220

NEITHER SYSTEM CAN SECURE CHAP.

The fact is that neither Protection nor Free Trade will ensure constant equilibrium of demand and supply, and this is the only way in which steadiness of employment might be secured. Protected producers, just like Free Trade producers, put themselves at the mercy of demand; they make, for the most part, in anticipation of orders, and, often enough, they find that their anticipations were mistaken. All goes well so long as trade is brisk. But when a lull comes, supply cannot easily be curtailed; more is being turned out than is taken off; and depression spreads its contagion through the organised web. All this is obviously independent either of Free Trade or Protection. One thing, however, may be said : that Protection, as tending to attract capital and

with 180 looms, which reported to the census of 1890, were not in existence when the census of 1900 was taken. Seven of these mills with 47,680 spindles were dismantled and their machinery sold; 13 mills, with 101,156 spindles, stood idle in 1900, or had been turned to other manufacturing purposes. One mill was burnt and not rebuilt; and one was consolidated with a neighbouring mill under new corporate organisation. In addition to these cotton mills there were 15 mills manufacturing cotton small wares, which went out of existence during the decade. Such a record indicates that unprofitable operation is constantly in progress side by side with more successful enterprise. In this particular industry, advance in machinery has been so rapid that it is calculated that a cotton mill must practically renew its machinery once every ten years if it would keep its plant in a condition that will permit profitable production, in competition with other establishments manufacturing the same class of goods, with the latest pattern of machinery, and the most labour-saving devices, the most effective methods of management, and facilities for the largest production at the lowest labour cost."-Twelfth Census of the United States, 1900, vol. vii. p. 65.

XXI.

REGULAR EMPLOYMENT

221

labour into artificial channels and oversupply them, tends to act against that mobility which is the best security of regular employment.1

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1 The statement, often hazarded, that there is less unemployment in Germany and the United States, may be true or may be false; it has at any rate no statistical basis. The returns of unemployment in these countries, such as they are, are made up quite differently from ours, and do not admit of comparison. "You will not see processions of unemployed in Berlin such as there are here in winter in London," said Mr. Chamberlain. "No," replied Lord Rosebery, "because they lock up the unemployed in Berlin, or deal with them in some other more beneficent manner." 'America," he went on, "is a country where you would think there should be no unemployed, for wages are high, and there is an unbounded area of territory; but, in 1900, the census year of the United States, the number partially unemployed for parts of the year was, in round figures, 6,500,000, or 22% of all the workers, or 10% of the population that is in the most highly protected country in the world, and a self-supplying country." On the whole subject, see the valuable section on Unemployed Statistics in Foreign Countries."-Second Series of Memoranda on British and Foreign Trade and Industry, 1904, p. 104.

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CHAPTER XXII.

PREFERENTIAL TARIFFS.

Preference to our Colonies involves putting on tariffs against the outside world, i.e. the return to Protection. But it is a peculiar Protection: if the proposal had come from the Self-governing Colonies, we should have called it Protection for them. As it is, in view of our gigantic imports from the world outside, we have to count probable gains and losses.

THE proposal of Preference to parts of the British Empire over the outside world is not a new one. The system prevailed for two centuries from the passing of the Commonwealth Navigation Act, and was abolished only by the Whig Government which succeeded Peel's, and received his support. But there was this difference at any rate. Nobody thought of calling it Free Trade. It was part of the Protective system under which we lived.

1

Suppose we now resume the discarded principle of Preferential Tariffs. It is not capable of being carried out unless there is a tariff on which to give a preference—“ the penniless traveller sings in the presence of the robber." Thus, as the first step in Preference, we must impose a tariff.

1 See [Cd. 2394], of 1905.

CH. XXII.

RECIPROCITY TREATIES

223

We resume, then, the system which used to be called Protection: we impose a tariff for reasons ulterior to that of revenue.1 But it is a very peculiar Protection. Germany and America justify their protective system, and escape its worst evils, by the fact that they have Free Trade within their Empires. The United States is by far the largest Free Trade unit in the world-some of her 45 states are larger than the entire German Empire-and it may very reasonably be contended that her prosperity is due, not to Protection, but to this Free Trade. But we are not, within our Empire, to have Free Trade. On the contrary, every constituent member of it is, apparently, to have the liberty of erecting what tariff it likes against other members, so long as its duties are lower to Great Britain and to British possessions than they are to the rest of the world.2 The scheme is well described as a British Empire Series of Reciprocity Treaties.3 1 It shows what a hold the word has on the unpleasant memories of the nation, that the name of Protection should be vigorously protested against. Just as Mr. Gladstone thought that he had gained something when he replaced the word Boycott by the word Preferential Dealing, so do many try to insist that Preferential Tariffs are not Protection. We want to admit our kinsmen free to our house; if we emphasise it by shutting the door in the faces of our friends-well, it is merely a regrettable incident!

2 Even this is not clear. New Zealand proposes to give a preference to Great Britain, but she adds that the same preference will be given to any country which gives her equal terms. All the time, so far as one can make out, Great Britain is the only part of the always to give a

Empire which is not to have this privilege, but is preference to the Colonies whatever they do.

3 At present the scheme has scarcely advanced beyond the

224

OUR PREFERENCE TARIFF MEANS CHAP.

If the request for Preference had come from the small group of self-governing Colonies, one would have said that it was a singularly frank proposal of a comparatively small portion of the British Empire to reverse the old trade policy of the Mother Country purely in their own interests. We should, I think, have called it Protectionbut Protection for Canada and Australia. But although these Colonies are, of course, willing that we should adopt a system which seems to promise such peculiar advantages to them, the proposal, so far as one can judge, comes, in the first instance, from British statesmen at home. We are to impose a tariff against the world, not that we have any desire to shut the world out, or because we want to protect British industries, but in order that we may take the tariff off the Colonies. Considering that the imports from Canada and Australia into this country amount to £42 millions, and that the imports from all the six self-governing colonies put altogether amount to only £59,800,000; while the imports from the Free Trade portion of the Empire amount to

enunciation of the principle. What, for instance, is to be the relation of one colony to another, or of the self-governing colonies to the other colonies, or of any colony to a "possession"; whether India and the Crown colonies are to remain free trade or to put on tariffs; whether the Protectorates, or countries in the anomalous condition of Egypt, are to be included; whether there is to be preference as regards all the imports taxed; or even what the position of revenue taxes is to be :-all these are details waiting the mandate of the country before they are discussed. One might hint that the possibility of such a scheme-to say nothing of its advantage-depends on the working out of the details.