A Policy of Free Exchange: An Argument Against Socialism and Socialistic Legislation

By Thomas Mackay

Thomas Mackay (1849-1912) was a successful English wine merchant who retired early from business so he could devote himself entirely to the study of economic issues such as the Poor Laws, growing state intervention in the economy, and the rise of socialism. Mackay was asked by the individualist and laissez-faire lobby group, the Liberty and Property Defense League (founded in 1882 by the Earl of Wemyss), to put together a collection of essays by leading classical liberals to rebut the socialist ideas contained in
Fabian Essays in Socialism edited by George Bernard Shaw in 1889. The result was a volume of essays called
A Plea for Liberty: An Argument against Socialism and Socialistic Legislation which appeared in 1891, and another volume of essays
A Policy of Free Exchange: Essays by Various Writers on the Economical and Social Aspects of Free Exchange and Kindred Subjects, which appeared in 1894.Two of the guiding intellectual lights of the Liberty and Property Defense League were Herbert Spencer (1820-1903), whose
The Man versus the State had appeared in 1884, and Auberon Herbert (1838-1906), whose
The Right and Wrong of Compulsion by the State had appeared in 1885. Both Spencer and Herbert were troubled by the direction in which the British Liberal Party was heading, away from strict adherence to policies of individual liberty and non-intervention in the economy and towards a “New Liberalism” which laid the intellectual foundations for the modern welfare state. The aim of Mackay and the members of the Liberty and Property Defense League was to use the occasion of the publication of a major defense of state interventionism in the economy, the
Fabian Essays, as an opportunity to oppose all advocates of these policies whether from the “right” (the Liberal Party) or the “left” the Fabian socialists and the Labour Party. The result were the two volumes mentioned above. The strategy adopted was to argue against both the morality and the practically of socialism. The latter resulted in many essays showing how specific examples of state intervention or control, such as electrical distribution or public housing, led to unintended, harmful consequences.The ideas expressed in the two volumes,
A Plea for Liberty and
A Policy of Free Exchange, are still timely even after the passage of some 110 years. In spite of the fall of communism and the discrediting of the idea of a centrally planned economy, myriad government interventions in the operation of the economy are still with us, seemingly entrenched and impossible to remove. It is thus interesting to see the response to socialism by free market people who were present at its birth.Dr. David M. Hart

Library of Economics and Liberty

December, 2002Recommended ReadingEric Mack,
“Foreword” to Herbert Spencer,
The Man versus the State, with Six Essays on Government, Society, and Freedom (Indianapolis: LibertyClassics, 1981).Eric Mack, “Introduction” to Auberon Herbert,
The Right and Wrong of Compulsion by the State, and Other Essays (Indianapolis: LibertyClassics, 1978).Jeffrey Paul, “Foreword” to
A Plea for Liberty: An Argument against Socialism and Socialistic Legislation, consisting of an Introduction by Herbert Spencer and Essays by Various Writers, edited by Thomas Mackay (1891) (Indianapolis: Liberty Fund, 1981).Edward Bristow, “The Liberty and Property Defence League and Individualism,”
The Historical Journal, 1975, vol. XVIII, no. 4, pp. 761-789.N. Soldon, ”
Laissez-Faire as Dogma: The Liberty and Property Defence League, 1882-1914″, in
Essays in Anti-Labour History: Responses to the Rise of Labour in Britain, ed. Kenneth D. Brown (Macmillan, 1974), pp. 208-233.J. W. Mason, “Thomas Mackay: The Anti-Socialist Philosophy of the Charity Organisation Society,” in
Essays in Anti-Labour History: Responses to the Rise of Labour in Britain, ed. Kenneth D. Brown (Macmillan, 1974), pp. 290-316.J. W. Mason, “Political Economy and the Response to Socialism in Britain, 1870-1914,”
The Historical Journal, 1980, vol. XXIII, no. 3, pp. 565-587.

Book Cover

Translator/Editor

Thomas Mackay, ed.

First Pub. Date

1894

Publisher

New York: D. Appleton and Co.

Pub. Date

1894

Comments

Collected essays, various authors.

Copyright

The text of this edition is in the public domain.

by William Maitland

II.

The Coming Industrial Struggle

WE frequently hear now that the Manchester school of political economists is dead, and that the doctrines it inculcated are extinct. That this should be so seems to be considered a subject for general congratulation. Its policy is described as narrow and selfish, unsuited to the more enlightened and philanthropic times in which we live; while its professors are accused of want of patriotism and, strangely enough, of having sacrificed the interests of the whole nation to those of one particular class. Those, however, who have read the inaugural address of President Cleveland—perhaps the most remarkable declaration of policy ever delivered by any man in any country, though it has attracted far less attention in England than it deserves—may come to the conclusion that the Manchester school is not dead; but that, like a large part of the population of this country, it has emigrated to America, and taken its principles with it. This is, perhaps, not to be wondered at. We are a very great and a very intelligent nation, and for the last twenty-five years we have been lecturing the United States, in season and out of season, on the folly of protection, and the advantages to be derived from a strict adherence to sound economic principles. We have pointed to the marvellous development of our own industries, and to the rapid increase of wealth and enlightenment among every class of the community, as the best proof of the soundness of our advice; while we even ventured to predict for them an almost similar advance, if they would but follow our example.

How far we were honest in proffering this advice it is difficult to say. The followers of the Manchester school could consistently do so; for they believed that their policy must be for the advantage of every country adopting it, and that every advance in prosperity made by one nation must be for the advantage of every other. On the other hand, many believed that American manufactures were solely kept up by protection; and that, if the United States could be induced to open their markets, their own manufacturers could not compete with ours, and we should obtain an almost complete monopoly. Even Mr. Gladstone, who claims to be one of the last survivors of the Manchester school, in a controversy with the late Mr. Blaine, in the
North American Review, some years ago, on the subject of free trade and protection, wrote as if it were the special mission of the United States in the universe to provide raw material for our manufacturers and food for our operatives, forgetting that he was addressing the representative of one of the largest manufacturing countries in the world. However, America is now going to adopt a free trade policy, possibly because of our advice, but much more probably from her own bitter experience of protection, which has ruined her agricultural classes, has tended to accumulate wealth in the hands of a few, and has led to a system of making concessions to every class of the community which had influence enough to exact them, to the detriment of those who had no such power.

This departure is far more important than at first appears. It may be said that America is only one country, and that most continental nations are still protectionist; but not only is America the most important of all as regards wealth, territory, population and resources, but she is also the only nation which can really claim to be protectionist in the fullest sense of the word. She alone is raising a revenue far in excess of her requirements. France, Germany, and all other protectionist countries, may gild the pill and endeavour to persuade their people that this form of taxation is a benefit, but every farthing raised is urgently needed for the support of their enormous armaments and the interest on their debts.
They probably find it easier to raise their revenue in this form than in any other. But the United States, practically without an army, a navy, or a public debt, had a revenue far in excess of what she could require, even after allowing for many illegitimate drafts made upon it; and, perhaps for the first time in the history of the world, the enormous accumulation of wealth in the public treasury became a pressing danger to the State. It was this condition of affairs which gave rise to the abuse of the pension fund, and led to the reckless extravagance, to call it by no stronger term, of the last Administration, which culminated in its defeat at the last election. But, opposed as I am to protection in every form, there is no doubt that more can be said in favour of it for America than for any other country. America is very nearly, if not altogether, self-supporting. With the exception of tea and coffee, and perhaps a few drugs, she can produce everything she requires in the way of food for her population, or raw materials for her manufacturers. If protection has failed in such a country, what can be said for it elsewhere? It has failed, and America is now pledged to a policy of free trade.

