ciently low to secure the custom. It must be 
remembered that Sydney has always had a steady 
export of her own manufactures, and that her 
manufacturers are giving inducements to our best 
workpeople to remove there. It also must be re- 
membered that all leathers — the boot manufacturer's 
raw material — are admitted free into the port of 
Sydney, while an import duty of 7k, 10, and 20 per 

124 State Aid and State Interference. 

cent, is enforced in Victoria, thereby placing the 
Sydney manufacturer at an advantage." 

It is not easy, in the absence of definite records, 
to estimate the actual output from these manufac- 
tories, and in neither Colony is there any appreciable 
export of commodities locally manufactured. But 
if we compare the articles which are imported into 
Victoria under a heavy duty, and which enter New 
South Wales free, we shall find that, in spite of the 
increase in price, Victoria still is forced to supply 
herself with these ' prohibited ' or ' weighted ' 
foreign articles ; and imports of these classes, on an 
annual average, about as much as the unprotected 
New South Wales. 

Consequently, in regard to the development of 
manufactures in these new communities, we find 
there is not much difference in results between the 
Free Trade and the Protectionist policy if we look at 
the employment of people, output of manufactured 
articles, and number and kind of manufacttires 
actually developed. 

§ 3. Revenue. — Protection, especially for young 
communities, is over and over again defended on the 
plea that revenue must be raised. This plea is 
common with statesmen not only in one or two of 
our own Colonies, but in the United States. It is 

Protection in Young Communities. 125 

the great plea set up in Germany by the Bismarck 
party. This plea proceeds on the assumption that 
the higher the tariff the greater must be the revenue 
derived from the customs duties. Theoretical econo- 
mists point out that " to tax your trade is to destroy 
your trade ; " that " where Protection begins there 
Revenue ends ; " that " to hamper the entry of goods 
into your market by heavy duties is to starve even 
unto death the goose that is to lay your golden 
eggs of Revenue." More practical economists 
hold that it is a mere question of balances, and that 
it is conceivable so cunningly to adjust the duties 
that, while inevitably destroying some of the trade 
existing under a lower tariff, this higher tariff yet 
sucks more revenue in the aggregate out of the 
lesser trade that remains. The question is really 
solved only by appeal to experience. And ex- 
perience tells us that a low Customs' tariff 
yields most actual revenue. It appears, if we look 
to the records, that the annual revenue derived 
from the high tariff in the United States has fallen 
steadily during the last decade from thirty-seven to 
twenty-seven millions sterling. During the same 
period the English low tariff steadily contributed 
and still contributes an annual contribution to the 
revenue of twenty millions sterling. During the 

126 State Aid and State Interference. 

decade the population of the United States has been 
increased by ten miUions of people, that of the 
United Kingdom by only four millions. So the 
English people, with all the acknowledged advantages 
of a low tariff, contribute, pro rata, actually more 
revenue by the means of customs duties than the 
citizens of the United States, who are hampered 
by all the acknowledged evils of a high, a very 
high tariff. 

The recorded results over the same decade in 
Victoria and New South Wales corroborate in a 
striking manner this matter-of-fact conclusion. 
During the decade the amount derived from customs 
duties in New South Wales has gradually risen 
from 95O,0O0Z. to 1,300,000Z. Over the same period 
the high tariff has provided to the Victoria revenue 
annual contributions which, if they have fluctuated 
at all, have shown a downward tendency, and now 
yield annually 1,400,000^. It will be observed that 
the smaller population of New South Wales con- 
tributes as much to the revenue by the means of its 
low tariff as the larger population of Victoria con- 
tributes by means of its high tariff. These are facts 
and not fancies, and it is only by ignoring them or 
being ignorant of them that any responsible authority 
can put forward this revenue argument. 

Protection in Young Communities. 127 

§ 4. General Prosperity and Growth. — I have said 
that Victoria and New South Wales each imports 
twice as much per head of population as we do in 
these islands. It is obvious that any policy which 
affects their iraports must affect their general life 
and well-being to a degree unknown even in these 
commercial islands. And I pass to compare the two 
Colonies in regard to general prosperity and growth. 
The signs of this are external and internal; the 
signs are to be seen in their dealings with the out- 
side world and also in their domestic condition. 

Firstly, then, as regards their dealings with the 
outside world. This is a most significant index of 
their actual welfare, seeing that their external trade 
is double in value per head of population to what it 
is even in England. This trade is a sure indicator 
of prosperity, inasmuch as it is a sure indicator of 
any increase or decrease in consumption and pro- 
duction, the two visible factors of prosperity. Ten 
years ago New South Wales was doing an external 
trade of the annual value of 19,000,000Z. A 
decade of steady increase brought this total up 
to 29,500,000^. in 1880. Ten years ago Victoria 
was doing an annual external trade of 27,600,000Z. 
In the succeeding decade a wavering line of 
rise and fall brings us to an annual total of 

l28 State Aid and State Interference. 

30,500,000Z. for 1880. Under the high tariff external 
trade increased during the decade by one-ninth 
only. Under the low tariff external trade increased 
by more than one-half of its previous annual total. 
The full significance of this is seen when we find 
New South Wales, at the end of the decade, doing 
10,000,000Z. more annual trade than at the begin- 
ning, While Victoria was only doing some 3,000,000^. 
more. Ten per cent, profit on such trade would 
mean an addition to the annual national income of 
New South Wales of 1,000,OOOZ., and to that of 
Victoria only some 300,000/. 

Incidentally it is worthy of note that the German 
Government, perhaps the best informed Government 
at present in existence, has chosen for the head- 
quarters of its Consul-General for Australasia the 
capital of the low tariff Colony, although the high 
tariff Colony is at the present moment ahead in 
number of population and in value of external trade. 
The Germans evidently judge of the certain future 
by means of the recorded past. 

Further instruction follows on further analysis of 
this external trade. If we turn to the exports we 
find that ten years ago the value of articles, the 
produce or manufacture of the Colony itself, was 
exactly 77 per cent, of the total value exported from 

Protection in Young Communities. 129 

each Colony. At the end of the decade we find the 
amount of this native produce exported had risen to 
83 per cent, in New South Wales, but had fallen to 
68 in Victoria. In other words, under the low tariff 
there had been increase, and under the high tariff 
decrease, in the exportable surplus of native products, 
a most important sign of prosperity and growth. 

If we turn to the imports we find that ten years 
ago there entered New South Wales goods to the 
value of 9,000,000Z. At the end of the decade this 
annual value had mounted to 14,000,000/., an increase 
of 60 per cent. Ten years ago the imports into 
Victoria were of the value of 12,500,000/. At the 
end of the decade this annual value had mounted to 
14,600,000/., an increase of 20 per cent. only. In 
other words, not only the power but the using of 
the power to purchase foreign produce (and there 
was profit accruing to each purchase made) increased 
by about three times the speed under the low tariff 
to what it did under the high tariff. 

There is another point in this external trade of 
much siffnificance. In New South Wales there has 
been an increase in the tonnage of the shipping 
visiting the Colony during the decade, from 1,500,000 
to 2,600,000 tons. In Victoria the increase has been 
from 1,300,000 to 2,200,000. It may be said that 


130 State Aid and State Interference. 

this difference in growth is inevitable under a low as 
opposed to a high tariff, but it none the less repre- 
sents a fountain of popular well-being, drawn upon 
in the one case to a much more profitable extent 
than in the other. 

In connection with this shipping there are the 
very important records of ballast. There came to 
New South Wales during the decade 3,000,000 tons 
of shipping in ballast. There left New South Wales 
during the decade 117,000 tons of shipping in ballast. 
There came to Victoria during the decade 113,000 tons 
in ballast. There left Victoria 2,500,000 tons, the 
greater proportion of which proceeded to New South 
Wales. Empty ships arriving in New South Wales 
have increased from an annual tonnage of 220,000 
in 1870 to a tonnage of 320,000 in 1880'. Empty 
ships leaving Victoria have increased from an annual 
tonnage of 198,000 tons in 1870 to a tonnage of 
250,000 in I88O.1 It will be observed that the con- 
ditions are exactly reversed in favour of the growth 
of the low-tariff colony. • 

^ The Sydney Morning Herald, in an able leader on my article, 
very properly suggests that some of this ballasting may be due to 
the fact that vessels freighted to Melbourne afterwards come on to 
New South Wales for coal. But the Herald points out that besides 
this Sydney is rapidly becoming the one mercantile centre of the 
Australian seas. 

Protection in Young Communities. 131 

The domestic or internal condition and progress of 
these two Colonies will complete the illustrations we 
would give of their growth and prosperity. 

In the first place, in regard to population, we find 
that that of New South Wales has increased from 
520,000 in 1870 to 740,000 in 1880, an increase of 
48 per cent. The population of Victoria has in- 
creased from 730,000 in 1870 to 860,000 in 1880, 
an increase of only 17 per cent. In the second 
place, in regard to wealth, already we have seen in 
every point we have touched upon the far greater 
rapidity with which wealth-producing developments 
have been proceeding in New South Wales than in 
Victoria. From this we infer the fact that wealth is 
being produced in. similar ratio. And when we read 
that the value of rateable property has doubled in 
New South Wales in the decade, and only increased 
by one-half in Victoria, we have our inference 
signally verified by recorded facts. 

Singular evidence is afforded, also, by the statistics 
of the Savings Banks. In New South Wales the 
deposits have increased from 930,000/. to 1,500,000/. ; 
and the number of the depositors from 21,000 to 
32,000. In Victoria the deposits have increased 
from 1,100,000/. to 1,600,000/.; but the depositors 
have increased in number from 38,000 to 76,000. 

K 2 

1-32 State Aid and State Interference. 

In other words, the average amount deposited has 
risen in New South Wales steadily from 44^. per 
head to 47^. In Victoria the average deposited per 
head has fallen from 29Z. to 15Z. This is evidence 
corroborating the fact so commonly asserted that in 
democratic Victoria wealth is accumulating in the 
hands of the few. This is a result generally asso- 
ciated -with a high tariff by all writers on political 
economy. It is a result which, in its direct an- 
tagonism to the wholesome principle of equable 
distribution of wealth, stamps it as one of the most 
injurious results of a high tariff. 

Illustrative of this tendency is the fact that the 
average wages of skilled labour grew in New South 
Wales, during the decade, from being lower to being 
higher than similar wages in Victoria. That wages 
should have risen under a low tariff faster than 
under a high tariff is a fact of great importance, 
especially to countries wherein manhood suffrage 
gives to the wage-earner so much political power 
and responsibility. But it is a fact of which most 
people are ignorant. 

It is well also to notice that the prices of the 
necessaries of life — of wheat, tea, and provisions 
and tools and implements — are generally lower in 
New South Wales than in Victoria. This, of course. 

Protection in Young Communities. 133 

adds much force to the before-recorded results in 
the nominal rates of wages, for it adds the essential 
element of greater relative purchasing power under 
the low tariff. 

In order to form an exact estimate of social well- 
being we must build a general judgment on numerous 
details ; and among these details marriages afford 
apposite information. In New South Wales during 
the decade the annual number of marriages has 
steadily increased from 3,800 to 5,100 — an increase 
of one-third ; in Victoria the increase in annual 
number has been from 4,700 to 5,100 ; an increase 
of one-eighth only. While in New South Wales 
marriages are in the proportion of 7 to every 1,000 of 
population; in Victoria they are but 6 per 1,000. 
And this is the more remarkable when we remem- 
ber that in New South Wales there are 80 women 
to every 100 men, whereas in Victoria there are 
90 women to every 100 men. 

Ample details have thus accumulated during the 
past decade to show that in regard to all outward 
signs of prosperity and growth — social, industrial, 
commercial — the Colony with the low tariff has pro- 
gressed with far greater rapidity than the Colony 
with the high tariff. This exhibits the great prac- 
tical use of statistics. They are thus brought to 

134 State Aid and State Interference. 

substantiate, by the cold logic of recorded acts and 
facts, tbe reports and rumours that have been rife m 
these two Colonies. The newspapers, it is true, had 
provided from day to daj' pictures of New South 
Wales altogether devoid of the sombre economical 
colouring that had become the salient feature in the 
accounts of Victoria. Nor has there been in New 
South Wales that general outspoken discontent 
among capitalists as well as among working men 
which has from time to time manifested itself in 
Victoria. Under the high tariff each industrial 
class in Victoria has in its turn bitterly complained 
of the duties that specially weigh upon it. The 
latest information carries on the tale to deputations 
of miners demanding of Government a lowering of 
duties on imported mining machinery and tools. The 
farmers have been for some time threatening to give 
up their farming because of the high prices they are 
forced to pay for their implements and materials — 
high prices unknown over the border in the low 
tariff colony of New South Wales. Multitudes of 
labourers, the very men who by their votes supported 
the policy of " Protection " to native labour, have 
had from time to time to stave off starvation at relief- 
work wages. It has been for some time more than 
suspected that capital had set in a strong current 

Protection in Young Communities. 135 

towards other Colonies ; it was not, however, known 
that the current of labour, far less easily transferable, 
had set in the same direction. The skilful and 
conscientiotis estimates of population made from 
year to year by the Victorian Statistical Depart- 
ment, under the guidance of that very able statist 
Mr. Hayter, proved, when the- actual records of the 
census of this year came to be taken, to be no less 
than 76,000 of people over the mark in a population 
of 850,000. Mistaken popular opinion refused to 
recognise the enormous emigration of labouring men 
and their families that had been proceeding all the 
while. But by this official recording of facts this 
popular error has now been set straight. 

§ 5. It is well, in conclusion, to summarise the 
general lessons of these recorded results. In his 
address to the Economic Section at the jubilee meet- 
ing of the British Association, Mr. Grant Duff put 
forward as a text the sentence, "Methods that 
answer follow thoughts that are true." This idea 
may be profitably amplified into the corollary, 
"Thoughts that are true follow knowledge of 
methods that do not answer." It has been my 
object to afford knowledge of methods that answer 
and also of methods that do not answer; and this 
knowledge 'has been sought in the recorded results 

136 State Aid and State Interference. 

of rival methods. This knowledge, when acquired, 
must be followed by thoughts that are true. In 
Victoria itself it is hoped this record of what has 
already taken place will give fresh impulse to the 
reactionary movement in favour of a lower tariff. 
Signs of this movement are already apparent. The 
new Premier, Sir Bryan O'Loghlan, has issued a 
Royal Commission to inquire into the working of 
the tariff, and he apologetically promises the people 
of Victoria ' a free breakfast - table.' These are 
thoughts that are true, and they seem to be following 
on the knowledge of methods that do not answer. 

In the wider sphere of the British Empire these 
recorded results may stimulate local Parliaments 
to maintain low tariffs. We must look to the 
spread of sound knowledge and to the honest 
subordination of class interests to the common 
national good rather than to fostering duties on 
foreign wheat, if we would successfully set the great 
and growing commerce of the empire on sound and 
profitable economic foundations. Until the Canadian 
Dominion, for political rather than economic pur- 
poses, not long ago swerved from the right path, 
there was but one Colony, and that one the unfor- 
tunate Colony of Victoria, among the eight great 
self-governing Colonies enjoying independence of 

Protection in Young Communities. 137 

fiscal action, that had burdened itself with a high 
tariff. It would seem that Victoria has paid the 
penalty of its backsliding. That the others did not 
follow suit is plain evidence of the great practical 
common sense and public loyalty of the majority of 
British Colonists. To this and to the spread of 
knowledge of recorded results we may look for a 
continuance of this tendency towards low tariffs 
throughout the British Empire. This tendency, if 
persevered in, will enable every Englishman, no 
matter where he may be domiciled over the wide 
empire, to thrive on the fact which has done England 
itself such unbounded material good, that whatever 
he uses or consumes is obtained by him at the lowest 
possible cost. Such action is urgently recommended 
by economic science, for it must contribute to the 
material prosperity of every industrial worker 
throughout the whole British Empire. 

138 State Aid and State Interference. 



§ 1. Supposed necessity for Customs Duties. § 2. Hong Kong 
growing and prosperous with no Customs Duties. § 3. People 
increasingly employed in Arts of Civilization. §4. Ample 
Eevenue raised. 

§ 1. Four of the commonest pleas put forward in 
defence of the imposing a high tariff, at all events in 
Colonies, are — 

(1.) We must have Revenue, and we can best get 
it by the means of customs duties. 

(2.) Even Mill allowed there might be something 
to be said for protecting, by a high tariff, the 
industries of a rising community. 

(3.) If you don't protect by customs duties, you 
will have a merely barbarous state — with no manu- 
facturers, no civilized industries. 

(4.) You must protect yourself by a high tariff 
when you have a much more populous neighbour 
rigidly protecting himself by a high tariff. 

One-sided Free Trade. 139 

These are the pleas we have -heard used by states- 
men in Germany, Victoria, the United States, Canada, 
and other places ; and we know they are pleas that 
are acted up to. 

I would call the attention of those who hold such 
views for one moment to certain recorded results, in 
which they wiU find ample food for reflection. 

§ 2. I would ask them to consider the one instance 
of Hong Kong. Here is a small community, intimate 
neighbour to an empire which is out of all compari- 
son more populous and which protects itself by every 
means of restriction and exclusion. And yet this small 
community is in a most flourishing condition; thriving 
in all civilized industries, manufacturing much, and 
contributing a sufiicient revenue of 1^. 7s. per head of 
inhabitants ;— although it levies no customs duties 
whatever. These are recorded results that Pro- 
tectionists everywhere should carefully weigh and 
ponder over. I do not for one moment say that all 
the prosperity of Hong Kong is due to her having no 
customs duties. All I wish to point out is, that a 
young community contributes a very large revenue, 
and flourishes in all civilized prosperity, not even 
omitting manufacturing industry, though it imposes 
no customs duties whatever. It flourishes in all these 
respects without the aid of that shield of Protecting 

140 State Aid and State Interference. 

duties which Protectionists tell us is vitally essential. 
It flourishes in every way, though it pursues a policy 
of what some call ' one-sided Free Trade,' that is, 
about as one-sided as such a policy can well be. 

Full details of all this happens to have been 
recently published in an Official Report, by the 
Governor, Sir John Pope Hennessy, on the condition 
of Hong Kong in the year 1876, and again in the 
year 1881. This official comparison is both suggested 
and rendered possible, because it so happens a census 
was taken in the year 1876, and again in 1881, when 
all the British Empire underwent the same process. 

In the absence of a customs tariff, it is scarcely 
surprising to find trade and commerce increase at a 
rapid rate. Nor is it surprising to find a concomitant 
development in all the divisions of social growth. 
On the one hand we find that the boats used in the 
harbour for landing and transferring cargoes, which 
numbered 1,860 in the year 1876, had, by the year 
1881, increased to a total of 2,780. There are four 
times as many steam launches in the latter as in the 
former year. And the Chinaman traders — the busy 
Hongs, who introduce English manufactures into 
China — and the various branches of money-lenders 
and local traders, and dealers, had risen in number, in 
five short years, from 1,200 to 4,000. It seems but 

One-sided Free Trade. 141 

natural to read after these figures, that in all details 
of social growth considerable and corresponding pro- 
gress had taken place. For instance, during the last 
year to which the Report refers, Chinese had pur- 
chased landed properties in the Colony to no less 
an amount than 600,000^. This is a very surprising 
growth ; but Free Traders will only say of it that it 
was but to be expected. 

And yet when we look further into details, we see 
much that must interest those who allow there is 
something in the four contentions mentioned at the 
commencement of this chapter. We find that the 
population had increased from 139,000 to 160,000, 
and that the increase was largely accounted for by 
an increase of 20,000 in the number of Chinese. 
Many of these were immigrants from China, and the 
remainder natural increase of previous arrivals, who 
preferred Hong Kong to China. And yet in China 
all industries are hedged round with a wall of Pro- 
tection, to defend them from those breezes of free 
competition to which all industries in Hong Kong 
are so fully exposed. 

§ 3. In each census elaborate details are given of 
the employment of the population. We may con- 
veniently class these under four heads. Commerce 
and Trade, will include the Hongs, money-lenders, 

142 State Aid and State Interference. 

dealers, traders, merchants, and all engaged in ex- 
change — especially in such Chinese commodities as 
birds-nests and joss-house requisites. Manufachiring 
will include the numerous makers of innumerable 
articles — of boats, cigars, glass, matches, sails, boxes, 
lanterns, rifles, sauce, soap, spectacles, sugar, tooth- 
powder, umbrellas, and vermilion. Among mechanics 
and artisans we find carpenters, smiths (of all metals), 
masons, rice-pounders, stone-cutters, and tailors. 
And lastly, we have a large class more intellectually 
employed as doctors, druggists, dentists, architects, 
fortune-tellers, schoolmasters, portrait-painters, stu- 
dents, and photographers. Placed in a tabulated form 
these records yield a significant lesson. 


Employment of Chinese in Hong Kong, 1876 and 1881. 


Nn. in 


of Total 



No, in 

of Total 




Intellectual Occupations 












2 7io 





One-sided Free Trade. 143 

There has thus been a steady and large growth in 
the employment of the natives in the arts and 
industries of civilization. ISTo doubt much of this is 
due to the particular encouragement given by a 
free port to commerce and shipping. We read, for 
instance, in the description of Hong Kong, given in 
the Colonial Office List : " Hong Kong is well pro- 
vided with dock accommodation. There are five 
docks and three shps, which are well supplied with 
shears, engineers' and carpenters' shops, foundries, 
and every requirement for making large repairs to 
ships of war and merchant vessels." But if we add 
to the hst the European adults, we shall find engaged 
in these and numerous other industrial and manu- 
facturing works more than 20,000, in a total popula- 
tion of only 160,000. Such a result compares very 
favourably with what has been attempted in the 
Colony of Victoria in Australia for instance. There 
a high protective tariff has been set up, specially for 
the purpose of fostering manufactures, and yet we 
find that there only 56,000 people are employed in 
manufacturing industries out of a total population 
of 860,000, one for every 15. In Hong Kong, with 
no tariff whatever, and with an enormous densely 
populated protected country of similar race in close 
proximity, there are 12,000 people so employed out 

144 State Aid and State Interference. 

of a total population of 160,000, one for every 
13 of total population. Thus not only in the 
matter of prosperity but of employment as well 
there exists a state of things in Hong Kong the very 
reverse of what the advocates of Protection tell us 
must occur in young communities unless they set 
up protective customs tariffs. 

