# Problems of Empire/The Need for Tariff Reform

Speech at Tunbridge Wells Farmers' Club, January 15th, 1904.
THE NEED FOR TARIFF REFORM.
At the Tunbridge Wells Farmers’ Club, on January 15th, 1904.
On the last occasion when I was present at a gathering of the Club, we had the advantage and pleasure of the presence of two distinguished Colonial Statesmen, in Sir Edmund Barton and Mr. Seddon. The subject of Tariff Reform was alluded to at that gathering, and I think that many of you would have gathered from the remarks I then made that I was not likely to be a bigoted opponent of the policy which has now taken its place in practical politics. The question has many sides to it. Before dealing with it on its agricultural side, I propose to say a few words from the industrial and Imperial points of view; on the latter of which I feel more especially competent to speak.
Our industrial position.In considering the question of Tariff Reform on the industrial side, a broad survey must be taken. Of course, it is very often discussed from the point of view of individual trades, but the objection to this method of treatment is that it is possible to quote particular trades which have been very hard hit by the system of free imports, and it is also possible to quote other trades that are doing fairly well. If you will go to what is, after all, the most important table in the great Blue Book which is being quoted by speakers ​on both sides, you will get figures which will show that the industrial position of this country gives grave ground for anxiety. In this table are given figures showing the export of manufactured articles from this country, as well as from France, Germany, and the United States for a considerable period of years. It is perfectly true that by taking only the last five years it is possible to show these exports had increased; and some of the speakers against Tariff Reform are very fond of taking the figures of the past five years. But if you take the figures of a longer period—and I maintain that to arrive at a right conclusion, you must take a longer period—you will observe that our trade is subject to periods of prosperity and of depression, and that at the end of each decade our exports have reached about the same figures as at its commencement. Taking the last thirty years, our exports of manufactured goods have remained practically stationary; while those from France, Germany, and the United States have enormously increased since they adopted a protectionist policy. On the other hand, during the last few years of the period the importation of manufactured articles has largely increased, showing that foreign countries are beginning to seriously invade our home market.
Another point which has had a very powerful influence in bringing me to my present convictions, is that during the twelve years from 1890 to 1902 the balance of imports over exports had practically doubled, having increased from £92,000,000 to £181,000,000. This balance represented the earnings of our shipping and the interest on foreign investments. Last summer the Chancellor of the Exchequer, in reply to a question put to him in ​the House of Commons, said that as far as could be judged from the Income Tax returns, the income from investments abroad during the last ten years has increased by about £12,000,000. Mr. Ritchie, it is true, pointed out that much of the income from foreign investments escaped taxation, but even making a large allowance on this account it is clear that only a small proportion of the heavy increase in the balance of imports over exports can be accounted for in this way. It is, moreover, certain that our shipping earnings only account for a small proportion of the increase of £89,000,000. I have asked many people how the huge increase in the balance of imports over exports is to be explained, but cannot get a satisfactory answer. I cannot find a satisfactory reply in the Blue Book, and if no satisfactory reply can be given, it comes to this, that as a country we are living on our capital. Those who are opposed to Fiscal Reform constantly quote the increases in income tax, savings bank, and bankers' clearing-house returns, which are given as evidences of our national prosperity. But if these facts be taken in conjunction with the other facts I have mentioned—the stationary character of our exports, the great increase in the balance of imports over exports, and the fact that a large proportion of our population are living on the verge of hunger—it seems to me impossible to resist the conclusion, which is supported by the census returns, that year by year an increasing proportion of the people of this country are living idly on accumulated wealth, and that fewer are annually earning their living in agriculture or any other industry. If that be so, the country is approaching the condition of the Roman Empire during the first centuries of ​the Christian era, immediately before its dissolution. The tendency to which I have alluded has been assisted by a policy which has been based upon the interests of the consumer, and absolute neglect of the interests of the producer.
Imperial Preferences.To turn to the question in its Imperial aspect. The policy of Imperial preferences was instituted by Canada in 1897, and the example of Canada had been followed by South Africa and New Zealand, and it is idle to assert that the Colonies are against the proposal. It is obvious to every one who knows anything of the Colonies and of their products that it is impossible to give the Colonies a preference unless we are prepared to put a duty upon food stuffs and raw materials. Mr. Chamberlain declares that he is not prepared to put a duty on raw materials, and, therefore, if the policy of Imperial Preferences is to be carried out, we are bound to put a duty on imported food stuffs. What Mr. Chamberlain proposes is not to put additional duties which would increase the cost of living to the people, but to transfer the duties from things we cannot produce to those which we can produce at home.