While this change has taken place in the United States, the very reverse is going on among ourselves. Our farmers and manufacturers, or rather those who profess to speak for them, clamour for protection. Workmen are to be protected against their employers; the unemployed against those who do not employ them. We are to be protected against working too many hours, against getting drunk, against old age, against incapacity, against everything, except, perhaps, small-pox, by these new reformers. All this will require money; and, enormous as our taxation is, especially in view of the present condition of trade and commerce, this appears to present no difficulty. Government is to pay for all the proposed benefits, and the necessary taxation can be raised from the capitalists. Coexistent with this public extravagance, as is always the case, there is the most wild and reckless private expenditure the world has ever seen among all classes of the community, while both public and private extravagances are held
up as proofs of our marvellous prosperity. For years the old watchword of the Manchester school—Retrenchment—has never been heard here, and it now sounds strangely in our ears, as it comes to us, across the Atlantic, from the lips of President Cleveland, as he preaches public and private thrift and frugality, individual freedom, and independence of all government support and protection.

The object of this paper is to forecast, as far as possible, what will be the effect of this change of policy; and what each country will gain and lose by it. But, before entering on this subject, and to show how wide the lines of divergence already are, I propose to place in juxtaposition a few statements from the speech of Mr. Cleveland, in which he lays down the fundamental principles of good government, and some of the utterances of prominent statesmen in this country, belonging to all parties—unless, indeed, there still be a party representing the Manchester school.

PRESIDENT CLEVELAND.

‘While every American citizen must contemplate with the utmost pride and enthusiasm the growth and expansion of our country, the sufficiency of our institutions to stand against the rudest shocks, the wonderful enterprise of our people, and the demonstrated superiority of our free government, it behoves us constantly to watch every symptom of insidious infirmity that threatens our national vigour.

‘It cannot be doubted that our stupendous achievements as a people, and our country’s robust strength, have given rise to a heedlessness of those laws governing our national health, which we can no more evade than human life can evade the laws of God and Nature.

‘…We should be wise and should temper our confidence and faith in our national strength and resources with a frank confession that even these will not permit us to defy with impunity the inexorable laws of finance and trade.

‘The lesson of paternalism ought to be unlearned, and the better lesson taught that, while the people should patriotically and cheerfully support their Government, its
functions do not include the support of the people.

‘Acceptance of this principle leads to a refusal of bounties and subsidies, which burden the labour and thrift of a portion of our citizens….

‘It’ (that is, the neglect of this principle) ‘leads also to a wild and reckless
pension expenditure, which…prostitutes to vicious uses the people’s prompt and generous impulse to aid those disabled….

‘Every thoughtful American must realize the importance of checking at its beginning any tendency to extravagance in public or private stations, and to regard frugality and economy as virtues. The toleration of the idea of extravagance results in waste of the people’s money by their chosen servants, and encourages prodigality and extravagance in the home life of our countrymen. Under our scheme of government, waste of public money is a crime against the citizen, and contempt for the character of our people for economy and frugality in their personal affairs; and it deplorably saps the strength and sturdiness of our national character. It is the plain dictate of honesty and good government that public expenditure should be limited by public necessity, and that this should be measured by the rules of strict economy. It is equally clear that frugality among the people is the best guarantee of the contented and the strong support of free institutions.

‘The existence of immense…combinations…formed for the purpose of limiting production and fixing prices is inconsistent with the fair field which ought to be open to every independent activity. Legitimate strife in business should not be superseded by an enforced concession to the demand of combinations that have power to destroy. Nor should the people…lose the benefit from the cheapness which usually results from wholesome competitions. These…combinations frequently constitute conspiracies against the interest of the people
*2….

‘When we proclaim that the necessity for revenues to support the Government furnishes the only justification for taxing the people, we announce a truth so plain that its denial would seem to indicate the extent to which judgement may be influenced by familiarity with the perversion of taxing power. When we seek to reinstate self-confidence…by discrediting abject dependence on governmental favours, we strive to stimulate those elements of the American character which support the hope of American achievement.’

SIR WILLIAM HARCOURT.

‘I have already pointed to the growth of expenditure in the last seven years, and I have nothing to say on the subject of that expenditure. I am not going to enter into any controversy with reference to it, or to condemn it, but this, at least, I may say—that those who have authorized, encouraged, and insisted upon it—I am speaking now entirely without distinction of party, for it has not been one party alone—are bound to provide the means of defraying it. I know there was once in this country an economical party (laughter); but there is no economical party now, and I believe that the Prime Minister and myself are the only survivors of it (laughter). There has been attributed to me a saying
that every one is a Socialist now. I do not know that I ever said it; but this I will say—there are no economists now. Financial economy has gone the way of political economy (ironical cheers). A chancellor of the exchequer preaching against extravagance is nowadays a voice crying in the wilderness. We hear much of the stinginess of the treasury; I only wish the treasury had power to be more stingy than it is. A chancellor of the exchequer may hold up his hands in despair, like the old steward in
The Rake’s Progress; the money is spent, or, as the French say, the wine is drawn, and you must pay for it. After all, the causes of this are not far to seek. Economy was possible, and even popular, in former days. Governments were compelled to be economical, for the people demanded it, and the House of Commons supported it. Sir Robert Peel was an economical minister. At that time the country was poor, capital was deficient, trade was bad, the weight of our debt was crushing, and taxation relating to the resources of the people was enormously heavy.

‘The people were obliged to attend to the pence because they had no pounds to look after. Now the nation has grown rich, taxation, compared to the resources of all classes, is relatively light, and probably, in proportion to its wealth, this is the most lightly taxed country in Europe. Therefore, it is not unnatural that when any one comes forward with a proposal for increased expenditure he should be received as if he were the discoverer of a new pleasure (laughter). Private members with large hearts and small responsibilities take up favourite schemes for some favoured class of the community. They demand higher wages and greater pensions, and they desire that the State should undertake new duties, fresh responsibilities and larger expenditure. We create new empires here, and annex fresh territories there; we are anxious to reduce postal charges all over the world, to relieve more rates, to undertake lifeboats, &c. For these things the country is well agitated, and interests are well organized, the House of Commons is well canvassed, and one afternoon, in the gaiety of our hearts, we pass a resolution unanimously
which is to cost a few millions when it comes into operation a few years hence. This is the cause of the increase of public expenditure.

‘I pointed out the other night, with reference to a motion of this kind, that it meant £25,000,000; but the House of Commons said, Only £25,000,000! How cheap! Let us have it at once (laughter and cheers).
I do not condemn these things—they are all excellent in their way, there is a great deal to be said for them, and very little to be said against them; but the time comes, and it has come, when you must pay for them…. I belong myself to the old school, and I would gladly see a good deal less spent, for, in fact, a good deal of it is wasted (cheers); and, if I might reverse the old saying, I would say that those who call the tune must pay the piper. The wealth of this country has increased, and is increasing, year by year. You may find yourselves in temporary straits,
but there is no occasion for apprehension and disquiet. The condition of your affairs is sound, solid and prosperous. The resources of the country are ample, and they are always at command.

