The Return to Protection

If Retaliation be not Revenge, the suggestions concealed in the word require careful analysis. We find action called for on two perfectly distinct grounds:—(1) hostile tariffs abroad, (2) dumping here.

IT may be that I am a man of peace, but I cannot see that the case for Retaliation is self-evident. “Revenge,” said Adam Smith in a celebrated passage,1 “naturally dictates retaliation.” But revenge is perhaps the stupidest and most immoral gratification in which man can indulge. That you hurt me, is no reason why I should hurt you—although I grant that, in the heat of a blow, one does not pause to think of that. It is a very good reason why I should recover damages from you, but that is not because the damages hurt you, but because they recoup me. To do people justice, revenge does not play any important part in the real world, however largely it bulks in innumerable novels. It generally takes time to plan and to carry through, and I, personally, have never met the nasty sort of person who “harbours a grudge,” and is really pleased when he pays the other party out. I do not believe he exists in decent society. What is often called “revenge” is something very different. It is best seen in that pleasant form of retaliation called the lovers’ quarrel, where the one does not want to hurt the other, but only to show how much he or she has been hurt. It is a compliment, indeed, which hurts one to pay! The very first glance, then, shows that the word Retaliation covers and conceals suggestions as to motive, purpose, and policy, and requires most careful analysis.2

The subject of Retaliation seems to divide itself into two according to the grievance which calls for it. The first grievance is, that we are injured by foreign tariffs; the second, that we are injured by what is called “Dumping.”

I. When we ask what is the harm done to us by foreign countries which prompts Retaliation on our part, we are told that they have raised hostile tariffs against us so that we cannot, or can with difficulty, get our goods through.

I confess I cannot see that this calls for retaliation. If they want to keep themselves to themselves, they have as much right to do so as we have to lock our front doors. We cannot very well deny to foreign nations what we have allowed to our Colonies—the right to surround themselves with tariff walls. Is it reasonable for Englishmen to arrogate to themselves the right to dictate to other nations what they are to do with their own property?

But, it is said, they have taken unfair advantage of our free ports; they send and sell us what they like.

The reply is obvious: Is not “open ports” the policy deliberately adopted in 1846 as one that suited us? There was no bargain with other powers. It was our own selfish policy;3 and, for sixty years, we have been boasting that it was the very best policy that ever was. Are we, in sober earnest, complaining that these nations enter our free ports? I thought we were always saying how good a thing it was for us that they did; we got cheap food, cheap material, cheap everything. How is it we have only now discovered that some wrong is done us when we get what we asked for?

It must come to this: not that any wrong is done us, but that we made a mistake in not making a bargain for reciprocity, and that we are now going to try back and find the means of making one. This is a quite sound and intelligible proposition. Entire free trade on our part, it may be said, suited us for half a century and more. So long as nations kept their tariffs moderately low, we could pass through them. But now they have raised them higher and higher; we find it more and more difficult to get our goods in; and we mean to call a parley. But why call this “retaliation”? Why cause bad blood among nations, and stir warlike feelings among ourselves, by speaking of “big revolvers”—of “hitting back”? Let us return to common sense. We said, and we thought, that our free imports would be balanced by at least moderate protective tariffs abroad. They have not been so. Then, as Mr. Balfour says: “The only alternative is to do to foreign nations what they always do to each other, and, instead of appealing to economic theories in which they wholly disbelieve, to use fiscal inducements which they thoroughly understand.”

The first proposal of Retaliation, then, is: that, on due occasion, we should put on import duties against certain nations, in order to take them off again when they have succeeded in bringing these nations to their senses; which, being translated, means, when they come prepared to make some modification in our favour. “At no time during my career,” says Mr. Chamberlain, “either as a business man or as a politician, was I ever able to make a satisfactory bargain unless I had something to give.”