§ 4. Another class of theorists, many of whom arro- 
gate to themselves the functions and fame of states- 
manship, tell the world " We leave to academic 
political economists this question of high, low, or no 
tariffs ; we are concerned with every-day life ; we have 
to raise revenue ; and our academic friends involved 
in the clouds of abstract theory will not condescend 
to allow us the means of raising revenue." Many 
have said and written, that customs duties, and high 
customs duties too, are absolutely necessary in Colo- 
nies, for the purpose of raising the necessary revenue. 
And yet we find Hong Kong, like the Colony of the 
Straits Settlement, successfully raising a very con- 
siderable and an elastic revenue, without the aid of 
any customs duties whatever. I do not for one 
moment advance this in evidence as to the universal 
and absolute condemnation of customs duties, but 
merely as proof, by recorded results, that revenue 
can be raised, and successfully and abundantly raised, 

One-sided Free Trade. 145 

in their absolute absence. The following short table 
exhibits clearly the relative Revenues derived from 
taxation in four of our Colonies, per head of 
population : — ' 

Revenue. Population. Per Head. 
B £ s. d. 

Victoria— High. Tariff . . . 1,700,000 ... 850,000 ... 2 
New South Wales— Low Tariff. 1,400,000 ... 720,000 ... 1 19 
Hong Kong— No Tariff . . . 221,000 ... 160,000 .17 
Straits Settlements— No Tariff. 366,000 ... 270,000 ... 1 7 

When we remember that the Straits Settlements 
and Hong Kong have Uttle or no interest to supply 
on any public debt but that both Victoria and New 
South Wales are considerably burdened in this 
respect, we shall see that these two free ports obtain 
ample revenue without resort to customs duties. 

It is often supposed that Hong Kong can afford to 
do without customs duties, because of her rich opium 
monopoly. It is therefore worth while noticing that 
the opium taxation only yields one-fifth of the total 
Revenue. The bulk is derived from hcences of vari- 
ous kinds and stamps, house-duty, and sundry small 
fees. And, after all, this opium revenue is 40,000^., 
from a population of 160,000, or 5s. per head ; and 
the revenue from tobacco in England is 8,000,000Z., 
from a population of 34,000,000, or as nearly as 
possible the same amount per head. An adequate 

146 State Aid and State Interference. 

revenue is raised without appeal either to customs 
duties or income-tax ; and the experience of Hong 
Kong is, so far, a recorded result of the highest 
value, no less to the practical statesman than to the 
student of political economy. 

The four objects mentioned at the beginning of 
this chapter ; — the raising of Revenue ; the starting 
industries; the promotion of the arts of civiliza- 
tion in a young community ; and the defending a 
young community of small size against the over- 
whelming influences of a mighty Protectionist neigh- 
bour ; — are found, in .the recorded case of the recent 
growth of Hong Kong, to be obtainable without the 
aid of any customs tariff whatever. This is a lesson 
which may well and wisely be taken to heart by 
many statesmen, not only of our own Colonies but of 
the United States, and even of the Mother country 
as well — and it is a lesson which should be specially 
valuable to those who talk and write so much 
on the subject of " One-sided Free Trade." 

A Low Tariff Empire. 147 



§ 1 . Our Trade with our Colonies is growing faster than our Foreign 
Trade, and more steadily. § 2. We are not as yet properly 
alive in England to tlie importance of securing this New 
Trade. § 3. We are the only nation that does not endeavour 
to secure Free Trade within its own frontiers. § 4. We have 
several Classes of Colonies — all of which would profit by Intra- 
national Free Trade. § 5. The several Colonies should unite 
with England in spontaneously agreeing to keep their tariffs 
low. § 6. Then they need not fear outsiders, hut will one and 
all secure their own highest prosperity. 

§1. It is commonly acknowledged that since its 
adoption of the principles that now regulate its 
commercial policy, the English nation has enjoyed 
forty years of unexampled growth and prosperity. 
But what is not so often acknowledged is the equally 
important fact that the nation in this prosperous 
development has appropriated vast unoccupied tracts 
of the earth's surface ; and that these appropriations^ 
which, not many years ago, were penal settlements, 

L 2 

148 State Aid and State Interference- 

struggling whaling stations, or distant trading fac- 
tories, have now grown into communities, whose 
wealth, success, and importance already give them 
claim to take rank among the prominent States 
of the earth. 

This rapid growth of the oversea portion of our 
Empire is at the present moment silently but surely 
making its weight felt in the most important 
interests and works of the nation. Among these 
none holds so important a place as the interchange 
of the products of industry. Natural and human 
forces exist in so vast a variety of combinations that 
each country seems always able to supply to every 
other country some definite products at a profit ; 
and it is on this natural exchange that the progress 
of the human race in prosperity seems to depend. 
These forces at present at work in England make us 
produce a large surplus of manufactures. And if we 
cannot sell this surplus, so much of our labour is 
in vain, and the product of so much of our energy 
absolutely valueless. What we must have is access 
to outside markets. But if we sell in markets in 
other communities we can only do so by obtaining 
access on terms settled by these other communities, 
and often dictated by considerations which have 
but little relation to commercial or even to economic 

A Low Tariff Empire. 149 

needs. The terms of this access in Holland not 
so long ago, and in France at the present moment, 
depend rather on the political strategy of ministries 
than on the economic advantages of the nations 

And yet our export manufacturers are putting 
forth all their vigour to prevent a rise in the French 
tariff. Our whole manufacturing body freely and 
liberally support the efforts and expenditure of our 
Foreign Oflfice in its endeavours to keep low on the 
European continent the " price of access to conti- 
nental markets." England spares no effort and no 
expense to maintain this estabhshed "custom." But 
up to the present, England has paid only too little 
heed to a new " custom," springing up in unlooked- 
for directions, a new "connection" which bids fair 
year by year to rival and to supplant this older 

Probably few of our manufacturers are aware of 
the following recorded results : — 


Valce of English MiHUFAcrunEs Exported to 
Europe. Other Foreign Countries. Oui Colonies. 

1870 . . £54,600,000 £34,600,000 £44,200,000 

1880 . . 52,400,000 32,900,000 58,500,000 

Decrease £2,200,000 Decrease £1,700,000 Increase £14,300,000 

150 State Aid and State Interference. 

Value of Total Tkade of United Kingdom with 
European Neighbours.* Otlier Foreign Countries. Our Colonies. 
1873 . £157,000,000 £373,000,000 £152,000,000 

1877 . 150,000,000 332,000,000 165,000,000 

Decrease £7,000,000 Decrease £41,000,000 iwcreo^e £13,000,000 
* France, Belgium, Holland, and Sweden and Norway. 

From these two tables we learn two lessons. The 
first is that our own Colonies are growing into 
markets not only already equalling in magnitude the 
older established markets of other lands, but pos- 
sessed of the further admirable attribute of unlimited 
future growth. Our trade with France is practically/ 
stationary ; our trade with our Australian Colonies 6ji 
itself already equals our trade with France. With 
France we have no reasonable prospect of a larger 
trade, because France is fully peopled and fully 
developed. With Australia our prospects of increased 
trade are commensurate with the fact that in 
Australia we have a continent capable by its own 
inherent fertility of supporting in prosperity a popu- 
lation of 200,000,000 human beings, and at pre- 
sent yielding wealth to a bare 3,000,000 of human 
workers. We make every effort to secure access to 
the dwindling French market : we make no public 
or appreciable effort to secure access to this real 
" market of the future " that invites us in Australia. 

A Low Tariff Empire. 151 

And what holds true of France and of Australia 
holds true of the whole of Europe contrasted with 
the whole of our Colonial Empire. In Europe we 
have a market old-estabhshed indeed, but in com- 
munities themselves fully developed, and moreover 
of natural and human forces very similar to those of 
our own islands. In our Colonies we have all this 
new grand possibiHty of markets (of which we have 
an earnest in their present rapid growth) in com- 
munities differing essentially in the character of 
their natural and human forces ; and therefore of far 
more certain value in the natural interchange of 
products of industry and enterprise. The Australian 
continent is overrun to grow wool, but its sparse 
workers in such industries congregate only reluc- 
tantly with sufficient concentration to produce con- 
ditions favourable to the genesis of the industries 
that find favour with the close- packed population 
of these islands. The areas we occupy in the tropics, 
where white labour is impossible, can be our allies 
but never our rivals. They can supply us with cotton 
and with sugar. But it wiU require a new civiliza- 
tion, a new order of mankind, to enable them to make 
for themselves machinery or even clothes on terms 
that can at all compete with the human vigour and 
the applicable mineral resources these islands possess. 

152 State Aid and State Interference,. 

Nor is it only of trade between England and the 
Colonies that cognisance is being forced upon us. 
There exists also a rapidly growing inter-colonial 
commerce already of vast dimensions. The tonnage 
of the shipping employed in this trade alone already 
excels that of France and Germany added together. 
The great Australian tea-market is now being largely 
supphed from Ceylon and Assam. The very life 
of some of our West Indian Colonies depends on 
the fact that ships bring them continual suppHes 
of labour from India. As the British Empire grows, 
so is it proved that tTte mainspring of its prosperity 
is free intercourse between its parts. 

The second table supplies us with a second lesson, 
significantly witnessing to these things. "We see in 
this table the recorded effect of commercial depres- 
sion on our trade. The Colonies record a protest, 
and no mean protest, in our own favour. During 
the four years of depression immediately succeeding 
to that notorious period of inflation culminating iri 
the year 1873, we find our trade with our Colonies 
continued to increase to the amount of 11 per cent. : 
we find our trade with foreign countries continued to 
decrease to the amount of 11 per cent. If we pay 
heed to it, we have here an invaluable hint as 
to the compensating influences resulting from width 

A Low Tariff Empire. 153 

of area and diversity of forces, both natural and 
human, provided their individual energies contribute 
in mutual union. 

§ 2. The surface of the world, so far as Englishmen 
are concerned, is held by two classes of communities ; 
the one class altogether independent one of another 
in sentiment and kinship, and only held together in 
any kind of forbearing union by the selfish interests 
of each individual community. The second class is 
a whole made up of homogeneous parts bound to one 
another by the powerful ties of national character and 
sentiment, as well as by the selfish interests of each 
individual community. This former class presents a 
mere discrete agglomeration of Foreign States ; the 
latter class embraces the wide-spreading provinces 
of the British nation. The one class Englishmen 
seem to be able to affect only by the means of 
threats and destructive retaliation ; the other class is 
directly ruled and controlled by Englishmen. 

It needs to insist upon the strange fact, that while 
England is maintaining at great effort a precarious 
and utterly untrustworthy commercial connection 
with foreign states, the average public seems dog- 
gedly to shut its eyes to the opportunities afforded 
by England's extensive empire. It is true this 
unaccountable error disappears when we look to 

154 State Aid and State Interference. 

that main but silent current of industrial endeavour, 
which runs its course, fed by every streamlet and 
font of individual interest and enterprise, consistently 
in the true direction of success. This current has 
long ago recognised that within the frontiers of its 
own empire the lively productive enterprise of the 
Enghsh race has plenty of scope for the profitable 
exercise of all its powers : there are long years, long 
centuries of work, before these ample resources shall 
be, all of them, opened out. The Australias, by 
themselves, are equal in area and in natural capacity 
to the whole of Europe. In the Canadas and the 
districts of South Africa the English race possesses 
yet another potential Europe. And in India and the 
various tropical Colonies the nation possesses surface 
and wealth of resources equalling those of Europe. 
I7t,e nation owns, then, an extent of surface and a 
variety of natural resources equal to three Eurofes 
conjoined. Here then we have a field not altogether 
insufficient for employing the best energies of a 
nation of 50,000,000 people, and for providing 
unlimited scope for an unlimited increase of this 

Mr. Neufchatel in Endymion makes the appro- 
priate and wise remark, " We do not want measures ; 
what we want is a new channel." At the present 

A Low Tariff Empire. 155 

■ . — m . 

moment our manufacturers and our exporters want 
for their relief not measures but new channels ; and 
trade, if we look to figures, is endeavouring to carve 
for itself a new channel in the mutual supplying of 
our wide empire. The great engine to the successful 
development of a vast mine of rich natural endow- 
ments is assured freedom of exchange. Labour and 
capital, energy and enterprise, skill and abstinence — 
these bases of successful production must be assured 
their opportunities of exertion over this vast field. 
In such case, and in such case alone, there opens out 
for Englishmen a new future of signal prosperity. 

But the fact is that although England enjoys free 
trade, Englishmen do not. There is free trade in 
Great Britain ; there is free trade in the Britsh Isles. 
But there exists also a greater Britain ; there are 
British Isles, ay, and British continents, over the 
Atlantic and the Pacific, that at the present have not 
the assured advantage of free trade, and thus every 
moment run the risk of a relapse to the evils of 
fettered production and fettered exchange. It is 
undoubtedly true that the British Empire is, in itself, 
for the next century or so at all events, a complete 
world of production and consumption. But it is a 
world which does not at the present enjoy that true 
commercial union which insures freedom both of 

156 State Aid and State Interference. 


exchange and of production. And yet it is a world 
so circumstanced that it may, immediately if it will, 
institute for itself the undoubted benefits of such 
union ; for it is a world inspired at the present by 
the two essential bases of human union, community 
of material interests and community of national 

§ 3. The very prime question in the whole matter 
is the reason why there is not this free trade. And 
the answer is simple. Under present conditions any 
' self-governing ' Colony finds itself free to adopt a 
policy of protection if it will. Consequently English 
merchants, manufacturers, or producers, no matter 
where they may 'build their castles within the 
Queen's dominions,' have at the present no guarantee 
that they shall enjoy freedom of exchange in regard 
to other portions of these same dominions. This is a 
statement that can be made of no other nation past 
or present, and it states a condition of things diame- 
trically contrary to all accepted principles of national 

It was a quarrel about duties that caused us the 
irreparable loss of the United States. And the very 
first action taken by the citizens of the New Republic 
was solemnly and irrevocably to institute perfect 
freedom of exchange within the frontiers of their 

A Low Tariff Empire. 157 

own new empire. Within those frontiers customs 
duties are to this day an impossibility. This emi- 
nently wise resolution has been one main element in 
the growth and prosperity of the United States. In 
all ages so soon as and whenever industry and com- 
merce win for themselves a supremacy in the face of 
politics and war, at once extended freedom of com- 
mercial intercourse is sought as an essential to exist- 
ence. A Customs Union was the first sign of a 
modem German nation. The jealous ' national 
independence ' of the petty German states in the 
early years of this century soon discovered the fact 
that free interchange of products was the one great 
mutual interest none could afford to forego. 

Moreover, at the present moment, if we look to 
foreign nations, we see everywhere signs of a ten- 
dency towards 'customs union.' Italy is straining 
every nerve, by the curious means of an elaborate 
reciprocity, to bind up as many nations as possible 
in close intercourse with herself. Belgium and 
Holland, and also Austria and Germany, are con- 
templating closer customs union. The United States 
is eager to obtain secured commercial footing in 
Europe. Spain is in earnest struggle to adjust the 
commercial connections of her colonial empire. 

Thus the English nation stands at the present 

158 State Aid and State Interference. 

moment in a very singular position. It is an 
anomalous and a self-contradictory position, but yet 
one of those that recur in the history of nations that 
grow, and are not manufactured. The thoroughly 
English principle of self-government has now de- 
veloped to such perfection in the larger provinces of 
the English Empire, that the fiscal policy of each 
province is regulated by the local Parliament. But 
this development has had an unlooked-for, an 
unexpected issue. 

There have arisen cases in provinces where this 
self-government rules, in which the fiscal liberty has 
run to seed, and become fiscal licence. The con- 
sequence is that what was originally a grant or 
concession of liberty to the individual has threatened, 
in these latter days, to become a liberty that is 
destructive of the same liberty granted to the other 

It seems to me that so long as this nation remains 
a nation it is not only its interest, but its paramount 
duty, to see that the liberty of any of its component 
parts be not in any way infringed by the action of 
other parts. Moreover, the fiscal liberty originally 
granted was merely and simply the handing over, 
for geographical reasons, to each separated commu- 
nity of Englishmen their right to devise and supply 

A Low Tariff Empire. 159 

the means to their own local government. To use this 
liberty for other purposes, such, for instance, as the 
discouraging the importation of particular products 
from some other English community, seems to me a 
direct subversion of this liberty, a distinct breach of 
the grounds on which the nation made the conces- 
sion. And the proof of this is the fact that the 
using of it for these other unforeseen purposes at 
once interferes with the grant of this liberty to the 
other Enghsh communities. 

Earl Russell in one of his speeches about the time 
of these concessions, distinctly acknowledged this 
priQciple : — 

" With regard to our colonial policy, I have already 
said that the whole system of monopoly is swept 
away. What we have in future to provide for is that 
there shall be no duties of monopoly in favour of one 
nation and against another, and that there shall be 
no duties so high as to be prohibitory against the 
produce and manufacture of this country." 

Earl Russell, with penetrating foresight, saw the 
high commercial value our Colonies were to be to us. 
And yet Canada has set up a high tariff, shutting 
out some of our products ; and Victoria has done the 
same. It is, however, satisfactory to hear in mind 

160 State Aid and State Interference. 

that of our eight self-governing_ Colonies, only these two 
liave as yet stepped aside from the right path. Canada, 
however, proffers the somewhat valid excuse of 
special necessities, bred of her political contiguity to 
a 'foreign' state of peculiar commercial views, and 
Canada has taken the lead in demanding free trade 
for all within the Empire. Victoria has no excuse 
but the fact that a crude but specious theory com- 
mends itself for the present to a majority of her 
manhood-suffrage rulers. 

The awkward question remains, why, when with 
self-government the nation conceded the obvious 
addition of fiscal liberty so far as the raising of revenue 
was concerned, the nation did not rigorously watch 
that any other fiscal action, which in any way cur- 
tailed the liberties of other sections of the nation, 
and for purposes other than revenue, should have been 
allowed or disallowed as a totally distinct question. 

§ 4. To the practical politician the interest centres 
in some adequate remedy: for the evil is accom- 
plished : and any analysis of its demerits and its 
causes is only of use so far as it enlightens us in 
regard to its removal. 

Inadequate information or thought leads many to 
forget that an authority still exists supreme over all 
others within the Empire. It is, indeed, only under 

A Low TaHff Empire. 161 

the shield of this central authority that the various 
self-governing provinces enjoy this liberty to govern 
themselves. But these various self-governing bodies 
are constitutionally subordinate to the Imperial 
Parliament ; the true explanation of their virtual 
independence is the fact that the Parliament has 
delegated, for the sake of obvious expediency, some 
of its po'vrers to certain bodies of Englishmen, segre- 
gated by long distances of 'disassociating' ocean. 
But the natural tie of supremacy remains ; sanctioned 
by the indisputable fact of the far greater material 
and human power congregated in the centre of the 
Empire ; and illustrated both by the eager willing- 
ness of the mother-country, on the first suspicion of 
danger, to spare no exertion to render adequate 
assistance to her oversea provinces, as well as by 
the wise habit of colonial statesmanship to look to 
the St. Stephen's Parliament for political inspiration 
and guidance. 

Nevertheless self-government, implying self-sup- 
porting government, involves self-taxation, and so 
the self-adjustment of fiscal policies. Each com- 
munity of Englishmen may tax themselves how they 
will to maintain their community in its corporate 
concerns; but to strain fiscal policies leyond the mere 
maintenance of government is a course of action legal 


162 State Aid and State Interference. 

only on the condition tfoat it do not touch upon the 
independence of other provinces of the Empire, and 
so interfere with the grant of self-government to the 
other provinces. 

It is against the equity no less than the interests 
of the Empire as a whole that any one band of 
Englishmen should impede the industrial progress of 
any other band. It is by the crediting aid and 
material support of the rest of the Empire that our 
Colonies spring into being and continue to rise in 
stable prosperity. England sent money, brains, skill, 
and muscle to Victoria, as she is now sending them 
to Natal. So is a prosperous community originated. 
Is that community to turn round and, with scant 
thanks, say, ' Now you have given us all we require, 
we will, if you please, keep all this for ourselves, and 
not allow the rest of the Empire to participate in the 
benefits it has conferred on us ' ? Communities of Eng- 
lishmen, at all events, are not likely to proceed on 
these pleas. They may, for the nonce, be led astray to 
consider they are doing themselves good by protec- 
tion or other such policy, but they will recognise, at 
the same time, that not only their duty but also 
their interest lies in maintaining the spirit and the 
principles that have brought their race all its signal 
prosperity. It may be held, then, that with all the 

A Low Tariff Empire. 163 

various grades of self-governing communities which 
form the British nation at the present time, some 
means of expression is surely attainable which shall 
make all acknowledge in their various degrees of 
constitutional spontaneity the essential utility and so 
the absolutely binding nature of freedom of exchange 
within the boundaries of the Empire. 

The St. Stephen's Parliament takes direct fiscal 
charge of most of our Colonies. Many of these have 
been with extraordinary success made into abso- 
lutely free ports. Such are the thriving entrepSts of 
commerce, Hong Kong, Singapore, and Gibraltar. 
There remain those groups of Colonies possessing the 
right of spontaneous action in this matter — in 
Canada, in Australia, and in South Africa. 

These three cases differ essentially from one 
another. In Canada we have a community of some 
four millions in political contiguity to an energetic 
foreign state of some fifty millions. This state, 
keeping closed its own markets against Canadian 
produce, attempted to flood Canadian markets. The 
Canadians, in natural pique, raised up the wall of a 
high tariff to stay this evil. This policy has been 
inspired by tv/o motives, the one to force the United 
States to a policy of reciprocity at all events, if not 
of mutual free trade ; the other simply to reserve 

M 2 

164 State Aid and State Interference. 

the Canadian market at all events for Canadian pro- 
duce. This latter is no doubt the policy most in 
favour with Canadians. They feel there is dangerous 
similarity between the products of Canada and of 
the States, these being the resultants of similar 
natural and human forces. They know the compe- 
tition of the larger threatens to swamp that of the 
smaller. Canada feels that if she be shut out from 
her own market her case is hopeless. And yet the 
case is little mended by her shutting herself up in 
her own market. Happily for Canada she yet 
retains, if she will, the market of the world through 
England. England is eager to buy of Canada if 
Canada will only buy of England ; and in this case' 
there is no destructive competition because the pro- 
ducts exchanged are the resultants of very diverse 
natural and human forces. Such a policy at once 
opens up the whole world as a market for Canadian 
produce. It enables Canada to compete, at insuper- 
able advantage, with the United States for Eng- 
lish custom. Englishmen will naturally purchase 
American produce where they can pay for it 
'in kind.' Trade always flows in those channels 
where it meets with least obstruction. The ship 
that leaves England to load with wheat will 
always go by preference to that port where an 

A Low Tari^ Empire. 16c 

outward cargo of English products can be sold 
■with least obstruction. 

The case of the Australians is of a totally different 
character. Here we have seven large Colonies at the 
present existing in total fiscal independence of one 
another. But as these seven Colonies fill up with 
population they feel more and more their geo- 
graphical contiguity ; and already in addition to the 
increasing expense of collection of duties along thou- 
sands of miles of border, all the evils incident to 
fettered intercourse are rapidly developing. At the 
recent conference in Sydney every Colony, with the 
single exception of Victoria, strongly supported a 
movement in favour of a uniform and low tariff 
for all the Australasian Colonies. 

