Reciprocity, bi-metallism, and land-tenure reform

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Preface

The greater part of the following chapters on " Keciprocity " appeared in Maximilian's Magazine early in the year. Want of space then prevented the writer from discussing the question of land reform, and an attempt is now made to fill the gap thus left. It is still however but an outline ; the writer naturally feeling that a subject so thoroughly handled in all its bearings by the many competent writers who have preceded him gave no excuse for detailed reiteration of threadbare arguments. The chapter on Bi-metallism has been added for the sake of completeness. That remedy for dull trade has been nearly as much in vogue as " reciprocity " with many 'people, and, along with " reciprocity " and the re- imposition of corn duties, it exhibits that curious outburst of trades-unionism among the moneyed classes which a time of languishing trade has produced. There is consequently a vi PREFACE.

unity of design in the following pages which may not at first blush appear. The subjects treated in it are either various phases of one and the same disease, or the remedies which that disease requires. For much that the writer has put forward under the latter head he expects little thanks from many. Although conscious of a desire to suggest the means of averting revolution he will probably be told that his remedies are worse than the disease.

But if the existence of the disease be recognised much will be gained, and should what follows help to quicken public apprehension on that point, the writer will be well satisfied. The diseases of the body politic, once recognised and understood, will themselves force the application of remedies ; and however much in love with an abstract theory he may be, yet on the question of practical remedies the writer is quite content to take his stand amongst the opportunists.

London, December, 1879.

THE REMEDIES OF EXPEDIENCY AND COMPROMISE .... 232 POSTSCRIPT 253

RECIPROCITY, BI-METALLISM,

AND

LAND-TENURE REFORM.

Chapter I. Can Reciprocity Help Us? — The General Answer To The Question

Few things have lately been calculated to oppress the mind more heavily than the troubled state of English industries and the confused ideas to which that state has given rise. Men wont to face their difficulties manfully, seem to have given way to a kind of despair, and clutch wildly at whatever ^promises a quick and easy way out of their distress. Prominent and influential sections of the nation are to all appearance disposed to apply palliatives to the situation, which can only aggravate their difficulties. If there be a principle of political economy which one might have sworn was fixed in the English mind never to be shaken, it is the principle of "free trade." Men of all shades of political opinion vied with each other in its praise. Free trade was like a new revelation, and the very squires themselves hesitatingly joined in boasting of what it had done to make England great. They might not, any more than the masses, have other than the haziest conception of what the words "free trade" meant, or of why the thing they represented should be so good; but the cry was fashionable, and more than that, the rents of land had risen in an unprecedented degree since the new era began. So dinners were given in honour of the new faith, and the flow of eloquence heard at these dinners and on all public occasions indicated clearly that free trade was firmly rooted in the hearts of the people. With that faith held high, we should yet subdue the earth. Already the triumphs to which it had led us exceeded those of ancient Eome. We had an empire on which the sun never set, and our ships traded to every known region of the globe. Before our merchants and manufacturers, opponents melted away like snow at the touch of spring, and all by the might of free trade. Listening to paeans chanted in a lofty strain like this, a stranger might have been forgiven for thinking that to an Englishman "free trade" was something holy — a faith never to be parted with — dearer to his heart than all the Christian creeds.

Less than three years ago he was a bold man who would have dared to doubt the absolute soundness of this mercantile principle ; and the man who could sneer with effect at our neighbours still in the bonds of protectionism was always sure of applause. Three short years ago ! and now what do we find ? We find that a large and increasing section of the working classes and of the trading community, as well as a most important proportion of the owners of land, are roundly asserting that this free trade has been all a mistake. "We have gone on the wrong principle altogether, and shall be ruined if we do not retrace our steps." When you ask these people what they want, they do not speak very clearly, it is true, but that probably arises from shamefacedness. Many of them have been such ardent wordy free-traders in the past that they cannot at once veer round and loudly abuse their old love ; so they prevaricate. They declare that "in theory, you know, free trade is an excellent thing — so excellent, that practically it will only work in the millennium! In these merely human days the world must content itself with something less perfect, lower if you will, but more practicable and handy." The

b 2 cry, in short, is "Free trade in theory, but in practice Eeciprocity ! " That is the new word which is going to charm back to us all our waning prosperity. As yet only a word, we may. soon expect to find it a political cry, and unless the country is wiser than it has lately shown itself to be, from a cry it will probably pass into a living, working pobcy.