‘He (Mr. Goschen) then proceeded to show that while public attention was fixed on the great staple industries of the country—the cotton, coal and iron industries—there is a mighty trade going on, there is wealth being rolled up—wealth of which no public statistics exist, but which is nevertheless accumulating and adding to the capital of the country. He pointed out that the profits of the cotton trade were less than the aggregate profits of the medical profession, and that the profits of the coal mines were still less than those of the lawyers (laughter).’—(SIR WILLIAM HARCOURT, Budget Speech, April 25, 1893.)

MR. ARNOLD MORLEY.

‘The market rate of wages referred to was not a standard a government, or any other large employers of labour, ought to be guided by, and, he thought, the Post Office ought to set an example to other large employers of labour.’—(Reply to Deputation of the Unemployed. December 2, 1892.)

SIR JOHN GORST.

‘The principle he was anxious to lay down was, that, whenever the public was the employer of labour, and the workers were working either for the general public or for the public in any division of the United Kingdom, the employers should so regulate all the conditions of the employment as to make themselves model employers of labour…. The whole matter was in the hands of a Government department, who were under no obligation to make any profit out of the work which they turned out; who had no foreign competition to rival them, and who were only under the necessity of seeing that the work was good.
It really did not much matter what it cost.‘—(Debate on Labour in Dockyards, March 6, 1893.)

MR. CAMPBELL-BANNERMAN.

‘With regard to wages, the Government did not shut their eyes to the change that had come over the public mind in this matter. A very few years ago it would probably have been regarded on both sides as a perfectly sufficient answer if he had said, “We get men enough at the wages we offer. If our doors are open, there is a constant stream of men coming in; and, if they are shut, there is a mob outside wishing to come in; therefore, why in the name of common sense should we wish to raise our wages?” He did not use that answer, he did not believe in it.’—(Debate on Labour in Dockyards, March 6, 1893.)

MR. JOHN BURNS.

‘No better method of attempting to solve the question of the unemployed, which grew more serious every year, could be found in large districts where Government establishments existed than for systematic overtime to be abolished, a week of forty-eight hours established, and men from the ranks of the unemployed engaged in the arsenals and dockyards on
reproductive work,’ &c.—(Debate on Labour in Dockyards, March 6, 1893.)

These quotations show how wide apart the lines of divergence already are; and I propose to consider, in the first place, how the United States will be affected by this new departure. Briefly stated, Mr. Cleveland declares that the government of the country must be carried on with extreme thrift and frugality, and that all taxation beyond what is actually required for revenue is alike impolitic and unjust. Protection, therefore, will gradually disappear; and those who believe that this step will give us a monopoly of the American markets, will, if they are right, see their desire consummated. I am of opinion, however—and I write with a long experience of America—that they will be grievously disappointed, and that the very reverse will be the case. Americans are at least as good manufacturers as we are; and, so far from protection having aided in the development of their industries, its effect has been to restrict them. I am not going to discuss here whether protection may not, in the first instance, have helped to establish these industries; that is now beside the question; for all the most important of them are now firmly established, and are ready for any further development. Many may feel inclined to dispute my assertion that Americans are as apt manufacturers as ourselves; but, if they will remember that the first consequence of protection is to raise the cost of production, and that of free trade to lower it, and that, notwithstanding this, there are already many articles in the production of which the United States not only compete with us, but in which we are quite unable to compete with them, they will find it difficult to explain this fact on any other hypothesis.

It is interesting to examine the cause of this exceptional position of some articles, as it has a very direct bearing on the future of industry in the United States. It will be found that when a very large home demand for any article has existed in America, a demand as great as, or perhaps greater than, the whole of the home and export demand of any other country, the manufacture of that article has been in the end confined to America, the extra cost of production there being met by improvements in labour-saving
machinery, &c., while the larger quantity turned out enables the manufacturer to accept a small profit. Let us take an example. Rifles and pistols are much more common in America than here, and there are probably five hundred Americans who own one or both of these weapons for one person who does so in this country. For this reason, American rifles and pistols are common enough in England, while English weapons are practically unknown in America. I am, of course, not speaking of the very finest weapons, but of those for which there is a popular demand. The same holds good of farming implements, tools of many sorts, clocks and watches, railway carriages, type-writers, sewing and many other labour-saving machines used in factories, &c., &c. It is, above all, in the manufacture of labour-saving machinery that Americans are pre-eminent, and, good manufacturers as we are, we cannot lay claim to equal inventiveness or equal mechanical skill of this kind.

The iron and steel industry is also, to some extent, a case in point, for—although, so far, there has been little or no export—the home demand for railway and other iron and steel is so enormous as compared with that of any other country, that prices have been reduced until they are perilously near those current in England; and any further reduction in the cost of production, such as may be expected from the promised revision of the tariff, is likely to bring the United States into our home and foreign markets as a competitor with us, for the first time, in one of the great staple industries.

This points not only to great manufacturing capacity, but to the immense advantage her large and increasing home market will give America over every other country. A home demand is always a much more important factor in industry than an export demand, as it is more steady and more to be depended on. I think, therefore, I am not wrong in saying that Americans are, at least, as good manufacturers as we are, and that men who have been able, notwithstanding the enhanced cost of production, whenever any exceptional circumstances were in their favour, not only practically to
exclude us from their markets, but to compete with us in our own, will, in the future, when they meet us on equal terms, be able to do the same with many other and much more important products. For it must not be forgotten that while protection—and even the last and crowning phase of it, the McKinley Bill—has succeeded only partially in excluding us from the American markets, it has, with the few exceptions referred to, absolutely shut American manufacturers in, and prevented them competing with us, either in our home or in foreign markets. In his address to the London Chamber of Commerce, towards the close of last year, Sir John Lubbock showed very conclusively that America had damaged herself far more than she had hurt us by her protective policy, and especially by the McKinley Bill; but it is easy to go a great deal further, and to demonstrate that to American protection, more than to anything else, we owe our still undisputed commercial and industrial supremacy, and that it will depend on the policy adopted by this country whether we are in future to retain our fair share of it or are to lose it beyond all hope of recovery.

No one will dispute that protection raises the cost of production and that free trade lowers it, and it is to this alone that we owe our present immunity from American competition. If protection is now abolished in that country, the cost of production will be reduced, and American manufacturers will then start on equal terms with ourselves. But will the terms be equal? I am inclined to think not. Assuming, however, that American manufacturers are not better than our own, that their energy and activity have not been stimulated by the adverse conditions under which they have hitherto worked, that they are not more inventive and have not greater mechanical skill—even then it will be seen that they have every advantage we can claim, and many we can lay no claim to. They have plenty of good and most efficient labour, and can get as much more as they require; they have an abundance of iron and coal; in many places they have natural gas, available both for lighting and fuel; they are far ahead of us in the use of electricity; and they
have unlimited water-power, which is likely to become a very important factor in the future of industry, in the production of electricity. But, besides all these, they have three special advantages which far surpass all the others—they have the home demand of a rapidly increasing population of already seventy millions; they produce nearly all the raw material for their manufacturers; and, above all, they produce all the food for their operatives. We are already dangerously dependent on our foreign trade, and must, to a large extent, import our raw material and food. Is it likely, then, that with all these advantages in their favour, and with a reduced cost of production, free trade is going to give us a larger share of the American markets than we have hitherto had? Those who think so know very little of the energy, the activity and the eagerness of Americans in business. On the other hand, is it not evident that free trade will exclude us from American markets much more effectually than protection has ever done? It will not stop there, however; for, if they can compete with us successfully in America, they can equally compete with us here in our home markets, in India, in China and the East, in our own Colonies (all the more successfully if the latter still adhere to their fatal policy of protection), and in Africa, when we have succeeded in colonizing that ‘most distressful country.’