And Australians are looking further afield. They 
know that each one's staple products — wool, and 
wine, and gold, and wheat, and. meat — are exactly 
similar ; the resultants of precisely similar natural 
and human forces. Thus, if they would achieve a 
right prosperity, they must exchange them with 
other commodities, the resultants of differing natural 
and human forces. This is necessary if they would 
secure the rewards due to their peculiar productions. 
Australians, both before and after the question of a 
customs union amongst themselves, will be ready to 

166 State Aid and State Interference. 

acknowledge the high benefits of assured freedom of 
exchange in the widespreading and varied market of 
the British Empire. 

The case of South Africa just now occupies promi- 
nent public attention The quarter-million of Euro- 
jjoans colonising South Africa have been and are 
unable to hold their own physically with the vast 
hordes of natives within and without the territory 
they have taken on themselves to civilize. The rest 
of the Empire aids them in this their uphill task. 
Were it not for this aid, the European element in 
South Africa would long ago have been driven into 
the sea. The people of England are paying to retain 
South Africa as a market for their wares and as an 
area of supply. They have the right, let us hope 
they will have the reason, to see to it that they are 
repaid by the mutual benefits of freedom of com- 
mercial intercourse. The Cape Colony, alone in 
South Africa, has fiscal independence of the Home 
Government. But the Cape is as much interested 
as any to secure permanent European supremacy 
over the African natives. This can only be secured 
by the permanence of Enghsh aid, and the price of 
this, a price the wise men at the Cape will, for their 
own interest, willingly pay, is the secured assurance 
of freedom of exchange with the rest of the Empire. 

A Low Tariff Empire. 167 

All the Colonies must feel that commercial union 
is even more important for them than for England. 
They know they obtain, by means of continued con- 
nection with England, safety and credit ; those two 
piUars of prosperity which alone support a com- 
munity from sinking under hostile aggression or 
commercial restriction. But this connection is a tie 
which, must depend in the main on identity of material 
interests. And this identity can only be preserved 
by the means of commercial union. 

All these Colonies do feel that commercial union 
is desirable. Indeed we have just witnessed in 
England what may be described as the first com- 
bined act of our Colonies on approaching manhood ; 
the first great move in Imperial politics that has 
originated in the Colonies. Accredited representa- 
tives of their interests have met in London, and with 
the assistance of leading Englishmen have founded 
an association " for the promotion of the commercial 
interests of the British Empire, and for the preserva- 
tion of its unity and integrity to draw closer the 
trade relations between its various component terri- 
tories." This is a startling reply to those who in 
ignorance conceived that the colonists, the very men 
who, by the indubitable standard of practical success, 
were admittedly the best judges, made no move in 

168 State Aid and State Interference. 

the matter. That the Colonists should came to 
England and agitate in favour of low tariffs through- 
out the Empire is a most welcome sign of the increased 
vitality of the English race. It remains for those to 
whom the prosperity of their nation is matter of 
concern to support and recognise this wholesome 

§ 5. The British Constitution has, then, to be drawn 
upon to provide for a new development which has 
grown up with the growth of the Empire, and which 
presses on us as the inseparable accompaniment of 
the continued prosperity of the Empire. It needs 
no keen sight to see that community of material 
interests is crying aloud for unfettered commercial 
intercourse ; and we know that community of 
national sentiment and tradition, as well as of enter- 
prise and industry, yet flourishes in the nation ; and 
that this community is the one powerful agent in 
any national effort. We have a national conscious- 
ness of the right end : statesmanship has to see that 
efficient means are adopted to give effect to this 

I must own that the one main fact graven on my 
own mind after sojourning in nearly every one of our 
Colonies is the fact that the English nation, if it 
remains in close commercial union, is only in th6 

A Low Tariff Empire. 169 

infancy of its career. All great statesmen who have 
understood our Colonies have come to this con- 
clusion. Earl Russell summarised the case in the 
strong words, " There is no greater benefit to man- 
kind that a statesman can propose to himself than 
the consolidation of the British Empire." 

And great statesmen have discussed the means to 
this end. Lord Grey, ia an article in the Nineteenth 
Century, has shown most amply and conclusively the 
great material injury that attempts at Protection in 
our Colonies have done to their own individual pros- 
perity as well as to the commerce and industries of 
Great Britain. He laments with great power of 
reason the policy that has prevailed in late years of 
relinquishing the control previously exerted by the 
Imperial Parliament over the commercial policies of 
our Colonies ; and he would resuscitate the ancient 
' Committee of Council for Trade and Plantations ; ' 
and, with the aid of the various Agents-General of 
our self-governing Colonies, set up in England a lody 
of such authority and influence as to justify Imperial 
supervision of all Colonial commercial policy in the 
spirit of justice to all members of the Umpire. 

It may not be without advantage to set side by 
side with this yet another scheme with similar aim. 
The essential principle of procedure is simple. The 

170 State Aid and State Interference. 

Imperial Parliament resumes its supreme control 
over the commercial as distinct from the fiscal 
policies of the Empire ; but in so doing it takes 
ample cognisance of the fact that large portions of 
the Empire have a prescriptive constitutional voice 
in this rearrangement. Indeed, action should be 
taken on the invitation of. the various self-govern- 
ing Colonies. There must be combination and 
mutual agreement, quasi-diplomatic if necessary, in 
favour of low tariffs throughout the Empire. And 
the Imperial Parliament will be charged with the 
task of defending and maintaining for the future 
this new charter of industrial prosperity. It is true 
the United States will not allow local tariffs even for 
the purpose of raising revenue ; but the low tariff 
necessary for revenue purposes is practically but little 
hindrance to trade. All that is necessary is that, by 
the direct means of the spontaneous action of enlight- 
ened local government, and by the indirect influence 
of advice and information, the various communities of 
the British Empire may come to subscribe, each in its 
own degree of autonomous action, to an agreement to 
keep its tariffs low. For this purpose one of two prin- 
ciples would suffice. Earl Kussell suggested the one, 
viz., that no customs duties should exceed a certain 
ad valorem percentage. A second principle would be 

A Low Tarif Empire. 171 

the rule that no customs duty be levied for any pur- 
pose save that of raising revenue. Thus could be 
secured the inauguration of that free exchange of 
products between all Enghshmen which, if we regard 
the teachings of the past, augurs a future of unpre- 
cedented prosperity. 

§ 6. I have reserved till the last what is perhaps 
the most important point in the whole case ; and 
that is the question as to the position such a com- 
mercially unified Empire is to hold to outsiders. 
The courses possible are practically reduced to two 
— the one the exclusion of outsiders, the other the 
non-exclusion of outsiders. 

To exclude outsiders is to appeal to the selfish 
concurrence of one or two interests affected favour- 
ably by such action. It is not and cannot be denied 
that the nation as a whole must be the loser. All 
see there is no reason in a policy which shuts off 
supplies and custom other communities are willing 
to afford. The advocates of this policy have but one 
plea that is likely to obtain patient hearing. This is 
the plea that high duties to those outside the union 
are the sole means to inducing those outsiders to 
lower their tariffs and join the union. 

It is even said that without some such national 
fence Colonies themselves will be loth to join. I 

172 State Aid and State Interference. 

have already given the grand answer to this conten- 
tion in noting the recent actions and expressions 
proceeding from the Colonies themselves. This point 
is sometimes not quite grasped in high places ; the 
feelings and acts of two only of our forty Colonies, 
because they chance to be feelings and acts that run 
counter to the general national tendencies, are apt 
to assume undue prominence, and have even been 
regarded as typical of the acts and feelings of the 
whole. They are distinctly not so. All the en- 
couragement our Colonies require is the guarantee 
that low tariffs shall exist en permanence in all 
British markets. 

The alternative plan, the non-exclusion of out- 
siders, implies a low tariff for all without exception. 
It is a plan which will ultimately prevail if only we 
pay any heed whatever to reason, experience, and 
expediency. A low tariff all over this vast agglo- 
meration of English markets will supply all these 
markets with products at their lowest cost of pro- 
duction. Each English community will then batten 
on the fact, which has done so much to enrich 
England, that whatever it uses or consumes will be 
obtained at the lowest cost possible. This is the 
one main condition of profitable production. This 
plan prevents any portion of the nation wasting its 

A Low Tariff Empire. 173 

energies on products that can be produced cheaper 

For instance, for many years to come the Colonies, 
if they judge aright of their real economic position, 
will be the natural markets for manufactures, the 
natural producers of raw materials. Manufactories 
only thrive in centres of dense population. Sparse 
populations, occupying vast tracts of fertile and 
virgin soil, if they would profit most will produce 
cotton, and wool, and wheat, and minerals. Among 
such populations, if there is no baneful interference 
of high tariffs to subvert the natural order of pros- 
perity, our home manufacturers will be assured 
natural and extensive markets for their wares, and 
reliable and inexhaustible supplies of those raw 
materials and food-stuffs which we are prevented 
producing in these islands by reason of the fact that 
our manufactures employ a population too dense for 
so utilising our limited area of soil. We have to live 
on and not out of our soil, because we are in the 
manufacturing and not the pastoral or agricultural 
stage. Our Colonies are . in these other stages, 
and to keep tariffs low is to enable all to profit by one 
another's opportunities thrcugh the medium of free 

That a high tariff for outsiders is unnecessary, we 

174 State Aid and State Interference. 

see when we remember the natural expediency of a 
low tariff. Trade is forced, by the insuperable power 
of its own inherent attributes, to flow along that 
channel which has fewest obstructions. Interchange 
of products always does and always will thrive and 
increase most where there are fewest restrictions. 
To that community, in which low tariffs are esta- 
blished with certainty of no upward change, trade 
will be diverted by the damning obstructions of 
high tariffs elsewhere. In this we shall find the 
natural ' sanction ' that low tariffs, permanently 
established over the British Empire, will increase 
the interchange of products, and in so far develop 
every industry and enterprise. 

There will be a natural tendency to buy our 
wheat of Canada and not of the States when we 
know our manufacturers meet with no obstruction 
m the one case, and with every obstruction in the 
other. And we shall take not only wheat but 
watches, or lard, or any other specialty of American 
production for which Canadian soil or people may 
develop special aptitude. And so with Australia, 
or India, or the Cape, we shall go to them naturally 
for our wool and our tea and our wine, if outward 
cargoes of manufactures can be sent in the ships 
that fetch home these goods. 

A Low Tariff Empire. 175 

With low tariffs so established over the British 
Empire we shall win the vast advantage of being 
less affected by the actions of foreign and inde- 
pendent countries. These actions, by the reason of 
their uncertainty, have been our bane in the past, 
and bid fair to be our bane in the future. We made 
treaties to obtain for ourselves wider markets and 
wider areas of supplies in the days when we had 
only foreign countries open to us. But now our own 
kith and kin, we ourselves, have become possessed of 
countries offering in the future more than the equi- 
valent of these markets and these areas ; and by the 
simple expedient of preventing the rise of restrictions 
on commercial intercourse we are likely to secure 
these markets and these areas, and to win for our- 
selves exemption from the only compelling power 
that of old forced us to seek to conciliate foreign 
powers. We can now, if we will, take our stand on 
our own self-sufficing independence. On this secure 
ground we can tell foreign nations we have no need 
of treaties. We are our own market and our own 
source of supply ; and if foreign nations bar them- 
selves by high tariffs from the great benefits of free 
intercourse, it concerns them indeed, but it concerns 
us no longer. The new British Empire affords us 
other avenues and other openings. 

176 State Aid and State Interference. 

The malign influence of differential duties, elabo- 
rate treaties, bounties, reciprocity, retaliation, and 
even protection itself, together with all the evils 
incident to the interference of policies having no 
political, national, or economic connection with 
countries they deleteriously affect, will all be 
banished from within the frontiers of the British 
Empire. Their evil results will recoil on the 
foreigners alone, and leave the reproductive energy 
of our vast Empire to work out its own great 
prosperity untrammelled and unimpeded ; with that 
true freedom of action which consists in the power 
of acting independently of foreign determining 
causes, and which is the condition most essential 
%o the success of that human co-operation or ' band- 
work ' which has been shown to be the one main 
lever of human prosperity. 

Foreign Competition in Agriculture. 177 



§1. The British Islands are becoming more Manufacturing and 
well-to-do, and less purely Agricultural. § 2. American 
Prairie-cropping must in a few years wear itself out. § 3. The 
price of American Wheat must increase. § 4. America be- 
comes rapidly populated. § 5. Americans really compete 
chiefly with our other Foreign Purveyors. § 6. Canada will 
supply "Wbeat, but not at permanently lower prices. § 7. Eng- 
lish Wheat-growing has many intrinsic and local advantages. 
§ 8. Foreign Competition has roused English Agriculture to 
improve itself. 

§ 1. Not long ago it was held that Agriculture 
was by far the largest of English industries. 
And although, since these good old days, we have 
become more than ever a nation of shopkeepers, and 
carriers, and manufacturers, we nevertheless con- 
tinue to farm, and to farm well, as much land in 
these islands as we can obtain for the purpose. It 
may be true nowadays that but a portion of the 


178 State Aid and State Interference. 

population is really connected with the land, so 
far as the earning its livelihood is concerned. But 
then the whole of the rest of the population lives 
by eating the produce of the soil ; and so, after all, 
the utilisation of its soil is, to Britain as to every 
other nation, a primary concern. It is no wonder, 
then, that our agricultural prosperity or depression 
affects every fraction of the community, and that 
the recent bad seasons have stirred up a wide- 
spread public agitation on the subject of land 

Pending the results of the labours of the Eoyal 
Agricultural Commission, much good and useful 
work has been done towards creating a correct 
public opinion in this matter ; and yet, if we may 
judge by their utterances, both public and private, 
it is only too common to find a most gloomy view 
of things which materially affects their energies and 
their enterprise, taken by the two classes more 
directly concerned — the great farming class on the 
one hand, and, on the other, that large proportion 
of wage-earners in this industry, whose winnings 
only too frequently barely cover the expenses of 
subsistence. To dispel this unnecessary but not 
unnatural gloom there is only needed the light 
of a wider knowledge of facts ; and a more thought- 

Foreign Competition in Agriculture. 179 

ful heed to the actual conditions, past, future, and 

This atmosphere of gloom is greatly brightened 
if we pay even momentary attention to. the history 
of the past twenty years. Hereby we immediately 
recognise the radical modifications that have been 
imposed on English agriculture by increase of popu- 
lation plus increase of wealth. These two must 
be taken together. Even in the last ten years, 
while population has been found at the Census 
of 1881 to have increased about 11 per cent., 
wealth has increased 30 per cent. Trade, com- 
merce, manufactures, and facilities of communi- 
cation have all increased' with even greater speed. 
This is no mere increase of mass of human beings, 
but of spending, and, above all, of working human 
beings. The British hive has not only increased 
in numbers, but both the reason and the result of 
this increase in numbers is increased production of 
wealth. The population is not only larger, it is also 
more busy and more well-to-do. 

The direct effects of this growth on agriculture 
are twofold : — on the one hand we have a new use 
for large areas of soil ; on the other hand we have 
greatly increased means for the purchase of food grown 
elsewhere. We have manufactories, railways, canals, 

180 State Aid and State Interference. 

docks, mines, and so forth, ousting agriculture from 
areas of soil that in the aggregate sum up an 
important total. We have cities, towns, far-reaching 
suburbs, garden-surrounded villas, and great parks 
rapidly extending themselves over the land. And 
these carry in their hands the proof of their utility in 
the higher price hy which they buy out agriculture 
from its occupation of the soil. The nation has so 
developed that it becomes more profitable to utilise 
the soil for these productive or residential purposes 
than for the growth of food alone. It will be found 
on calculation that the land so occupied is a no 
inconsiderable portion of the total area in our 
islands that can produce food. But this new occu- 
pation is a type or sign of what is going forward 
among us. 

Another sign of progress is the fact that annually 
we import as much wheat as we grow, simply that 
the population may be fed. The signal import- 
ance of this fact will be appreciated by farmers 
when they bear in mind its necessary corollary, 
that if we would feed Englishmen on home-grown 
bread and no other we must actually double the 
acreage devoted to wheat-growing. On this analogy, 
in regard to the food-supply generally, we must 
double the area we farm. But we already farm 50 

Foreign Competition in Agriculture. 181 

of the 80 millions of acres, which is all the sea allows 
these islands to possess. It is then a physical 
impossibility to double the area, and to double the 
whole production is certainly beyond the dreams 
of the most extravagant of 'scientific farmers,' 
considering the fact that, acre for acre cultivated 
for the purpose, English farmers already produce 
far more than farmers of any other nation. We 
may, as knowledge advances, increase our total 
produced; we cannot do so to any large extent; 
nor can we extend the productive area to any large 
extent. We must be content, as a prosperous, 
industrial nation, to buy much of our food elsewhere. 
That the nation accepts and makes the most of 
these incidents of its growth is seen in the fact 
that of the food we import one-third at the least 
is food of a kind euphemistically described in the 
returns as that ' not usually produced ' in the 
British Islands. We are not only importing food, 
but we are enjoying, in addition, that variety and 
plenty which results from our ability to lay under 
contribution the uttermost ends of the earth. 
Iceland moss and Ascension turtles, Canadian apples 
and Guinea cocoa-nuts, Australian meat and Cali- 
fomian barley, assure for the English market not 
only variety but certainty of supply. 

182 State Aid and State Interference. 

Thus, while the producer has continued to produce 
as of old, the consumer has asserted the natural 
order of things, and sought abroad for the supplies 
necessitated by the great increase in demand. New 
developments in industry and commerce supply 
the wherewithal for the purchase of this extra food. 
And if we thus give proper prominence to the 
immediate past, and recognise the true nature of 
the national growth, we see that foreign supplies 
of food are a necessity of our new position, and 
that ' foreign competition ' in this supply is in 
very great measure no competition at all, but merely 
the supply in quantity, no less than in kind, of food 
that the physical limits of British agriculture forbid 
the English farmer to supply. 

§ 2. But this appearance of the foreigner in the 
English food market has created a kind of panic, 
and for the nonce the British agricultural brain 
appears to be bereft of its accustomed shrewdness. 
Among the more important foundations of a sound 
judgment of the present, is a proper estimate of 
the probabilities of the near future. This is an 
estimate which has been strangely ignored. Un- 
kindly seasons and low prices seem to have riveted 
attention on the gloomy present, and the eye of 
intelligence is thereby prevented from looking 

Foreign Competition in Agriculture. 183 

into the past for the sure and only prognostics of 
the future. For instance, 'American competition' 
is a bugbear only if we disregard the future as 
well as the past of the United States. Prairie- 
farming for the supply of the home and the European 
market^ is an industry of recent growth and 
developed under most peculiar conditions. Meat 
and wheat are produced on the spot at low prices. 
In twenty or thirty years' time at the most this 
industry will be at an end, so far as the maintenance 
of the present prices is concerned. 

The United States at the present is an under- 
peopled but fertile country. At present there are 
vast tracts of virgin soil awaiting development. 
With Nature so favourable to its advances, a large 
community, with every appliance of an eminently 
practical civilization at its command, has but little 
difficulty in at once and with ease procuring a lavish 
supply of foods. But in such cases there exists 
a tendency — and the United States are no exception 
to the rule — for this very facility of production to 
outrun prudential methods of production. Wheat- 
growing in the United States has afforded a notable 
example of this tendency. The more settled and 
populated districts on the east coast had developed 
a system of farming but little differing from that 

184 State Aid and State Interference. 

prevailing in the fully-peopled communities of the 
European continent. But, as the increasing popu- 
lation pushed westwards, vast tracts of wheat- 
producing soil were opened up by energetic men 
greedy of present results. Wheat became, to adopt 
Sir T. Brassey's happy phrase, ' the ready-money crop 
of the pioneer farmer.' But the system of cultiva- 
tion adopted was the ' earth-scratching ' of Gibbon 
"Wakefield ; and the profits of the system hung 
on the very roughest cultivation and the very 
cheapest access to the soil. 

But even so, this rough prairie-cropping was soon 
found to be liable to unexpected risks. Success in 
the ' Far West ' was frequently checked by causes 
to which the English farmer is happily a stranger. 
The farms are necessarily extensive ; and, with this 
cropping on a vast scale, weeds, as if inspired by 
the surroundings, appear in quantities commensurate 
with the true magnitude of American operations, 
and on a scale inconceivable in carefully cultivated 
England. Weeds have been known so to choke 
a whole crop as to render it absolutely not worth 
the ingathering. And there are plains in California 
State, all part and parcel of the boasted ' wheat- 
area,' which enjoy a rainfall sufficient for a crop 
only once in four or five years. And there are 

Foreign Competition in Agrictdture. 185 

seasons when all the scanty crops are consumed by- 
locusts and grasshoppers. Again, the danger of 
prairie fires is greater the greater the area covered 
by wheat. 

These and other risks are further supplemented 
by the fact that the supply of labour in these 
wilder States is not only precarious, but is very 
frequently absent at the critical times. A new 
mining rush, busy times reviving suddenly in other 
districts, or other counter-attractions, not infre- 
quently force the farmer to leave good crops to rot 
where they stand from the sheer absence of the 
physical labour necessary for the harvesting. And 
there are other surroundings of this prairie-farming 
that do not readily occur to the English mind. 
Thus, for instance, it is found that for every four 
acres devoted to wheat one acre has to be cropped 
in fodder for the support of the horses or cattle 
necessary for carrying on the farming operations. 
Or, again, grain has been often known to ripen too 
quickly and to turn out ruinously light in the ear. 

These are among the drags pecuhar to the rough 
cropping of the prairie. But, by way of antidote to 
these, we find access to the soil is remarkably 
cheap ; labour is only needed in small quantities ; 
machinery can, in great [^measure, be made its 

186 State Aid and State Interference. 

substitute ; and little more capital is invested or 
risked than suffices to pay for sufficient seed. Thus 
in lucky seasons the price of wheat on the spot is 
proportionately low under present conditions. 

