international socialist or the professional pacifist. But the curious fact is that in our own country the very people to whom credit belongs for taking the lead in exposing German ambitions and in denouncing German methods are themselves the advocates of a policy which involves the acceptance of German principles. There are two widely differing conceptions of commerce. According to one view, which is usually stigmatized by a certain school of politicians as Cobdenism, trade whether national or extra-national is the affair of the individuals who engage in it. France does not trade with England; it is Auguste Lesage who trades with John Barclay. If the bargain is a good one both are satisfied, both are richer than before, and-in default of evidence to the contrary-the presumption is that each nation gains by the increased prosperity of its respective citizens. According to the other view, extra-national trade must be looked at primarily as an affair of the nation as a whole. Individuals must not be left to seek out the most profitable bargains they can make with the subjects of other States; they must be partly coerced and partly bribed into directing their trade into certain restricted channels which are presumed to be more advantageous for the nation as a whole.

Both views are fairly old. There were convinced freetraders in England long before the activities of Cobden, and there is no reason for suspecting that they were any less patriotic than their protectionist contemporaries. Among the more prominent free-traders of the eighteenth century was Pitt, who is not generally regarded as a traitor to his country. Nor apparently did the eighteenth-century protectionists arrogate to themselves a monopoly of patriotism. What they were most concerned about was the national stock of gold. Here is not the place to discuss the mercantilist theory which so largely dominated English economics in the eighteenth century. It led straight to the absurdity that a nation would trade most favourably if it always sold and never bought. That delusion has long been abandoned in England, even by most protectionists, but it still survives in the Antipodes.

It was crudely set forth by the late Mr. Seddon, at one time premier of New Zealand. Observing that the recorded imports into the United Kingdom exceeded in one year the

recorded exports by £160,000,000, he lectured his mother country for her folly in annually sending abroad' a hundred 'and sixty million golden sovereigns.'

A more recent illustration of the same delusion is given in a publication issued by the Incorporated Accountants' Students' Society of Victoria, in March, 1918, where the following passage is reproduced from a leading article in the Melbourne Age:

"If the "Aspasia "takes £250,000 of wool and meat to London, it thereby benefits Australia to the extent of £250,000.

she brings back a cargo worth £300,000, is it not evident that Australia is a loser to the extent of £50,000? If she return empty is not Australia clearly £550,000 to the good, less only the trifling expenses of the return voyage?

These bizarreries of the protectionist creed are, however, a side issue. The intelligent protectionist understands clearly enough that trade is, and always has been, and always must be, an exchange of goods or services against other goods or other services, gold only serving as a counter. What the intelligent English protectionist wants to do is to regulate this interchange of goods and services with a view to increasing the wealth and power of his country; he demands that the individual seeking private profit should be guided and curbed by the State seeking national ambitions. This also was the policy of the whole German people.

That this policy does not tend to promote peace is fairly obvious. In trade itself there is constantly involved an element of war. The rival grocers in a village street fight for the custom of squire and farmer and even of Hodge; the great steam-ship lines that trade to the ends of the earth contend fiercely to secure contracts for the shipment of produce. All kinds of devices, reputable and disreputable, are employed in this warfare which accompanies trade; but as long as the combat is confined to private traders or trading companies no national question arises. When, however, the State steps in and deliberately pushes one trade or blocks another, for some motive of national policy, what was a struggle between private merchants or manufacturers begins to loom forth as a national quarrel.

*' Money and its Purchasing Power,' by J. R. Butchart. Published at 59, William Street, Melbourne. 1918.

If one State by devious methods assists its subjects to secure a hold upon the industry and commerce of another country, may not that other country retaliate by legislation directed towards an economic boycott of the offending foreigner? The next step may be actual war. Or, again, if one State having control of large sources of supply of raw materials that are widely wanted by mankind refuses to allow the citizens of other countries to purchase these materials except upon disadvantageous terms, will not those other countries have some justification if they decide to try to take by force of arms what is refused to fair commerce? The area of the world is limited, the strain upon its natural resources grows greater as population increases; if the peoples of the world are going to struggle for the possession of these resources, not as individuals on commercial principles, but as States on national principles, wars long and frequent will hardly be avoided. For disputes between individuals in the final resort are settled in the law court, which in every civilized community has resistless power behind it; disputes between nations imply a trial of strength, and even if a League of Nations were set up to act as arbiter the dissatisfied parties would frequently have at their command sufficient strength to challenge the judgment.

