free entry. This being so, a retaliatory duty on machinery, is not to be thought of. Another item of imports is that of house frames and joiners' work, valued at £386,000, of the utmost value to us in the erection of artisans' dwellings. Is it conceivable that we should be so unwise as to select this item for retaliatory duties? Deducting these and a few other similar cases, the items in respect of which a policy of this kind could be applied amount at the outside to a value of less than a million, and consist of caoutchouc manufactures, £360,000, cotton manufactures, £255,000, chemical products, £174,000, watches, £56,000, glass, £35,000. Is it to be believed that a threat to impose duties, say of 10 or 20 per cent., on these articles, or even to prohibit them altogether, would have any effect whatever in inducing the American Congress to depart from its settled policy of Protection? The more probable, the more certain, effect would be to incite them to further action in counter and higher duties, and to hit back in return against those of our exports which, in spite of the already general high tariff, have succeeded in discovering the means of access to the United States.

But if retaliatory measures, limited to manufactures only, are found to be impossible or inexpedient as against the two greatest offenders in respect of hostile tariffs, Russia and the United States, is it likely they could be used with greater advantage against smaller Powers, such as Spain, Italy, and the Argentine Republic, from whom we mainly import food and raw produce? The countries from whom we mainly import manufactured goods are Germany, France, Belgium, and Holland. Holland has adopted Free Trade, and the duties in Belgium are very moderate. It is only necessary to look through the list of our imports from and exports to Germany to see how impossible it would be, with any advantage to ourselves, to frame a policy of retaliation. The imports and exports of manufactured goods nearly balance one another. A tariff war, which would be certain to follow any such action, would be fraught with infinite loss and damage to both countries. The case of France, where there is more reason to complain of her present tariff, is complicated by the extreme intricacy of her commercial treaties with other Powers, and by the conditions imposed on her at the conclusion of peace with Germany. In the case of all these countries and others, the use of threats in the direction of retaliation, whether confined to manufactures or extended to food, would be far more likely to provoke counter attacks than to lead to substantial tariff concessions. There is ample experience in this direction in the proceedings of other countries inter se. There have been tariff wars between Russia and Germany, between France and Italy, between France and Switzerland, and between Germany and Austria, lasting for years,

entailing vast losses on both sides, and resulting, ultimately, in little tariff advantage to either parties. No single case can be quoted in which such proceedings have resulted in a substantial extension of free trade between two countries. At best they have ended in drawn battles, and a return to the duties previously existing. We in this country would enter into such contests with great disadvantage. Other countries, believing in the benefits of Protection, and not desiring Free Trade, would resent any interference with their settled fiscal protective policy. As a rule, they would be quite willing to suffer diminution of their export trade to this country rather than surrender any substantial part of their home trade.

It may be confidently asserted, then, that if any scheme of retaliation, limited as proposed by Mr. Balfour, is ever proposed in Parliament, it will prove to be impracticable and futile, and, if extended to food, will be mischievous and unbearable in the highest degree.

It is, indeed, impossible to believe that this country will ever agree to duties on food being used for the purpose of retaliation. The essence of such a scheme is that the duties would be temporary, and the confusion resulting from this would be unbearable. On the other hand there were ominous symptoms at the recent meeting of the Central Chamber of Agriculture that great opposition will arise from that quarter to Mr. Balfour's scheme of retaliatory duties, confined to manufactures and exclusive of farm products. Why, say the representatives of agriculture with great force, should farmers be called upon to pay higher prices for machinery, for farm implements, for clothing, and for many other requirements, when they are to derive no advantage from an increased price of their own products. It must be

admitted that if the system of Protection is to be revived, the agricultural interest has the first claim to any benefit supposed to be derived from it. This alone will be fatal to Mr. Balfour's scheme.

The same objections apply also to Mr. Chamberlain's scheme, so far as it contemplates a policy of retaliation. His duties on corn and meat and dairy produce are intended solely for the purpose of enabling preferential arrangements with our Colonies. It is obvious that if they were to be used for retaliatory purposes also they would necessarily fail for Colonial preferences. The imposition of a duty of 2s. a quarter on corn, with an exemption in favour of Canadian produce, would cease to be of any advantage to that Colony if remitted to the United States as the result of negotiation and retaliatory threats. It is not quite clear from his Glasgow speech whether he intends his further proposal of a 10 per cent. duty on manufactured foreign goods to be the means of retaliation

or not. It seems probable, however, that he intends it as a combative tariff in the sense repudiated by Mr. Balfour, in the passage already quoted, and with the object of reducing or remitting it in favour of those who will give us something in return. If this be the intention, it is obvious, for the reasons already explained, that it will wholly fail in the cases where it is most needed, namely, in those of Russia and the United States. Such a duty, restricted to manufactures, and not applied to food and raw produce, would not alarm either of these countries, and would produce no effect. One result of a combative duty, to be reduced by negotiation, would be that it would be entirely inconsistent with the agreements which we have entered into with most countries for most-favoured-nation treatment. It would necessarily involve our withdrawal from all such agreements, with the lamentable result that our exports would at once become subject to the higher range of combative tariffs applicable in countries with whom there is no agreement. The immediate result, therefore, of the new policy, would be most pernicious. We should lose our advantage ground, and would have to commence negotiations with the different Powers under the disadvantage of being subject to the highest range of duties.