Many things combine to make this contingency less remote than it seemed but a few months ago. First of all the Government wants money — a great deal of money, as is the custom of Tory Governments ; secondly, the landlords want to maintain their rents, at last threatened by the action of free trade, superadded to bad harvests ; thirdly, many of the farmers are not unlikely to say that they want the same thiDg as the landlords ; and, finally, the manufacturer and shipper want a larger foreign trade, which they seem in many cases to imagine "reciprocity" will give them. The change that a few years of dull business has wrought upon the ideas of the trading and moneyed classes is indeed astounding. Men now advocate what they before cried down, and as beaten children run to their mothers for shelter and comfort, these " reciprocitarians " come running to parliament for assistance against the aggressive foreigner. In this feeling the workmen join the manufacturers much as the farmers join the landlords. A well-informed correspondent, writing to me from Manchester — that cradle of the free-trade movement — gives the following account of the state of mind existing there now upon this question : —

"It is a great mistake to suppose that the mass of the people of this country are free-traders from intelligent conviction. They are nothing of the sort. The bulk of the working men, whatever they may call themselves, are protectionists. So also are very many of the merchants and manufacturers. These latter almost all say that they are free-traders, but when they come to explain, they are not free-traders, unless ' the people we deal with are free-traders too.' I talk with no end of such people. ' You see/ they say, 'what your free trade has brought us to at last.' ' And are you not a free-trader ? ' I ask The usual reply is, ' Oh, yes ; I'm a free-trader in the abstract — of course everybody is that now ; but I don't think it works well all round.'

" This is the state of mind very common at present among the younger merchants and manufacturers here, and it will certainly be fumed to account at the next general election. Of course nobody will go in for ' protection in the abstract ; ' but there will be much sneering at ' ultra free-traders ' — at ' men -who, not content with ruining our industry and prosperity by over-production at home, insist on exposing us to the mad and reckless competition of the- whole world/ &c, &c. That such talk is meaningless, or destitute of definite meaning, instead of being any objection to its acceptance, is only a ground for believing that it will go down the more sweetly."

This is a very disturbing account of the thoughts prevailing in the leading manufacturing centre of the country. The " hard times " are obviously producing an unlooked-for effect upon the weaklings of the present generation, and the nation may yet have to fight its free-trade battles over again. To a free-trader by intelligent conviction that seems hardly possible, but we must never forget that the world is not governed by intelligent convictions. Stupidity is still, alas ! a most powerful factor in mundane affairs, and the more stupid a people is, the more easily will it follow a mere sound. You might turn "Tweedledum" into a capital political cry if you contrived to make believe that it meant higher wages and more beer.

It was shrewdly remarked by Mr. Horace White, of Chicago, at the recent Cobden Club dinner, that the English had been converted to free trade through their stomachs, and the remark was only too true. For a while it answered most marvellously in filling empty stomachs, but a new generation has grown up, crowding the towns ; new conditions are coming to the fore such as try the feeble faith of those who thought that the summit of human progress had been attained. In spite of free trade, " hunger " has once more appeared among us, and what its presence mayconvert us to Heaven only knows.

It is therefore time to take a look at this genera- , tion's new pet trade-reviver. What do these adversity and hunger-driven people mean ? They say, " Love free trade platonically, but use something else for every-day purposes." We must seriously endeavour to discern what that something is. For fear one might be accused of misrepresentation, it will be best to give the description in the words of some of those who obviously consider themselves chosen apostles of the new sect. Take this as a first sample : —

"The most ardent free-trading theorist would, I suppose, be ready to agree with me that the protective tariffs of foreign nations and in some of our own colonies are injurious to the manufacturing interests of Great Britain. But I am prepared to go much further than this, because I entirely believe that those protective tariffs, if continued long enough, are not merely injurious to our home industries, but will come to mean the absolute extinction — so far as manufactures are concerned — of our export trade. Nor do I think that foreign nations or the colonies are at all likely, of their own accord, to modify those tariffs to our advantage. I say deliberately ' to our advantage,' because I believe that protectionist nations are not such fools as our British political economists would have us believe them to be. It seems to me that these foreign and colonial gentlemen for the most part understand their own interests perfectly, and that we may reason with them until Doomsday without any result so far as the advancement of free-trade principles is concerned. They will adopt free trade if free trade suits them ; and, for the most part, our friends are perfectly able to judge, without any assistance from us, whether free trade does or does not suit them. In plain truth, our British political economists — those who are our teachers — fail to understand that the laws of trade include elements which their theories have not yet grasped. Certain things ought to be, according to theory, which nevertheless are not, so-called political economy to the contrary notwithstanding. Our teachers have, I think, still something to learn; but, as it seems to me, it is at least quite clear that free-trade theories have in practice completely broken down. My business friends tell me it is not the fact that American commerce is as depressed as our own. I am assured also that French commerce is fairly prosperous, and that even in Eussia trade is better than with us. I know of no British industry that is really active except the making of machinery for export to those who find it more remunerative to manufacture abroad.

