CHAPTER XXVIII. TAKING STOCK.

If the case for Free Trade remains unshaken, there are at least two lessons we have learned. (I.) That Free Trade is merely a condition under which men trade; it may be outweighed by the natural resources of other countries; by their wiser government provisions; by their better methods; by their better habits of life. (II.) That circumstances have changed since 1846: the world’s growing wealth and population make it quite impossible that England should remain the world’s sole workshop and keep the local trade of other countries; the severer struggle of international competition makes the demands on the individual heavier, and the task of the employer more onerous, though more honourable. Finally, must be considered the position which Free Trade has given us in making every new acquisition of Great Britain an open market for the whole world.

AFTER nearly a year’s unremitting discussion, during which the old argument has been restated, old history been retold, and present discontent has found voice, one may ask, “Is the case for Free Trade shaken?”

I do not think it is. But the discussion has not been wasted. It is a good thing for a faith to be attacked as a fetichism and its creed as a shibboleth. Free Trade was too easily taken on trust, and economists at least have long known that the man in the street had very little reason in his mind for the faith on his lips. I think that those who were willing to be taught have learned two things which were worth learning.

I. The first is that Free Trade is after all only a condition under which men trade. And it is not freedom but the use men make of it which tells. Nations may have less freedom, and yet make better use of their opportunities. If we had realised this earlier, we should not have spent so much time over the question why it is that Protected countries have flourished under a system which seems to impose so many handicaps.

There are many reasons for it. Natural resources may outweigh wrong methods of using them. No fiscal system will fill a country with minerals, nor change its climate, nor give its people brains; a country that is well equipped in these respects will not easily be held back, even by a mistaken effort of its government to guide the employment of its people.

Again, a government that we count foolish in its fiscal policy may be wise enough in other directions. Germany devotes large sums to education, general and technical: a university training is not counted a disability for business life: even her military system may drill the people into habits that are useful for industrial occupations. France has a land and succession system which secures peasant proprietorship, keeps people on the soil, and gives them the most personal interest in their work. Denmark, lending a helping hand to the co-operative organisations initiated by her farmers, gives an example of wise State aid which we might do well to follow.¹ Free Traders do not in the least minimise the work that governments can do. The proof of this is that ours is pre-eminently the country where Factory Acts, Education Acts, and all manner of sanitary regulations have expressed the “broader view” of freedom against unregulated laisser faire. All that they insist on is that the sphere of government shall be limited to laying down the conditions which shall allow the citizens as a whole to realise the best that is in them, and to helping them to stand the firmer on their own feet.

Another thing that may outweigh the handicap of Protection is where other countries adopt better methods of business than we do. Some time ago, we found—I think I may say, with some amazement—that these handicapped countries were disputing neutral markets with us; even coming into our own, and selling goods in the making of which we thought we had a clear advantage. One part of the explanation at least was not far to seek. The American Trust, though born of a bad ancestry, emphasised the neglected economic truth that there is often immense waste in competition, and that cost may be very greatly reduced by combination of effort and enlargement of the unit of production. The excesses and failures of the Trusts leave this fact untouched. Another part explanation is embodied in what we hear everywhere of the German commercial traveller. Granted that England is “dear for her reputation through the world” for honest goods and straight dealing merchants. Yet, when our consuls everywhere inform us that German travellers, speaking the native language, are waiting at every door, selling in measures and money that are familiar to the people, invoicing goods duty paid, making everything easy for the buyers, meeting—we may even call it “pandering”—to the wishes of the customers, we cannot hope that similar success will attend those who content themselves with sending English circulars and price-lists through the post, or send out travellers who have to use an interpreter and remember cities only by the names of the hotels in which they stayed, or “sell only according to sample.” A trade depression which would force our manufacturers to realise that the seller must now wait on the buyer, might not be a calamity.