§ 3. But it is important to remember that the 
price of this wheat on the spot and its price in 
England are two totally distinct facts. And, again, 
the price in England now and the price in England 
hereafter are no less distinct. And, after all, this 
price is the main item for the British farmer. It 
is well, then, to note the facts and prospects of 
the several elements of this price of American 
wheat in the English market ; among these we find 
cost of production on the spot, cost of carriage, 
influence of middlemen, and, lastly, the fact that 
numerous other countries supply our markets with 

In regard to the first of these elements, the 
paradox may be advanced with truth that the 
cheaper wheat is produced in the prairie the sooner 
will it disappear from the English market. The 
low price on the spot prevailing at present depends 
on the abnormally cheap use of good virgin soil, 
and on the possibility of a system of cropping, (for 
it cannot properly be termed cultivation,) which 
obtains large present returns on insignificant 

Foreign Competition in Agriculture. 187 

outlay. This method necessitates a continual taking 
up of new land and a continued abandoning of that 
which has been cropped. And even in the United 
States there is a physical limit to virgin prairie- 
lands that will grow wheat. The saying is attributed 
to the eminent American economist, Carey, that by 
thus growing wheat for export, Americans were 
exporting their own soil. The truth of this saying 
may be seen in the impoverished tracts from which 
all the good has already been literally exported. 
The cheaper wheat can be produced by this system 
of cropping the more rapidly does this wave of 
exhausting energy pass over the land. 

Several results follow. In the first - place, so far 
as this pioneer wheat-growing and prairie -grazing 
succeeds (or, in other words, pays) in the same 
proportion does it attract people. For, as Adam 
Smith puts it, people congregate where they can 
live cheapest. This incidental increase of popula- 
tion on the spot, due to the lowness of cost of 
production, at once raises cost of production. The 
first pioneer takes up his 10,000 acres, and for his 
first year's crop he feeds his cattle and horses on 
hay, cut gratis on the surrounding prairie — but in 
a year or two these surrounding prairies are also 
taken up, and he is forced to devote . 2,000 of his 

188 State Aid and State Interference. 

acres to growing fodder — he is deprived of so much 
of his ready-money crop. The price of the re- 
mainder must rise if he is to reap the same profits. 
And again, this cropping is the work of man, and 
this increase of population largely stimulates the 
consumption on the spot of food produced in the 
district for both man and beast. And again, the 
competition incident to this increase of population 
sends up the value of this access to the soil ; culti- 
vation has to succeed, to cropping; the terms 
' manure,' and ' drainage,' and ' water-supply ' are 
introduced to common use ; and the farming that 
ensues produces wheat but little cheaper than it is 
produced in more fully peopled lands. 

In the second place, this cheap production of 
wheat on the prairie is a result which acts as a cause 
of the rapid increase of the population of the States. 
The United States in good years produce at the 
present 350 million bushels of wheat, which, at the 
English average of consumption, is sufificient for, 
say, 70 million people. This conclusion is verified 
by the fact that the United States, with a population 
of 50 millions, exports oDe-third of the wheat 
produced. But if we calculate on the average 
increase of the population of the United States 
for the past eighty years, we see that the number 

Foreign Competition in Agriculture. 189 

of the population twenty years hence will be 100 
millions. In other words, by the close of this 
century there will be added to the population of 
the United States a mass of human beings con- 
suming three times the amount of wheat the United 
States now export. If the European market is still 
to receive the amount of wheat that now comes to 
it from the United States, Americans will have to 
produce about double the amount of wheat they 
now produce ; and they will have to produce it at 
the same low price if English farmers are to be any 
way concerned. 

But it may well be asked where in the United 
States are new fresh wheat-producing areas to be 
found sufficient for this gigantic purpose ? Even the 
short history of this prairie -farming incontestably 
proves that as this cropping- wave succeeds in over- 
running new ground out West, it recedes, pari passu, 
from old ground, so far as this cheap method of 
cropping is concerned. In the doubling of the area 
at present in use we must allow for what is deserted 
in the process. For if we include the farming of 
the old ground we find at once increased cost of 

But even if we grant the most extravagant 
anticipations of prairie-farmers, and agree that this 

190 State Aid and State Interference. 

cheap production of wheat will still be possible, we 
are faced by another fact of experience already 
amply demonstrated. The cheaper the production 
of wheat in the prairie, the less the production of 
wheat in better-farmed districts in America itself. 
The home market, rapidly increasing in its con- 
sumptive demands, rapidly loses its former sources 
of supply. To feed itself only, the American nation, 
by the end of this century, would have to nearly 
double its present production of wheat. If this is 
all to be accomplished by the prairie process, this 
process will have to be trebled in effect by reason 
of its incidental action in destroying other national 
sources of supply. The very cheapness of this prairie 
method, if continued, would cause it more and more 
to confine its energies to the supply of the home 
market. And this home market of the United 
States is in its infancy, and it will be centuries 
before even the ' magnificent resources ' of this 
large area can be so utilised as to outrun these 
local demands in the supply of wheat. 

But at the least as important an element in 
this matter of price is the cost of carnage. There 
is truth here, also, in a paradox. The cheaper the 
cost of carriage in the present the sooner will it 
rise to a height barring present prices. If freights 

Foreign Competition in AgriGulture. 191 

and rates had been at normal heights a long-con- 
tinued and steady trade might have been possible ; 
but freight and rates have been the resultant of 
altogether abnormal conditions ; and their very 
lowness will largely stimulate and hasten the ma- 
turity of normal conditions altogether prohibitive 
of such facilities for export. 

However true it may be that, at the present, in 
favourable years wheat and meat are produced on 
the spot at remarkably low prices, yet the market 
for such large supphes of food is a long way off, 
and the very industry itself would never have come 
into being but' for the fortuitous co-existence of 
altogether abnormal faciUties of carriage. The 
people of the United States early determined to 
spread over their vast territories an elaborately 
planned network of waterways and railways. Means 
of communication were not only devised but per- 
fected long before the necessities of communication 
had grown up. This proleptic action owed the fact 
of its realization to the abundance of capital, chiefly 
in other lands, that chanced at the moment to be 
anxiously looking for employment. But the rad- 
ways were before their time; no dividends were 
forthcoming; and they passed, for the most part, 
into the hands of mortgagees. Much of their first 

192 State Aid and State Interference. 

cost was dropped in the operation. The immediate 
future seeks only to provide interest on this dimin- 
ished capital. Thus, for the present, over such 
portions as are now completed it positively pays 
to carry goods at rates a few years ago deemed 
inconceivable, and which, not many years hence, 
will be altogether impossible. 

The very lowness of these rates was thus the 
opportunity of prairie-farming. Thus is supplied 
the incentive and, in addition, the means to popu- 
lating large areas. The march of the invading 
immigrants has already reached far into these 
wheat-producing districts. Towns, or rather cities, 
have sprung up with the proverbial American 
rapidity. Thus the very lowness of rates will 
hasten the development of the social conditions 
for which the railways have been planned and 
constructed. But this pioneer wheat-growing has 
been more than mere result, it has also been cause 
of more vigorous extension of railways. It has 
afforded forcible pretext for the present and hasty 
realization of plans schemed for more populated 
times. Ajid even the very abandonment of cropped 
for virgin areas has further stimulated this move- 
ment. Competition among the railways, with a 
view to securing future benefits, the excuse of 

Foreign Competition in Agriculture. 198 

promoters that their schemes must be realized ia 
full before they can pay, the forced interposition 
of the mortgagees, and other causes, intrinsic and 
extrinsic, have enabled American railways in recent 
years to lower their rates beyond all belief. These 
causes are temporary, and contingent upon the 
peopling up of the country. There are powerful 
groups watching for their long-deferred profits. The 
finance of American railways is now chiefly in the 
hands of such groups. It stands to reason that if 
wheat can now be thrown upon the European 
market shillings per quarter below average prices, 
these railway financiers, if they retain any spark 
of the astuteness for which they have been famed 
in the past, will of a certainty judiciously tap this 
new source of revenue. In due measure will this 
action raise again the price of American wheat in 
foreign markets. It will be the object of these 
financiers to maintain the price of wheat at the 
hio-hest rate commensurate with the continuance 
of the trade. The details of sharing the new pro- 
fits will have to be arranged between the farmer 
and the companies, but the price will and must be 
enhanced in the operation. 

But even this arrangement as to price is sub- 
ject to another important factor, viz., the influence 

194 State Aid and State Interference. 

of the indispensable middleman, A commodity 
in general demand, and produced in sucli vast 
quantities and in large proportion for distant 
markets, must necessarily pass through the hands 
of middlemen. The prices must be regulated in 
accordance with what are or may be the needs of 
distant communities. The prescience on which 
these middlemen must needs depend is often at 
fault : now it is too daring, now insufSciently so. 
This raises the ultimate price of the commodity 
dealt with. It thus comes to pass that wheat has 
actually been purchased in Liverpool for less than 
was paid for it in Chicago. And, on the other 
hand, large fortunes have been made out of wheat 
by buying it in Chicago |ind selling it within the 
month in Liverpool. The recent gigantic specula- 
tion known as the ' Keene wheat corner ' is typical 
of these things. The partners in this ' pool ' held 
at one time as much as sixteen million bushels 
of wheat, and thus obtained complete command of 
the market for the sake of their own advance- 

§4. The last element of this important feature 
of price to which we need revert is the fact that the 
English market numbers among its purveyors others 
besides Americans. We in England have for years 

Foreign Competition in Agriculture. 195 

past imported wheat on an annual average sufficient 
to feed fifteen millions of people. Last year, because 
of short harvests, we imported sufficient for twenty 
millions. The United States, in good years, produce 
an exportable surplus sufficient to feed twenty 
millions of people ; but a large proportion of this 
does not reach the English market. The great 
sting of this American competition will be felt by 
our foreign purveyors, more especially in all such 
years as we ourselves are blessed with good harvests. 

I have adverted to the fact that this prairie- 
farming has already scotched one source whence 
supplies would have reached the English market. 
The New York and New England farmers have 
been forced to cease competing with the wheat 
supplies from the West. Prairie-farming has thus 
created for itself a great gap in the supply of the 
American home market, and in so far has diverted 
from export a largo amount of its own produce. 

But it is further necessary to remember that, 
although under these present exceptionally favour- 
able conditions the United States grow one quarter 
the wheat the Western World consumes, yet not 
more than one quarter of what they grow is ex- 
ported. The price of the wheat thus exported must 
become regulated by the prices prevailing in the 


196 State Aid and State Interference. 

European markets. The United States supply to 
Europe one-twelfth only of the annual supply. The 
price of this twelfth must assimilate to that of the 
remaining eleven-twelfths. The only imaginable ob- 
stacle in the way of this assimilation of prices is the 
resolution of Americans, once they are established 
in the European market, to refuse to take as much 
as they can get for their commodity. The history 
of American enterprise does not warrant such 
expectations. The EngHsh farmer must remember 
that American competition affects all the purveyors 
of the English market, and not only of that, but of 
the whole European market ; and that, in this 
larger view of the actual facts of the case, it will 
at once be seen that even the low prices possible to 
the present system of prairie-farming have a merely 
fractional effect on the European market. What 
then becomes of the claims put forward by 
enthusiastic Western farmers to the effect that 
their prairies are to become the granaries of the 
world, and their capital the flour metropolis of 
humanity ? These sa«xguine anticipations, in the 
ratio of their successful realization, would drive 
wheat-cultivation out of Europe. The monopoly of 
supply, and so of price, would fall to Americans, 
But we must remember that the very existence of 

Foreign Competition in Agriculture. 197 

the industry, and so of the monopoly, depends 
altogether on the continuance of those low prices 
which enabled it to corae into existence. In a word, 
if these sanguine anticipations are to be realized 
Americans must accomplish the dual feat of quad- 
rupling their present produce of wheat, and at the 
same time of maintaining the population of their 
country at the exact figure at which it stands at 
present. If they fail in either task the price 
of wheat must rise ; and this rise would be 
the signal for the re-appearance of wheat-growing 
in Europe, and of the consequent fall of their 

The conditions I have now detailed combine to 
render possible for the present this large export of 
breadstuffs and food. The main fact for English 
farmers and landowners is that this export is from a 
fund on which Americans will not be able to draw 
much longer. Even under the present most favour- 
able conditions of access to pasture and of freights, 
sound meat cannot always be placed in the English 
market below the price of letter grown English 
meat. And similar conditions will soon arise in 
the supply of wheat. Thus a careful survey of the 
facts of the case brings us to the conclusion that, 
if present conditions continue, the great areas in 

198 State Aid and State Interference. 

the "Western States -will in, say ten years' time, 
be no longer able to export wheat and meat at 
prices below those which yield profit to the English 
farmer. In ten years' time ' American competition ' 
in the English market will be in rapid natural 
decline. Thus the future of agriculture in the 
United States need not clash with the future of 
agriculture in the United Kingdom. And, after 
all, the prospects of English farming are in the 
future and not in the past, or even the present. 

§ 5. In deaUng with the competition in English 
markets of the United States, it is essential to a 
right judgment of this question to remember that 
Canada, in opening up her North- Western territories, 
has without doubt brought before the world a wheat- 
producing area of enormous extent. The soil and 
climate of that portion of this area already opened 
up produce crops double as heavy as those of the 
prairie lands in the States ; and there are districts 
where continuous cropping for fifteen or even twenty 
years does not appear to exhaust the rich soil. 
Moreover the coming Canadian Pacific Railway is 
penetrating this area. It is not surprising, then, 
that with all these inspiriting prospects the sanguine 
pioneer farmers of the North-West should declare 
and, in a measure, prove their ability to produce 

Foreign Competition in Agriculture. 199 

and place wheat in the English market at an average 
little over 38s. a quarter. 

But these sanguine anticipations must be taken 
cum grano. They are the first reports from a raw 
and untried district. And, indeed, the more we 
inquire into detail the more we find cause largely to 
discount these alleged anticipations. In the very 
first place we find the area has been gravely ex- 
aggerated, so far as wheat-production is concerned. 
Geographically, it may be true there are some 150 
million acres awaiting the plough and the seed of 
the farmer, but practically it seems certain that a 
vast proportion of these acres will continue to wait 
till the end of time. Large curtailments of this 
area must be made owing to physical causes. And 
even where the climate is favourable, large tracts 
are found on inspection to be too sandy or too 
swampy for wheat, while in others there is dearth 
of water for the cattle that are indispensable in the 
carrying out of such extensive farming operations 
as are the main element in the cheap production 
of prairie wheat. Sinking wells, damming, draining, 
or irrigation — like manuring — are not adjuncts of 
prairie-farming, pure and simple. They add largely 
to the cost of production. 

Again, although the crops are heavier than those 

200 State Aid and State Interference. 

farther south, they are, nevertheless, found to be 
even more liable to the various scourges I have 
detailed. Fire has already eaten up valuable crops, 
and fire comes when all things are dry, in the 
autumn, when the crop is just ripe ; grasshoppers and 
caterpillars have devastated large areas ; the sun has 
been too favourable and ripened the ears too quickly 
for weight ; and already the proof of these things 
is seen in that farmers, even in this much 
vaunted North-West, have been forced to sell out 
or to carry on at a loss through lad seasons and 
low prices. 

A great point is the enormous interest (15 or 20 
per cent.) now actually paid for money advanced for 
agricultural purposes on the security of these new 
lands. This is sure evidence of the existence of a 
deep-seated conviction that land will rise in value, 
and that such a rise will take place is of course a 
mere truism in the face of the advent of population. 
There is ample precedent in the eastern provinces of 
the Dominion. There agricultural land, manifestly 
and avowedly inferior to that of the North- West, is 
now worth 8Z. and 10/. an acre. Such a price, when 
it comes to prevail in the North-West, will at once 
raise the price on the spot of wheat from 3s. Qd. to 5s. 
the bushel. Such a rise will not, however, take 

Foreign Competition in Agriculture. 201 

place unless and until the North-West proves its 
claim to be the wheat ground of America. But rise 
in the price of soil must accompany any and every 
step in the successful realization of these vast wheat- 
growing anticipations. 

In this great North-West, if you can get your land 
at first prices, if you have good years, and if freights 
remain low, then you can export at a low price. But 
already these conditions are changing ; already there 
is a steady enduring flow of population to the North- 
West. The farmers in the older provinces are either, 
taking to stock-raising and dairy and fruit farming 
or selling out and going west to grow wheat. Im- 
migrants from all parts of Europe are seeking this 
great wheat area; it is the paradise of that large 
class of farmers who start without any great extent of 
capital. The great evidence of the fact of this vast 
migration is that the men who are already there 
farming on the borders of this area and getting their 
twenty and even thirty bushels to the acre, sell all 
they grow as seed and as food for these immigrants. 
Human beings are coming down on the land like a 
swarm of locusts ; they and their beasts devouring 
what is reaped ; and big cities springing up rapidly 
in their track. Not till this area is peopled will 
it export to any great extent. But by that time 

202 State Aid and State Interference. 

land will be far dearer — it has already doubled ia 
value — and cost of production on the spot will rise 
pro rata. 

And yet, in spite of all this, for long years to 
come wheat growa in the North-West must be 
grown there cheaper than it can be in England. The 
English farmer will find comfort in this, for he 
must also acknowledge that this fact makes the 
Canadian North-West the natural granary not of 
Europe but of America. Prairie-farming in the 
United States, obtaining ten to fourteen bushels per 
acre, at once substituted itself for the wheat-growing 
of the old Eastern States as the principal source of 
supply to the American market. The new method 
was prosecuted with such impetus and success that 
it also maintained and, in a small measure, increased 
the ratio that the export of wheat bore to other ex- 
ports. The bright prospects of this Western farming 
were, however, destined to be ruthlessly disturbed by 
the discovery that the prairies north of the Canadian 
boundary line not only produced wheat but produced 
doiible the quantity, acre for acre, with no additional 
expenses. The inevitable and natural consequence is 
now following. The North-West is succeeding to 
tlie West as the West succeeded to the East. 

We see, then, that there will he hot little export from 

Foreign Competition in Agriculture. 203 

the Canadian North- West till that . North- West is 
peopled. In the next place, when so peopled, the cost of 
production on the spot will have risen considerably; 
and, lastly, the wheat so grown for export will find its 
chief market in America and not in Europe. 

It is thus evident, if we give proper prominence to 
the immediate past and duly weigh the probabilities 
of the near future, that ' American ' and other com- 
petition in agricultural matters is a fluctuating 
factor; and that it will wax and wane in accord 
with the growths and developments of other 

§ 6. There remains the task of facing the present, 
which we thus clearly understand, and seeing what 
good and true use may be made of it. 

The farmer in these islands will remember that 
his dread of American competition was chiefly bred 
of an untoward and rare succession of bad harvests. 
But he will find on his own farm many substantial 
crumbs of comfort. In this matter of wheat, for 
instance, the farmer does not live by the ears alone ; 
for even in the very production of these ears he gains 
2s. a bushel on the American in the value of straw. 
This is an important item in wheat-growing ; and on 
the prairie the straw is not only of no use but wastes 
the certain amount of labour necessary to burn 

204 State Aid and State Interference. 

it as rubbish. The getting rid of manure on 
the richer prairies is likewise an actual additional 
expense to the farmer. Again, the fertility of some 
English districts, when properly farmed, is so great 
that it outbids all possible prairie competition. The 
yield per acre is above competition. Again, in most 
good districts English wheat is of higher intrinsic 
value (often 3s. and 4s. the quarter) than any that 
can be grown on the prairie system. Again, we 
have Mr. Prout's records of his experiment of ' con- 
tinuous wheat-growing' to show that even in the 
exceptionally bad years through which we have 
recently passed such " scientific agriculture " con- 
tinues to yield profits. 

Free Trade and density of population also range 
themselves on the side of the British farmer. Forty 
years of English progress have made fewer more 
important marks on the state of affairs than in 
regard to agricultural labour. This commodity has 
now become certain in its supply and, as times go, 
cheap. It is 15 per cent, cheaper than labour of 
similar type in America. The fact is that both the 
farmer and the labourers he employs are in capital 
position as consumers. When our short wheat crop 
last year forced us to import half as much again of 
wheat as usual, there was a fall rather than a rise in 

Foreign Competition in Agriculture. 205 

price of tMs first necessary of life. The commercial 
policy England has adopted has enlarged greatly the 
general wealth chiefly by the channel of easier con- 
sumption. Our farmers, deprived of profits, by the 
cruelty of the season, as producers, nevertheless 
found compensation and relief as consumers in the 
accommodation afforded by the wisdom of the 
national policy. 

§ 7. But though the weight of this American 
competition is temporary, and aggravated by reason 
of bad seasons in England, it will nevertheless have 
an abiding effect which is altogether salutary. Agri- 
culture is an industry which has a proverbial 
tendency to extreme conservatism. Its very success 
seems to engender a condition of bucolic content- 
ment which is little in keeping with these times' of 
' Progress.' The British landowner no less than the 
British farmer in the future will have cause for deep 
gratitude to his Transatlantic rival for rousing him 
to a sense of the needs of the day. It is one of the 
great benefits conferred by Free Trade, that where it 
prevails no industry can fall behind the best know- 
ledge of the day. The United States have taught 
Europe the great fact that even in the most trivial 
tasks, the brain can be made the most profitable ally 
of the hand. English agiiculturists have never been 

206 State Aid and State Interference. 

"wanting in shrewdness or in energy ; they have 
occasionally lagged in knowledge ; and even this 
recent short scare has set them thoroughly to work 
on the science of agriculture. But this science must 
not be confined to the chemical cultivation of the 
soil or to the mere physiological processes of organic 
growth — wisely and well it will be extended to 
embrace the economic and political as well as the 
natural factors of agricultural success. Commercial 
geography and statistical information will prove as 
precious to the English farmer as local lore of hus- 
bandry. It will henceforth be recognised as more 
useful to know that in a particular series of years 
pasture or roots will pay better than cereals because 
of the state of distant competing markets, than to 
abide by some chemically perfect rotation of crops. 
It may be that for the immediate present, wheat- 
cultivation that is not of the highest order will be in 
abeyance in England. A true science of agriculture 
shows the political reasons for this temporary sub- 
version of natural courses. But this same knowledge 
will again forewarn farmers of the time when the 
fuller growth of America will enable the revival of 
wheat-growing even on the poorer soils where for the 
time it had been given up. 

We may trust this American competition scare 

Foreign Competition in Agriculture. 207 

especially to influence landowners. The report of 
the tenant farmers' delegates to the Canadian North- 
West are full of allusions to the highly profitable 
absence in Canada of the interference of " lawyer 
factors." The facts of this competition may awaken 
us to the removal of what is antiquated in our 
present system of land tenure. Adam Smith's 
vigorous, nay, pathetic, denunciation of entails and 
other ' remnants of feudal anarchy ' have hitherto 
made little impression ; but now, coupled with these 
lessons from America, such reasonings are likely to 
generate a new zest in the minds and work both of 
owners and tenants, and thus considerably to 
enhance the profits that have for years been 
carelessly deemed sufficient for landed property. 