"I am not against free trade. I want to see reciprocity in trade; but I do not believe we shall ever get it by talking political economy to our trading competitors. Foreign nations have less to gain from free trade than we have. It is a matter of business ; and if we want real free trade — as assuredly we do — we must go beyond the present teaching of British

1.] CAN RECIPROCITY HELP US? 9

political economy and make it the interest of those who now exclude our manufactures to adopt a different policy. Our foreign friends who decline to understand the advantages that free trade offers would understand at once the disadvantages under which a British retaliatory tariff would place them. Those to whom I am opposed on such questions say sometimes, I think unreasonably, that retaliatory tariffs to be effectual must be prohibitory. They say also, but I think only with partial truth, that we could only levy duties upon articles of food ; and they put forward as an axiom, I think upon insufficient data, that the entire cost of all such taxation would be borne by the British consumer. But it can easily be shown that retaliatory tariffs far short of anything prohibitive would, in many instances, ' turn the scale ' in favour of purchasing from such nations as might be willing to accept British manufactures in payment for their productions. I think, also, that we are none the richer as a nation by continuing to import inferior French watches in Hall-marked cases, although the vendors who sell them as of British manufacture may become so; nor are we much the better for getting such things as French silks free of duty when we cannot export woollens or cottons or anything else of home manufacture in return, And if, in the absence of a retaliatory tariff, we do get some of our sugar a little cheaper than would otherwise be the case, we are, I think, paying too dearly for such cheapness in submitting to the extinction of British sugarrefining. But even a tax upon imported grain, unless universal, need not injuriously affect the consumer.

Some portion of the burden would no doubt fall upon him, but some also upon the foreign producer. The foreigner would have to content himself with smaller profits ; our untaxed grain-exporting colonies would be gamers in finding a better home market for their wares ; and the consumer, able to pay in kind, could better afford to buy.

" We ought, as it seems to me, to face our national position in a business-like way, as any business man would in his own affairs ; to realise that in adopting free trade without reciprocity, a mistake has been made, and that our path cannot be too soon retraced. Once admit the principle that retaliatory tariffs may lawfully be used 'as a means to an end,' and there need be no difficulty in again finding markets for British manufactures, nor in so working our fiscal system as to strengthen the commercial ties with those magnificent colonies which 1 trust may long form with Great Britain one great united Empire."

So says Mr. David Maclver, M.P. for Birkenhead, in the Times of 16th Nov. 1878. We cannot complain that his utterance is hesitating. He laughs the theorists in political economy to scorn, tells them that they have yet something to learn, that free trade has completely broken down in practice; and, not content with that, boldly announces that reciprocity is the sovereign remedy for the decline of our trade. We want real free trade " assuredly," but we cannot have it till other nations come to think as we do, and in order that they may speedily so come, we must punish them a little. "Our foreign friends who decline to understand the advantages that free trade offers would understand at once the disadvantages under which a British retaliatory tariff would place them." Here you have the whole secret. Eeciprocity means retaliation. We are to preach free trade as the followers of Mahomet preached Islamism, by a little forcible persuasion. If nations became converts to a new creed by the power of the sword, why not to a new political idea by the might of retaliation ? According to Mr. Maclver's policy — and he expresses the feelings of thousands of influential people at this moment — we are to say to our colonies, " Give up your protective tariffs, or we will shut out your raw produce." To the French we must say, "None of your wines can come here unless you take in exchange our linen, woollen, and cotton goods, to any extent we choose to send them." To the United States the message would be, "Take our iron and machinery, our manufactured tissues and our ships, or keep your bread and cotton to yourselves." One can imagine under this retaliatory system our customs' officers telling the people of Victoria, say, that they must remove their 50s. duty on iron under pain of having to submit here to a duty of 10s. an ounce on their gold, or 2s. a cwt. on their wool. And so it would be all round. The customs' tariff that would meet on their own ground the various nations with whom we are thus to trade would be the most remarkable ever devised. It would embody a sliding scale on a new principle, according to which duties would be high or low in proportion as those of the countries upon whom we were " retaliating " were high or low.

