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TAXING EVERYTHING

CH. IX.

everything; and when it tries to let in some things free, or at a reduced rate, is met with a storm of opposition from hundreds of vested interests.1

A French contemporary of Cobden once said that an umbrella maker is a protectionist in umbrellas and a Free Trader in wood, silk, and whalebone. The kind of problems presented may be illustrated by the treatment of colza oil in France. It is manufactured from the seeds of a kind of turnip, which is also a valuable feeding stuff. To protect the growers, in 1890-2 the Commission of Customs proposed that colza should be protected by a 6 per cent. duty. But the oil is burned in lamps, and the consumers rebelled. To protect their interests, it was proposed that other illuminating oils should be admitted free. Again, colza is largely used in the making of certain soaps, and these soap makers rose in arms. To propitiate them, it was proposed that oleaginous substitutes used in the making of other soaps should also be taxed, and all soap makers put on an equal footing of disadvantage. Thus, to favour the farmer, colza was taxed and lamp oil made dear; oleaginous substitutes were taxed and all soap made dear. The later development, I believe, is that, in 1903, the home colza growers asked for the taxation of all oil-producing grains as well. To propitiate the French Colonies on the West Coast of Africa, it was proposed to admit their colza free. The Colonies refused the offer, knowing that they "would have to pay for it" in other ways! One may judge if Sumner exaggerated when he said: "Tax A to favour B. If A complains, tax C to make it up to A. If C complains, tax B to favour C. If any of them still complain, begin all over again." -Protectionism, p. 78.

CHAPTER X.

CONCLUSIONS AS TO PROTECTION.

I. A protective tariff which does not present all manner of anomalies and inequities is impossible. II. Protection tends to political immorality. III. It tends to commercial immorality. IV. It raises cost and checks exports.

FROM what has been said, four conclusions seem to suggest themselves.

I. That it is beyond the wit of man to draw up a tariff which will protect whole ranges of industries without causing all sorts of anomalies and inequities.

Under Free Trade, self-interest, urged by competition, directs capital into the industries which pay, and buys its material and tools wherever it gets them cheapest and best. But Protection, having for its object the restriction of competition, even where it allows the free entrance of food and raw material, taxes other material and tools differentially, according to the circumstances and needs of particular home trades; that is, not according to any principle of suiting the needs of those trades which use the material and tools, but according to the circumstances and needs of other home trades. Thus one industry may

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PROTECTION TENDS TO POLITICAL CHAP.

get in its material at a low rate because the home producers of that material do not need much protection; another industry, which competes with it, may have to pay a high rate for its material because the home producers are at a natural disadvantage. Every industry, again, under this artificial system knows its own weakness or strength against outside competition; but outsiders do not know, and every man keeps his Own trade secrets. Even granted, then, that there are, in each business, experts or men who know just what amount of Protection is needed to protect," no Legislature has the knowledge or the means of getting at the knowledge. If the Legislature simply asks each industry how much Protection it needs, what kind of answer will it get? Or suppose a tariff is based on the cost of thoroughly efficient home producers, how will this suit the average or the inefficient? Will it not tend, as it has done in other countries, to throw industry into the hands of great combinations, and end in monopoly?

II. That Protection tends to political immorality.

Under Free Trade, the statesman is the voice of the nation. He is elected, indeed, by a section, and he is bound, to a certain extent, to look after the particular interests of that section, but the interests of the wider community are always paramount. He takes his seat as a member of one political party, but that party has, and tries to carry out, a national programme. At the very

X.

AND COMMERCIAL IMMORALITY

93

worst, he stands for no selfish or sordid interest. But what becomes of the purity of political life when every elector looks to his member, not to think of the local and national interests, but to give him a tariff high enough to let him earn a profit? Nay, what becomes of the party to which he belongs when the whip calls one way and the vested interest another? How, in these circumstances, can the state remain the "armed conscience of the community "?1

III. That Protection tends to commercial immorality.

Law ought not to lead men into temptation. And nations should have some regard to the temptation which their laws put in the way of other nations. We are all too apt to think that our obligations to obey stop at the boundaries of our own country and the limits of our own laws. There are very few Englishmen who will not do a little smuggling when they cross the channel-the tariffs of other countries, they argue, are "so irrational." And when it is found, not only that the tariffs are irrational, but that, on the one hand, the administration of them is modifiable by influence or bribery, while,

Where an industry can be made or unmade by a few lines in a tariff schedule, the interest which people take in politics tends to become absorbing in a wrong direction. Although one does not like to cast reflections on one's neighbours, there is some truth in the statement that Americans regard politics as a "business proposition," and spend large sums in it and on politicians as a business investment. "The day we adopt Protection," said Sir John Brunner, we may say goodbye to honesty in the House of Commons."

66

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PROTECTION HANDICAPS EXPORTS CH. X

on the other, custom-house officers are ready to pounce, with fine or confiscation, on the error of a careless invoice-clerk, the temptation to regard the entrance duty as a fair mark for ingenuity is all but irresistible.

But this need

not be dwelt on. The annals of Protection are full of tales of evasion, of connivance, of bribery -to say nothing of smuggling.

IV. That Protection, as it raises the price of everything imported, and, as consequence, the price of everything raised or made at home, increases cost and handicaps exports. Only great natural resources, great superiority of skill, or production on a very large scale, can outweigh this handicap. Unless, indeed, recourse is had to the complicated and mischievous machinery of "drawbacks" on export, with the extraordinary corollary that the producer charges dear for his goods at home and sells them cheap to the foreigner!