§ 8. Profits also wiU come from the transference 
of agricultural activity. The general tendency of 
this transference may be described as towards meat- 
growing, dairy-farming, poultry-breeding, and 
market gardening — in the words of Professor Aldis 
—towards "the growth of such products as, from 
their nature, must be consumed comparatively near 
to their point of origin." No doubt the British 
farmer will seek for crops and produce that are not 
readily transported, by reason of their perishable, 
bulky, or fragile nature. He will come to regard 

208 State Aid and State Interference. 

the risks and costs of carriage as his natural ' pro- 
tection.' And he will come to learn that in other 
ways, in the superior productive power of the 
English soil and climate, and of the English system 
or skill in farming, he yet retains, if we judge by 
results, a sure pre-eminence. And he, of all men, 
will acknowledge that, after all, whatever the theory, 
the cause or the reason — the proof of the pudding is 
in the eating. 

As an instance, the English agriculturist will ask 
himself, " How is it I do not grow beet for sugar- 
making ? I know there is just twice the amount of 
beetroot grown in Europe for this purpose that there 
was only ten years ago ; I know that England uses 
just twice as much beet-sugar as she used even ten 
years ago ; I know our English refiners buy abroad 
every year nearly 200,000 tons of raw beet-sugar; I 
know root-crops in England produce more, acre for 
acre, than they do abroad. And yet I don't grow 
beet ; I grumble that no crops pay nowadays ; I 
don't suppose more than that can be said of beet. 
Caird and Duncan and such other authorities tell me 
I have a capital climate for the purpose. Am I in 
the position of the Irish before they grew the 
national potato ? Am I still under the Napoleonic 
ELpell? I know Bonaparte started beet-growing on 

Foreign Competition in Agriculture. 209 

the Continent as one of his many devices for destroy- 
ing England's commercial greatness, by the ruin of 
her sugar colonies. Can't I have my revenge by 
taking this leaf out of his book ? " And he will find 
his consoling answer in a matter-of-fact conclusion 
that he cannot tell till he tries. 

It has been my object to focus the attention of 
agriculturists on a wider appreciation of the facts 
of the past as well as of the present, in order that 
we may judge aright of the future. The question 
of its food-supply is to any nation its primary 
concern, and the utilisation of the soil is a main 
element in this question. It is often mistaken for 
the whole of the question. It is well to bear in 
mind that since the inauguration of free trade we 
have added eight millions to our population, and 
we have increased our imports of food (of kinds 
usually grown in England) by something like 
80,000,000^. value in the year. It may be said, 
then, that these new eight millions of people spend 
\Ql. each per annum to pay for foreign supplies 
which they fail to obtain from English sources. 
Thus, seeing that our system of agriculture is more 
productive than that of other countries, we are 
driven to acknowledge that at least a partial cause 
of this purchasing abroad of these foods is that 


210 State Aid and State Interference. 

we do not farm sufficient soil to feed our own 

Two questions remain: Is this owing to actual 
lack of land ? do we practically make the hest of 
all the soil we possess that irs fit for the purpose? 
Or, on the other hand, assuming that soil exists 
sufficient for the purpose, is not much of this now 
utilised for industries or pirposes that pay better 
than the direct production of food ? This latter 
explanation is, at all events, supported by the fact 
- that annually we increase our consumption of foods 
that cannot be gro^vn in England. In 1840 we 
sfjent 9s. per head per annum on these foreign foods. 
In 1878 we spent 30s. per head. As compared 
with pre-free-trade days, we now buy three times 
the amount of currants, ten times the amount of 
oranges and lemons, four times the amount of tea, 
and so in all other details. Manufactures, mining, 
and carrying have progressed in proportion ; but 
population has only increased by one-fifth. We are 
driven, then, to the conclusion that capital, labour, 
and probably large areas of actual soil, have been 
turned to other and more profitable uses than the 
direct production of food. The Census records are 
significant. In 1841 the rural population of England 
and Wales (the portion, that is, connected with 

Foreign Competition in Agriculture. 211 

the direct production of food) numbered 8,200,000 ; 
the town population (that portion not connected 
with the direct production of food) numbered 
7,700,000. The country folk outnumbered the 
townsfolk ; those who produced food outnumbered 
those who only consumed. But in 1871, while the 
rural population only increased its numbers by some 
2,000,000, the town populations had increased by 
no less than 5,000,000. In 1871 the tables were 
reversed; the townsfolk largely outnumbered the 
country folk — those who produced food were largely 
outnumbered by those who only consumed it. The 
Census of 1881 proved that the urban population 
continues to increase nearly twice as fast as 
the rural. We have more people, we have more 
monev, and we have found for certain areas of soil 
more profitable use than the manufacture of food. 
What wonder, then, that the national food market 
is supplied in some measure by foreigners ? 

We have thus, in brief, the whole case of this 
foreign competition. British agriculture will derive 
invaluable benefit from these alleged inroads on its 
prosperity if, as seems probable, this competition 
of virgin soils directly or indirectly rouse English 
agriculture to a survey of the needs of the day . 
By the close of this century, twenty years hence, 

P 2 

212 State Aid and State Interference. 

prairie produce will be more and more absorbed in 
its own home market ; and even wheat-growing 
in England may again have reverted to its old 
courses. English agriculture will then be found, 
without doubt, to have passed through the fire 
of competition improved vastly in quality, purged 
and hardened for a long future of prosperous 

Foreign Competition in Manufactures. 213 



|1. What Foreigners are doing and what they are asserted to 
be doing. § 2. The modern tendencies of Foreign Tariffs. 
§3. Of Colonial Tariffs. §4. Pauperising effects of High 
Tariffs. § 5. Foreign Exporters of Manufactures. 

§ 1. There is no field of human industry for 
which the aid of the State is more often invoked 
than for that of manufactures. To start non-existent 
manufactures; to foster and cherish manufactures 
that ai-e hard pressed; to protect all classes of 
manufactures against foreign oppression or aggres- 
sion ; — are held by many to he among the . first 
duties of a national government. Such is the end 
put forward. And to attain this end means are 
suggested in which assumption and assertion entirely 
swamp experience. Government are told to start 
and cherish and protect manufactures by the means 
and instrumentahty of customs duties. What I 
wish in this chapter to suggest is that these means 

214 State Aid and State Interference. 

have proved by no means infallible. Indeed, if we 
look to recorded results, we find that the lower the 
customs tariff the more do manufactures originate, 
progress, and prosper in a country. Experience tells 
us that if you would start and encourage and main- 
tain manufactures that shall be profitable to the 
community, you must jealously watch that your 
tariff of customs duties be low enough not to 
interfere practically with the free course of industry. 
There is no more self-evident proof of this to be 
found anywhere than in the records of what manu- 
facturers are actually doing in England and in 
foreign countries. And these records belie in a 
most astounding manner the assertions on the 
subject that are, strange to say, commonplaces in 
books and newspapers, no less than on the platform 
and in the public utterances of those who aspire 
to be leaders and advisers of the community at 

§ 2. One of the commonest of these assertions is 
to the effect that " Fo7'eigners are by their tariffs 
shutting us out of their markets," and that "hostile 
tariffs abroad are closing to our manufactures the 
markets of the world." In the first place, this type 
of assertion is absolutely and, in the second place, 
it is relatively contradicted by the facts of the case. 

Foreign Competition in Mamifactures. 215 

It is absolutely untrue because, as a matter of 
fact, the variotis foreign countries have, for instance, 
during the last twenty years, in the aggregate 
taken great strides towards Free Trade principles 
in regulating their tariffs. 

Lord Sandon did his party a sterling benefit by 
calling for a parliamentary return recording the 
rates of duty in English money levied on articles 
of British produce or manufacture imported into 
the various foreign countries and chief English 
Colonies in each of the years 1860, 1870, 1875, and 
1880. These returns are now before the public, 
and to ignore them is to ignore recorded facts of 
the highest value at the present moment. 

On the continent of Europe we find, from these 
returns, that during the last twenty years tariffs 
have been generally and considerably lowered; the 
numbers of articles taxed has been considerably 
reduced ; and all the states of the Continent have 
either granted or expressed their willingness to 
grant most favoured nation treatment to English 

It may be well to place on record here a few of 
the details of this notable European movement. 

In the first place, in regard to the tendency 
towards reduction of tariffs. Comparing the tariffs 

216 State Aid and State Interference. 

of 1880 with those of 1860, we find that in only 
two out of the sixteen European states is there 
any increase. These two exceptions are Italy and 
Greece. And even in these two cases there are 
explanations that are most satisfactory. In Italy 
the change is due to the fact that in 1880, by the 
lapse of special treaties between Italy and third 
countries, English imports fell under a 'general 
tariff' higher than that they had enjoyed under most 
favoured nation treatment. In Greece the change was 
due to the fact that all duties were raised 10 per cent. 
ad valorem by the promulgation of a financial law 
requiring all duties to be paid in new instead of old 
drachmas. Of the other states of Europe — in France 
and in Turkey the tariffs remained the same ; in 
Denmark, Portugal, and Switzerland there has been 
reduction when there has been change ; in Spain, 
Germany, Russia, Sweden, Norway, and Austria 
there has been general and, very often, great 

A point of great additional importance is the 
number and kind of items in which alteration has 
been made. If we omit Italy and Greece on account 
of their present anomalous position, we find that of 
the 2,140 'items' existing in 1860, 136 only have 
been raised, while 900 have remained the same and 

Foreign Competition in Manufactures. 217 

no less than 1,104 have either been lowered or 
removed from the list altogether. 

Or the 136 that have been raised, 30 are in 
Denmark, 53 in Germany and Russia, and the 
remaining 53 scattered over all other countries. It 
is desirable also to remember the kind of items so 
altered. In Denmark the increase has taken place 
in the duties on spirits, raw sugar, butter, and 
fire-arms. In Russia the increase has been in wool, 
engines, and machinery. In Germany the chief 
rise has been in yarns of Various kinds. In Holland 
there has been increase on raw sugar. In Sweden 
and in Norway on spirits and raw sugar. In Austria 
on railway carriages. Generally speaking we find 
that the duties have been raised in 61 cases on yarns, 
raw materials, and food ; in 20 on spirits ; in 19 on 
tissues ; and in 37 on sundry manufactured articles. 
Thus the English manufacturer has been directly 
favoured in many more instances than he has been 
directly hampered in the comparatively few instances 
in which duties have been raised on the Continent. 

Incidentally it may be mentioned that in Russia 
alone a very great advance in favour of the English 
manufacturer has been made in the abolishing the 
distinction which was drawn in 1860 between goods 
arriving by sea and by land. Tissues, hosiery, 

218 State Aid and State Interference. 

carpets, earthenware, refined sugar, iron-castings, 
paper, and other items of English export, were all 
saddled with these extra duties in 1860 from which 
they were relieved in 1880. 

As to the 1,104 items that have been lowered, 
the English exporter has even more definite cause to 
congratulate himself In 200 cases there is a 
decrease in the duties levied on raw materials and 
food. In 400 cases there is a decrease in the duties 
on yarns and tissues, and the remaining 504 cases 
are in sundry items of manufactured articles. 

Perhaps the most conclusive .testimony is that 
which deals with the comparative height of the pre- 
sent tariffs. It may be held that a tariff not exceed- 
ing 10 per cent, ad valorem will not greatly interfere 
with trade. A tariff that is, in the aggregate 
average, above 20 per cent ad valorem may be set 
down as decidedly high and ' hostile.' An inter- 
mediate tariff may be described as medium. If, 
then, we classify continental countries under the 
three categories low, medium, and high, accord- 
ing as their tariffs are under 10 per cent., between 
10 per cent, and 20 per cent., and above 20 per 
cent., we shall find that Switzerland, Turkey, Hol- 
land, Norway, Sweden, Belgium, and France, range 
themselves under the first category. Italy, Denmark, 

Foreign Competition in Manufactwes. 219 

and Germany may be described as medium. Spain, 
Greece, Portugal, Austria, and Russia still remain 
under the category of high tariff countries. It is 
not our province to deal with prospects, but it may 
be mentioned that Italy, Portugal, and especially 
Spain, are determined to advance themselves out of 
this backward class so soon as they can. It will 
thus be seen that during the last twenty years 
tariffs have been generally and considerably lowered 
on the continent of Europe. 

We must also recognise the fact that the number 
of articles appearing in the tariffs has been very 
considerably reduced. la only three States — in 
Germany, Italy, and Denmark — has there been 
any increase in the number of items on the list. 
In the other States the average number of articles 
scheduled has fallen from 134 in 1860 to 118 in 
1880. And there are now only three States that 
have more than 200 articles on their schedule. This 
tendency is of course a tendency invaluable to 
freedom of commerce, for it clears the channel of 
numerous obstructions that otherwise impede and 
hamper that free current of commercial intercourse 
which is so absolutely essential to a healthy state 
of trade. 

Perhaps the most definite advance is, however. 

220 State Aid and State Interference. 

the general adoption of the most favoured nation 
principle. This is a great step out of the com- 
plications and impediments to trade inevitable 
to the system of many and separate commercial 
treaties. It seems that in I860 we enjoyed this 
favour by express treaty with eight only of the 
sixteen European states. In 1880 we had actually 
secured the privilege with no less than fourteen, 
and the remaining two had expressed their definite 
determination to adopt the arrangement so soon 
as treaties could be arranged. The high importance 
of this increasing inclination of foreign nations to 
give us most favoured nation treatment is seen in 
the fact that it is one half the battle at the least in 
our competition to supply a foreign market. We 
have ' opposed ' to us the native and the foreign 
competitor ; and this ' most favoured nation ' treat- 
ment at once puts us on an equal footing with our 
foreign competitor. As for the native competitor, 
he, so far as he can compete at all, can only hope 
to compete with success provided he enjoy the same 
facilities as a consumer that ^^}e enjoy in conse- 
quence of low tariffs. We have thus advanced the 
great step since 1860 which places us in nearly all 
European markets on an equality with all foreign 
competitors in those markets. This is a distinct 

Foreign Competition in Manufactures. 221 

and general advance along the whole line in the 
direction of greater freedom of commercial inter- 
course. And on the whole we see that on the 
continent of Europe the tariffs are becoming less and 
less hostile to English goods. 

§ 3. A subsidiary but none the less common and 
important complaint is put forward that our Colonies 
s/mt us out hy hostile and Protective tariffs. Indeed 
Protectionists, not only in England but in other 
countries, have twitted us with the assertion that 
however ' Freetrade ' we may be ourselves, never- 
theless our colonial offspring, so soon as they acquire 
fiscal liberty, immediately raise up hostile tariffs 
against us, and adopt the policy of Protection for 
themselves. This strange and utter misrepresenta- 
tion of what is actually occurring holds sway over a 
strangely wide domain. It is reflected in leading 
articles in leading newspapers ; it is even a common- 
place on the platform, in Parliament, and even 
within the precincts of the Cobden Club itself 
Professor Bonamy Price is indeed one of the few 
public authorities who has put the matter in its 
true light. In an address in 1878 he well put 
the matter in the sentence : "Victoria, at the 
instigation of an ignorant democracy, breaks the 
financial uniformity of a mighty empire, and loads 

222 State Aid and State Interference. 

the merchandise of the central State with har- 
rassing duties." As a matter of fact we have nine 
Colonies that arrange their own fiscal affairs in 
independence of the Colonial Office. Of these, 
only two, Canada and Victoria, have ' hostile ' 
tariffs. The Cape of Good Hope, New South 
Wales, Queensland, Tasmania, South Australia, 
New Zealand, and Newfoundland, all have tariffs 
that would fall under the ' low ' category as being 
under 10 per cent. They are all tariffs imposed 
solely for the purposes of revenue. And of our 
remaining Crown and other Colonies all have low 
tariffs excepting, indeed, those which have no 
tariffs at all. 

Canada and Victoria have both of them set up 
high tariffs within recent years for the special and 
avowed purpose of Protection. But Victoria, as we 
have seen in detail in a previous chapter, has 
grievous cause to repent this fiscal backsliding. In 
Canada the main reason for the adoption of a 
Protective policy is political and not economical. It 
is a measure of self-defence against the supposed 
overshadowing of its great neighbour. The Canadian 
Government determined to protect itself by a high 
tariff against the United States. And, yielding only 
to the definite law of the British Empire, that within 

Foreign Competition in Manufactures. 223 

its boundaries there should be no differential duties, 
the high tariff had to include British as -well as 
American goods though the Canadians themselves 
pointed out it was distinctly not hostile in intention 
to British goods. 

Our Colonies and India are, as is very well known, 
taking from us vastly increasing quantities of manu- 
factured commodities. As we see, they most of them 
have low tariffs ; but it is a notable comment on the 
policy of high tariffs that the two Colonies that im- 
pose them still, continue to do their share in the con- 
sumption of manufactures from the mother country. 
The squatters and miners of Victoria no less than 
the farmers and lumberers of Canada are not to be 
turned aside from their most lucrative enterjDrises by 
any blandishments of Protection. The great bulk of 
population in each of these two Colonies sturdily 
refuses to reverse the natural and most profitable 
order of opening up a new country. All that the 
high tariff can do is to make these natural pioneers 
of their country's growth and greatness pay more 
for what they use. The high tariff is merely a 
tax on growth which is paid without difficulty 
out of the great profit that accrues from the rapid 
development of virgin resources. The amount of 
this tax may be fairly gauged in the comparison 

224 State Aid and State Interference. 

of Victoria and New South Wales we have made 
in a previous chapter. 

§ 4. Recorded results tell us that the assertion 
that most other countries are exhibiting in their 
tariff arrangement increased hostility to British 
manufactures, is absolutely contrary to truth. The 
assertion is also relatively untrue. If we for one 
moment ask ourselves the question who pays import 
duties we shall at once see that a high tariff only 
excludes foreign goods in the sense of rendering the 
population of the protected country less able to buy 
these goods, whether of foreign or of home make. 
If it so happens that the country is rich in other 
wealth-yielding forces the general effect of the tariff 
will be, not to curtail the importation of foreign 
goods but, simply to force the population to pay 
more than other nations pay for these same goods. 
We still find that, in the strictly protected com- 
munities of the United States, Canada, and Victoria, 
the consumption of English manufactured articles, 
of the very kind the tariff seeks to exclude, 
nevertheless continues to increase year by year. 

Supposing that a ton of linen piece-goods can be 
manufactured in England for lOOZ. Add to this lOZ. 
profit and 1/. carriage to market. The English 
dealer can sell at a Brofit for 112^. The Germans 

Foreign Competition in Manufactures. 225 

place on this a duty of hi. in order to protect their 
own linen industries. This difference is either pure 
profit to the German manufacturer or it represents 
extra cost of production. And so long as the higher 
price is paid by the German purchaser English 
goods may be able to compete, provided the added 
duty only brings up the total cost of the English 
goods to the level of the cost of production in 
Germany. In this sense the Import duty is merely 
the entrance-fee charged by the State for entry into 
the German market, which fee is recouped out of 
the higher prices obtaining in the market. And if 
these prices are not higher the protective tariff is of 
no effect. 

The point of the question is, whether this 
entrance-fee can be recouped out of the differences 
of price. If it cannot, English goods will not pene- 
trate ; but in that case the German State fails to 
obtain an equivalent amount for its Kevenue ; and 
the German consumer has to contribute in some 
other way. But it all comes in the end to the issue 
that the amount of the Import duty that is paid is 
ultimately paid by the German consumer. 

This tells terribly on production in Germany. 
The value of wages or of profits depends intimately 
on their purchasing power. If a Protective duty 


226 State Aid and State Interference. 

raises local prices 20 per cent, it makes labour 20 per 
cent, dearer, and it makes profits 20 per cent, less 
profitable. It is paid by the producers of the nation 
qua consumers. In the enhanced prices of his 
clothing and his food the labourer will contribute 
out of his wages. In the enhanced prices not only 
of his clothing and food, but also of his machinery 
and his raw materials, the capitalist will contribute 
out of his profits. 

If the duty succeeds in fostering, that is inter- 
fering with, industry, it can only do so by succeeding 
in making the price of the commodity higher to the 
consumer than it otherwise would be. And pro tanto 
it reduces the earnings of labour and the profits of 
capital. Pro tanto it is a dead loss to the producers ; 
a dead handicap on the nation as a whole. 

And there is further loss to the nation that 
imposes import duties that are so high as to inter- 
fere with the free course of industry. We are 
all struck by the fact that any nation famed for 
wealth is a nation of great commercial dealings. 
There is most capital made by those nations that 
trade most. Exchange is the one great fountain 
head of capital, whether it be local or cosmopolitan. 
The reason is not commonly understood. The 
popular mind with strange perversity vainly desires 

Foreign Competition in Manufactures. 227 

that tlie nominal value of exports should balance 
or exceed that of imports. The very reverse is, of 
course, the more profitable account. It is out of 
the profits made by importing that commerce en- 
riches a nation. The exports are merely one of 
many methods of paying for the imports. But 
after they are paid for, imports bring with them 
profit. We may put a hypothetical case. Very good 
pine-apples can be grown in England at a cost of 
2s. %d. each : equally good pine-apples can be sent 
from Jamaica at a cost of &d. each, including 2cl. 
profit to the grower. Consequently we import 
great quantities of pine-apples from Jamaica. Porter 
cannot be made in Jamaica, so warm is the climate, 
at less cost than 2s. 6c?. a bottle. It can be made 
in England at 6c?. a bottle, including 2d profit to 
the brewer. The cost of carriage to and fro is 
equal for a bottle or a pine-apple. We send to 
Jamaica as exports 1,000 bottles of porter costing 
25?. We receive from Jamaica 1,000 pine-apples 
costing 25?. The brewer in England, by having a 
market in Jamaica, has made 8?. profit ; and so 
too the pine-apple grower in Jamaica, by having a 
market in England, has made 8?. profit. So far 
each nation has been enriched. But there is a 
far greater source of profit to each community in 

Q 2 

228 State Aid and State Interference. 

the enormous saving of expense secured by the 
exchange. Supposing there to exist prohibitive 
tariffs in England against pine-apples and in Jamaica 
against porter. Then in one country, if they drank 
porter, consumers would have to pay 125Z. instead 
of 2ol. for the 1,000 bottles ; and in the other 
country they would have to pay 125^. instead of 
25Z. for their 1,000 pine-apples. In other words, by 
the means of the protective tariff, Jamaica would 
have been impoverished lOOZ. and England lOOZ. in 
every such transaction. 

It is in this respect that high and protective tariffs 
most injure English exporters. It is an indirect and 
not a direct effect. But it is none the less powerful 
and telling. A high tariff prevents a nation reaping 
all the profits which accrue from exchange ; and 
the nation has so much the less to spend on the 
necessities, the conveniences, or the luxuries of life. 
In England, by our commerce, we can eat pine- 
apples for %d. that would otherwise cost us 2s. &d. 
And so, in proportion, with all other commodities, 
there is profit in whatever we consume or use by 
reason of our free imports. We leave trade unre- 
stricted, and we know that then it will run in 
those channels and in those directions which are 
most favourable to the genesis of profits. 