This I take to be the meaning of these " reciprocity" ideas, and that I have given no travesty of them is proved by the utterances of another prominent exponent of the new faith. Lord Bateman, who has written and spoken more on the subject than even Mr. Maclver, managed to get a debate raised in the House of Lords, in April last on our free-trade policy. In opening that debate he delivered a clever and very ingenious speech couched in terms of a much less hoity-toity tone than the letter just quoted. But substantially it came to the same thing. His plea was that we could have no " one-sided " free trade. Such a thing was a delusion and and a misnomer, and we were therefore all on the wrong tack. " We had," he said, "for a long time past been throwing away in the most gratuitous manner many millions sterling of customs' duties which had been either repealed or reduced simply as sops to the free-traders or as occasional sops to disarm opposition." And then he proceeded to give his definition of reciprocity, which is as follows : — 1

" His own definition of reciprocity was that it was not necessarily protection, and that it was in reality mutual interchange and barter for the benefit of both parties. They had reciprocity of feeling in love (laughter), and the only thing in which there was not reciprocity was in commercial affairs. He did not ask for protection, but he contended that if there were no reciprocity there could be no free trade. Eeciprocity ought to be regarded as the coping-stone of the free-trade system. It was the one thing wanting to the establishment of that universal free trade which every one desired, but which had not yet been secured. He would illustrate the meaning of reciprocity by referring to the duties on tea. Out of the four millions raised by the duties on tea, one million was derived from our own Indian empire. Now, the other day we had remitted 200,000Z. of cotton duties — that is to say, we made the Indian empire pay 1,000,000Z. on tea and 200,000?. for the cotton imported from this country. This was unfair. If we had done away with the 200,000?. on cotton and had at the same time relieved our empire from the million that was derived from tea, we should have been illustrating the principle of reciprocity. But it might be asked, what was his idea of reciprocity — how did he propose to carry it out % (Hear, hear.) Well, in the first place, he would propose a close federation between England and her Colonies in all 1 Tide Times report, April 30th, 1879.

parts of the world, establishing between them .free trade in the most unrestricted sense. In New Zealand there were hundreds of thousands of quarters of wheat annually used as manure or thrown into the sea simply because California being nearer to this country than New Zealand, the New Zealander found it impossible to send his wheat to us under present circumstances at a profit. That was not a state of things which ought to exist. Again, could anything be more disastrous or more painful to witness than the position occupied by Canada at the present moment ? There was no doubt that the Canadian tariff would act most injuriously on the trade of this country, and it was by no means certain that the colony of Victoria would not follow suit. There was no cohesion between the Mother Country and its dependencies such as ought to exist. We relied upon foreign imports and shut out entirely our own colonies from trading with us. Under the system he proposed every scrap of import duty on colonial produce would be abolished, and the result, he believed, would be that we should be able to snap our fingers at all foreign countries, being no longer dependent upon them. A small deficiency of revenue would, of course, have to be met, but it might easily be made up by a tax upon intoxicating liquors, which would at the same time have a beneficial effect upon the country by diminishing drunkenness. If that were not enough, some other small indirect tax might be levied. He was advocating, not protection, but reciprocity, which meant a mutual exchange of benefits. They should urge it upon all foreign i] CAN$EUIPJ$OCITY HELP US?% 15 nations, and if thqse^fOjgeign natfifflF accjpted it they would enter into W^jM^tsitisgfS^^^^ich. he had spoken. If they refused* n r"Trfr Sqffesti on of import duties would of course arise. But he did not wish to talk about protection. He did not wish to mention the word. At the same time he would admit that, in his opinion, if foreign nations would not accept the principle of reciprocity, we ought, by way of inducing them to do it, to impose a certain small restriction — he did not care how small — on foreign imports."

The childlike hopelessly muddle-headed adroitness of this is most admirable. There is no thought of protection, of course not ; " we only want a free-trade federation. First, between this country and her dependencies ; then, between ourselves and foreign countries." And no dream could be more beautiful. But supposing the colonies and these other countries refuse to listen to the voice of the charmer ? Ah ! " then a little gentle pressure must be put on, just a pinch of customs' duties by way of reminder and to further conversion. Thus it comes in the end to the same thing as the fisticuffs and swagger of the other apostle, or of the German Bismarck. If mutual free trade does not spring up at our bidding, then we must win it by force — the force of persuasive retaliatory tariffs. We must, in short, give blow for blow and triumph by a process of exhaustion. Such ideas as these surely require only to be brought to the test

