flowing from international partition of labour, through the sums which the States took for themselves in customs dues, and the greater the profit flowing from international commerce for all the countries interested. For a time this hope appeared likely to be realised. The whole commercial policy of Europe tended in the 'sixties more and more to Free Trade. But France, after the Franco-Prussian War, retraced the timid steps towards Free Trade which she had been forced to make by Napoleon III., and then at the close of the 'seventies, Germany and most other countries followed suit. This step was certainly very unacceptable to a great number of branches of industry in England. Already in the 'eighties the cry had been heard in England that Free Trade should give way to a system of reciprocity. But over against the self-interested demands of isolated industries public opinion remained staunch and true to Free Trade. Not that the English people had not been painfully sensible to the damage inflicted on English manufactures by foreign Protective Tariffs. The irritation thus caused contributed not a little to embitter the feeling in England against Germany. But they stood by the conviction that the introduction of a retaliatory Tariff would be a most unsuitable way of making these losses good. The phrase that he who does not buy cannot sell was too deeply impressed upon the intelligence of the English nation. If a reply was to be made to the obstacles whereby the foreigners sought to make the entrance of British goods difficult, by imposing a retaliatory Tariff upon foreign goods, this would only mean a loss of market for those British goods which were exchanged for foreign products. Retaliation seemed like a second box on the ear, inflicted upon one's self as punishment for having already received one from the foreigner.

Now come Balfour and Chamberlain, the docile pupils of our Protectionists, proclaiming that retaliation is the very best means of keeping British national economy in working order, and the British Empire in continued existence. From a study of their speeches, one thing, however, emerges. While the whole question is in the highest degree an economic one, indeed, quite a sum in arithmetic, their speeches betray no trace of economic reasoning. There is an effort to fan the flame of indignation over the injustice of the foreigner, to submit to whose treatment any longer would be an outrage. Indeed, Chamberlain says candidly that the question is in the highest degree not economic but political. His leading argument is an appeal to the national emotions; the necessity of a Protective Tariff for the maintenance and expansion of the British Empire. Will he win through? Where we have to deal with passion we touch the incalculable. Who could give his opinion with any certainty upon the pros

pects of Mr. Chamberlain's scheme? The only thing one can do is to get a clear view of the interests which are involved in the project.

At the outset of the task one must especially guard against an error which besets various English and German expressions of opinion, namely, the confusion of the Colonial policy, for which Chamberlain is fighting with the policy of the Mercantile system now gone by. Certainly what Mr. Chamberlain wishes for has some features in common with the old Colonial system, notably the principle of the imposition of higher duties upon the products of non-British possessions. But on one point there is a fundamental difference; the old Colonial system was carried through against the interests of the Colonies in the interests of the Mother Country, the new one may prove a fleecing of the Mother Country by means of the Colonies. The supporters of the new Colonial system are the Colonies. Their interest in it may be grasped if we glance at the development of English foreign trade. Going no further back than the decade 1890-99, according to the Statistical Abstract, it amounted to:

This table shows that the trade of Great Britain and Ireland with the outlying British possessions amounts only to one quarter of her trade with the rest of the world.

In comparison with this, the trade with her Colonies has, in fact, a quite subordinate significance for Great Britain. But the tables prove something more. They show that from 1890 to 1899 the imports from countries other than British into England increased by about 16.5 per cent., the exports from England abroad by about 1.9 per cent., the imports from the British possessions into England by about 11 per cent., but the exports from England to the Colonies show no increase at all.

Thus England's trade with the rest of the world is not only three times as great as her trade with her Colonies, it has also increased in very considerable measure. If we leave out of account the years from 1899 onwards, when the Transvaal War must already have exercised some influence upon these statistics of export and import, we see no advance at all in the trade between England and her outlying possessions. This backwardness of the English Colonial trade compared with the rest of her foreign trade, has been for a long time the grievance of English Colonial Governments. To see their imports into England on the increase has long been the goal of their desires. To attain this they declare themselves "patriotically" ready to make " sacrifice" to the Mother Country. The sacrifice is certainly of a peculiar kind. They declare themselves ready to admit British goods at a lower rate of duty than foreign goods, if England will thereby guarantee to Colonial produce preference in the British market. As, however, England does not subject such produce as the Colonies export to any duty at all, this amounts to nothing else than that England is to introduce duties against the foreigner, not, indeed, to favour her own products, but to favour the products of her Colonies.