Take as an example one of the most important industries, the manufacture of cotton goods. This industry is already firmly established in America; and, with nothing to feed on but a demand practically limited to the home market, it has advanced with leaps and bounds, and is ready for any further developments. America grows the best cotton in the world and grows much more than all the rest of the world. At present we import the bulk of this cotton at a great cost, manufacture it, and, after deducting what we require for our own use, export the balance, much of it back again to America. We know that India, where trade is as free as it is here, now retains a large part of the cotton produced in that country; and, by manufacturing that cotton, which is much inferior to American in quality, has almost monopolized the
trade for all the heavier and coarser cotton goods, not only in the Indian, but in all the Eastern and East African markets, leaving us to supply the demands for the finer goods made from American cotton, or from a mixture of the two. This has not really hurt us, for the prosperity which this and other large industries have produced in India has created such an increased demand for the finer goods that our exports are larger and relatively more valuable than they were. But if America now retains her cotton, and can manufacture it as cheaply as, or more cheaply than, we can—is there any reason to doubt that she will succeed, at least as well as India, hampered as that country always is by an excessive burden of taxation? And, if so, what will be the condition of Lancashire? Surely the moment is ill chosen for imposing restrictions and regulations which can in any way hamper the free action of our manufacturers—whether capitalists or operatives—when a struggle is before them, on the result of which their very existence may depend.

I may be told that the high wages in America will prevent all this coming to pass; but here again I believe that those who differ from me are mistaken; I do not believe that the real cost of labour is higher in America than here. The apparent excess in wages merely represents greater efficiency. But assume for the sake of argument that wages are higher, much higher, if you like, in America than here—does it follow that they will remain higher, or, what is the same, that wages here will remain lower? We are all aware that there has been now for many years a vast emigration of our people to the United States, some twelve millions having gone there in the last fifty years; and the same emigration has been going on from every country in Europe. Few of us, however, know that of this large emigration not much over one per cent. has been skilled labour. Our operatives have not gone to any great extent, and the reason is not very far to seek. They knew, some had probably learnt from experience, that employment in industries which are dependent on, and strictly limited to, the demand for the home markets, and which have no other outlet for their surplus, is apt to be less
regular than employment for a market which commands both a home and an export trade; that, while they may receive higher wages so long as they are employed, they are much more liable to be thrown out of work than in a country which has the whole world for its customer; and that, therefore, at the end of a year, or a series of years, they are worse and not better off than they were at home. But if this new departure in America also attracts the whole world as her customer, the objection to emigration on the part of skilled labourers at once disappears; and in its place they will see the great advantages active, energetic men have in a new and rapidly developing country for the investment of their savings and the opportunity it affords them of raising themselves and their families to a much superior condition. It is the pressure of population to a very great extent which leads to emigration; and, so far, it has been the lowest class of unskilled labour which has emigrated, while the skilled labour has remained. The moment, however, that our operatives begin to see that America holds out inducements to them which the older country cannot offer, they will emigrate in increasing numbers; the pressure will be relieved, and the unskilled labour will remain to fill their places as best it can. There is one way, and, as far as I can see, only one way, in which we can hold them—we can give them higher wages, wages at least equal to those obtainable in America; and to do this we must be able to afford it. If we find it impossible to retain our skilled labour, other consequences will follow of immense importance to both countries. No one who has watched the emigration to the United States for many years past can doubt that it has been far from an unmixed benefit, and it may have been an unmixed evil, to that country to receive the continuous stream of emigration which has poured into it—the most miserable, the most ignorant, and the most discontented population from the poorest agricultural countries in Europe, almost unmixed with any better element. Its departure was a benefit to the country it left, but a danger to that which received it. If these conditions are now reversed—if the better class of labour leaves us, and the less
competent remains, the emigration of a large part of our population every year may cease to be the blessing to this country it has hitherto been.

This is no wild, incoherent prophecy, dead though the Manchester school may be, and oblivious though we may have become of the most fundamental principles of political economy. Admit only that free trade will lower the cost of production, which protection has raised, and it will be evident to any one who will carefully consider the whole question, that every one of the changes foreshadowed must follow as a necessary consequence.

If it were not that we see so many indications that the country is deserting its old policy of freedom of trade and freedom of enterprise, we could look forward to the future with perfect equanimity. If our adoption of the principle of free trade has in the past led to most marvellous prosperity at home, which has reacted on every part of the world, and if so great an advance has been made by the action of a small country like England, what may we not expect from the same action in a country with the immense and varied resources of the United States, capable of supporting a population at least ten times as large as England? Even during our greatest prosperity we could not maintain the increased population which that prosperity produced, and, during all those years, millions emigrated to people America and other countries for whom we had no room at home. At least one half of our increase we had to send abroad to maintain our prosperity. Can we suppose that it will be no additional advantage to America and to us, no additional security to the permanence of worldwide prosperity, that, for far more years than we need look forward to, overpopulation there must be impossible; that every soul born in that country will be one more worker, one more customer for the trade of the civilized world, instead of being, as is so often the case here, a drag on the rest of the community which must be got rid of?

We should remember, however, that while America has so many advantages over us, we have at least one advantage
over her, and that a very important one. We are in possession; and, before she can wrest our present industrial supremacy from us, she must dislodge us from the position we now occupy. It must be years, it may be many years, before she can stand on as strong an industrial footing as we now hold. Time is in our favour; and if we are wise we can so fortify our position as to render it wellnigh impregnable. Those of us who are convinced free-traders do not believe in or care for exclusive commercial supremacy; the very phrase is a contradiction in terms, for trade is in its nature not exclusive but reciprocal. Further, we believe that Nature, if her laws are not interfered with by artificial restrictions imposed by the ignorance or folly of mankind, will give supremacy in the future, as she has always done in the past, to that part of the world, and to that nation, which, for the time being, can use it most for the benefit of the whole human race. We believe also that the most efficient and economical distribution of industry is that which takes place under free trade; and that, if from any cause we lose any of our more important industries, others, perhaps now unthought of, will spring up to take their places. We believe that every country and every nation will under freedom be guided to its true path of development, and can retrograde and become extinct only through its ignorance, its folly, or an overweening and ill-founded belief in its own greatness.

When, however, we look at home we are filled with misgivings. While we see America embarking on a course which, judging from our own experience, must lead her on to fortune, we see England rapidly retracing her steps. The whole air is redolent of protection, which now comes to us under many new disguises, most of them strangely enough described as reforms. This new school of self-styled reformers (I do not know if they also profess to be economists) has many and most wonderful panaceas for the improvement of mankind, for there is scarcely a measure proposed by them that is not a restriction of individual freedom. And yet the great fight of the old school of reformers was for freedom, not
alone of trade, but for the individual freedom of every man to use the powers given him for his own advancement, well knowing that no man could improve his position without at the same time adding to the well-being, not only of his own nation, but of all humanity. The fight against governmental extravagance and the demand for retrenchment were scarcely even an extension of this principle. It was believed then that every man was entitled to the fruits of his labours, and that Government had not the right to ask him to contribute from these more than was absolutely requisite for carrying on that government with the strictest economy. We have changed all that now. Sir John Gorst and Mr. Arnold Morley appear to belong to the same school of political economists (if they will excuse my applying so mean an epithet as economist to gentlemen with such liberal ideas)—for the one believes it does not matter how much a warship costs so long as the Government foots the bills, and the other considers that the market rate of wages is not the standard which ought to guide the Government or any other large employers of labour. Mr. Arnold Morley does not tell us what the new standard he has discovered is, but I presume it to be sentiment. I wonder if he ever remembers that there are many small employers of labour, who pay their wages out of their own pockets, and not out of the pockets of the taxpayers, who will be ruined by the introduction of his new standard, and that their ruin will entail ruin upon thousands of working men, every whit as deserving as his letter-carriers.