It is difficult to escape from the conclusion that the nationalistic conception of commerce is directly provocative of war. Yet the members of the present government of the United Kingdom, while proclaiming that their ideal is universal peace, casually announce that they have decided on a policy of imperial preference. In other words, they propose to identify commerce with nationality throughout the whole British Empire, to segregate that great Empire with all its varied peoples and spacious territories from the rest of the world, and to treat all other nations with varying degrees of commercial hostility.

The two reasons which are urged on behalf of this policy are, first, that it is necessary to protect ourselves against German commercial penetration and incidentally to punish the Germans for their crimes; secondly, that the Dominions have rendered such invaluable services to the Empire during the war that we must comply with their oft-repeated demand for a general system of imperial preferences. Both these

arguments rest upon a substratum of truth. It is true that German methods of commercial penetration do constitute a danger which we ought to take into account; and it is also true that in most of the Dominions some persons at one time or another have expressed a desire for a system of imperial preferences.

But these two propositions do not lead towards one policy; they lead in opposite directions. If we are to guard against German penetration it is of the utmost importance that we should form a definite league for that purpose with our present Allies. This was the object contemplated in the famous Paris resolutions of 1916, and the spirit of those resolutions still holds good, though no opportunity for giving effect to them has yet arisen. But the policy of imperial preference involves an economic breach with our Allies. By whatever phraseology this policy is covered up it means in hard fact the imposition of duties on Belgian, French, Italian, and American goods which previously entered the United Kingdom untaxed. Protectionists at any rate cannot dispute that such duties would be an injury to the nations who are now fighting side by side with us on the battle-fields of the world, for their doctrine is that the 'foreigner pays the tax.' From the free trade point of view a protective tariff is an economic injury to both sides-to the country that imposes the tariff and to the country against whose goods it is directed. If then we impose duties upon the goods of our Allies in order to please those persons in the Dominions who ask for imperial preferences, we can hardly expect Belgians, Frenchmen, Italians, and Americans to show any great desire to co-operate with us in an anti-German economic policy. They are quite likely to say: If that is the way England plays the game we had better seek our commercial ends in our own way.

Even if Belgium, France, and Italy alone took that course the whole policy of an economic boycott, or partial boycott, to prevent German expansion or to punish German crimes would fall to the ground. We cannot imprison Germany in an economic strait-jacket if her territorial neighbours are willing to trade with her. As a matter of fact before the war the most important and the most expansive portion of German export trade was with the continent of Europe. Striking figures illustrating this point and showing the simul

taneous expansion of the trans-oceanic trade of Great Britain are given in the Economic Journal for June, 1916, and the writer thus sums up his conclusions:

'The broad conclusion to be drawn from these figures seems to be that, as regards the continent of Europe, Germany had a great superiority, obviously due to her central position and to her magnificent railway and water communications with the countries by which she is surrounded; while we, on the other hand, had an even greater advantage as regards the rest of the globe in our ocean communications and in the increasing magnitude and efficiency of our mercantile marine. The continent in the pre-war days was becoming more and more the hinterland of the German railways, while the overseas countries of the world remained in increasing measure the sphere of influence of British sea supremacy."

Parenthetically, it may be noted that the point here brought out is important for other than commercial reasons. It shows how rail-power has become a rival of sea-power, and proves, if further proof were needed, that we should have lost the war if, while driving Germany back in the west, we allowed her to retain control over Russia with the accompanying power of railway expansion over the whole of Asia.

But for the moment the continental character of Germany's trade is only emphasized here for the purpose of showing that we are dependent upon our continental Allies for any effective economic restraint over Germany after the war. Of necessity also we shall be partly dependent upon neutrals, but if our Allies go with us we shall be justified in approaching the neutral States who adjoin the German Empire and demanding that they shall help us to prevent Germany from again using commercial means to secure her national ends. We cannot however present such a demand if we have alienated our present Allies by pursuing for our own imperial purposes a policy embodying the German principle.

To this argument the preferentialists reply that our Allies would have no right to complain, because we in establishing colonial preference should only be doing what they have long done. That reply is not conclusive. In the first place we should be making a change in our policy to their injury, and a new injury is generally more unpleasant than an old one, especially if the old one has never been noticed until it was wanted for argumentative purposes.