Foreign Competition in Manufactures. 229 

We regret to see other nations cutting them- 
selves off from such sources of profit, and we are 
fain to console ourselves with the tendency there 
arises for us, profiting so as consumers, to cheapen 
so greatly our costs of production as to undermine 
altogether these walls that other nations build up 
in order to keep out the fertilising and enriching 
current of free commerce. 

It is as though villages in the rainless Delta of 
the Nile were to fence themselves and their lands 
round with walls impermeable to the annual flooding 
of the Nile, and set to work to manufacture manures 
and distil water. Each year that river brings down, 
it is calculated, so many millions of tons of fertilising 
deposit and so many billions of gallons of water to 
a rainless land. Supposing that one of those vil- 
lages adopts the opposite policy, and by clearing 
away all obstructions, invites and receives the full 
flood of the fertilising and enriching Nile ; and 
supposing the remaining villages continue stoutly 
to keep out all such external aid — not only will 
this one village flourish, but its crops will become 
so perennially abundant that it will shortly find 
itself able to purchase with its surplus all that it 
desires of the property of its desolated neighbours. 

230 State Aid and State Interference. 

And in the end, when, for lack of recuperative 
force ; when, through despising the outside aid of 
more favoured regions of the earth ; when, by reason 
of refusing to admit the waters of rainy and snowy 
Abyssinia, these villages of the rainless Delta dwindle 
and fall into ruin, then the wise village, which has 
made the most of the bounty of nature in other 
lands, will be flourishing as ever, and only regretting 
that the other villages should, by foolish exclusive- 
ness, have so entirely pauperised themselves as to 
be no longer capable of purchasing its own surplus 

So do nations, which open their doors to supplies 
from all the world, profit not only by the large and 
steady supply of all they need as consumers and as 
producers, but above all by the fact that wheresoever 
they can obtain a commodity abroad cheaper than 
it can be made at home — in every case there is 
enormous profit to the nation, simply out of the fact 
that it is not made at home at so much extra cost 
of national labour. 

§ 5. It might be supposed, not altogether without 
reason, that, if our manufactures were in actual 
process of extinction by this asserted irruption of 
foreign competition, these various countries, and 

Foreign Competition in Manufactures. 231 

more especially those which foster their manufactures, 
would be all of them increasing the percentage of 
manufactures exported. 

In his most admirable book Freetrade v. Fairtrade, 
Mr. T. H. Farrer gives the following tables, which 
tell no uncertain tale. 

United Kingdom. 

Articles of Food, Drink, and Tobacco 




















Total Exports of British and \ 
Irisli Produce J 





United States. 
























Raw Materials . 

Manufactured \ 

Articles ... y 








232 State Aid and State Interference. 




Raw Materials 









































Raw Materials . 


Articles ... 








* The values for 1869 are estimated only. 

It will be observed that the percentage of manu- 
factures to total exports decreases in proportion as 
the tariff is higher and more avowedly protective. 

It is well to compare particular points. 

We are frequently warned that in textile manu- 
factures our day of supremacy is past and gone. 
And we are told France is wise in her generation 

Foreign Competition in Manufactures. 233 

in keepiag to an elaborate scale of duties. If we 
look to results we find that in supplying the markets 
of the world, we are not only at the present doing 
nearly five times the foreign business that France 
is doing, but within the last 20 years , while our 
export of textiles has increased 50 per cent, that of 
France has decreased 10 per cent. The figures are 
worthy of record :— 

Exports of Textile Manufactures. 
(Cotton, linen, silk, and woollen.) 
1859. 1869. 1879. 1880. 

France je32,000,000 ... £35,000,000 ... £28,000,009 ... £29,000,000 

England 73,000,000 ... 107,000,000 ... 94,000,000 ... 109,000,000 

Perhaps there is no State in the world that has 
set to work so determinedly to foster manufactures 
by the means of a high customs tariff as the United 
States. Mr. Mulhall in his valuable work The 
Balance Sheet of Nations gives some very remark- 
able figures. He tells us that in 1870 the inha- 
bitants of these islands manufactured 408 shillings 
per head, but that in 1880 the value of the manu- 
factures was 440 shillings per head — an increase of 
8 per cent. In the same two years the value of 
manufactures per head of population in the United 
States was 854 and 355 shillings respectively. In 
other words, the population of the United Kingdom 
was becoming more and more a manufacturing 

234 State Aid and State Interference. 

people, while the population of the United States 
was remaining stationary in that very respect. 

And it is not only with us that all this is so. 
The Swiss exports to the United States tell the 
same tale. There is increase in the watches 
exported, a very significant item. 

Again — If we ask for the export of a manufactured 
commodity for which any country is famous, and if 
we also look to its tariff, we shall notice some curious 
facts. On the continent of Europe France is the 
great silk manufacturing country, Switzerland fol- 
lowing next. In all European countries there are 
heavy import duties on silk, excepting only Switzer- 
land, where there is a light duty, and France, where 
there is no duty at all. 

Again fire-arms enter Belgium and Norway free, 
and all other continental States place import duties 
on them. Belgium, at all events, is the great 
continental manufactory of fire-arms, and the only 
one whose competition is actually felt by England. 

Again it will be held that Switzerland is the 
head-quarters of European watch and clock making. 
And yet Switzerland of all continental countries 
alone refrains from taxing the imported watches 
and clocks, and is content with a merely nominal 

Foreign Competition in Manufactures. 235 

It may be that a country does not import in any 
quantity those commodities it chiefly manufactures ; 
and that therefore the duty is useless ; but the fact 
none the less remains that in each instance these 
manufactures flourish most -when ' unprotected.' 

On the whole, then, so far as Foreign competition 
is actually affecting British manufactures, we find 
that gradually the latter are obtaining easier access 
to the chief foreign markets. Any nation that still 
clings to the idea of a high tariff clings to an idea 
that has a pauperising effect : and in so far its powers 
are curtailed for purchasing English manufactures ; 
in so far, its powers are curtailed of successfully 
competing in manufacture with those nations that 
enjoy all the industrial advantages of free intercourse 
with the rest of the world. 

236 State Aid and State Interferoice. 



§1. "What we are doing in England — Our Home Market and 
Foreign Purveyors. § 2. Percentage of Manufactures to other 
Imports. § 3. Particular examples — Hardware — Silk — 'Wool- 
lens. §4. English. Labour cheaper and better. §5. Failure of 
Foreign Competition. 

§ 1. One of the commonest assertions on which is 
founded an appeal to the State to do something for 
English manufactures is that the English Iwme, 
market is heing flooded hy foreign manufactures. We 
must therefore form some idea of what this home 
market really is, and of the place taken in it by 
imported manufactures. 

The British Association for the Advancement of 
Science recently appointed a Committee to inquire 
into the manner in which incomes were spent in 
England. Abundant statistics of all kinds were 
collected and collated. From the elaborate calcula- 
tions of the Report of this Committee, it appears that 

Foreign Competition in Manufactures. 237 

we probably spend .each year in England on various 
manufactured commodities a sum approacbing to 
500,000,000Z. Of these commodities we obtain only 
one seventeenth, or 30,000,000Z. worth, from abroad. 
This amount of foreign goods is roughly distributed 
as follows, and I add for comparison the values of 
our export of similar articles : — 

Imports. Exports. 

Silks and Gloves £15,000,000 

Cottons and Woollens 10,000,000 

Iron, Steel, and Glass 4,000,000 

Miscellaneous 1,000,000 

Total of these Manufactures £30,000,000 






The silks and gloves are distinctly luxuries, and 
could only be purchased by well-to-do people. A 
large portion of the ' woollens ' is to be credited 
to the influence of fashion. The chief feature, 
however, is the utter insignificance of the total 
sums as compared with the values of what we 
export. We probably send abroad ten times the 
value of the manufactured commodities we import. 

There is, however, a fact of much importance in 
connection with this home market which largely 
regulates our dealings with foreigners. And this 
fact is the curious effect of fashion in the matter 
of clothing. Things have altogether changed in 

238 State Aid and State Interference. 

this respect within the last fifty years Wear was 
then the great attribute of good clothing ; but now it 
is so no longer. There may be compensation in all 
this. It may be that a working man spends no 
more on dress in buying a 1/. suit each year than 
in paying lOZ. for a suit that lasted him ten years ; 
or that his wife should buy a new 11. costume each 
year instead of a new lOZ. gown every ten years. 
But all this has a great effect on manufacture. 
Districts and classes were formerly most conserva- 
tive in the matter of dress, but now fashions 
penetrate all over the country and through all 
classes. There is much more frequent change. 
And where in old days this change of fashion 
affected 1,000 people it now affects 100,000. 

The sewing-machine — ' the printing-press ' of 
fashion in dress — has been the great and indis- 
pensable ally of this revolution. 

A notable example of this effect of fashion has 
been felt in the woollen trade. The English woollen 
manufacturers were slow to recognise this new 
invasion of fashion. The point was well if familiarly 
put in the remark that women at one time made 
balloons of themselves, and at another time mops. 
At one time they were all for stiff, spreading, stand- 
ing-out skirts, and at another all for limp, clingino-, 

Foreign Competition in Manufactures. 239 

close-fitting skirts. And as fashion had come to 
rule, not only in Hyde Park, but in every country 
town and village, this change in the material used 
for dresses had a most powerful effect on the trade. 
In this case in particular English manufacturers 
were slow to believe that fashion had so great an 
influence on the trade. But now that the lesson 
has been learnt, a more watchful eye will follow or 
anticipate the vagaries of fashion. 

A change of fashion has all this widespread 
effect; but it must 'be mistaken neither for our 
industries being defeated in competition with those 
of foreign nations, nor for effects of depression 
among consumers. Fashion is a factor in our in- 
dustrial and commercial life that has put on a new 
power lately, and one we must seek to understand 
and to acknowledge. And it has nowhere so great 
an effect as in the English home market. What 
with lowering of ^prices and raising of wages the 
great bulk of the people in England have now more 
to spend on dress and the accessories of life than 
any people have ever had elsewhere or in any other 
age. This fact not only widens the domain of 
fashion, but also gives to the Enghsh home market 
an importance in the national economy that makes 
it paramount to all other elements. 

•J 10 ,<lfnfi' Mif and iSStafr 1 uti^rfiirncc. 

^'1. ll' it ho tnio thai tlio l<in>j;lisli lion\o tnMvUi>t 
is lunv bi-iuj;' IKhkKh) with rori>i;;'ii ma.t\ii1':\i'tiiros l.o 
1.1u> liotriinoiil, ol' luMiu' ni,MiuifMrlur(>s, we sliiill liiiil 
nocossarily tl\.'it tlio ])ori'i'niin;;o of iiianuraclunHl 
arlicli's io tlio rosli of our impdi'ts is incn\asiii,i:;. Tt, is 
Irliuswoll \v<irti\ l.abulat.iiiL!; Ilu> ncliial lads of t.iu> case. 

I'mirKNTAiiH OK Manvkai'I'im!I';ii Airru'i.iw 'jo 'riiif. ToTAi, op 
Imi'ok'I'.s AN'ii K.xroii'i'.s ok vwv, IInm'ko Kincuiom kou 'I'Iih 

l.ASI' KlI'l'KKN ^'K\l:.s. 


ny,o or 





Man 11 



















r;!i.'i 110.000 

ISI, 000.000 



in, itini. (1(1(1 

•!!M, Villi, Olio 



l,S(l. Olio, 000 







100. 000, OHO 


is', It 




Mt.|, 1(1(1. (I(l() 

'.:oo, 000, Olio 


l,s', 1 

•.Ml, ,1(1(1. (UK) 






1 s', •,' 

•'■.!, '.'(1(1. Ill (1 

;;:.!, ViHi.dOit 





1 N', ;i 






117 s 

1 sV 1 

'.', 1,(1(1(1, 0(1(1 

;tvii. ion, (1(1(1 






•.!7. 1(1(1. iimi 








M',V>, ','0(1, (1(10 


IIM, 7(10,111)11 




•.'S,,s(l(l, (1(1(1 



lll'.l, ','00,(1110 









IS', 11 





1 '."^,000,00(1 

I sso 


■11 l,'.i0O,(HI0 


•.!l/. ,0(111. (111(1 

li'JH, 000,001) 

I'^roni iJiis dalilt' id is sih'ii, onco ai\il for a.ll, (.iiiil 
for dlu' | lilYcrn yc>ars onr iorcio'ii liradc i?i 
ina,iiiirai',turi'il ('(iiuimtililit'S has niaiiil.aitiod a stoiuly 

Forc'ujH, Com,pf'Mf:ion in MtimifdclKrcH. 241 

rolativr l('V(il ; and tliiil. there lias been no iipproci- 
able (1(m;i(;;i,sc', in our relative exports nor iricrea.sct 
in our rchitivo iiii|><)rt,H of manufactured to other 
commodil.ics. Ah onr population increases in nuni- 
liers Mild in woidth, it would bo a v(;ry sus|)i(;ious 
sij^^n irid(M!d if we did not spend some of our incrcsased 
j^idriM in the |»nrelias(! of ;^fr(!a,ter values of forisif^n 
manufactured^s. ]5ut that at the same 
time \v(^ incri^MSe in ei|ua.l ratio our purchases of raw 
ma,teri:d and of food is clear irr(!iVa,^fal)le evideiKx; 
that our tnanul'acturinj^ ahility is not in the least 
impaired. In short, these reeoi'ds dislhietly show 
that to say that our homo Tria,rl<et is being flooded 
by i'oreign nianufa-ctures is to rev(!r8e the truth. As 
a mattcu- (if I'a.ct wc continue to flo(jd fort^gn markets" 
a,ti(] we eonlhuu! to H|)(!nd more and more in our 
home ina,rl<et, Itiit the proportion of fondgn manii- 
I'actures to naJ.ive pur(-ha,se<l in that homo market 
does tiol, increase in like ratio. 

§ ;}. I twill not h(! all,o(,'eth(!r unprofitable to in- 
vestigat(^ OIK! or two j)a,rticular instances as to our 
loreign tia,de in certaJii specific iiiaiiul'ai^tures. The 
most livcjiKuit public complaints have been in regard 
to liardwani, silk, and woollens. 

Wo a-re fn!(piently infornuMl that Amcsricau cutlery 
and tools m^^ driving those of English manufacture 


242 HlaU', Aid and HlaU JnUrfcreucc. 

out c)!' tin; 8}jop wiTidowH. Wu ij.n; f'ri.'(|ui;ntjy in- 

rorrnct] tliat continental, iind cKjiociiilly Anicric;)!), 

r(Hn|»otition is ;ilto;,'oUi(:r iipwjttirig our liunl 

triMK,'. Thfi following,' tabuliUcd record of wli;i,t in 

actually })!j,p))(;ninj( will anKiHt UK to a correct 

ju<lgmcnt : — 


iMi'oiri'H AND Kxi'oiiiK (IK IIaiuiwakK and MamJI'AC'IIUU',/; 
Mk/i'AI.h dktwki'.n 'iJ/r, U.mtku Kin'jjxjjm ank 'I'iiio Foi;i; 




fjf^rijiuiiy ....,,, 
Ulliti-il K(.llli:H 


Oth(;j' CountriuH . 

Bx]jurt« t*.! 


.VI',), 1)00 
1 ,()(I7,0'«) 

£«,. or, 1,000 

£2.',, HH.OOO 

Jjjij>';i*U frvii) 


J 1)0, Olio 

•/M Mm 


It French ami (Jerrnan and American cutlery an<l 
tooJH and rna,cliin<;,s are flooding the KtjgliKti market, 
what shall he Haid of EngliKh goods of tJic Kunn 
kind in those rnarketB ? — at all evefjtH wii are 
returning the conipliment fif'tyfold. 

And if we look into the silk trade we find HimiJar 
evidence; and yet we not unfroquently hear that 
the silk trade at all events has heen ruined. lOven 
l''ree Trade orators have comforted t)ji; Coventry 

Foreign Competition in, 3fimnfact>ire.^. 24:5 

mill-hands by pointing out that though the one 
industry of silk manufacture has slipped from their 
grasp, its place has been occupied by the manu- 
facture of bicycles. The following details as to our 
annual exports of ' silk manufactures ' may be 

mterestmg : — 

1869. 1880. 

Fniuco ... • flU.OOO steady vise to £577,000 

Omuiuiy 77,000 110,000 

United States . . 279,000 uneveu fall ,, 218,000 

Belgium Nil. steady rise ,, 56,000 

Canada 22,000 „ ,, „ 84,000 

India 10,000 ,, „ „ 355,000 

Australia 66,000 ,, „ „ 205,000 

Other Countries .... 512,000 unev™ fall „ 425,000 

ia, 110,000 stendy rise to £2,030,000 

1860. 1880. 

Exports of Silk ) 
,f , [ .£1,110,000 rise to ,£2,030,000 increase 90 per cent. 

Manufactures ) 

Imports of Silk 

Manufactures ' 

I 11,800,000 „ 13,100,000 ,, 11 
I 1 

The tendency here again is to turn the tables on 
foreigners so faj as flooding markets is concerned. 

Another instance is that of the woollen trade. 
The facts of the case I condensed in a letter to the 
Timc^, which I will here reprint, as it contains 
evidence very much to the point : — 

" At this mooting at the Mansion-house it was 
explicitly stated by the speakers, with the tacit 

K -2 

2-t4 State Aid and State Interference. 

acquiescence of the audience, that the English 
-woollen trade was being overwhelmed by foreign 
competition, and that that mysterious despot Fashion 
marshalled and directed' this new invasion. The 
leaders of the movement that is to oppose this con- 
jectural invasion seem content to depend on mere 
allegations, and to be presumably not aware of the 
figures of their own trade. They may, therefore, be 
interested to know that transactions were as follows 
in the year 1880 : — Of woollen manufactures, in 
round numbers of value, we made and consumed 
in England 63,000,000/. ; we made and exported 
from England 17,000,000/. ; and we imported and 
consumed from abroad 7,000,000/ 

In other words, Fashion, marshalling to her sup- 
port all the varieties and excellencies of foreign 
endeavour and skill, manages to supply us with 
one-tenth onlj'' of what we annually consume in 
woollen manufactures ; and, on the other hand, we 
supply foreigners with nearly three times the value 
of woollen manufactures that we obtain from them. 
The foreigner must be mightily unfashionable ; and 
it seems that his eagerness to possess himself of 
goods that are pronounced at the Mansion-house 
to be unfashionable enables the ladies of England, 
out of the profits of the trade, to wear whatever 

Foreign Competition in Mamifactures. 245 

they may consider most suitable to their position, 
their person, or their purse. 

It may also be interesting to the leaders of this 
new movement to know that we are year by year 
using more and more ' raw ' wool in England. The 
following figures testify to this : — 

1870. 1875. 1880. 

Lb. Lb Lb. 

1. Of Foreign Wools we Imported.. 263,300,009 ... 365,100,000 ... 463,500,000 

2. Of Foreign Wools we Exported.. 92,500,000 ... 171,100,000 ... 237,400,000 

3. Of Foreign Wools we retained 1 iro,800,000 ... 193,000,000 ... 226,100,000 
for use J ' * 

It is also to be remembered that as a nation 
we are taking from foreigners more and more yarn 
for weaving and other manufacturing purposes. 

The figures are :— 







Yarns Exported 

... 36,500,000 .. 

. 31,700,000 .. 

. 26,500,000 

Yams Imported 

... 10,300,000 . 

.. 12,400,000 ., 

.. 14,900,000 

Excess of Exports ... 

... 26,200,000 ., 

.. 19,300,000 .. 

.. 11,600,000 

In other words, so far as the foreign trade in 
yarns is concerned, we are supplying less and less 
to foreigners, and taking more and more from them ; 
and, as yams are only used for manufacture, these 
facts do not exactly prove that foreigners are manu- 
facturing more and we manufacturing less. 

I would allude briefly to the other point— the 
alleo-ed effects on British agriculture. Here, again. 

iMG Sfntr Aid and Sfafc Iiifcii'cmin 

it is often bettor to know \\\\nt is aetuallv proeeediug 
than to ignore siieli kaowleiige, aaid allow the kindly 
inipnlses of generosity to be led astray by the imagi- 
nation. It seems to have been taeitly assumed that 
both prices and iprantity of English-grown wool liave 
fallen solely beeanse fashion has for the time being 
deserted Instro and long wool for dnlness and short 
wool. But the magnitvrdo of this asserted influence 
is linntod by the faet that of the 150 milhon lbs. 
of wool annually grown in tliese islands, 55 millions 
at the least are short wool. A.nd, again, those 
familiax with agrieulture know very well that for 
years past fanners have bred for the oaroase and not 
for the fleece ; they found it more profitable 
(>ver since tlie beginning of the century to supply 
the butcher rather than the maiuifacturer ; aad the 
consequent fall in the value of the lleece has been 
more than compensated by the increased bulk a.nd 
general I'haracter of the carcase; and meat is one of 
the few commodities that seem always to remain 
high in price. The number of sheep in England 
varies but little taking one year with anotber. The 
averages for the last four triennial perioils have 
been— r,:i,',, XU, 32.',, a.nd 31,! millions. The figures 
ahvays fall off in wet years. Fluke and other diseases 
incidental to excessive moisture are known to have 

Foreign Competition in Manufactures. 247 

almost decimated flocks in certain districts of late. 
The fashion for these dull wools, on the showing of 
the authors of this new movement, did not enter 
upon the scene till 1874. But in 1868 there were 
35 millions of sheep in these islands, and in 1871 
only 31 milHons, in spite of the absence of all 
interference on the part of fashion. It is also worth 
while noting that the increase has been continuous in 
the export of English-grown wool, from 9,000,000 lbs. 
in 1870 to 11,000,000 lbs. in 1875 and 17,000,000 lbs. 
in 1880. Foreigners are taking more aud more of 
our home-grown wool. The results on fashion may 
be disastrous, but we have no cause to complain. 

When we meet with an appeal to English ladies 
to employ English labour in preference to foreign, 
we find ourselves face to face with an appeal 
altogether out of tune with the intelligence and 
tendency of the times. If education has achieved 
anything, English women will know they cannot 
spend a penny on French or any other fashions 
unless the penny has been earned first; English 
labour provides the English nation with the where- 
withal for these foreign purchases. 

On this question of fashion the ladies of England 
will do well to follow the ' statesmanlike ' lead of her 
Royal Highuess the Princess of Wales, and not be 
led astray to imagine that by purchasing what they 

248 State Aid and State Interference. 

do not want they can in any way assist those whose 
economic function it is to supply what is wanted. 
British industries, as a rule, are quite capable of 
taking care of themselves ; they require no patron- 
ising, and least of all would they brook any 
grandmotherly protection from foreign competition. 
England manufactures nearly one-third of the wool 
that is manufactured in all Europe. The English 
system is doubtless capable of improvement, but it 
is not trembling in its shoes because the general 
prosperity enables the nation to make a few pur- 
chases abroad. As long as we in England wisely 
and determinedly allow as little as possible to inter- 
fere with the free course of industrial transactions, 
fashion can but assist in giving spice and stimulus 
to industrial exertions. 