The occasion on which Mr. Arnold Morley delivered himself of this sentiment furnishes us with perhaps as good an example of the change which has come over us in recent years as can be found. A deputation of the unemployed, having nothing better to do, arranged to pass a part of their day with Mr. Arnold Morley. Instead of entering into their own woes, as he probably expected they would do, they read him a severe lecture on the duties of Government in general, and of the Postmaster-General in particular, towards those whom they employ. These gentlemen evidently belonged to the same school of political economists as Sir John Gorst and
Mr. Arnold Morley himself, for they shared their belief that the more money Government expends on wages, the more there will be for outside employers of labour to pay as wages to their workpeople, and the more with which to give employment to the unemployed themselves. If Mr. Arnold Morley will refer to the life of his most distinguished predecessor, the late Mr. Fawcett, he will find that, on a somewhat similar occasion, that gentleman laid down an exactly opposite rule; and Mr. Fawcett not only spoke with authority as a political economist, but he did more during his term of office, by affording the public greater facilities for the transmission of parcels, &c., to increase in a legitimate way the employment given to the working classes by the Post Office than any other Postmaster-General in our time.

Mr. Arthur Balfour tells us that the failure of Mr. Cobden’s teaching is due to his having fought against the aristocratic and landed classes solely in the interest of the manufacturers. No doubt Mr. Cobden did oppose the landed classes, and the fight was a bitter one; but there was at least as much bitterness on the one side as on the other. It was that class which had imposed and maintained the disabilities under which all the other classes of the community suffered; and it was for the repeal of these disabilities, in the interest of all classes, that Cobden fought, and fought successfully. What is there in Mr. Cobden’s life to show that he would not have fought as stoutly against the restriction of labour as he did against the restriction of trade; and that in doing so he would not have believed he was acting in the best interests of the working classes themselves? To the last hour of his life Mr. Bright remained unconvinced as to the advantage of factory legislation; and it suits those who are opposed to his views on that subject to point to this as a proof of the selfishness of the policy in furtherance of which he spent his life. But Mr. Bright’s conduct in this, as in all else, was perfectly honest and consistent. He believed, not in helping or protecting people, but in teaching them to help and protect themselves. It is true he was a manufacturer; but, as such, he probably knew more of the working classes than most of
those opposed to him, and he knew that the conditions which gave rise to the cry for this special legislation would, if things had been left to work themselves out, have taken another form, and these people would have protected themselves, as responsible human beings ought to do, and can do, more effectually than any government can ever hope to do for them. In the last fifty years two men stand out conspicuously as the champions of the working classes, two men of blameless life and noble character, who spent their lives in the service of their fellow-men—Lord Shaftesbury and Mr. Bright. The one, a great nobleman, taught that it was the duty of the upper classes and of the Government to protect those whom he believed to be weak and incapable of helping themselves. I yield to no one in my admiration of the single-heartedness with which Lord Shaftesbury devoted a long life to the cause which he had at heart; but I am convinced that his action has been disastrous, and to none so much as the working classes, by teaching them to look for help elsewhere than to themselves. Mr. Bright, on the other hand, was a man of the people, who knew them well, and believed in them. He spent his life trying to awaken the working classes to a sense of their rights and responsibilities; and, having done that, he had no misgivings as to their being able to protect themselves. Mr. Bright’s teaching has been, I believe, all for good; but then I belong to the extinct Manchester school.

Perhaps the best exposition of the policy of the new Liberal party is that presented to us by Mr. Chamberlain in his article in the
Nineteenth Century of last November. Mr. Chamberlain says a few half-complimentary words over the grave of the Manchester school. It was useful in its day, he thinks, but its day is passed; and he then proceeds to introduce to his audience our old enemy protection in a number of new disguises, under the name of ‘Constructive Legislation.’ He enumerates some, possibly all the measures which he thinks may be advantageously passed for the amelioration of the condition of the working classes. There are two characteristics common to all these measures; they all require a great deal of money and the interference of
Government. Neither Mr. Chamberlain nor any of those who agree with him have ever been able to tell us where all this money is to come from, nor, I fear, will they succeed in doing so until they have solved the greatest economic problem of all time—how you can both eat your loaf and have it. The pockets of the capitalists and manufacturers have, it is true, been suggested; but Mr. Chamberlain knows full well that they never have much money in their pockets, and have none at all when they are most prosperous. They can then employ it to better purpose. It cannot be taken from the wealth realized by past production, for three reasons—the first, because that wealth has been largely re-employed in industry; the second, perhaps a childish reason, because it would be misappropriation; the third, because, as the fund would soon be exhausted, it could not provide a permanent provision for the objects in view. It must, therefore, be taken from the current industry. It must come from the manufacturers’ profits, where they still exist. Even admitting that all manufacturers are still making a profit, it is not a very large one; and it is clear that the profits in every industry must vary according to the special advantages possessed by some manufacturers as compared with others. The larger and wealthier among them can, as a rule, make money when those less favoured can barely make both ends meet. It is evident, therefore, that any readjustment of the division of profits between employers and employed, or any provision made out of profits for the latter based on what the larger and wealthier manufacturers can afford, must tend to the extinction of the smaller men, and that with their extinction a large number of operatives will be thrown out of work. These will, I presume, join the ranks of the unemployed, for, according to Mr. Burns, Government is to find
reproductive work at a full rate of wages in our dockyards and arsenals. It seems to escape our new reformers that in process of time all the population which has not already left the country will be occupied in the manufacture of war material; for it is evident that the wages paid to every man engaged in the building of warships and guns, which, Mr. Burns notwithstanding, is not
reproductive work, means the withdrawal from really reproductive industry not of one man but of many men. If we know anything, we surely know by this time that money raised by taxation, and expended by Government, does not go nearly so far and is not applied to as good purpose as the same sum expended in private enterprise. Moreover, these ships and guns once made must be manned; and the evil does not stop there, for then we must get up a little war just to see how well, or how badly, they work. There is one sense, however, in which these works are reproductive. When finished, they are so imperfect, that the supposed necessity for them requires us to produce others to take their place; and in these we reproduce the same or as great defects. The difference between building a war vessel and a merchant vessel is, that every man engaged either in the construction or the maintenance of the former is a drain on the resources of the country; while every man engaged on the latter is contributing to find employment for many others at home and abroad, and is thus, not only occupied in work which will in time reproduce itself out of the profits it makes, but is adding to the wealth and prosperity of the nation at large. Our new reformers seem to take a totally different view of the situation from President Cleveland; and consider that, while it is the duty of the Government patriotically and cheerfully to support the people, it is in no wise one of their functions to support the Government, or, in other words, themselves. Those manufacturers who are left after the extinction of their smaller and less wealthy competitors will, for a time at least, do an excellent business, even after they have deducted from their profits their share of what is required for the support of the unemployed. It is wonderful how clearly we see the mote which is in our brother’s eye, for I should be afraid to say how many English homilies I have read in the last ten years, addressed to the benighted American people, proving most conclusively that the protection of industry must create huge monopolies which oppress the people, and especially the working classes. We fail to recognize the fact that the protection of labour must accomplish the same result even
more surely. It is the same with every measure proposed, if we follow it to its logical conclusion; it is the working classes who must, as Sir William Harcourt says, pay the piper; and this is, perhaps, only fair, for it is they who call the tune.