There would be this further difficulty, that if such duties are imposed, they will have the effect of raising the prices in this country of similar manufactured goods, and will at once create vested interests, or claims for vested interests, on the part of those engaged in such manufactures. A strong opposition will in such case arise in this country on the part of these people-manufacturers and their friends, against any terms being made with other countries involving a reduction of duties on their special goods in return for concessions on exports of another kind. Let us take the case of woollen goods. Suppose a combative duty of 10 per cent. to be levied on imported woollen goods. The effect will be to raise somewhat the price of such goods in this country. The manufacturers, therefore, will be bitterly opposed to any commercial arrangements with other Powers by which this duty on woollens in this country would be remitted or reduced in favour of some concession in respect of some other article of export, say cotton goods or metal manufactures. It may be taken as an axiom that whenever it is decided to levy a 10 per cent. duty on manufactured goods imported into this country, the duty will be a fixed and permanent one, and it will not be possible to use it as a means of extracting reductions by other countries of their present high tariffs. To effect this purpose it will be necessary to threaten to impose much higher duties.

A further difficulty and danger which must arise will be that, to whatever extent the duty on imported manufactured goods raises the price of similar goods produced in this country, the export

of such goods will be handicapped in foreign markets, and especially in neutral markets, as compared with the exports of our rivals and competitors. Our export trade will therefore be impeded and reduced in quantity. We may easily lose more in our foreign trade than we gain in our home business. We do, for instance, a great business in woollens with other countries, exporting to and importing immense quantities. By imposing a duty on imports into this country we may effect a reduction of them and secure a larger share of our home business, but in doing so we shall raise the price of similar goods now exported, and we shall probably lose at least an equal or perhaps greater share of such export trade.

Both Mr. Balfour and Mr. Chamberlain seem to labour under the delusion that they have invented a new principle, that of retaliatory or combative duties-new, at least to this country. But, in fact, a tariff with this object was in force long before 1846, and was only abandoned in consequence of its total failure to produce any effect on the hostile tariffs of our rivals in trade, and its inutility as a means of negotiation for a reduction of their duties. For years prior to the adoption of Free Trade by Sir Robert Peel, unceasing efforts were made by the British Government to induce other countries to reduce their tariffs in return for similar reductions on our part. Frequent references to these negotiations are to be found in Mr. Morley's recent great work. Mr. Gladstone, who was at the Board of Trade from 1841 to 1843, was actively engaged in them. But these efforts were in vain, and it was the failure of them which induced Peel, in 1842 and 1846, to act independently, and to adopt the principle of Free Imports, without longer waiting for reciprocal action on the part of other countries, and without any expectation or promise of their following our example.

Of the many myths invented by Mr. Chamberlain in his recent fiscal campaign, there has been none more unfounded than that which he developed at Birmingham, that Free Trade was only adopted in consequence of the confident expectations and promises on the part of its founders that other countries would follow our example, when its beneficial result should become apparent, and that had these men anticipated that other countries would remain as protectionist in policy as they now are, they would not have adopted the policy so fully as they did. There is no ground whatever for this assertion as regards Sir Robert Peel -the statesman to whom the carriage of the great measure through Parliament was mainly due. The exact opposite was the case. This is abundantly clear from the great speech which Peel made in proposing his measure in 1846.

"I fairly avow to you," he said, “that in making this great reduction of the duties on the import of articles, the produce and manufacture of foreign countries, I have no guarantee to give you that other countries will follow our example, and I give you the full benefit of that argument. Wearied with our long and unavailing efforts to enter into satisfactory commercial treaties with other nations, we have resolved at length to consult our own interests, and not to punish other countries for the wrong they do us in continuing their high duties upon the importation of our products and manufactures by continuing high duties ourselves."

In his powerful defence of Free Trade, in answer to a motion of Mr. Disraeli's in 1849, he returned to the same topic:

"In bringing forward," he said, "the present motion, Mr. Disraeli observed, speaking of our recent legislation, 'that we have established a new commercial system, which mistakes the principles upon which a profitable exchange can take place between nations; that we can only encounter the hostile tariffs of foreign countries by countervailing duties, that such a system occasions not scarcity and dearness, but cheapness and abundance... Now, in opposition to these doctrines, I boldly maintain that the principle of protection to native industry, meaning thereby legislative encouragement for the purpose of protection by duties as imposed for that purpose and not for revenue, is a vicious principle. I contest the assumption that you cannot fight hostile tariffs by free imports. I so totally dissent from that assumption that I maintain that the best way to compete with hostile tariffs is to encourage free imports. So far from thinking the principle of protection a salutary principle, I maintain that the more widely you extend it the greater the injury you inflict on the national wealth, and the more you cripple the national industry."

He further called attention, with strong approval, to a petition presented by the merchants and bankers of London, at a time when the country was passing through a period of great depression, a petition drawn up by Mr. Alexander Baring, in which it

was said that—

"The maxim of buying in the cheapest market and selling in the dearest, which regulates every merchant in his individual dealings is strictly applicable as the best rule for the trade of the whole nation... Although as a matter of diplomacy it may sometimes answer to hold out the removal of particular prohibitions or high duties as depending upon concessions by other States in our favour, it does not follow that we should maintain our restrictions in cases where the desired concessions on their part cannot be obtained; our restrictions would not be less prejudicial to our own and industry, because other Governments persisted in preserving impolitic regulations."

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It is true that Cobden, in the exuberance of his joy, after the adoption of the policy of Free Trade by Peel, predicted that other Powers would follow our example, but no passage can be quoted from his speeches or writings before the passing of the great measure in which he held out expectations or made promises as an inducement to its adoption that other countries would follow suit. On the contrary, in a speech which he made at