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.

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. A distillery or a brewery, in fact, is a kind of island on a lake. We do not allow their 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.

The actual figures suggest the extent and intention of this government interference. We raise by Customs on foreign beer and spirits, at the gateways of our island, £4¾ millions. But we raise by Excise on our own distilleries and breweries no less than £31½ 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, and heavy import duties, but there is not a 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 ulterior to simple taxation of its own citizens. It does not object to the revenue, but the revenue is not its sole purpose, nor even its main purpose. How such a system works out may be understood if one notices 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.

Free Trade, it may be said at once, is the economist’s policy. From his point of view, it seems as if there were no question between Protection and Free Trade. He looks on men as wealth producers and wealth consumers. To 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 abundant. The whole world of man ought to be a vast co-operation of industrial servants, and all hindrances to this co-operation should be removed. So far as pure economic theory goes—and putting aside considerations of revenue—customs, excise, duties, tolls, octrois, are remainders of the dark ages. For all these things cause friction and expense, and the resources of the world are not fully exploited. It looks almost as foolish to impose a tariff at Calais and Hamburg, as it would be to tax goods passing through Berwick-on-Tweed.

All the same, I am inclined to accuse English economists of being too economic. I think they forget that it suits us to put economic interests first, and the rest nowhere; they forget how peculiarly favoured we are as compared with most other countries.

Shakespeare put it long ago, in words that ring through us like the blast of a trumpet:

“This royal throne of kings, this sceptred isle,

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This fortress, built by nature for herself

Against infection and the hand of war;

This happy breed of men, this little world,

This precious stone set in the silver sea

Which serves it in the office of a wall,

Or as a moat defensive to a house

Against the envy of less happier lands;

This blessed plot, this earth, this realm, this England

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This land of such dear souls, this dear, dear land

Dear for her reputation thro’ the world—

England, bound in with the triumphant sea.”¹

But the very words which emphasise our insular strength also bring out how peculiar our position is among nations. Between us and attack lies the silver sea—a wall or moat defensive of our house. We have no Alsace and Lorraine to atone for. Our boundary is not a river across which one may throw a stone, like the Rhine, crossed and recrossed in the past by invading armies. We are not like an old Hanse town, set in a plain, within whose walls we might be shut up, and forced to grow our food in the city streets and make our arms in the city smithies. Our little island is what Venice and Holland were a few centuries ago—a country too small to have many internal resources, but seated, like a spider in its web, at the cross roads which lead to and from the great world.

Thus it is that, secure against invasion and the hand of war, our island life is more purely economic than that of any continental country. Hence, perhaps, the angry jibe of Napoleon at the “nation of shopkeepers”—a very poor jibe, as the Parisian is notoriously the very type of shopkeeper. It annoyed him that we, and we alone, of European nations, could give most of our time and energies to industry. No continental economist, I imagine, would hesitate to say that Free Trade is the policy for us, and that nothing but Free Trade would have given us the position we hold.

But Frenchmen and Germans are like Nehemiah’s men; they have still to hold the trowel in one hand and the sword in the other. The atmosphere of two centuries ago is still around them. Wars, in which they personally take part—and not by a shilling a day deputies—keep alive a narrowed national and patriotic life which is strange to us. To guard it, they have to sacrifice—not, like us, in pocket only, but in time, in ease, and sometimes in blood.

This is the defence and explanation of the fact that continental economists are, many of them, Protectionists. They aim at making their countries self-sufficient first and rich afterwards. They are not willing to depend too much on nations that might some day encircle them with fire.

And so we might imagine that our economic policy of Free Trade is the “natural” policy—the policy to which they have yet to come when the barbarism of war disappears.

Here, however, we come right against the fact that there is a country where economic pursuits are even more absorbing than with us; a country with no army to speak of; with absolutely no foreign question except what she brings on herself; perfectly secure against attack or invasion; and that in it Protection has reached its highest point. The country in question is, of course, the United States. Evidently we must find another explanation of Protection beyond the political point of view.

There is an explanation, which, if not economic, is at least based on an economic consideration. It is that the continued existence of a nation, as a nation, depends on its finding employment for its own people.

The Protectionist finds that the world of man is divided into two categories, although the people who occupy these categories are pretty much the same, Consumers and Producers. As a consumer, everybody’s anxiety is to get things plentiful and cheap; and there is no difficulty so long as he has plenty of money in his pocket to buy with. But the only way in which, as a rule, he can get the money is by industry. Thus industry comes first. Although the producers, numerically, are a smaller body, they are, economically, more important. Give a man plenty of work and he will have the money.

Here seems a plausible case: that the interests of the consumer are selfish, short-sighted, tending to national disintegration. It is especially plausible in the ears of the working man. “The rich are those who have the means of benefiting by cheap goods. The poor—well, there is a previous process with them before they get any goods at all, cheap or dear.” Therefore, it is said, the attention of government must be directed to protecting the interests of the producer qua producer.

One part of the argument certainly appeals to the economist. He could wish that every man had so much capital at his back as not to be dependent altogether for his daily bread on his daily work. As things are, however, the great majority of the nation have nothing to earn money with but their two hands. Continuous, steady employment, then, is certainly a much more important thing than a halfpenny off the loaf.

It is a common idea that economists underrate the importance of steady employment. Only very ignorant people can think so. What can be worse than intermittent work, if the object of work be the increasing of the wealth that supports and satisfies life? What can be worse for the skill and habits of industry than days spent out of work? Nay—although it is often said that the economist has nothing to do with any but material things—what can be worse for moral beings than compulsory idleness? I confess I have never been able to find a satisfactory place in economic theory for the Non-Worker. Certainly he has no place in God’s universe. He is not even a sponge—for one can wash with a sponge. Work—independent of its product, but necessitated by its product—is the education in which, and only in which, we become men. In idleness alone, as Carlyle said, is there Eternal Despair.

Prove, then, that Protection will permanently give the people of this nation fuller employment at the same rate of real wages, or more continuous employment even at a slightly lower rate of wages—to say nothing of higher rates of wages—and we economists will at least reconsider the question. But what we must ask is, first, to be assured that producers need the help of government, and, second, that government can give this help. This is what we are inclined to deny.

¹King Richard II.