These would-be reformers are entirely sceptical as to the capacity for progress possessed by a really free society, and they map out the future course of progress by means of their own foot rule. A reference to the many proposals for the provision of old age pensions from the rates will explain my meaning. It is clear that the rate of pension must bear some proportion to the rate of wages current at the time the measure is proposed, the more so if the prospective pensioner is to contribute towards the amount required. To-day we fix the pension at five shillings a week, and in forty-five years a working man now aged twenty will come into the enjoyment of that income. Supposing, however, a similar measure had been passed forty-five years ago, half-a-crown a week, or less, would probably have borne about the same proportion to the rate of wages then current as five shillings does to-day. In the meantime, we have taken away from the young man, during the best years of his life, the greatest incentive to thrift—the necessity of making provision for old age—and we have misled him into relying on a pension at sixty-five, which, when that time arrives, proves to be no provision at all. What reason is there for thinking that the rate of wages will now stand still, and that forty-five years hence five shillings will satisfy the legitimate ambition of a working man any more than half a crown does to-day?

I have often wondered what an American working man would say if any one suggested he might have a pension of five shillings a week when he was sixty-five. I should not advise any one to make the proposal to him, except at a very safe distance.

‘God knows,’ said Mr. Gladstone, in his interview with the coal-miners, ‘that eight hours is long enough for any man to work underground.’ Mr. Gladstone generally weighs his words very carefully, and, in speaking thus, he must have
done so either to add impressiveness and solemnity to what he was saying or because he considered it incapable of contradiction. It is evident, however, that God cannot have come to two absolutely contradictory conclusions; and I would ask if God does not also know that there is far more suffering of the cruellest kind among the poor from cold than there is among the colliers from overwork, and whether legislation which could in any way add to that suffering would not be wellnigh criminal? We know from experience that, where a policy of free trade prevails, the tendency is always to the maximum of production consistent with a reasonable profit to be divided between employers and their workpeople. A maximum of production must necessarily lead to a maximum of employment and a maximum purchasing power for the wages earned. The regulation of industry must as certainly lead to its restriction, to a decreasing amount of employment available for the working classes, and to a lower scale of real as opposed to nominal wages. The former policy leads to a state of great national prosperity and an increasing demand for all the necessaries and luxuries of life; the latter to continual contraction of production and the misery to which it must give rise.

England and America can be very useful to each other, and in no way more so than by teaching each other what to avoid. The whole history of American protection provides us with an object lesson which we cannot study too carefully. At first it was a tax for revenue and, as such, possibly accomplished its object as well as any other form of taxation; then it was to establish their industries, and this it may have helped to do; but it was found that this system had no inherent strength. The older these industries grew the greater was their need of protection. Tariff was piled on tariff, and still the believers in protection cried Give! give! and at last the climax of absurdity was reached when the McKinley Bill was passed. Protection is unsound in theory, but it is far more unsound in practice. It is not equal protection which is wanted; but each section of industry intrigues to be specially protected at the expense of every other section. Wealth and
poverty being merely relative terms, a good protectionist has no desire to advance only with the rest of the population, and calls on his fetish to pass him on a little ahead of the others. It generally happens, however, that there is some class which cannot be protected, and the larger and more simple this class, the longer will it be able and willing to support all the rest of the community. In the United States this was the agricultural class, and on it fell the entire burden of taxation. Naturally its powers of endurance were limited; but the crash was averted for long by loans made to the farmers on mortgages of their properties by the other sections of the community which they supported, and, unfortunately, to a large extent by investors in this country. The financial crisis through which America is now passing is purely agricultural, and neither commercial nor industrial, as seems generally to be supposed. Of the bank failures which have taken place, 85 per cent. have occurred in the Western States, 10 per cent. in the South, and only 5 per cent. in the Eastern States, which alone can lay claim to any industry not immediately connected with agriculture, excepting, of course, mining, through which, however, banks could not become directly involved. And the end of the crisis is not yet, for the mortgages on agricultural lands are held principally by the savings banks, which have the right to require six months’ notice of withdrawal from their depositors, and this, it has generally been supposed, would give sufficient time to enable them to foreclose, should that be necessary. In every announcement of the failure of a bank it has been stated that the assets were amply sufficient to cover the liabilities; and no doubt they are, if the same level of value at which these mortgage loans were made can be maintained. This, however, remains to be seen, and must depend on the proportion of mortgages they hold, as compared with other securities. It is evident that anything like general foreclosure is impossible.

With this picture before our eyes, it is wonderful that we should rush so madly after the chimaera protection. Like the Americans, we think we have discovered the class which can support all the others; and this class we fondly
believe is the capitalist. Unfortunately capitalists, unlike the American farmer, are neither very simple nor very enduring; and we may find that they, or at least their capital, have taken wings for other countries where they will be less interfered with. In the end, we shall find that the burden must be borne by the whole nation, and that the working classes, who form by far the larger part of it, must suffer the most severely. We cannot fight against natural laws; and, in the end, we must awaken to a sense of our madness; but my fear is that, in the interim, we may lose our present strong commercial and industrial position beyond all hope of recovery. In his speech of June 10, on one of the Home Rule amendments, Mr. Chamberlain, speaking as the representative of the working classes, pointed out that, if less costly and less restrictive State regulation of industry is adopted in Ireland than is in force in Great Britain, Irish manufacturers will be able to work on such favourable terms, as compared with their English competitors, that an agitation will at once be set on foot to repeal these regulations. Now, except one comparatively small part of it, Ireland has never been, and never can be, under ordinary circumstances, a great manufacturing nation, yet if, notwithstanding this, Mr. Chamberlain believes that Irish competition is a real danger, does he see no danger threatening us from the enormous resources and natural advantages of America, a country which has no State regulation or restriction of her industries at all? How does Mr. Chamberlain propose to meet this difficulty? Or does he believe that America is a less dangerous industrial competitor than Ireland?

We may be told that America also has her labour troubles, and that the working classes there will also insist on having State regulation. The first part of this statement is true, no doubt; but it must be borne in mind that American labour troubles have been different from ours. The labour agitations there have generally been directed against great artificial monopolies, which were either directly protected or the outcome of protection. When Labour found its partner, Capital, pillaging the agricultural classes, it is not to be
wondered that Labour should have tried to insist on having her fair share of the plunder. So far, the labour agitations in America have been directed against protected monopolies; although many of those who took part in them may not have recognized the fact. I am convinced that the American working man will never tolerate any attempt on the part of the State to interfere with his right to do what he likes with his labour. He will continue to work how and when and for as many hours as he likes. He looks forward to something a good deal more substantial than a pension of five shillings a week, and he is not going to allow the State to interfere with the attainment of the object which he has in view.