To attempt to fight natural tendencies is a 
beating of the air that is vain, if it be not indeed 
actively injurious to the interests involved. And it 
is a fight which the wise will wage only when they 
are ignorant. A generous but purblind imagination 
has before now led good people to lay the lance in 
rest, even against innocent windmills." 

By thus gathering together facts we see that even 
these three classes of manufacture, classes to which 
popular rumour has specially credited most ruinous 

Foreign Competition in Manufnctures. 249 

effect from foreign competition, retains nevertheless 
all the outward signs of vitality, and of most success- 
ful competition against the dreaded foreigner. In 
short, there is not apparently any single instance of 
manufacture in England that is not doing at the 
least as well as those in foreign lands. And it is 
probable that the majority of these are prospering 
better, especially in regard to the export trade they 
can and do command. 

It may be well to append to these particular in- 
stances an analysis of our exports to France during 
the last few years : — 

Table of Exports to Franok from the United Kingdom. 

Apparel and Hosiery 

Cotton Textiles 





Other Manufactures 

Total Manufactures ... 



Metals Unwrought 


Total Raw Materials... 














































250 Stats Aid and State Interference. 

From these records it will be seen at once that so 
far as the French market is concerned we are in- 
creasing our hold upon it in regard to manufactures, 
but that we find the French require of us less and less 
of the raw materials which manufacturers make use of 

§ 4. If we look to England itself we shall learn 
much. The prosperity of the people, and more 
especially of those whose incomes are small, depends 
intimately on the purchasing power of money. A 
high tariff is always opposed to increasing this 
power. Its effect, if it has any, must be to raise local 
prices. Indeed a high tariff has no influence of a 
protective kind unless it raises prices above what 
they are in other countries. Even American au- 
thorities have to allow that the labourer in America, 
if this purchasing power of money be taken into con- 
sideration, is not so well off as the labourer in Eng- 
land. And the United States is only to a moderate 
degree affected by its high tariff, because all over its 
vast interior it upholds Free Trade. In the United 
States, for instance, the growth of corn and wheat 
and meat is practically unlimited ; in England we 
can only grow half of that we consume, and yet in 
England the prices of food are not higher than the 
prices of the same in the United States. This is all 
proof of the maxim — " If cheap food is not brought 

Foreign Competition in Manufactures. 251 

to the people the people will go to cheap food." 
We have had in England a series of seven very lean 
years, and yet prices of wheat and agricultural pro- 
duce have not risen. The farmer as a producer has 
consequently suffered : there has been no compensa- 
ting rise in price for shortness in quantity of wheat 
he produces. But as consumer, not only of food, 
but of manures, implements, clothing, labour, and 
all else, he feels the benefit of no rise in prices. And 
above all, he has enjoyed the reflex action of living 
on in a community where dearth of harvests has not 
ruined the general prosperity. There have been no 
famine prices to check industrial prosperity. 

And another remarkable feature is the great 
advance in steadiness of prices : not only has wheat 
not risen but meat has not fallen. We open our 
markets to all the world, and we are rapidly discover- 
ing a steady uniform price for our own chief com- 
modities. This is of special value to the farmer, 
because he can teU surely what he is working for. 
When he knows that prices will not alter very greatly 
he can tell beforehand what it will pay him to pro- 
duce ; and he will not devote a year's energies and 
a year of his farm and all its belongings to the pro- 
duction of something which in the outside vagaries 
of market prices he may find valueless when he has 

252 State Aid and State Interference. 

produced it. This steadiness of price, consequeut on 
worldwide supply, is a maia element in the steady 
prosperity of agriculture. 

It has been calculated that the wage-earning 
classes of England win a quarter of wheat now at an 
expenditure of exactly half the amount of labour they 
had to give for the same quantity thirty years ago. 
This represents a very great advance. It accounts 
for the fact of the shortened hours of labour we in 
England can institute and yet compete with all other 
nations successfully. Our labour is more profitable, 
and one chief reason of this is that we have no 
high tariff taxing the ordinary commodities of life 
and transferring money from the pockets of the 
labouring classes to the pockets of the capitalists. 
It is not remembered so often as it should be that a 
protective tariff raises a revenue over and above that 
which finds its way into the coffers of the State. The 
tariff raises prices. In many protective States every 
hardware article, every yard of cloth, or piece of 
clothing or furniture, costs more because of the tariff. 
Every labouring man has to pay this increase of 
price, and a great part of this increase finds its way 
into the pockets of the manufacturer and distributor. 
This does not occur in England, and as a consequence 
the wage-earner is better off. 

Foreign Competition in Manufactures. 253 

But there is another point we have to see to. If 
labour is nominally cheaper in England than in other 
countries, is it really as good 1 We may answer de- 
cidedly in the affirmative. We shall do so if we go 
into details ; we shall do so if we only look to the 
fact that competition is free not only to goods but to 
men ; and the Enghsh artisans and mechanics not 
only completely hold their own against all foreign 
invasion in England, but are to be found in almost 
every manufacturing centre in the whole world. And 
in each of these they are found holding prominent 
positions. We are told on the one hand that we 
cannot compete with France, for instance, because 
our Factory Acts limit us to fifty-six hours, while 
manufacturers in France obtain seventy hours work 
a week from their 'hands.' The answer to this is 
that we do compete. And if we do compete at so 
much less expenditure of time, we find at once we 
must be doing our work far more economically. This 
must not blind us, however, to the danger that 
State Interference, as embodied in the Factory Act, 
might at any moment cause serious injury to English 
industry if it prevented a natural change in the 
hours of labour due to any new change in the 
comparative efficiency of our labour and of foreign 
labour that was working under freer conditions. 

254 State Aid and State Interference. 

A great deal has been said of our sad lack of tech- 
nical education. We are in a transitional state. We 
abolished that State Interference which ^vas em- 
bodied in aU the old apprenticeship and other close 
trade regulations and traditions, but live put forward 
no substitute. Indeed, the State forced on the nation 
an altogether different commodity on the plea, that 
it was a fair substitute. Reading, writing, and 
arithmetic were made the substitutes for technical 
education. We do not yet understand the fuU effect 
of the great error that was made when the nation, in 
its proper determined enthusiasm to educate itself, 
was altogether led astray by rashly assuming that 
the three R's represented education. The farmer 
has all along protested ; and now, at last, the manu- 
facturer is protesting likewise. And we must hope 
shortly to see a reform in our education policy, which 
wiU, at last, begin with some adequate definition 
of the term education. 

Farmers have long pointed out that children who 
are probably destined to become agricultural la- 
bourers are practically better educated bv being 
taught the technicalities and practical operations of 
agriculture than by being hurried through courses 
of reading, writing, and arithmetic. Both branches 
of education are good, but if you substitute the one 

Foreign Competition in Mamifactures. 255 

for the other you will oftentimes obtain an adult 
'educated,' but ignorant of all knowledge that can 
serve him honestly for his life's work. 

And so it is with manufacture. The dead level of 
the three R's is to be imposed on all children alike 
at the sacrifice of all other training. This unforeseen 
tendency of the nation's first grasp on the great idea 
of a thoroughly national education policy will soon 
be checked, and we shall have some real and efficient 
substitute for those means of technical education — of 
acquiring training and knowledge in their real work 
of life — which close guilds and apprenticeship 
systems sought, however badly, to provide. 

It is well for English labour that it can still com- 
pete with the world, even though it has been so 
hampered by a partial attempt at national education. 
It is one sure hope of the future that in this direc- 
tion — at all events, in the direction of technical 
education, considerable improvement is yet possible 
and probable. 

§ 5. On the whole we see that foreign competition 
in manufactures is at the present a non-existent 
element in our position. We open our doors to the 
foreign competitor in every sense of the term ; and 
by our national prosperity, we, so to speak, invite 
him to do his worst. In spite of all this, the amount 

256 State Aid and State Interference. 

of manufactures lie supplies to us is altogether in- 
significant if compared either with the amount of 
manufactures we supply to him or with the amount 
we supply to ourselves. 

We remain, after what has been called 'forty 
years of disastrous one-sided Free Trade/ the one 
great exporting country of manufactures. We also 
note, that of the other countries, those export the 
greatest percentage of manufactures that have the 
lowest tariffs ; and we are driven, if we look to ex- 
perience, to adopt the maxim that " the export of 
manufactures proceeds in inverse ratio to the height 
of the customs tariff." This is not a theoretic idea, 
but merely a plain matter-of-fact account of what 
has actually occurred among nations. One-sided 
Free Trade has, at all events, enabled us as a 
nation to pay the lowest prices for everything we use 
or consume. The consequence is that, flourishing 
thus as consumers, we can, as producers, in the long 
run undersell all foreigners who attempt to compete 
with us, and who do not enjoy similar advantages. 
It is for this reason we have been able to make so 
much of our coal and our iron and our climate. 

What a country can best produce is not confined 
to what its soil or its climate yield, but to what 
the whole of the conditions of its existence yield. 

Foreign Competition in Manufactures. 257 

Character, skill, perseverance, and even traditions in 
the people are often quite as important as latitude, 
or mineral resources, or rainfall. Forty years of free 
traflSc with all the world, so far as we could make it 
free, have enabled us to develop many invaluable 
national qualities and attributes. In addition to 
this, on the one hand we have been checked from 
wasting our energies on the production of com- 
modities more cheaply produced elsewhere ; and, on 
the other, we have been enabled to establish and 
to obtain a good start in various other industries for 
which we have equal, but not superior, natural 
facilities to other nations, but of which other nations 
have deprived themselves by a variety of artificial 

As a matter of fact, nature is more bountiful in 
regard to particular products in some districts of the 
earth's surface than in others. A high tariff prevents, 
and a low tariff allows, a nation to profit by this fact. 
And a government which would aid its citizens in 
industry or commerce by interfering with their 
natural advantages, and obstructing free intercourse, 
must, in the long run, injure and impede, not only 
the commercial, but the manufacturing prosperity 
and advance of the people. 

258 State Aid and State Interference. 



§1. Four General Principles. §2. Lowering Tariffs. §3. Fighting 
Bounties. § i. Commercial Treaties. 

§ 1. The Government of any one country is not 
infrequently urged, propria motu or from without, 
to extend the active influence of its own commercial 
policy so far as to interfere with the private and 
public policies of other nations. I wish in this 
chapter first of all to summarise the principles that 
should lie at the base of all international commercial 
policy; and then to apply these general principles 
to the particular modes in which such interference 
may be embodied. 

I will formulate four general principles, and then 
pass on to apply those general principles to these 
modes : — to tariffs, bounties, and treaties. I ven- 
ture to think it is no exaggeration to say that the 
jDroblem we here deal with is one of the most vital 

Interference with other Nations. 259 

importance to our national future. We in England 
have again arrived, as it were, at cross roads in our 
commercial progress. We liad done so before when 
we took the right road in 1846, and again when 
we took a wrong turning in 1860. 

If we review generally the principles that ought 
to regulate our dealings with other nations in re- 
gard to commercial policy, we see at once that we 
have two concurrent duties to perform. There is 
our duty to ourselves, and there is our duty to 
foreign nations. It is not only just as wrong, but 
it is just as foolish, to forego the one duty as to 
forego the other. In regard to our duty to our- 
selves we light upon a first principle which I need 
not dilate upon It is a principle more generally 
accepted than any other. It is the promotion of 
our own prosperity. In regard to our duty to other 
nations, ideas are more mixed. In the first place, 
there must be international as well as national 
freedom. In short, the hberty of each nation is 
only confined within the limits of like liberties 
in other nations. Our liberty does not authorise us 
to do anything that robs other nations of a similar 
liberty, and we must resent any such attempt on 
the part of a foreign nation. We must neither 
interfere nor suffer interference with this liberty. 

S 2 

260 State Aid and State Interference. 

With this proviso in mind we come upon a second 
general principle — the promotion of the prosperity 
of other nations. It is often forgotten of what very 
great importance to our individual prosperity is the 
prosperity of other nations. Many of us know the 
bad effect of a famine in India or China on English 
trade. But there is more than this. In the late 
heated discussion in newspapers and elsewhere on 
the free trade question one point seems to me to 
have been altogether overlooked. Stated broadly, 
this point is that much of the falling off in particu- 
lar cases in our export of manufactures, and certainly 
a most serious drag on any increased consumption 
of our manufactures in certain countries, is, — not that 
they are supplying themselves ; not that protection 
has fostered and developed in their midst rival 
manufactories to ours — but that they heavily tax 
each native in his capacity as consumer, and so 
discourage and weigh down his efforts as a pro- 
ducer ; they pauperise the nation, and render it less 
able to buy from other nations. This is a fact 
strangely overlooked. I do not, of coTirse, say that 
it is the case everyivhere, but it is the case in 
certain countries whose natural and virgin resources 
do not assist the population to resist and overcome 
the pauperising effects of commercial restrictions. 

Interference with other Nations. 261 

A third general principle that should regulate 
international commercial policy is the removal of all 
restrictions or obstacles to the free current of com- 
mercial and industrial life. Freetiom to industries is 
the mainspring of industrial prosperity. Of course 
this freedom is like international freedom, a mere 
relation. It means freedom to do all that does not 
interfere with the same freedom in others. The 
chief function of Government is to watch over this 
essential condition to the existence of freedom. 
That is the final cause of the State's existence. 
The State which busies itself with other matters is 
likely to busy itself to the detriment of its subjects. 
The main condition of commercial success also is 
that the will, whether of the individuals or of the 
State, be left as free and as untrammelled as possible. 
The contravention of this principle leads to endless 
conflicts of interests and to strange breaches of 
justice. To say that commmercial intercourse must 
be as unrestricted by State interference as possible 
ought to appear to many to be a needless truism, 
and yet it is a principle more commonly violated 
than any other. Indeed, the true value of com- 
mercial intercourse is not commonly appreciated. 
Many have forgotten how Mill proved commerce to 
be ' a mode of cheapening production.' Commerce 

262 State Aid and State Interference. 

is certainly a means to that end. The more we 
import and export the cheaper we can produce. 
Interchange of commodities implies saving in the 
cost of production. It is this saving of price in all 
the nation consumes that makes commerce a source 
of national wealth. Each commodity imported re- 
presents normally so much labour saved in its 
production. The more the nation imports the more 
it saves in the cost of production. Unrestricted 
commerce will regulate itself according to the actual 
profits accruing to the community. Anything that 
interferes with commerce is simply a curtailment of 
these profits. There is an important corollary to 
this principle which most people overlook. It is true 
we must never seek to compete against greater 
natural superiorities in other nations. But, at the 
same time, we must never forget to compete against 
equal or lesser natural superiorities. It is by not 
attending to this latter wholesome rule that we have 
allowed the silk industries of France to steal a march 
upon us ia the matter of better technical education 
and a higher standard of taste. This rule specially 
affects Ireland. There are many industries in which 
other countries have no natural superiority to Ire- 
land ; and some industries in which Ireland and Irish 
people have actual natural superiority. Yet these 

Interference with other Nations. 263 

industries do not now flourish in Ireland. Lately, 
however, an altogether wholesome private movement 
is on foot which will, we all hope, be pre-eminently 
successful in reviving in Ireland those industries for 
which Ireland and the Irish have natural facilities 
greater than, or at all events equal to, those possessed 
by other nations. 

These three foregoing principles apply to our 
commercial policy in so far as it affects our industrial 
and national prosperity. But our commercial policy 
is also largely controlled by the need of enabling 
the State to perform its duties. In most civilized 
countries the commercial policy adopted has close 
connection with the question of raising State 
Revenue. This we are compelled to recognise in 
regulating our commercial policy. And the best 
general principle to act upon is to ,see that the 
collection of Revenue does not hamper commercial 
and industrial life. 

§ 2. If we apply these four principles to tariffs, we 
must come to these conclusions. We have our own 
tariff and we have the tariffs of other nations. Low 
tariffs are everywhere desirable if we would realize 
our four principles of prosperity. A low tariff, by 
interfering as little as possible with the ordinary free 
current of commerce, does not in practice restrict 

264 State Aid and State Interference. 

or direct production or exchange. There is con- 
sequently no waste of labour or of capital on the 
production of commodities that can be produced 
cheaper elsewhere, or on the importation of commo- 
dities that can be produced cheaper in the country 
itself. A low tariff incidentally promotes commerce, 
and so increases the profit or saving of labour 
accruing from all exchange. It thus promotes the 
prosperity of all nations. And besides this, so far 
as the object of raising revenue is concerned, a 
low tariff is right, a high tariff wrong — that is, if 
we judge by results. A low tariff may practically 
not interfere with the free current of commercial life 
if we see to it carefully that it neither oppresses 
nor relieves of oppression home as compared with 
foreign or foreign as compared with home products. 
For instance, we not unfrequently meet with the 
argument that some home industry should be 
relieved of taxation. This contention , has reason 
iu it only if a like industry ia a country trading 
with us in that particular commodity is free of 
similar burdens. But we are apt to forget that 
foreigners pay rates and taxes as well as ourselves. 
It is not so generally acknowledged as it should be 
that a low tariff in the course of years yields 
more actual revenue than a high tariff. We have 

Interference with other Nations. 265 

our two colonies in Australia — Victoria and New 
South Wales. They are very similarly circum- 
stanced. Victoria for the past ten years has had 
a high tariff, and New South Wales a low tariff. 
In Victoria the income from customs duties during 
these ten years has remained about the same per 
annum : in New South Wales it has steadily 
increased. Another example is that of the United 
States as compared with the United Kingdom. 
During the past twelve years the English customs 
revenue has maintained a steady level of 20,000,000/. 
per annum, though the tariff has been low, and 
even reduced during the decade. During the past 
ten years, with a high tariff, the United States 
customs revenue has fallen from 37,000,000Z. in 
1869 to 27,000,000/. in 1880. And we must remem- 
ber that during this decade the population of the 
United States has increased by 10,000,000 while 
our own has increased only by 4,000,000. If we 
add this direct result to the indirect result of 
largely increased imports, each item of which brings 
profit to the nation, we shall see that a low tariff 
brings a vast balance of material benefits which 
would overwhelm even the most extravagant pre- 
tensions in the way of industrial benefit set up 
by the advocates of a protectionist tariff. If we only 

266 State Aid and State Interference. 

remember that we profit by imports even more 
than we do by exports, we shall not go wrong. 
We must keep our own tariff low ; that promotes 
our own prosperity; but is it also our desire to 
promote the prosperity of other countries ? For 
both reasons, then, we wish other nations to have 
low tariffs. How are we to accomplish this ? 

We are told to put on an equivalent tariff so long 
as they maintain theirs. But such a retaliatory 
tariff is an act of war. There must be economic 
loss. Such a tariff can only be justified by success. 
Where have we experience or reasons to prove that 
such a tariff ever reduced any other tariff? The 
cost of such an act -of war would forestal much of 
any ensuing profits. Such an act would breed many 
evil indirect influences, which last for a long time 
and which, in the everchanging arena of ' practical 
politics,' may well outlast any succeeding period of 
low tariffs, even assuming such a period ever came. 
It is instructive also to regard the practical possibili- 
ties of retaliatory duties in England to-day. In the 
first place, were we to impose them, the opinion 
must gain ground among other nations that we 
have abandoned low tariffs. All might not think 
so ; but some would ; and in so far the imposition 
of retaliatory duties to force some nations to low 

Interference with other Nations. 267 

tariffs would increase the tendency of other nations 
to retain high tariffs. In the second place, we must 
either impose them for a term of years or until their 
object be accomplished. A term of years will be 
taken, especially by the more obstinate opponents, 
to be merely a term of waiting. No term of years 
puts us to the risk of pursuing a hurtful policy for 
ever, or, at all events, for long. We should bind 
ourselves, in self-contradiction, to that very policy 
which we were seeking to overthrow. In the third 
place, more than 90 per cent, of what we import is 
food and raw material, aud to put duties on these is 
simply to commit industrial suicide. In the present 
political state of the world, the remedy for high 
tariffs is to keep our own low and free from all 
foreign interference. This is the surest means 
eventually to outlive the action of high or hostile 
tariffs. We must hold up to the world the example 
of successful fact. This is a remedy which has not 
yet been tried. In the case of England, we began 
it in 1846 ; but we left off in 1860, when we made 
the French Treaty. 

§ 3. In determining on the principles that should 
regulate our conduct towards countries that give 
Bounties, we must above all keep our attention fixed 
on actual experience. Mr. Gladstone has said, in 

268 State Aid and State Interference. 

regard to the notorious Sugar Bounties, — " We do 
not regard with any satisfaction the system under 
which an artificial advantage is given in our 
markets to the products of foreign labour." But 
this idea is applicable only in the event of their 
products being sold in our market at less than their 
cost of production. This would deprive our own 
industry of legitimate employment ; but only when 
and if it takes place. The question remains, What 
Bounties do actually give an artificial advantage 
in our market to the products of foreign labour ? 
A great many people will name at once the Sugar 
Bounties. Well, firstly, let us look to facts. In 
regard to the countries that give these Bounties, it 
is, of course, evident that the artificial advantage 
comes from the pockets of the people at large. 
Consequently all profits of this artificial advantage 
is merely returning to a few of the people what all 
the people have paid out. But there is the further 
question. Axe there any extra profits created by 
these Sugar Bounties ? If we turn to reasons we 
shall light upon an explanation which no one seems 
to notice. These bounties are drawbacks on export. 
In other words, the ' bounty-fed produce ' is 
produce which has escaped contributing to the 
revenue, and which yields in addition certain 

Interference with other Nations. 269 

surreptitious profits on the transaction. But to 
accomplish all these ends there must be a duty 
on sugar. The greater proportion, then, of all 
this labour is simply to overcome an obstacle to 
industry which we in England have most wisely 
abolished when wo abolished the sugar duties. 
It is not known so generally as it should be that 
no State on the Continent gives Sugar Bounties. 
The bounty is obtained in spite of the Govern- 
ment, and by reason of the difficulty of assessing 
a duty and an equivalent drawback on raw and 
refined sugar. Each Continental Government knows 
this, and each wishes to abolish so faulty a system. 
The only method that can really succeed is the 
doing away with all duties on sugar; and seeing 
that sugar is so necessary a food, this would appear 
to be both wise and necessary, and English experience 
proves the entire success of the method. 

But, then, there are other bounties not founded on 
drawbacks. The most recent instance is the insti- 
tution of Shipping Bounties by France. Their 
object is to promote a carrying trade and a ship- 
building trade. And they are to accomplish this 
by turning to these trades labour and capital from 
other employments. Much must be lost to the 
community by such forced interference with industry. 

