160

INEFFICIENCY MORE TO BLAME CHAP.

under £3,000,000; in 1900-1, was nearly 5 millions; and, in 1901-2, was £6,000,000, one is tempted to say that the iron and steel trade is a very majestic ruin.

There are, undoubtedly, a good many concerns which are heavily hit. But when so many others are doing well, it is to be suspected that the causes of this may be found nearer home. It has been said of textile factories in America that no firm-can compete which is not content and able to put in new plant every ten years: perhaps in view of modern improvements and changes of process, the unwillingness to make rapid and expensive changes may explain the general statement that our iron trade is in a bad way." South Wales certainly needed a lesson. Its mills were, many of them, ill-situated, in valleys far away from the sea and dependent the world was coming to an end within twelve months, and took a new lease of his house for twenty years!

The instance points a moral. There is not the slightest doubt that great employers like Mr. Brailsford and Sir Thomas Wrightson-who said the same kind of things before, and met with a similar rejoinder, that in five years his concern had paid dividends to the amount of three-quarters of its capital-are perfectly honourable men. They think their case so clear that they do not hesitate to put it before the nation and to ask Protection. The case is examined from all sides, and the verdict is, at least, Not-Proven. But if these same gentlemen had been living under a government which was very willing to lend its ear to those who cried out before they were much hurt, and could have put their case, thus persuasively and strongly, before their representatives and before members of the Cabinet who had not the means of checking their statements by cross-examination or public discussion, is it not in the highest degree probable that they would have got Protection?

XVI.

POSSIBILITY OF DUMPING

161

"family

on single railways; and many were affairs," seething in corruption and bristling with abuses," as the Ebbw Ebbw Vale Company itself was eleven years ago. The future course of this industry must be in the direction of consolidation, amalgamation, and economy. We can can only meet gigantic trusts like the American Steel Corporation by combinations at least large enough to secure the same efficiency —and, remembering that, beyond a certain point, size is a weakness and not a strength, this should be quite possible. Certainly, regret it or not as we may, the day of the small iron and steel maker is as much past as the day of the small miller.

Two facts should not be forgotten. The first is that, except where it is the "selling off" of practically bankrupt stock, as has been the case with Germany for the last two years, dumping is possible only where it is a small proportion of the total output that is thus sacrificed. 'You can afford to sell 10 per cent. of your make at a loss if you thereby reduce the cost of your whole production by an amount

greater than the loss on the ΙΟ per cent. But this proposition cannot be true if you are consuming 10 per cent. and dumping 90 per cent., and the advantage of dumping disappears long before you have got anything like these figures." 1

The second is that, where there is any considerable elasticity of demand, it would generally 1 Sir Hugh Bell, in Spectator, Ist November, 1903.

L

162

LIMITS OF DUMPING

CH. XVI.

be more profitable for the Trust to reduce its prices and sell all its output at home, than to sell a smaller quantity at home at a high price and sacrifice the surplus abroad. There are comparatively few things for which the demand would not increase in greater proportion than the reduction of price.

These two considerations seem to suggest that, annoying and depressing as it is, dumping can scarcely be considered an established trade policy of other countries.1

1 "Some of us may easily be misled into supposing that a Cartel or Syndicate is created for the express purpose of dumping. No doubt the severe economic depression of Germany during the years 1900-2 (caused by over-production) forced the syndicates into their export policy for the purpose of relieving the congested home market. But that was an incident, like the blood-letting of an apoplectic patient. The real object of German Cartels is to proportion production to the market demand, and so to avoid over-production. In other words, the Cartels exist to do away with the necessity for dumping, so far as human foresight can do it. The dumping is not calculation, it is mis-calculation."-C. H. Oldham, in current issue of the Journal of the Statistical Inquiry Society of Ireland. Mr. Oldham calls attention to the latest development of the Kartell system, the syndication of syndicates, in the Steel Works Association now being formed for the whole of Germany, and already signed by all but two of the great groups. "What has brought about this Association seems to have been the necessity of doing away with the dumping policy of the syndicates controlling raw materials (coal, coke, pig iron, and half-finished steel products) by which German home manufacturers of finished iron and steel goods have been placed at a disadvantage as compared with foreign firms in the exploitation of the mineral resources of Germany."

CHAPTER XVII.

RETALIATION ON DUMPING.

We cannot very well ask a foreign government to stop its individual citizens doing in foreign trade what it cannot stop them doing in home trade. We know how underselling is met in home tradeby similar underselling. But the only retaliation yet proposed against underselling nations, is the imposing of Import Duties here, and this, surely, is merely a defensive measure. Will this, however, cure dumping in our case when it has not cured it elsewhere? But, once admitted that dumping constitutes a claim on government protection, where are we to stop? And who or what is to define what selling at or under cost" means?

66

GRANTING, however, all the compensations of Dumping; granting that it is more harmful to the nations that dump than it is to us; and granting that the extent of the dumping is small: let us assume that the actualities are so annoying, and the possibilities so great, that we must seek a remedy. In the present chapter, then, we shall consider Retaliation as the proposed remedy. We premise, as before, that we have no thought or intention of protecting home industries; that we are Free Traders in theory, and mean to return to Free Trade in practice whenever we have attained the end aimed at.

164

DUMPING NOT A

CHAP.

Is it quite realised that Dumping is not a government policy like a protective tariff, but a thing done by the individuals of a nation as one of their business methods-"unfair" competition, perhaps, but still individual competition ? It is not even a bounty; it is only an indirect result of two things, the government policy of Protection and the private Trust.

In other words, protective duties by themselves are part of a specific government policy. We can fight them either by free imports, as Cobden advised us to do, or by another government policy, namely, counter protection. But this dumping is not is not an organised attack of the American or German nation on the English; it is not, indeed, a thing recognised by the American or German nation at all: it is an act done by individuals, by Trusts or Kartells, in their own self-interest. What happens is that some individual foreign exporter, for one reason or other, offers goods for sale in this country to some individual firm of importers at a low price. All the nonsense one hears about dumping as a "national conspiracy," is derived from that fallacious idea which thinks of another nation as an industrial unit.

When, then, we find our trade interfered with by foreign Trusts and their policy of dumping, are we to go to the Governments of these countries and say, "You must stop this or we shall do something"? Why, the American government is as convinced as we are of the evils of Trusts, but it can do nothing; it cannot