The Pamphlet Collection of Sir Robert Stout: Volume 56
The Proposed Tax on Sugar
The Proposed Tax on Sugar.
(A Letter to a Working Man.)
Leaflet No. XLI.
My dear Sir,
You tell me you have always been a Free Trader, and have always regarded the interference with trade caused by the Customs Duties as a serious evil. Such interference, you say, raises the price to the con-sumer, decreases the production throughout all trades-doing thus a double injury to the labourer—prevents men of small capital competing for their share in the profits of industry, and, denying a free use of the blessings of civilisation, delays the time when the good things of the world shall be more fairly distributed than they are now. Accordingly you tell me you have always been against Bounties as one of the worst forms of such interference. You want, however, to know what line to take, with some few of your fellow-workmen, who, though they claim to be Free Traders, yet want to put a tax on the cheap sugar that comes into England, because they say it is cheap owing to Foreign Bounties. You don't think Bounties good, but you can't feel sure that it can ever be right to tax trade; and you ask me to tell you whether I think we ought to interfere with the Sugar Trade and levy a tax in order to increase the price of sugar made cheap by the Foreign Bounties. I could answer that question very shortly if I liked by saying, "Never look a gift horse in the mouth; never let any one persuade you to tax anything because it comes into England too cheap. Nothing can be too cheap." I will not, however, content myself with such an answer, but I will put before you some facts, which I can hardly believe it possible that a man can read and still want to tax foreign sugar, unless he should happen to be a sugar refiner. I think if we attend to these facts we shall not be greatly concerned whether sugar is getting cheaper because the Germans understand how to cultivate and manufacture beetroot to perfection, or because of their ignorance of the science of wealth, or for whatever other reason.
I will try to state shortly what has happened in England since any one who likes has been allowed to bring sugar into England without any interference from the Custom House.
In the year 1841, when we still had a heavy duty levied on sugar, the average consumption per head in the United Kingdom was about 17lbs. of sugar. This amount, at the prices caused by the policy of interference with trade, could not be bought under 9s. 7 1/1 d. At the present time (that is, in the year 1884), when sugar is free, the average consumption per head is 681bs., and the cost for this vastly increased quantity is 10s. 4d, or only 8½ d. more. That is, under Free Trade and the development which has come with it, the average consumption of each person has trebled, while, instead of the price having trebled, it has remained nearly the same. An English family, thanks to Free Trade, can now use in the year three times the amount of sugar they used forty years ago, and yet only have their yearly expenses increased by a few pence. This is what has come from letting the Sugar Trade alone.
Now let us see how the nations get on that have not got Free Trade, but give Bounties to any one who will take sugar out of their countries and sell it below cost price to us. Let us take the case of America. There, though the country produces sugar-cane, and though the West Indies are so near, the people have, by reason of their system of duties, to pay 3½ d. for a pound of sugar, while we Free Traders are paying only 2d. a pound. In Germany, where page 2 the most beautiful sugar is made, the poor Germans do not get the benefit themselves, because the Bounties make it more profitable to carry the sugar out of the country than to sell it at home. There is no Bounty for selling it to their own people; only a Bounty for making a present of it to foreigners. The consequence is that the Germans have to use an inferior sugar and pay for it a larger price than we do. While the German housewife—to borrow an illustration from Sir Thomas Farrer—can only afford to put in one spoonful of sugar to sweeten the children's pudding, her English sister can put in two; and that is not all, for the German spoonful is only half as sweet as the English. But I don't want you to think that getting more sugar for our tea and our puddings is all the good we get as a nation by letting the Sugar Trade alone.
Let us look beyond this. Let us look at the trade benefited and the labour employed in getting all the enormously increased amount of sugar now consumed manufactured and then distributed to the consumers. First look at the work for our ships to bring it over raw or refined; then for the manufacturers who make it eatable; for the railways and other carriers that take it all over the country; for the extra shops, the extra counters, and the extra shopmen that are required to sell it; for the men who make the paper and fold the bags in which it is sold. A plentiful supply of cheap sugar is to the general trade of the country a shower of gold that finds its way everywhere.
And this is not all. Think of the other manufactures in which sugar is used, and which can only be carried on at all when sugar is cheap. Think of the jam and the confectionery, of the jars and bottles, each with its lid or cork stopper and printed label, in which the jam and the sweetstuffs are contained, and which are all made in England. Think of the profits to agriculture which can be derived from growing fruit if there is a demand for jam among the poor; and there can only be such a demand when sugar is very cheap. Think of the biscuits that are made because sugar is cheap, and of the highly-paid labour that is called into employment thereby, for making and packing the biscuits, and for carrying them about England and the whole world; for, since sugar is cheap in England, the English have become the biscuit makers of the world. Think of the chocolate and the cocoa manufacturies which flourish on cheap sugar. Think of the sugar used in brewing, and in the making of those invaluable feeding stuffs for cattle which enable our farmers to fatten stock cheaply and well, and so increase our supplies of meat Think of the artificial waters, like gingerade and lemonade and so many others, which have sprung into popular favour since the Sugar Trade has been let alone, and which employ so many thousands of men in their production. These occur to me as I write. You, who know so much of our productive trades, will remember a hundred other industries which, if they are to be worked at all, must be worked with cheap sugar.