And there is still another thing that may outweigh the handicap. Other countries may have attained better habits of life than we have. There is no social or industrial enquiry ever set on foot, but brings up the fact that “England free” is not “England sober.” The fetters people put on themselves are sometimes worse than any that mistaken governments can make them wear. No one who has thought out the matter will contend that short hours and high wages are in themselves a handicap in international competition. But when the leisure gained is not spent in healthy exercise and relaxation, and when the extra wage goes to the public house, we are terribly handicapped in the struggle with more sober nations. Short hours, in fact, are only possible, economically, if they go along with high productiveness, and high wages are a comparative advantage only if the wages pass into high efficiency. It does not seem too much to say that, if our artizans would add to their other good qualities that of coming into their work when the whistle sounds on Monday morning, and keeping at it till it sounds on Saturday, and would not waste their substance in an indulgence which never ennobles and which generally degrades, we should hear little more of these twelve millions on the brink of destitution, who are continually thrown in our teeth whatever “tests of prosperity” we put forward. There is a possible reduction of cost here—every great employer witnesses to it—which would enable us to force our way through almost any tariff. One can but sigh for another Mr. Chamberlain to rouse the country to this peril at home.

II. The second thing we have learned is, I think, that circumstances have changed since 1846. The national stock-taking period of the last year has not been lost if it forces us to weigh these new circumstances, strike the balance of profit and loss, and decide what our future policy is to be. Those who defend Free Trade on principles and on experience borrowed unreservedly from the circumstances of sixty years ago, and who vex their souls defending Mr. Cobden and his prophecies, are taking weak ground. It is not seriously doubted that, in 1846 and for many years after, Free Trade justified itself. It gave us the condition we needed in order to make the most of our resources, and to take full advantage of the great inventions. At that time we had a long start of the world. It is questionable even if moderate Protection would have kept us back.¹

But now it is different. Other countries have pulled up. Their Protection was not able to keep them back. And I do not think we yet recognise the truth that we cannot expect to remain the “workshop of the world.” We have no natural monopoly of manufacturing, and we send our capital, our employers, and our workmen freely to other countries.

Two things are forgotten. The one is that it is quite impossible that this little island can supply a world, growing so fast in population and in wealth, with all the manufactures it wants. I have come across no more significant reminder of the limits of our powers than Mr. Whiteley’s words at Bradford, quoted by Mr. John Morley: “If every man could buy an extra woollen vest for himself; if every woman could buy an extra blouse; if every child could wear an extra pair of stockings; why, the demand from all these millions of population, male and female, would be so enormous that the whole of your plant would not be able to meet it.” This should remind us that a very moderate return of good trade would cause such a run on our capital and labour that, as in the early nineties, we should have more than enough to do at home, and should have to do as we did then—refuse foreign orders.

The other is that, as other nations grow, they naturally develop their own home trade as their most immediate and their most profitable interest. Under Free Trade they would have done exactly the same. The fact is, that we are still supplying many goods to other countries which they would long ago have manufactured for themselves, if they had not been intent on devoting so much of their capital and labour to industries where Protection gave them the hope of large profits without the stress of competition.

Circumstances, then, having so greatly altered, we might have expected that, when an opportunity was given, and a hope held out, every interest hurt or pressed by the change would find voice. I grant, in the fullest way, that we have to count the cost of Free Trade now as we had not to do before. In 1846 the cost was paid, for the most part, by the vested interests, particularly the agricultural; and the advantages gained were immediate and obvious. It is not so now. As I said in the first chapter, it was all very well so long as each country had the natural Protection of distance, and exports accordingly were products for which the exporting country had obvious natural advantages—in days when France sent wines, and America maize, and Norway timber. But now when America sends wheat, and France woollens, and Norway butter, we begin to feel the hard side of the international struggle to serve, and to question whether the service is not outweighed by the hardships of the struggle.

In internal trade, all nations have, practically, agreed that, on the whole, the more liberty they allow to every man to make and sell what and where he thinks best for his own interests, the better will be the results to the community. And here they have counted the cost, and decided to pay it. The path of progress within every country is strewn with failures. Changes in demand and changes in method of supply have wiped out many once prosperous men and many once prosperous industries; have arrested the growth of some places, and overcrowded others. And the sad debris of change lies around us in men and women who have not been able to keep up with the course of modern industry—worse, who have not been able, from pressure of poverty, to bring up their children to take advantage of the new conditions. I need only instance one case: the women-workers in our large cities who used to get a living by their needle at home, and who now find their occupation gone through the growth—the beneficent growth—of the large clothing factories.

