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The Pamphlet Collection of Sir Robert Stout: Volume 56

The Fair Traders and Reciprocity. — Leaflet No. XXXVII

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The Fair Traders and Reciprocity.

Leaflet No. XXXVII.

Cobden Club Motto

The new School of Protectionists say that "one-sided Free Trade is bad for this country." A more straightforward way of putting the complaint would be, "'No bread' is better than 'half a loaf.'" It is founded on the fallacy that we buy what we want as a favour too other countries; whereas the truth is, we buy these things s because we want them.

But what is the remedy which is proposed by the Fair Traders for the state of things of which they complain? They suggest Reciprocity, or rather Retaliation, on the foreigner. We are to put duties on the goods we import from them, in the hope that they will take off the duties they impose on ours; that is to say, we are to injure our-selves at the same time that we injure them, in the hope that they will abandon their policy, which injures both them and us. We are to become Protectionists in thee hope of persuading them to become Free Traders. We might just as well say to the Conservatives, "Unless you become Liberals we will adopt your principles and become Tories." Would not foreigners at once say, "You seem n to have very little faith in your own principles. Either page break Free Trade is a good thing, or a bad thing. If it is good, why do you abandon it? If it is bad, why do you ask us to adopt it?" We hope that some day other countries will see that their Protectionist policy is good neither for themselves nor us; but such an argument as that would certainly retard the change. The course they would probably take would be to retaliate still further upon us; and here we encounter the chief difficulty in the way of retaliation.

Foreigners could retaliate with far more effect against us than we can against them, because our imports of their manufactures are far less than their imports of ours. I will go into that matter presently; but first I want to ask whether we are to levy these duties against all other countries alike, or are we to single out particular countries, and tax their commodities only? If we are going to treat all alike, that will be making no distinction between those who treat us well, and those who treat us badly; so that is out of the question. If, on the other hand, you are going to pick out the countries that tax our goods, there is this practical difficulty. What security have you that the country against which you raise the barrier would not evade it by sending their goods through another country against which it does not exist? For instance, if we put a duty on French silks, what is to prevent their being sent here through Belgium?

Then, again, these measures of Retaliation—are they to be permanent or temporary? If they do not have the desired effect of coercing other countries—which they certainly would not—are we to advance further on the downward path, or to recede? If we were to enter on that path, we should probably be unable to help going further, because those who did not happen to be interested in the particular articles protected would soon get tired of paying higher for them, and would call out for protection for the articles they themselves produce. But supposing, as the more reasonable Fair Traders would no doubt say, it is page break intended to be a temporary measure, you would for a few years have diverted capital into trades which could not stand alone, and then, having fostered them in this way, have left them in the lurch. The effect of that would be in and disaster to those whom you had tempted out of other branches of trade, where they needed no such bolstering.

But now comes the question, Upon what imports do you propose to put a duty? Is it to be upon raw materials, or manufactured articles, or food? We may leave raw materials out of the question. No one seriously proposes it. The Fair Trade agitation proceeds chiefly from a few manufacturers, and they know too much to propose that the raw material which they purchase should be raised in price. There remain, then, duties on manufactures and on food. Which is it to be? Judging by recent experience in bye-elections, it is to be one thing in one place, and another thing in another. The Conservative candidate who stands for a county goes in boldly for a duty on corn, to please the agriculturists; but this would never do in the towns, where the people eat bread, but do not grow it; so another Conservative candidate in that case tries to please the manufacturers. But the Fair Trade League consists of both these classes, and it has therefore to adopt a policy combining both programmes. No doubt what the manufacturers would like best would be duties on manufactured goods; but they see the hopelessness of proposing this without allies, so they hold out a tempting bait to the agriculturists to join them, and go in with a light heart for a duty on corn as well. Let me tell you what they recommend.

"A very moderate duty to be levied on all articles of food from foreign countries, the same being admitted free from all parts of our own empire prepared to take our manufactures in reasonably free exchange;" and then, again, "adequate import duties on foreign manufactures."

I have dealt with a duty on corn in another leaflet Here let us examine into the effect of a duty on manufac- page break tures. This is a very dangerous weapon to use, and mo likely to explode backwards than forwards, for our manufactures are that part of our trade in which we are most vulnerable. Our imports of manufactures are fifty millions, but our exports are over two hundred millions; so you see that if we once begin the game of retaliation, there is no doubt which side can hit hardest. If I were to fight a due! with a very small man, it is clear that he would have a great advantage over me, because he would have so much more to shoot at. In the same way we are open to attack all over the two hundred millions, and can only impose duties on fifty millions; and, indeed, in practice, that total would have to be reduced by one-half, as it includes many items which practically could not be taxed. Now take a particular case, that of the United States, which is certainly the greatest sinner, and therefore the nation which the Fair Traders are most anxious to attack. We send to the United States twenty-four millions of manufactures, but we take from her only a little over three millions. With what prospect of success should we go to them and say," We will tax your three millions unless you untax our twenty-four millions." They would say, "Do so, if you like; it will have the smallest possible effect on us. We shall be happy to put another ten per cent, on your twenty-four millions." In such a war of tariffs as that we should be fighting against enormous odds, and should inevitably be worsted.

E. N. Buxton.

Messrs. Casse & it Company, Limited, La Belle Sauvage, London, E.C., supply this Leaflet in packets of 100, price 2s.