II. The second argument for Retaliation takes entirely different ground. Up till lately, as was said, we congratulated ourselves that, under free trade, we got all goods cheap, and we used to point out that other countries, by taxing imports, were making everything dear, and so preventing themselves from competing with us in neutral markets. But now we have an outcry against the admission of certain goods on the ground that they are too cheap. And the proposal is, that we should take measures against other countries to prevent this evil.

The essential difference of these two grievances should be realised before we assume that one remedy will cure both;—will lower other countries’ tariffs to admit our cheap goods, and will prevent them sending us their cheap goods.

4Wealth of Nations, book iv., chap ii.

5Again and again, during this fiscal enquiry, I have been reminded of my old friend’s warning: “There are masked words droning and skulking about us in Europe just now, which nobody understands, but which everybody uses, and most people will also fight for, live for, or even die for, fancying they mean this or that, or the other, of things dear to them. There never were creatures of prey so mischievous, never diplomatists so cunning, never poisoners so deadly, as these masked words; they are the unjust stewards of all men’s ideas: whatever fancy or favourite instinct a man most cherishes, he gives to his favourite masked word to take care of for him; the word at last comes to have an infinite power over him,—you cannot get at him but by its ministry.”—Ruskin, Sesame and Lilies, p. 20.

6See Peel’s words, Jan. 27th, 1846, Hansard.

• 1“When, on Pike’s Peak in Colorado, the thermometer is down to 12° or 13°, and, in the North-west is only a few degrees above freezing point, in New England it will be moderately cool—say 43°; in the Mississippi valley it will be comparatively warm—say 52°; and in Florida it will be at summer heat—75°.”—Lawson, American Industrial Problems, p. 43.
• 2The above figures of Imports and Exports, taken from the Statistical Abstract 1903, do not include Bullion and Specie, of which we imported, in 1902, £21,629,000 of gold (£8 millions from South Africa, £3¼ millions from India, £5 millions from Australia), and £9,764,000 of silver (£8 millions from the United States), and exported £15,409,000 of gold and £10,716,000 of silver. Nor do they include, either as imports, exports, or re-exports, excisable foreign merchandise transhipped under Bond, (£13,683,000). To the imports should be added £5,380,000 of diamonds from the Cape, not declared to the Customs. It may be noted that fish of British take, landed in the United Kingdom, are not included among imports. The value of these in 1901 was £9,000,000.
• 3Without going into the mysteries of banking, it may suffice to say that the reason why payment for foreign goods is not made by cheque is that each country’s banking system does not extend beyond its own shores.
• 4IT would be rather short-sighted to gauge the importance to us of foreign trade by the fact that it is perhaps only one tenth or one eighth of our total trade. If the United States were to shut herself up inside a prohibitive wall of tariffs, she would still be almost self-sufficient. But we lie between 50 and 60 degrees north latitude; ours is a very small country at best, with a dense population; and we have, besides, sunk much of our capital and specialised much of our labour in industries which depend on other countries for their material and for their market. It seems, too, as if we were destined by nature to be ocean carriers.
• 5Our foreign trade, then, altogether amounts to £877,000,000; made up of £528,000,000 of Imports, and £349,000,000 of Exports (£65,000,000 of these being re-exports). These are values of solid Commodities brought in and taken out over British seas; and—partly as reflex and consequence—of the 32,000,000 gross tons of shipping in the world, we own the half.
• 6Nor yet is the way in which payment is made essentially different. In due time, home goods are paid by a cheque; foreign goods, by a bill of exchange. Indeed, in many cases, when goods are put on board ship, the Bill of Lading is given to a bank here, which does not give it up till cash is paid abroad, the bank meantime giving an advance to the exporter to a large proportion of the value. In either case, the sender gets his payment, in British money, through his own bank, and each transaction ends with a payment. The export of goods, again, from other countries to us takes place in exactly the same way—merchants and manufacturers, there also, sending out goods for a profit, getting paid in their own money, and the transaction ending with the payment.