It is most gratifying to see how cheap sugar has been the means of introducing, even into the poorest country districts, articles of luxury and comfort never known before. I talked only the other day to a country grocer, in a large business with the poor, about some of the facts which had come under his own notice.
What he told me was astonishing. He put his hand on a great glass bottle of mint dumps-those sweets the children and the old women are so fond of in country places—and he said, "Look at these. Where I used to sell a pound of these, I now sell a hundredweight." I looked up at his shelves next—at the pear-drops and acid-drops. "Yes," he said, "those are now a halfpenny an ounce; they used to be one penny." The trade set going in sweets has been enormous, while the comfort and enjoyment obtained by the poor have been equally great. In France, though they excel in the arts of confectionery, such things are only for the rich. I have been into plenty of village shops in France, but in them you see no sweets. The poor never get them. In France they do not leave their Sugar Trade alone. My friend the grocer told me something also about jams. He opened a splendid great earthenware pot of gooseberry jam, smelling most deliciously, and he showed me how clear and wholesome it was. "We have just ordered eleven tons of this. We used not to keep jam five or six years ago. When it was high we could not sell it; now it is an article of food for quite poor people. At the school treats the children used to think bread and jam a great pleasure; now they would rather have bread and butter: they are so accustomed to jam."
What a difference to a poor family! Before we let the Sugar Trade alone they had to eat their bread dry; now they can make their bread not only far nicer, but far more nourishing, by spreading some jam on it. I would advise you to ask your fellow-workmen to think, not only whether they don't save a great deal each week in sugar, but whether they don't see a great deal more jam about, and a great deal more sweetstuffs and chocolate, a great deal more biscuits, a great deal more gingerade and other temperance drinks, and whether, if they follow out each one of these trades, the letting our Sugar Trade alone has not done a vast deal to bring work to the English working man.
However, there are two sides to every question. Let us hear the other side's arguments to persuade us to give up the blessings of cheap sugar. They say, first, that Bounties are very bad things. In this we heartily agree, and we wish foreign nations, for the sake of their own poor people, would do away with them. They go on to say that sugar is cheap because of these Bounties, and that this is not fair to our refiners and their workmen, and that, accordingly, we ought to put a tax on sugar equal to the Bounties. Now, I will begin by observing that we must not forget that the good intentions for which a tax is put on make no difference to its effects. A tax put on commodities to pay for the most necessary acts of Government will have just the same effect on trade as a tax put on for the most selfish interests of the home manufacturers. A tax put on sugar to teach the foreign nations sound political economy will be just as oppressive to the consumer and just as shackling to trade as a duty put on with the page 3 avowed intent of letting the Sugar Refining Businesses pay 5 instead of 2 per cent. Fortunately, however, we need not go into the arguments whether, if the Refining Trade of England was being killed by Bounties, it could be saved by a tax on sugar, because, as a matter of fact, the Refining Trade is not being killed at all. Trade is never killed by freedom. These are the facts on which agitators have actually had the audacity to declare that the Refining Industry was being killed, and that the working men were losing £15000,000 annually in wages:
In 1881 it was no doubt shown that since 1864 the Refining Trade of England had lost 50,000 tons of loaf sugar, but then the Refining Trade has also gained 30,000 tons of other hard sugars, and 300,000 tons of moist sugar. Cheap sugar has not caused a loss, but has given a net gain of 280,000 tons of sugar of all kinds. Since 1880 the quantity of sugar refined at home has risen from 653,000 tons to 816,000 tons, and, along with this increase, there has been a proportionate increase in the number of men employed. The refined sugar sent us by the foreigner is only 39,000 tons more than it was in 1877 (being in 1884 210,000 tons, against 171,000 tons in 1877), while the refined sugar we sent out of the country has increased by 9,000 tons since 1877. It was in 1884 65,000 tons, against 56,000 tons in 1877.
As Sir Thomas Farrer says, "These are not the figures of a declining trade." They are a sufficient answer to the foolish outcry that the Germans could first kill our industry with Bounties and then raise the price on the English consumer.
The amount of the capital in the Sugar Trade has been greatly exaggerated. Probably there is not more than £3,000,000 of capital engaged in it altogether-a sum far less than the capital engaged in those trades which, as I showed before, only exist with cheap sugar. It is the same with the workmen. The workmen in the refineries are by no means so numerous as the men who sail the ships and drive the engines and carts, who make the bags and bottles, who grow the fruit and pick it, and fill the pots, and who make the biscuits, sweet bread, and confectionery which are required extra by the consumer when sugar is cheap.