In a recent speech delivered in Hyde Park, Mr. John Burns spoke of Labour as crucified between two thieves, Capital and Machinery. Now America, with its vast resources requiring development, and a relatively small population, ought to be an ideal country for the new trades unionism. Clearly if ever there was a country in which labour should be able to fix its own wages it is America; and yet here is to be found a production out of all proportion to the population, when compared with that of any other country, and yet wages are not much higher than they are in this country. Making use of Mr. Burns’ somewhat question-begging illustration, we may find an explanation which is simple enough. Capital is not so dependent on labour as he had supposed; and, when driven to it, perhaps without being driven to it, it can reduce its wages bill by the introduction of labour-saving machinery. Hence the crucifixion of which Mr. Burns complains, and from which he will find that the working man has only two means of escape; he may subside into a state of pauperism and dependence, or, becoming self-reliant, he may accept Capital and Machinery as his partners and become as independent as either of them.

If Mr. Burns and his colleagues will only consider the question calmly and dispassionately, and take a somewhat wider view of the whole matter than they are wont to do, they will find that, so far from legislation being able to do anything for the improvement of the condition of the working
classes, exactly the reverse is the case. Much of the money received by Government is, and always will be, wasted, while the balance is expended so extravagantly that it does not go nearly as far as it would in the hands of private individuals, and, consequently, cannot afford as much employment for the working classes. We cannot impress upon ourselves too often, or too strongly, that every farthing raised by taxation is taken from some industry where it is directly affording employment to labour of a useful and profitable nature.

Apart from this, moreover, we shall find that under no circumstances can a country hope to wall itself in, and become independent of the rest of the world, by protective or restrictive legislation. America has tried and failed; and yet America was more independent of foreign supply and foreign demand than any other country on the face of the globe. Such a policy may for a time give an appearance of great prosperity, which is, however, purely fictitious, and at last ends in disaster. England, however, is in a very different position. We have long passed that stage of our development in which we could rely on our own resources and be independent of other countries. On them we depend, to an almost unexampled extent, for our supplies of raw material, for our food, for the sale of our products, even for the absorption of our surplus population. If the labour party will only recognize this surely very patent fact, they will see that we may pass all the Acts we like; we can make our Government departments model employers of labour, and thus raise the rate of wages against other employers; we can limit the hours of labour, give every man an insurance against old age and accident, establish councils of arbitration with compulsory powers to give effect to their decrees—but all this legislation must be in vain if the United States adopt a free trade policy and their working men determine that each man shall retain the power to dispose of his labour as he sees fit.

In the case of labour, whatever it be with regard to other things, it is not the worst or the least favourably situated which determines the value, but that which is most efficient
and enjoys the greatest advantages. If this were not so, we should not have seen wages advancing as they have done during the last fifty years; nor should we have been able to maintain our industrial supremacy in face of the competition of other countries where wages are much lower, and whose industrial progress has been relatively greater than our own. Clearly it is the country which possesses the greatest natural advantages which must determine the margin of profit for which it will work; and, fortunately, there is always a tendency to raise the standard of subsistence, which not only leaves a sufficient margin for other less favoured countries, but by creating an increased demand, not merely for the necessities, but also for the comforts and luxuries of life, leads to a great extension of industry all over the world, and to the general well-being of the human race.

If labour is well advised it will leave its cause to the action of natural laws instead of trusting to human legislation, which must in the end prove a broken reed. The worst feature about all forms of protection is that it always requires further protection to support it; and, unless we are warned in time, we shall find that labour is making greater demands on industry than can be satisfied, and that other nations are beginning to monopolize our trade. Each decadent trade will then demand protection against its foreign rivals, and we shall see a huge edifice of protection raised in our midst, which must in the end, from the want of any sound foundation, crumble to pieces and destroy those who built it up. It is surely evident that, if America has greater natural industrial advantages than we possess, from the day she appears in our foreign and colonial markets as our competitor (which her system of protection has till now practically prevented her becoming), the working men of America will fix the rates of wages and the hours of labour for us, as well as for themselves, in defiance of all the laws we may pass with a view to controlling them.

But, while working men can do nothing by protective legislation to improve their condition, there is one way in which they can do much. They can protest against national extravagance, instead of demanding it; and they can insist on
retrenchment. Our public expenditure is now close upon £100,000,000 a year; and if Government goes on as it has been doing for years past, acceding to every fresh demand made upon the treasury by every section of the community, this amount will soon be largely exceeded. It is in consequence of this enormous unproductive expenditure, more than anything else, and perhaps also not a little to the private extravagance to which, as is always the case, it sets the example, that our industries are depressed and our workpeople to a large extent without employment. If the labour leaders will make use of the power now vested in their hands, and will insist on the most thorough-going retrenchment in every department of Government, they will find abundant scope for their energies, and will do more to ensure the prosperity, not only of the classes they directly represent, but of the nation at large, than any other leaders of the people since the days of Mr. Cobden and Mr. Bright. They need not fear that they will be spoiled by overpopularity, for the economist is never a popular character. Nor need they fear that the task will prove unworthy of their strength, for the great spending departments of Government are as strong as, or stronger than, they ever were; and where Mr. Cobden and Mr. Bright failed, or succeeded only for a time, they will do wisely not to overrate their strength. But if the task is no lighter than it was, the necessity for some one undertaking it becomes greater every day.

We build great navies and maintain large armies, and we are told that the main object of these is to protect our trade from the possible attacks of other nations. Have we no reason to fear an attack far more dangerous from the United States, which will be carried on by industrial armies and merchant fleets, and which, if we continue in our present course, will find us weakened and unable to resist? We have recently been having an arbitration in Paris with the United States. Some of the incidents in the dispute are worth attention. We had one of our numerous fleets lying in British Columbia, and the United States, practically without a navy at all, sent a revenue cutter—a mere naval police-boat—and
arrested every British ship she found sealing in Behring Sea. The Commission has decided that this was little else than an act of piracy, and yet we neither bombarded New York nor San Francisco nor annexed Alaska nor marched an army to Boston, simply because we knew that America never interferes except in what is, or what at least she believes to be, her own business; and, although in this instance she may have been technically wrong in the action she took the regulations now laid down by the Commission for the future conduct of sealers show that she was to some extent justified. We hear a great deal about our prestige, and spend millions to maintain it. Surely a nation which can boast that she can maintain her prestige with a single revenue cutter is in a most enviable position. Clearly dignity and moral strength are not the prerogatives only of nations armed to the teeth with engines of destructive warfare. True, America now seems anxious to follow the burdensome European fashion, and acquire a navy; but even in this she is different from European nations. The real origin of her navy was the necessity of finding an outlet for her overflowing treasury, and now that that has been somewhat depleted, wiser counsels are likely to prevail.

Unfortunately there are ‘jingoes’ in America as everywhere else, who wish to have the pleasure of paying for an army and navy, and to annex every conceivable continent and island under the sun; but they receive very little support from the bulk of the nation. Only the other day the American residents in the Hawaiian Islands deposed the native government, and practically annexed the islands to the United States; but the Federal Government absolutely declined to confirm their action. Yet Hawaii is much more closely connected with the United States than many islands and other parts of the world which we have annexed were with England. By a commercial treaty existing between the two countries each had agreed to admit the products of the other duty-free, and the sugar industry of the Pacific States, the largest foreign industry they possess, was dependent on Hawaii; but America has not yet discovered that apparent expediency gives her any right to
commit an injustice, and it is to be hoped that for her own sake, as well as for that of other nations, she may never make this discovery. The best reason for America not having a large and costly navy is that she does not require one, and, such being the case, she could not man it, for her people are too profitably employed at home to spend their time sailing the seas in search of quarrels.