a

When in the year 1902 a registration duty of 1s. per quarter was imposed upon the import of foreign wheat into England, we in Germany designated it as England's return to Agrarian Protection. In my paper upon "The Corn-duty as a remedy for the distress of the Farmer," I recognised this as an error; apart from the financial burden that the duty might help to remove, it was intended, with the help of the tax, to create the possibility of giving Colonial wheat more favourable treatment than foreign wheat. But as far as British agriculture is concerned, it comes to the same thing, whether it is Colonial, American, or Russian wheat which depresses British wheat. Events which happened shortly after have proved me in the right. Certainly Chamberlain's commercial programme means Agrarian Protection though not Protection of British but of Colonial agriculture in the British market. According to this scheme, the manufacturers of the Mother Country are to be benefited by getting their goods into lands where as yet there is a lack of population to desire them! Will the Mother Country entertain the proposals of her Colonies, made in a spirit of selfless patriotism as singular as this?

In the next place, there are the working classes to be considered. If they are not willing to make the patriotic sacrifice of accepting a rise of price in food in order to preserve the British Empire, Chamberlain declares his plan incapable of execution.

They must bear three-quarters and the upper classes one-quarter
of the cost of his Colonial project. Still he promises them that
the whole proceeds of the tax upon food shall fall to the share of
the labouring classes, in the form of a provision for old age.
Here we have another German exemplar! Indeed, the copy is
even better than the original. For the English taxes upon food
do not form a Protective Tariff for the produce of the Mother
Country, since the food consumed by the working classes would
be imported in the future as in the past. In fact, all that the
working men must pay in addition in consequence of the duty
would flow into the State chests, and would be placed to the credit
of their Old Age Pension fund. The German pension scheme for
widows and orphans, on the contrary, only amounts to some tenth
part of what the German working classes have had to pay in
addition in consequence of the food tax. Chamberlain's pro-
posal to allow the proceeds of the food taxes to be credited to the
Old Age Pension scheme is thus considerably more honourable
than the like resolution of the German Reichstag, upon a motion
brought forward by the Centre. But, at the same time, the
British working man might be face to face with a possible
dwindling away of the financial basis of his Old Age Pension, in
proportion as the Preference guaranteed to the agricultural in-
terest of the British Colonies by the Mother Country enabled
them to absorb her market. And, owing to the unlimited quantity
of land in the Colonies which still awaits disposal, in contrast
to the working of the German Agricultural Tariff, this point may
not be far out of sight. It is therefore intelligible that the labour
organisations in England, up to now, should have expressed them-
selves entirely opposed to the scheme. The British middle class
have been hitherto no less adverse, nay, perhaps, even more
hostile to it. That, also, is intelligible if we look somewhat more
closely at the English Commercial Balance-sheet since 1855. It
is based on the average of the exports and imports for the year.

This table shows that the commercial balance of Great Britain. and Ireland, hand in hand with the increase in wealth of the country, has been passive, and has tended continually to become more passive; further, it shows that simultaneously, in most years, more precious metals were imported than exported. This excess of imports over exports has therefore not been compensated for by remittances of money, as, according to the doctrine of the commercial balance should have been the case, but it has been compensated for by the claims which England has on other countries, whether from investments, which she made in them, or for freight dues, or banking commissions, or other matters of less significance. But the table shows something else very worthy of consideration. If one compares the figures of export with those of import, it is apparent indeed that the export of English produce continually increases, but that the proportion in which it serves as an equivalent to the import of foreign produce continually decreases. It is found instead that in increasing proportion the imports are balanced by British claims based upon investments which Englishmen have made outside England. It is a noteworthy fact with which we are thus confronted. English capitalists are placing themselves every year in an increasing degree in the position of "absentees," as they call the owners of Irish land, who live in England or abroad, and spend in their places of domicile the rent of their landed property in Ireland. This resulted, as has often been demonstrated, in an export trade from Ireland to England, which served to satisfy the demands for rent made by the absentees, whilst in England industries arose to meet the needs of the absentees who lived there. So, to-day, the increasing contribution in interest which comes to Englishmen from the Continent leads, on the one hand, to an import of products from abroad, and, on the other, to the establishment of industries which depend upon the consumption of these same capitalists.

So that, besides showing the trade of England, on the one hand, with the foreigner, on the other, with her Colonies, the table given above shows also that English capital finds it far more profitable to seek investment in countries other than British than in British possessions.

What then would be the result of the realisation of Chamberlain's commercial programme? The majority of the goods which serve as the equivalent of the claims of British capitalists, come from foreign countries. These goods are to be subjected to an import tax. Obviously, in proportion as this takes place, the profit upon British investments abroad suffers a corresponding diminution. Does Chamberlain intend thereby to entice English capital out of such foreign investments to investment in the