Now there is another point which has come to the front in this sugar question. Are our West Indian Colonies being ruined by competition of Bounty-fed sugar? I am afraid there is no doubt that certain classes in the West Indies are suffering, and I know that you, as an English working man, are the last person to say that we need not think about them. We ought to think about them just as we do about our own sugar refiners, and remove all restriction on their trade; but, at the same time, refuse to sacrifice the poor consumers and producers at home to the interests of any class. Nor, even if we would, could we really help the West Indies by a tax on Bounty-fed sugar. Their case is more difficult than that. The competition of beetroot sugar, though not helped by Bounties, is their danger. They must look to improving their methods of extracting the sugar from the cane. Those who know most about the subject declare that great improvements could be made. Let the energies of the West India sugar planters be turned in this direction, rather than in the direction of converting England to interfering with the Sugar Trade; give them Free Trade in food, and we may soon hope to see them again taking the greatest share of the profits of sugar-growing.
There is one more fallacy in this controversy that I would warn you against—that is, the argument of certain men who pretend to be Free Traders, but who say that, though everything which is naturally cheap should be allowed to enter England free, nothing that is artificially cheap should be allowed to pass without paying duty. On this ground, our present sugar is said to be artificially cheap because of the Bounties, and so ought to be made to pay. I will ask these pretended Free Traders one or two questions which I have asked them before.
Is it not the essence of Free Trade that the consumer should be unhindered by legislation from buying in the cheapest market?
Is there any reason for the consumer to inquire why sugar is cheap, and to accept it if he fancies he has found out that it is only cheap by reason of good soil or improved manufacture, and to reject it if it is cheap by reason of the mistaken policy of a foreign State?
Is it not as little Free Trade to protect a home industry for one reason as for the other?
If the sugar workman asks for protection against German Bounties, may not the farmer just as fairly demand it against the low rates of the American railways or "the unfair" fertility of a virgin soil?
Besides, no one can really tell how much the sugar is made cheap by natural, how much by artificial, Bounty causes. Bounties take endless forms. Some countries give them in hard cash, some in drawbacks and exemption from taxation, some in free grants of land, some in free transport by railway, road, and canal, some by subsidies to steamship companies. In truth, no scheme based on the distinction between artificially cheap and naturally cheap will hold.page 4
I have tried to show some of the advantages derived from letting the Sugar Trade alone for ten years. I implore the working men of England not to throw away these blessings by beginning to interfere again with the Sugar Trade. No one can hate Bounties more than I do; no one would more gladly see the foreign nations persuaded to abolish them; but, I ask, is it the way to persuade them to leave off their interference with trade by beginning a fresh interference ourselves? Besides, countervailing the Bounties by a duty would do no good, for the Bounties would only be raised in turn, and we should enter into a miserable war of tariffs with the great nations of Europe, and should lose for ourselves the blessings of cheap sugar. Unless the countervailing duty proposed raised the price of sugar, it would do no good. If it raised the price, perhaps a few refineries might begin to pay, and, as a set-off to that, ruin would be spread throughout the country. Not only would the poor man's wages lose a great deal of their purchasing power, but on all sides jam factories, sweetmeat factories, mineral water factories, biscuit bakeries, cattle feeding factories, and all the other trades that rest on them, would begin, first to shrink and contract their businesses, and then to fall in headlong ruin. Free Trade has built a gallant tower, but undermine its foundations and it cannot stand.
Believe me, it is not the Bounties that have made sugar cheap, but it is the letting the Sugar Trade alone. A good authority, Sir Louis Mallet, declared before Mr. Ritchie's Committee that he did not believe that the effect of the Bounties was to enable the receivers of the Bounty to sell their produce at a very much lower rate than they would be able to sell it without the bounty. And in this he was, I am sure, correct. Plenty of sugar will come to us, whether there are Bounties or not. I doubt whether sugar would rise in price if Bounties were swept away to-morrow; but I know this, that if we try to sweep them away by interfering with and hampering the Sugar Trade, we shall not weaken the Bounty system in the slightest-we shall only give a reason for increasing it—and the price of sugar in England will rise, not only by the amount of the countervailing duty, but by a much larger amount. It is not the actual duty, but the Custom House friction which kills trade and raises prices; it is not Sugar Bounties, but leaving our trade alone that has given us the benefits of cheap sugar.
Let me again insist that nothing can alter the fact that to refuse, in the interests of a particular industry, goods cheap by reason of Bounties, is simply to put a tax on the many for the benefit of the few—or, shortly, Protection. Shall the mining, the agricultural, the domestic, the manufacturing population of England be taxed for the benefit of the Bounty-injured industries—that is, for the benefit of those capitalists whose money is invested in sugar-refining? For the workmen, it must be remembered, will not be helped. Their wages are settled, not by the profits of the industry, but by the competition of the labour market. This cry of Protection under a new name is not without danger for the English workmen. Let them remember that there is one, and only one, safe maxim in regard to all matters of trade—the maxim of "Hands off." Let no specious pleas, no pretexts of goods being artificially cheap, reconcile the working classes to any manipulation of our Free-Trade policy, for by such manipulation it is they who must be the losers.
I am, my dear Sir,
Your obedient servant,
St. Loe Strachey.
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