V.

CHECKS EXPORTS

45

the former amounts, the consignee in the foreign country would find that there was a premium on, the means of remittance, which would make the transaction pro tanto less profitable, and act as a check on our further exports.1

These things are not less real because they are unseen-hidden by the fact that, in foreign trade, each transaction, whether of exporting or of importing, stands by itself, and ends with a payment in money. Only those who do not see, or who choose to ignore, any mutual and causal relation between imports and exports, can believe that putting a tariff on imports will have no effect in checking exports. This is the meaning of the

1 This is amply confirmed by experience. When Peel, in 1842, took off or reduced duties on over a hundred articles, the exports rose from £46 millions to £60 millions in 1845. When the Corn Laws were repealed, the exports rose from £60 millions to nearly £100 millions in 1853. In the late tariff wars, exports suffered correspondingly with imports. See Cd. 1938: Commercial, No. I. (1904). "Every time," says Gide, "that a treaty of commerce or any other cause has considerably increased a country's imports, its exports have never failed to increase in like proportion. Thus when, in 1860, France threw open her ports to foreign products, her imports rose from 2,521,000,000 francs (the average of the previous five years) to 3,231,000,000 francs (the average of the next five years); but her exports likewise rose, between the one period and the other, from 2,813,000,000 francs to 3,449,000,000 francs. Thus the increase in imports was 23 per cent., in exports, 28 per cent." On the whole question, the chapters on International Trade, in Professor Gide's Principes d'Économie Politique, as the utterances of a French economist, are particularly interesting and suggestive. The above quotation is from the 3rd edition, p. 261, but, as very considerable changes have been made, the 8th edition (Larose, Paris, 1903) should be studied.

46

LOOK AFTER THE IMPORTS

CH. V.

homely adage :-" Look after the imports and the exports will look after themselves." It simply suggests that, if no restrictions are put on imports, there will be competition from all nations to send in what goods they can, and the necessity of paying for them will call out a return flow of exports to the same value.

CHAPTER VI.

THE RIVAL POLICIES.

Every nation needs a revenue, and so levies customs duties. But, while a Free Trade country has in this no object ulterior to revenue, a protected country has. Apart from political considerations, which, in many cases, determine fiscal policy, the protectionist argument is based on the assumption that the interests of the producer are not the same as those of the consumer, and come first.

THE difficulty of defining Free Trade seems very much due to this; that the word "free" is itself so entirely ambiguous.

Freedom, as a philosophical conception and as a practical thing, never means the absence of restraint. It is not opposed to Law or Morality. It means putting ourselves under conscious and purposed restraint—the drunkard who drinks as much as he likes is the very last man we should call "free."

For this reason, internal trade is never free in the sense of having no restrictions placed on it. We are a Free Trade country, but we keep as sharp an eye on the manufacture and sale of liquors as any other nation does on their entry : there is no freedom to purvey these as we like. This reminder gives us the cue to a definition.

48

TAXATION FOR REVENUE

CHAP.

Every nation needs a revenue for national purposes. A Free Trade country is one which imposes duties on imports with no other consideration than that of revenue. This comes out quite clearly in the case of spirits and beer. We make them pay Customs duties when they come from abroad, whether from other nations or from our own Colonies; but any idea that we make them pay because they come from abroad is at once dissipated by the knowledge that we put similar and equivalent duties on spirits and beer made at home, calling the duty, in this latter case, Excise. is a kind of island on a lake. We do not allow the products to be imported from them into the surrounding country, without paying the same amount of duty as is paid on similar products coming from countries which are really outside.

A distillery or a brewery, in fact,

The actual figures suggest the extent and intention of this government interference. We raised last year by Customs on foreign beer and spirits, at the gateways of our island, £43 millions. But we raised by Excise on the products of our own distilleries and breweries no less than £311 millions. These two things hang together. It is for the purpose of taxation that we put a duty on home spirits and beer, and we put a similar duty on imported spirits and beer that the foreign articles may not be favoured. Thus the sole explanation of this Customs duty is Taxation: not taxation of the foreigner, not a price for admission, but taxation of the home consumer.

In our country, then, we have Import Duties,

VI.

TAXATION WITH ULTERIOR AIM

49

and heavy import duties, but there is not shadow of anything ulterior to revenue purposes. It is pure and simple taxation, imposed, as it should be, on ourselves by ourselves,-the special mark of a free nation.

What, on the other hand, we call a Protected country is one that frames its Customs duties with an aim beyond and ulterior to the taxation of its own citizens. Revenue for taxation is not their sole purpose, nor, generally, even their main purpose. How such a system works out may be understood if one thinks what would happen if we imposed duties on spirits and beer from abroad, and imposed no excise at home. Whatever the object of this might be, it is evident that it would handicap foreign imports and favour the home distiller and brewer.

These, then, are the rival policies which we are asked to set against each other.

Το

Free Trade would seem to be the economist's policy. From the purely theoretical point of view, it almost looks as if there were nothing to be said for Protection. The economist takes men as wealth producers and wealth consumers. get the largest amount of wealth-production with the least amount of human exertion, the greater the division of labour the better. He would like the boundary walls of empires broken down entirely as regards trade and industry, and the division of labour made territorial. Whether goods come from Ireland or from France, is to him the same, so long as they are good and

D