16 BBCIPEOCITY AND LAND-TENURE REFORM. [chap.

of practical life to stand revealed in their natural absurdity. The promulgators of these notions of course disclaim so rough an interpretation. They tell us that they want nothing so extravagant, only, as Lord Bateman gently puts it, just a taste of what protective tariffs mean, administered as a wholesome corrective all round. If they mean that, why not say so at once, and honestly ? Why wrap up protection, under the guise of "reciprocity" or "retaliation," trying thereby to palm off on the people as a new and sovereign specific what is really an old and exploded quack dodge? Protection is at least something tangible, which, "reciprocity," whether in its maudlin or its truculent guise, is not. You could no more punish other nations for not adopting free trade, by . treating each according to the measure of its protectionist iniquity, on its refusal to re-arrange its fiscal system at your bidding, than you could .prevent the earth turning on its axis. The world has grown too big for such nonsense, and were powerful nations to be treated in this fashion by us, they would simply laugh at us, and take their trade elsewhere. America, for example, would' find no difficulty in disposing of its cotton in Europe were we to shut it out from our ports by a retaliatory duty. No doubt Europe would be very happy to take our place in supplying i.] CAN BECIPBOCITY HELP US? 17

the eastern and other markets with the manufactured tissues made from that cotton.

We must not, however, dismiss these notions lightly because they are nonsensical, for the circumstances of the time favour the ascendancy of folly. There is no denying that the country has lost some of its foreign trade, that competition increases abroad and misery at home. These facts are patent enough, and the distress of many here makes the wildest proposals of relief find eager acceptance. The new " reciprocity " cry is therefore a serious affair, and must be treated seriously.

The " retaliation " people are mostly to be found amongst the trading and manufacturing classes, while the protectionists proper are mostly in the ranks of the landowners. These two classes may possibly join their forces with a view to obtain legislation in the direction of their fancied interests ; and as a practical outcome of their agitation we may live to see protection once more established — at first, perhaps, tentatively, but possibly with increasing vigour, as its mischiefs develop themselves.

Mr. Maclver's letter — to which I revert because it is so frank and clear — indicates with a brusque contemptuous definiteness the line of argument which is likely to be adopted by such a reactionary party, and the sophistry of it is in a measure sheltered

e

18 KECIPROCITY AND LAND-TENURE REFORM. [chap.

behind the self-assurance with which assumptions are stated as axioms. He denies boldly, for example, that the only taxes we can impose would be on raw materials and food, and is equally sceptical of the effects which import duties on manufactured articles, supposing them effective, would have on the British consumer. He even goes so far as to assert that a tax on imported grain need not injuriously affect the consumer ; and, in short, throughout his letter, laughs the accepted and proved maxims of political economy to scorn.

Political economists will no doubt say that argument is wasted on such peoople. And so it is : but still the nonsense has to be faced, for the sake of those who, though ignorant, are open to reasonable conviction, and for the sake of the nation which may be led astray by this will-o'-the-wisp. And I take Mr. Maclver's letter as the most pronounced and conspicuous type of the stupidity which prevails on this subject. His assertions are useful, in so far as they give a clue to the mischiefs which foolish people would bring down on the nation if they could.

There are several ways by which the core of the question may be reached, and the difficulty is to choose the simplest. On the whole, it seems best that the subject should be met less by the advance of theoretical propositions than by an appeal to facts, i.] CAN BECIPKOCITY HELP US? 19

and to the facts I shall therefore as much as possible address myself. Those who wish for a clear statement of the principles of free trade as applied to the present situation of affairs cannot do better than read Mr. Fawcett's recent volume on Free Trade and Protection} Protectionists, too, might be much benefited by a perusal of Chapters V. and VI. of that work, which deal specially- with the evil effects of high tariffs and with the causes that produce hostility to existing commercial treaties.

Mr. Maelver touches with very great skill upon those few facts which seem most to favour his notions. He mentions, as I shall show, only those industries which bulk largely in the figures of our import trade, and those nations alone who claim to be prosperous. In so doing, however, he omits some most essential considerations, and in order to bring the points of the debate sharply and clearly before the mind of the reader, it will be well so to divide the subject as to secure a fair review of the facts. Admitting to the full the recent decline of our trade, it shall be my object to show by citations of facts regarding the industries of other countries that protective duties give no security against decline or stagnation in their ' case. The ground to be gone over in this way is very extensive, but the investigation need not be very minute.