But, heavy though the price is, no nation thinks of going back to Protection within its national boundaries. In this country, however, we have extended our freedom to the international field. However much we may concede to the circumstances, political and otherwise, of other countries, we claim for our island that this Free Trade allows us to make the most of our national resources, and permits us to call in other countries to make up what we lack. If it cannot give our workers brains, it at least sharpens the brains they have, makes them resourceful, compels them to adapt themselves to changes: putting them in competition with the whole world, it makes them able to compete with the whole world, relying, not on weak props and crutches of government, but on themselves.

In the professions, we have not the slightest jealousy of foreign methods and discoveries; we count it treachery to ourselves and to our clients if we do not adopt them and build on them. So, in industry also, we copy the methods of our rivals, although we, often enough, persist in our old courses till some of our neutral markets are captured and our own home market is invaded. If we were late in recognising electricity as the light and force of the future, no one can say that we are not making up for lost time now. If we allowed France to get a considerable start of us in the making of motor cars, it is perhaps not altogether bad that we start now from the level which she has attained, and apply all our experience and advantages to making British cars which shall have a field of their own. If, in footwear, we endured the agony of but few sizes and only one width for many a year, the welcome we gave to the American boot woke up our manufacturers, and our adoption of American processes, methods, and machinery, is easily stemming the tide of the invasion and regaining the ground we had lost in exports. And those who ride cycles must be grateful that, some years ago, the American wheel was seen in every shop, and drove our makers to the methods which have ended in its disappearance.

In all this, just as in internal trade, there must be many who suffer. Some industries must decline if they are industries for which other countries are better fitted than our own, just as power-loom weaving in Glasgow has gone down before Lancashire competition; and, the freer trade we get with other countries, the more quickly will this come about.

Even where industries are entirely suitable for our country, our employers must recognise, more seriously and conscientiously than they have done, what their responsibility is. Their function in the industrial organism is to organise the capital and regiment the labour of the nation, and “bear the brunt” of change; their “profits” are the payment for this work. It is indeed a very honourable position to fill. In a Socialistic State, it would be entrusted only to men possessing high qualifications, both natural and acquired. It is a far finer thing to organise a thousand workers to earn good wages than to command a brigade. For its due performance it requires no less than professional zeal, and sometimes employers must be content with little else than the knowledge that they have kept the labour world employed. There was a time when every one who could scrape together capital enough counted himself fit to take this function on himself. But, with the phenomenal advance of science and its applications, the superannuation of fixed capital tends to be very rapid, the necessity of quick and expensive adaptation to new conditions and methods is more marked, and the place of the employer becomes more and more difficult to fill. If, in these circumstances, men still rashly assume the position, it cannot be said that they are fit objects for compassion if they fail; certainly they have little claim on state subsidy through a protective system. It is to be feared that employers have not yet got it burned into them that, if they cannot organise the nation, they have no business to undertake the work. They themselves cry loudly enough against any Trade Union interference with their liberty of paying off workers who are not worth a wage; they ought to realise that no wrong is done them, if the competition of employer with employer remorselessly eliminates those who are not worth a profit.

Happily, the industries which we may expect to decline under international competition are fewer than one would think. So long as we are allowed to bring in food, materials, and machinery free, we are in almost as good an economic situation as any other country. It is not as if we were an inland kingdom, and had to carry our imports over hundreds of miles of railway. All around us is the path of the deep waters—the cheapest means of conveyance. Ours is a little island, but its economic position is enormously strong, so long as we retain the freedom of drawing on all the world for everything we require. But if one would see how a country, more favoured by nature than ourselves in many, perhaps in most, respects, can throw away her chances by not preserving this freedom, it is enough to look at shipping in America.¹

Finally, I would very earnestly ask my countrymen to consider the political position which Free Trade has given us, and us alone, among nations.