We, on the other hand, are so entangled in the meshes of European and Eastern politics that all parties in the State seem agreed on the necessity of submitting to the grievous burden of our military and naval armaments. Great wars are happily so rare that we are entirely in the dark as to the value of the huge and costly experiments which we are making in naval construction. We do not know whether in time of war our ships can be successfully manœuvred, whether they will prove seaworthy and shot-proof, and we are not without apprehension that they may turn out to be as great a danger to each other as to an enemy. We maintain an army at an enormous expense, and yet it is admittedly insufficient, without the aid of very untrustworthy alliances, to meet the demands which may be made on us. We attempt to conciliate one nation in the hope of securing it as an ally, and by doing so we arouse the suspicion and jealousy of some other nation, and so almost precipitate the catastrophe we seek to avoid. Is not the position of America, I repeat, in many ways enviable? Is it impossible for Europe to learn a lesson from her example?

Our Colonies, unhappily, have committed many errors; but they have none of them been drawn into the stupendous folly of wishing to entangle themselves in our complicated European politics. Ambitious and sentimental schemes of Imperial Federation have dwindled down to a mere proposal for protection, a Zollverein, which is to open colonial markets to our manufacturers and home markets to colonial products, to the exclusion of other countries. The proposal is too ridiculous to bear much discussion. How, for instance, would it suit Canada to be shut off from trading with the seventy millions of the United States, her nearest and best customers, in exchange for the
very trifling advantage to be gained from trading with Australia and her small and probably decreasing population of three millions? Or is it likely that Australia will care to involve herself in war with the United States for the sake of a few sealskins coveted by British Columbia? If our Colonies have done nothing else by incurring the enormous load of debt which now weighs them down, they have at least discovered a new protection against annexation. The Colonies have now neither men nor money to spare; so they are not likely to prove valuable either as markets or recruiting grounds for many long years; and until they follow the example of America, and, paying off their debts, determine to contract no more, they will find that the surplus population of this and other countries will prefer the United States as a field of emigration.

These, I am well aware, are unpopular sentiments; but in the changes which must follow on the adoption of free trade by America, England will be brought face to face with a great dilemma. We have an enormous population absolutely dependent on our foreign trade. If we wish to retain our share of that trade and to save our labouring population from the suffering involved in a long, continuous, and ever-increasing depression of trade, we must insist on some relaxation of the burden of taxation. We have staggered along till now because America has handicapped itself with protection and because we have only been opposed by European States as heavily burdened as ourselves. In the future we are to face a young and vigorous competitor, which is laying aside the errors of protection and preparing to run its industrial course without encumbrances. The question is not, Are these sentiments popular? but, Is the danger real? England has a proud roll of achievement in the service of humanity. No greater addition could be added to her fame than that it should be given to her to take the initiative in the disarmament of Europe.

There is another way in which more economical public administration and greater freedom of enterprise would materially assist industry. Of late years vast sums of money have
been sent abroad to Argentina, to Australia, to Africa, and to every part of the globe. A very large part of this might just as well have been thrown into the sea; it is hopelessly and irretrievably lost. This money would have been much safer at home; and, if our industry were not hampered with heavy taxation, obstructive regulations and with fear of what is known as the ‘labour trouble,’ it would remain at home, and give employment to labour in the extension of industry.

One might write much without exhausting the lessons to be learnt from America; but these I have mentioned must suffice. No one reading Mr. Cleveland’s inaugural address inculcating thrift and self-reliance on his countrymen, and warning them against overconfidence in the future because of their achievement in the past, and then turning to the somewhat boastful harangue of Sir William Harcourt, can doubt where the real strength and wisdom lie. Both of these men presumably represent a majority of their countrymen and of public opinion. The one represents a country where development has little more than begun, and whose prospective wealth is greater than has ever been dreamed of for any nation in the history of the world—a country not only practically without a debt, but which has just, by an unparalleled effort, repaid an enormous debt, so repugnant to it was the very idea of indebtedness—a country without an army because it fears no other nation, with no liabilities beyond her own frontiers, and no complicated foreign relations such as in European States may at any moment give rise to a struggle for existence: and to this country her President preaches public thrift and frugality, and deprecates overconfidence in her own powers. Sir William Harcourt, on the other hand, sees great and increasing depression in all the most important industries of this country; but he bids us be of good cheer, as there is no occasion for apprehension or disquiet. A mighty trade is going on, wealth is being rolled up, capital is accumulating; and the two industries to which he refers are the medical and legal professions, which, according to him, produce wealth faster than either cotton or coal.

These comforting assurances do not reassure. Turning
from Sir William Harcourt’s easy, confiding optimism, we see on every side leaders of party renouncing the duty of leadership, ostentatiously abandoning every principle of economy in a headlong race to catch the votes of the most ignorant class of the electorate—a class which, to do it justice, is amenable to reason and appreciative of courage, if those who profess to be our leaders had the boldness to speak out. We see that freedom of enterprise which is the foundation of England’s greatness, and the support of her vast population, threatened on all sides by the unreproved clamour of ignorant empiries. We feel ourselves burdened by a large imperial debt of which we have repaid only a fraction and by a local indebtedness which increases by leaps and bounds, while during the last twenty years we have spent on our armaments nearly enough to have paid off the national debt. We have got rid, it is true, of an oppressive protective tariff, but we are fettering our industry by debt, by taxation, by strikes, and by innumerable vexatious and costly regulations. Meanwhile, we see a great nation of our own kith and kin about to adopt that principle which has been the secret of our success, and which we in our folly are now throwing away. We cannot, under these conditions, look forward without apprehension to the inevitable and rapid transference of the centre of trade to the other side of the Atlantic. It means to our poorer classes long and dark years of suffering, till our population can transport itself to freer fields of industry or becomes reduced by decimation to the needs of an industry shrunk to the narrowest dimensions.

If, by reason of the very obviousness of the danger, we are warned in time, not we alone, but all Europe, will have to thank America. That country, fearing no other, and at peace with all, will begin to monopolize the trade of the world. The nations of Europe will then, when they find their resources dwindling away, discover, perhaps when it is too late, that they have devoted too large a proportion of their wealth and the flower of their manhood to preparations for wars which rarely come, and would never come at all without these preparations. Then, when they will find themselves
sinking beneath the burden which they have allowed their rulers to impose upon them, despite the opposition of officialism and of the classes interested in keeping up this extravagant expenditure, they will insist on following the wiser and better example set them on the other side of the Atlantic.

WILLIAM MAITLAND.

Mr. Cleveland here refers to the great trusts and monopolies which have ruled the markets for some years past; but his words are equally applicable to combinations in this country which have attempted and, to some extent, succeeded in forcing the Government to conform to their demands.

Essay IV, Fortescue

Categories: Thomas Mackay

A Policy of Free Exchange: An Argument Against Socialism and Socialistic Legislation

By Thomas Mackay

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by William Maitland

II.

The Coming Industrial Struggle

PRESIDENT CLEVELAND.

SIR WILLIAM HARCOURT.

MR. ARNOLD MORLEY.

SIR JOHN GORST.

MR. CAMPBELL-BANNERMAN.

MR. JOHN BURNS.

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A Policy of Free Exchange: An Argument Against Socialism and Socialistic Legislation

By Thomas Mackay

Translator/Editor

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by William Maitland

II. The Coming Industrial Struggle

Annual EconTalk Survey

II.

The Coming Industrial Struggle