270 State Aid and State Interference. 

Had France population to spare to earn a livelihood 
on the sea ; had France more coal and iron in close 
proximity to harbours ; were France a mass of good 
harbours standing midway between the Eastern 
and Western civilizations ; had France committed 
herself to a low tariff for purposes of Revenue only ; 
had France 10 millions of Frenchmen and 200 
millions of native races under her own rule domi- 
ciled in all distant parts of the world ; — France would 
have been the natural rival of England in all ship- 
ping affairs. But France has none of these things, 
and it so happens that England has them all. It 
is therefore not wise of France to endeavour to 
rival England in a special industry due to special 
environments which France does not enjoy. More- 
over, we already see that Italy and Germany and 
Spain are talking of Shipping Bounties. To put on 
such a bounty is to invite — nay, rather to incite — 
other nations to do likewise, and thus, even if 
successful, it becomes more than ever a dead 
economic loss to the country, and the instrument of 
its own destruction. 

It may be contended that while we in England 
are waiting for other countries to experience by sad 
disaster and loss the mistakes they have made, our 
own particular industries may suffer from tern- 

Interference with other Nations. 271 

porary depression, and that thus, in order to 
promote our own prosperity and also that of the 
other nations, we should endeavour to put an end 
to all bounties. If we take the case of England 
and France we shall see the difficulty in our way. 
If we place countervailing bounties on our own 
industries we at once bring the two cases more on 
to an equality. But then that means that we reduce 
the natural advantage we now possess — a natural 
advantage which is only made the greater by the 
artificial arrangement adopted by France. Again, 
it is equally impracticable to place a duty in 
English ports on all shipping that receives bounties, 
because by so doing we at once put a premium on 
French ships visiting foreign and neutral ports. We 
have become the great carriers and builders by our 
natural opportunities, and in some measure by 
our rather unique low tariff. Nothing can even- 
tually deprive us of this but similar conditions 
arising in some other nation. If France pre- 
fers to take millions a year out of the pockets of 
her people, to make what M. Tirard himself has 
recently called 'great and heavy sacrifices,' in 
order to turn labour and capital from more profiit- 
able to less profitable employment, and to waste 
the margin of labour and capital expended in this 

272 State Aid and State Interference. 

production aver and above what would be expended 
were things left free, we shall indeed note the ex- 
pense all this is to the French people. We shall 
also note the fact that in so far as these bounties 
succeed in diverting capital and labour from 
other industries, in so far do they open up a 
new gap for English industries to fill. We shall 
note, too, that whatever success may attend this 
new policy will have its first effect on those ship- 
building and carrying interests which exist by 
sufferance under peculiar local conditions. The free 
and healthy English industry will be the last to 
feel their effects. We remember that the up-keep of 
the ships of the French navy is nearly three times 
as costly as that of English inen-of-war. There 
are not the same material facilities in France. All 
this dead loss of a forced industry, coupled with the 
direct burden of the bounty, renders it absolutely 
certain that in the end England must win. And 
this even without taking into account that for very 
consistency's sake the logical French mind will yet 
demand similar bounties for all other industries. 

To destroy the Bounty System we must trust to 
indirect influences. And among these the most 
powerful is the care that the natural advantages 
any particular industry threatened enjoys in Eng- 

Interference with other Nations. 273 

land be not in any way hampered. As "we have 
successfully braved the Sugar Bounties by taking 
away all duty on sugar, so we can successfully 
brave the Shipping Bounties by removing all re- 
strictions on the increase of our commerce, and 
promoting the efficiency and speed and comfort of 
our mercantile marine. The French bounties, in 
so far as they are efficacious, wiU greatly stimulate 
private skill and enterprise in England. England 
has still the great sources of supply of coal and 
iron, and she has that colder climate that is so 
essential to metal working. England must look to 
facts and let fancies alone ; put her trust in ex- 
perience, and keep her tariff low. Then the force 
of nature will overcome all those artificial restrictions 
placed by other nations on their own industries. 

8 4. There remains the last of our particular 
inquiries — ^What principles ought to regulate our 
dealings with other nations m respect to commer- 
cial treaties? Commercial treaties are bargains or 
contracts based on a state of warfare. To have 
a treaty at all you must assume that the two 
-countries are in a condition of antagonism. In so 
far, then, as commercial treaties are treaties of 
amity, in so far are they good. But in so far as 
they are treaties of commerce, in so far are they 

274 State Aid and State Interference. 

restrictions on commerce. Now, they may be re- 
strictions on commerce itself being restricted, as 
when Japan contracts not to levy more than three 
per cent, on imported goods. We find that this is 
the usual tendency of modem treaties; they are 
bargains by which one nation contracts with an- 
other for greater facilities of commerce. But by 
their very nature they also bind a nation to con- 
fine these facilities to some one or two other 
nations. They only do away with restrictions on 
one stream of commerce by placing restrictions on 
other streams. They thus compel a nation to adopt 
a more costly mode of obtaining certain commodi- 
ties than it would adopt were its action free and 
unfettered. It would thus appear that no commer- 
cial treaty is correct which binds the contracting 
parties to any differential duties or tariff. Commercial 
treaties that open up trade with another country 
without, at the same time, restricting trade with 
other countries, may be beneficial. Such are the 
treaties by which England secures commerce with 
China and Japan. The French Treaty is not one of 
these. The treaty of 1860 was a decided departure 
from Free Trade principles ; it restricted our free- 
dom in commercial dealings with other nations. We 
gained indeed by the low duties France placed on 

Interference with other Nations. 275 

our goods ; we gained by the low duties we placed on 
French goods ; but we lost in other respects. For 
instance, other nations, Spain and Portugal, at once 
raised their tariffs against us, and by this French 
Treaty we lost our liberty of managing our own 
financial and commercial affairs as we might deem 
best. Mr. Chamberlain has told us " If the treaty 
negotiations with France break down, the English 
Government would be perfectly justified in dealing 
with the wine and spirit duties as they thought best 
for the interests of the country." In other words 
the treaty, if made, will deprive the English Govern- 
ment of its liberty to deal with duties tending to the 
best interests of this country. We obtain, indeed, 
entry into the French market, but in so doing, if we 
may judge by experience, we close other markets to 
ourselves. That is sufficient of itself to condemn the 
treaty. But the question remains — Is this treaty the 
only means of gaining entry into the French market ? 
Jt^Tow, if we declare to all the world we will make no 
contracts that bind ourselves, but wiU, from time to 
time, put on and take off duties as suits our own 
financial policy, will not such a policy afford them 
strong reason to open their ports to us in order to 
maintain commercial intercourse ? We might well 
tax some luxuries more than we do, apd our wiije 

276 State Aid and State Interference. 

duties might well be readjusted. In tliese matters 
our hands have been hitherto tied by treaties. In the 
present condition of the world England would find 
much saving of labour could her commercial treaties 
be restricted to one clause — that known as ' the most 
favoured nation ' clause. Thus we should contract to 
grant to all nations the fullest favours our domestic 
policy will allow; we should contract to receive 
from these nations the fullest favours their domestic 
policy will be able to grant. But we should leave it 
to each nation to elaborate its own domestic policy. 
If we abide by profitable principles of conduct we 
shall not make commercial treaties that restrict our 
financial policy, or that in any way, directly or 
indirectly, restrict our trade with third countries. 
It will be better for our prosperity to have no 
treaties at all than treaties that in any way bind 
us. We are more likely to lead other nations to 
lower their tariffs by such action than by that 
vain seeking after reciprocal concessions which has 
been attempted now for more than sixty years, and 
which, whenever it meets with success in one 
country causes, ipso facto, an equivalent backshding 
in other countries. If we have a treaty at all it 
would be well if it consisted of the one clause — ' the 
most favoured nation ' clause. Even this is merely 

Interference with other Nations. 277 

a conditional arrangement — conditioned by the 
peculiar political relation of nations to one another 
at the present day. A treaty is the only means 
existing, with the exception of warfare, for pre- 
venting one nation from pressing its own liberty 
so far as to encroach upon a similar liberty in 
other nations. 

In thus considering what principles ought to 
govern our dealings with other nations as respects 
tariffs, bounties, and commercial treaties, I tabulate 
four principles : — 1, "We must promote our own 
prosperity; 2, We must promote the prosperity 
of other nations; 8, We must free from all re- 
straints and obstacles the courses of commerce and 
industry; 4, We must not allow the collection of 
revenue to hamper commercial or industrial require- 

These principles are largely conditioned by the 
political relations of nations, but in applying them to 
the special objects under discussion we shall see that 
they lead us in regard to tariffs simply to keep our 
own as low as possible ; in regard to the bounties 
avoid them altogether; in regard to commercial 
treaties, to make f none that in any detailed way 
hamper our own liberty of financial or commercial 
action. These solutions proceed on the sound and 

278 State Aid and State Interference. 

profitable principle of assuring, both to ourselves 
and to others, the utmost individual freedom com- 
patible with the like individual freedom of each 
other. By such courses we shall, in doing our 
duty to ourselves, also do our duty to other nations. 
And if we win in the race it will be because 
other nations handicap their own chances by un- 
necessary and hurtful restrictions on the liberty of 
the individual. 




Abstract principles, 2 
Abyssinia, 230 
Access to soil, 19 
Advertisement, 31, 44 
Agriculture, 18, 177, 246 
Agricultural competition, 177, 212 

„ education, 206 

Aldis, Professor, 207 
American farming, 21, 188 

„ Free-trade, 35 

„ manufactures, 37, 242 

„ railways, 193 

„ tools, 42, 241 
Apprenticeship, 254 
Arts of civilization, 15, 143 
Australia v. France, 150 
Australia, 74, 165 
Austrian bounties, 96 
Authority, 2 

Bad times, 39 
Barbados, 85 
Barley prices, 20 
Beet sugar, 82 
Belgian refiners, 97 
Berry, Mr. Graham, 13 
Bismarck, 112 
Boot-makers, 123 
Bounties, 11, 64, 271 
Bounties and prices, 90 
Brassey, Sir T., 184 
Breeding, 246 
Bright, Mr. J., 31 
British agriculture, 31, 246 

British Association, 14 
„ constitution, 168 
„ empire, 15, 148, 152 

Burdens on farmers, 33, 184 

Carey, Mr., 187 
Canada, 163, 222 

„ North-west, 198 
Canadian tariflf, 22, 136, 160 
Cane and beet sugar, 93 
Civilization, 1, 15, 143 
Chamberlain, Mr., 275 
China market, 45 
China trade, 141 
Coal, 118 
Cobden, 36 
Colonial growth, 120, 127 

„ and foreign trade, 143 

„ manufactures, 21 

„ policy, 159 

„ trade, 16, 127 

„ revenues, 126, 145 
Commercial policy, 258 

„ treaties, 273 

Competition, use of, 212, 257 
Consumers, 38, 251, 262 
Continental dislike of bounties, 

102, 269 
Continental tariffs, 35, 215 
Corners, 194 
Cost of bounties, 70 

„ production, 82, 191 
Countervailing duties, 13, 93 
Coventry, 242 



CusDoms dnties, 34, 144. 
„ revQiae, 125 

Delia of the Nile, S9 

Differential dnties, 223 

Distress in ITnited States, 39 

Dnfi, Mr. Grant, 135 

Dnlness, 246 


Daly of the State, 6, 261 

Educatiox. 253 

„ in agricnltnre, 206, 2-52 
Educated igncj-ance, 3 
Effect defined. 4 
Effidency of labour, S3 
Employment of popolation, 142 
Endvmii'Tu 154 
En^ li^ h cuTlerr. 41, 242 
„ estate, the, 154 
„ exports. 240, 256 
„ fntm«. 1-55 
5, home market, 236 
„ grown wool, 247 
„ manniaetares. 35, 240 
„ retaliation. 267 
„ shipping, 5S 
„ Bngar-beet, 308 
„ EnperioritT, 303, 353 
Enropean tariffs, 35, 215 
Exchange, 22o 
Esperioice invalnahle, S 
Exporting soil, 1S7 
Exports and imports, 43, 129 
Exports of mamifactares. 241 
Extravagance, 40 

FACT3ET Acts. 253 


Fairness. 56 

Fair-trade empire, 16 

Farmers' prices, 33, 251 

Fashion, 237 

Finsncial independence, 157 

Floods of mamifactnres, 24, 231, 

Food supply, 33. 2 W 
Fonqnet, JL, 97. 104 
Forcing foreigners. 25 
Foreign competition, 64, 230 

,. food supplies, ISO, 309 

,. taiiiis. 22, 215 

Formulated ignorance, 4 
Free exchange, 36 
land, 19 

„ ports, 14 
Freedom, 9 
Free trade for British empire, IS, 

Free-traders and Free-traders, 30 
Free trade a^H Protection, 113 
Fraich complaints, 94 

„ manufactures, 232 

„ shipjring bounties, 69, 129 

„ taxation, 70, 145 

,. trade, 249 
Future of American Protection, 62 

Gboeges, SL, 95, 103 
Gorman GoTemment, 12S 

„ sugar, 9? 
Germany, 157, 232 
Gladstone, Mr, 355 
Gloves, 236 
Gold, 11?. 23S 
Gold diggings, 119 
Govemment, 6 

- popularity, 64 

Grain crops, 33. 198 
Granary of America, 20? 
Greece, duties, 216 
Grey, Lord, 169 
Groans of tJip planters. 77 
Growth of England, 179, 210 
Grumbling, 75 

FCalf-kxottledge, 3 

Hayter, Mr„ 135 

Hardware, 241 

Hennessy. Sir J. P., 140 

Hero-worship, 2 

High tariffs paTifferise. 22S. 26i3 

Hogg. Mr. Q.. S3 

Holland, 105 

Home markets, 35, 190. 236 

Hongs. 141 

Hong Kong. 15. 139 

Hostile tariffs, 22. 214 

Igsoeaxck, 19 
Immigrants, 35 
Imperial Union. 169 
Import duties, 224 
ImpDrtei food, 1 52 



Imports, 10, 116, 262 
Improvements in farming, 205 
Increase of English nation, 148 
India, 223 

International contracts, 27 
„ freedom, 258 

Italy, 85, 217 
Irish manufactures, 262 
Items in tariffs, 217 

jAcanaioNT, M., 100 
Jamaica, 75, 227 
Japan, 274 
Jemingham, Mr., 99 

Laeotie, 43, 119, 185 

„ in England, 252 

„ in United States, 250 

Land prices, 180 
„ question, 19, 209 

Less hostile tariffs, 220 

Liherty, 2, 158 

Loss by waiting, 271 

Low, medium, and high tariffs, 218 

Low tariffs, 39, 133, 234, 257 

for Colonies, 173, 223 

Lubbock, Mr. N., 91 

Lustre, 246 

MacCuixoch, Sir J., 113 
MaHet, Sir L., 94 
Manufactures, 11 
Manufactures from abroad, 213, 

Manufacturing nations, 233 

„ supremacy, 25, 41 

Markets abroad, 215 
Marriages, 133 
Mercantile marine, 72 
Misapplication of enei^, 25, 38 
Monopoly, 197 
Mot, M. de la, 97 
Most favoured nations, 220, 276 
MulhaU, Mr., 233 

Napoleon, 208 
National feeling, 168 
Natural advantages, 273 
Nature's bounty, 257 
New lands, 200 
New South Wales, 14, 212 
North-west, 201 

Oats, prices, 20 

O'Loghlan, Sir B., 136 

One-sided free-trade, 15, 137, 256 

Opium revenue, 145 

Other nations' prosperity, 260 

Pacific railway, 198 
Parliament, 161 
Penal clauses, 105 
Percentage of manufactures, 24, 

Pine-apples, 227 
Planters, 74 
Political economy, 4 • 
Popery in polities, 2 
Population, 42, 117, 187, 201 
Population and wheat, 189 
Prairie cropping, 33, 184 
Price, Professor Bonamy, 221 
Prices of sugar, 81 

„ of wheat, 18, 186, 196 
„ steady, 251 
Printing-press, 29 
Principles, 2 
Produce of the soil, 178 
Production and use, 67 
Profits on imports, 226 
Profitable manufactures, 213 
Protection, 9, 32, 214 

„ for young countries, 

16, 112, 212 
Protective prices, 34 
Prosperity of United States, 32, 

Prout, Mr., 204 
Purchasing powers, 133, 225, 250 

Eails, 42 

Railways, 18, 191 

Eainfall, 185 

Eaw materials, 34 

Eaw wool, 245 

Eeciprocity, 26 

Eefined sugar, 110 

Eefining in bond, 103 

Eeforms in farming, 207 

Eetaliation, 266 

Eevenue, 126, 144, 263 

Eitchie's, Mr., Committee, 74 

Eoyal Agricultural Commission. 

Eussell, Earl, 159 



Sacohaeucetbt, 108 

Sandon, Lord, 215 

Savings' banks, 131 

Say, M. Leon, 82 

Self-government, 161 

Sewiag-machines, 218 

Sheffield ware, 42 

Sheep, 246 

Ship-bvulding, 67, 123 

Shipping, 68, 129 

Shipping bounties, 12, 66, 271 

Silk trade, 242 

Slave V. free-grown, 78 

Smith, Adam, 37, 187, 207 

South Africa, 166 

States in error, 7 

Steadiness in prices, 251 

Steel, 42 

Successftd example, 28, 105, 110, 

Sugar bounties, 12, 73 

„ conference, 105 

„ consumed, 79 

„ growing, 80 

„ refining, 94 
Sumner, Professor, 112 
Supreme 'Will, 160 
Surplus products, 44 

Taeiffs, 22, 35, 234 

„ and prices, 224, 250 
„ and revenue, 48, 145 

Taste, 262 

Taxing industries, 264 

Technical education, 206, 254 

Tendency to low tariffs, 216 
„ toward union, 157 

TextUe manufactures, 232 

Theorists, 144 

The three K's, 254 

Tirard, M., 271 

Tobacco revenue, 145 

Tools, 42, 241 

Town and country, 211 

Trade channels, 174 

„ depression, 152 
Treaty of 1860, 274 
Tropical farms, 77 

TJndeb-peopled countries, 33, 

116, 173, 183 
United States, 9, 31, 36, 231 
Unity of empire, 170 
Unkmdly seasons, 178 
Unprofitable manufactures, U.S., 

11, 37, 43 
Use and production, 67 
Use of soil, 180, 209 
Use of treaties, 275 
Usine, 75 

Value of commerce, 261 
Victoria, 14, 222 

Victoria and New South Wales, 

Wages, 132, 224, 250 
Wakefield, Gibbon, 184 
Wales, Princess of, 247 
War of tariffs, 26, 266 
Wear, 238 
Weeds, 184 

Welfare of wage-earners, 252 
Western States, 198 
West Indian sugar, 75 
Wheat farmers, 18, 182, 246 

„ in England, 181 

„ surplus, 195 
Who pays bounties, 79, 99, 

Who pays import duties, 224, 

Women, English, 247 
Woollen trade, 238 

Yaens, 245 

ZOIXTEEEDf, 15, 171 


Henrietta Street, Covent Garden, W.C. 
{Late 193, Piccadilly, tV.) 

June, 1883. 











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In January -was published 

^i0t0rg 0f ^ncitnt figgptian ^rt. 


Translated from the French by W. ARMSTRONG. 

Containing 6l6 Engravings, drawn after the Original, or from Authentic 
Documents. 2 vols, imperial Svo, £7. 2s. 

The study of Egyptology' is one which grows from day to day, and which has now reached 
such proportions as to demand arrangement and selection almost more than increased collec- 
tion of material. The well-known volumes of MM. Perrot and Chipiez supply this require- 
ment to an extent which had never hitherto been attempted, and which, before the latest 
researches of Mariette and Maspero, would have been impossible. Without waiting for the 
jlIustrious_authoi;3 to complete their great undertaking, Mr. W. Armstrong has very properly 
seized their first instalment, and has presented to the English public all that has yet appeared 
of a most useful and fascinating work. To translate such a book, however, is a task that 
needs the revision of a specialist, and this Mr. Armstrong has felt, for he has not sent out his 
■ version to the world without the sanction of Dr. Birch and Mr. Reginald Stuart Poole. The 
result is in every way satisfactory to his readers, whose attention is further stimulated and 
their knowledge advanced by more than 600 illustrations, some of which, however, can only 
be regarded as tolerably accurate. Mr. Armstrong adds, in an appendix, a description of 
that startling discovery which occurred just after the French original of these volumes left 
the press — namely, the finding of 38 royal mummies, with their sepulchral furniture, in a 
subterranean chamber at Thebes. This event, which was one of the most romantic in the 
annals of archeology, is still fresh in our memories, but it forms an exceedingly interesting 
commentary on M. Perrot's praise of inductive processes in the practice of antiquarian 
research. It forms a brilliant ending to a work of great value and beauty." — Pall Mall 

T\i^ Saturday RevieTVt speaking of the French edition, says :_" To say that this magni- 
ficent work is the best history of Egyptian art that we possess, is to state one of the least 
of its titles to the admiration of all lovers of antiquity, Egyptian or other. No previous 

work can be compared with it for method or completeness Not only are the best 

engravings from the older authorities utilised, but numerous unpublished designs have been 
inserted. Mr. Chipiez has added greatly to the value of a work, in which the trained eye of 
the architect is everywhere visible, by his restorations of various buildings and modes of con- 
struction ; and the engravings in colours of the wall paintings are a noticeable feature in a 
work which is in every way remarkable. This history of Egyptian art is an invaluable 
treasure-house for the student-; and, we may add, there are few more delightful volumes 
for the cultivated idle who live at ease to turn over— every page is full of artistic interest." 

" Mr. Armstrong is to be congratulated on the large measure of success with which he 
has caught the spirit as well as the letter of the original ; in these respects the translation is 
a model of careful workmanship. Nor have the publishers spared either pains or expense to 

put the book before English readers in an attractive form The numerous and 

excellent illustrations which are interspersed through the text have a very high value." — 
Globe. ^___ 

" The reasoning is clear and apparently correct, and the style of the translation leaves 
nothing to be desired. The book is particularly welcome at preseut, when we are so much 
concerned with the affairs of Egypt."— ZJai/j' News. 

"A week's study of these volumes would better prepare a traveller for appreciating the 
■wonders of Egypt than a year's turning over of the ' Denkmaler ' of Lepsius, the ' Monu- 
ment! ' of Rosellini, or the 'Monuments* of Champollion _ Mr. Armstrong's transla- 
tion is a necessary and useful work. It is well written, and with unusual care, some new 
information having been added. Such a book should, far more than the drawing-room 
volume of Ebers, attract new students to the constantly decreasing body of Egyptologists in 
this country, for it is full of the charm of Egj'pt, leading the reader back to the ideas which 
took shapes we may almost call immortal, whether we regard their first embodiment or their 
long survival in ever-changing forms." -St. James's Gazette. 



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