France, Germany, ourselves, even of late the United States, are accused of thrusting our civilisation on backward countries at the point of the bayonet. It is not missionary zeal that makes us take such interest in the welfare of our fellow men. It may be mere ambition; it may be a deliberate policy of preparing an outlet for growing population; it may be the last resort of governments whose peoples will adventure too far and get into difficulties; it may be for recovery of debts; it may be “for purposes of trade.” Anyhow none of the great nations has many scruples about its own expansion. Opinions will differ as to whether this is a good thing or a bad. Personally, I do not count it a bad thing for Egypt that the bondholders were influential enough to rouse two great nations to take over the administration: and I do count it a bad thing that political jealousies are as yet too strong to prevent France thrusting her civilisation on Morocco.

But, whatever the motive and intention of other countries may be, as regards ourselves it is generally the commercial interest we have in foreign markets that first makes us cognisant of the universal interest in honest and settled government. And here one thing is clear: that the first thing we do, after running up the Union Jack over a new country, is to throw its ports open to every nation under heaven. We at least do not count it a preserve to be shot over only by the owner and his friends.

Were it not for this, the growth of our Empire would probably have been more vehemently resented by other nations than it has been; and, under a protective system, its further expansion would certainly not be considered, as it is now, a commercial gain to the whole world.

¹I am tempted to quote from Bulletin No. 6: Department of Agriculture, Ireland, 1903, on Agricultural Co-operation and Credit, p. 10: “In Denmark, as in France, the State, in its action in assisting farmers, is closely dependent on the co-operation of the farmers themselves in voluntary associations. A State Department of Agriculture exists, hut it aims at encouraging and seconding, not displacing, these organisations. Though the State has aided agriculture for a considerable time, it was not till so recently as 1895 that a separate ‘Department of Agriculture’ was formed, dealing with agriculture proper, surveys, cattle diseases, forestry, etc. But the staff of officials is small, and is mainly occupied with accounts and statistics. The agriculturists are assisted directly through the previously existing voluntary local organisation with which the Minister of Agriculture consults through a system of experts. The Government spends annually about £108,000 in aid of agriculture; most of this amount is administered through the voluntary associations, such as the Royal Danish Agricultural Society and the Federations of local Societies, which Federations in turn act through the local Societies. These local Societies are, it may be stated, largely co-operative in their nature and methods. In almost every instance—and certainly in the most prosperous agricultural countries—the co-operative organisation of agriculturists has not been initiated by the State, but has preceded the giving of any assistance from the State.”

¹“Sixty years ago open ports were merely an important aid; they were not a necessity as now. Of course, our heavy duties on corn, aggravated by the stupid ‘sliding scales,’ had to be removed. But, though we had long outgrown the stage at which Protection could benefit any one section of the nation without doing a greater harm to others, I think we might have prospered in spite of a tariff averaging, say, ten per cent. For many of our exports were such as foreigners could get only from us, at all events at a reasonable price; and our manufacturers wanted very few foreign products, except crude material, on which a drawback could be granted if it had been taxed on entry. In fact, there never has been, and never can be again a monopoly of so great a share of the best business in the world as we then had. Its origin lay partly in character. The English had combined order with freedom, and therefore had lived strenuous lives longer than any other nation, unless it were the Dutch. That was one cause. The second was that the Continent of Europe was at short intervals the field of barbarous wars, which were almost as hostile to the growth of capital and of highly organised industry as the present ravages in Macedonia. Meanwhile England, blessed for two hundred years by peace at home, developed a steady enterprise, and a faculty for master inventions which have not deserted her now, though she is distanced by her great colony in the United States in fertility of minor advantages. She has turned to full account her natural advantages in waterways, in coal, and in iron, and even sixty years ago she had brought almost to their present perfection those broad principles of massive mechanical production which have now spread over the world.”—Professor Marshall, Journal of the Institute of Bankers, Feb., 1904, p. 94.

¹In 1835 De Tocqueville said, in his Democracy in America: “Ever since the Declaration of Independence the shipping of the Union has increased almost as rapidly as the number of its inhabitants. The Americans themselves now transport to their own shores nine-tenths of the European produce which they consume. And they also bring three-quarters of the exports of the New World to the European consumer. The ships of the United States fill the docks of Havre and of Liverpool, whilst the number of English and French vessels at New York is comparatively small.” The words may well give thought to an American when he notices that the oversea tonnage of his country now is less than it was in 1840, and is not a tenth part of ours.