Imperial Defence.I have in previous speeches given my reasons for believing that it is necessary for us to adopt the policy advocated by Mr. Chamberlain before the Colonies will contribute seriously to the cost of maintaining the Imperial Army and Navy at sufficient strength in times of peace. We have many rivals in the command of the sea, where we previously had only one. When I first became the editor of the Naval Annual, thirteen years ago, there was only one Power, France, whose navy offered any serious comparison to our own. Now, however, the navies of not only France, but Russia, ​Germany, and the United States are increasing year by year, and if we are to maintain the command of the seas we must have a strong Navy. Further expenditure may be necessary on the Navy; while the burden on the taxpayer in this country has almost reached its limit. Increased help will be needed from the Colonies, or otherwise we shall lose the command of the seas, upon which our prosperity and very existence as an Empire depends. At present the Colonies are doing very little, and Canada, in fact, has not hitherto made any direct contribution to the defence of the Empire in time of peace; but I am satisfied from what I have heard from Canadian friends who have recently been visiting this country that if Mr. Chamberlain's policy is carried through there will be a very much greater disposition on the part of Canada to bear her share of Imperial burdens than there is at the present time. In a speech delivered at Epsom twelve years ago I said: 'Though a commencement has been made in this direction, it may well be doubted whether the Colonies will face their fair share of the burden unless you give them further advantages than a control of Imperial questions. The Colonies, as you know, are all rigidly Protectionist. On the other hand, it is said that all that the Colonies hope for from a connection with the mother country is the enjoyment of trade advantages. I am a staunch believer in the economic advantages of Free Trade to this country, even on the present one-sided system; but, in my opinion, it is well worth considering whether we should not gain more than we lose if, by entering into reciprocal trade arrangements throughout the Empire, we induced the Colonies to bear their fair share of the cost of Imperial ​defence. In the present state of public opinion on fiscal matters in this country, such an arrangement may be impracticable. It is a problem which will undoubtedly have to be faced sooner or later if this Empire of ours is to be kept together, and it is a question on which the electors of this country will have to make up their minds.' I have long seen that the question raised by Mr. Chamberlain would be the prominent political question of the day, and I believe that on the decision of the people of this country, one way or the other, hangs the future of the Empire.
Reciprocity with United States.In his Budget speech of 1903, the Canadian Minister of Finance stated that the Canadian Government had been approached by a representative of the United States Government with a view to negotiating a treaty of reciprocity between Canada and the United States. If such a treaty be made it will not only mean the loss of the great and growing market of Canada to British goods, but it will mean, in my opinion, sooner or later, political unity between Canada and the United States. I will not ask you to accept merely my opinion, but would refer you to the statements of Mr. Blake, who was for many years the leader of the Liberal Party in Canada. Mr. Blake took no part in the Canadian General Election of 1891. He did not, until the elections were over, make known the reason of his action. He then published a letter, in which he said that, in his judgment, reciprocity between Canada and the United States would mean political union with the United States, and as he did not think that the people of Canada were prepared for annexation to the United States, he was not prepared to advocate reciprocity. I think that it will generally be admitted ​that this point has a very important bearing on the discussion now going on. While I think the unity of the Empire will certainly be promoted by the adoption of a policy of preferential trade within the Empire, I have come to the conclusion that we cannot hope to permanently hold Canada by the sentimental tie alone.
Sir Robert Giffen and ineffectual Preferences.In an article in the current number of the Nineteenth Century, Sir Robert Giffen, one of the most important opponents of the policy, asks: 'What is the use of discussing theories of Free Trade and Protection when no material advantage can result to anybody from the special proposals put forward?' After considering the effect of Mr. Chamberlain's policy as regards Canada, he says: 'A 2s. rise in price will not of itself increase the wheat area in production.' During my recent visit to Canada I went to Winnipeg and the North-West for the express purpose of inquiring into the points raised by Sir Robert Giffen in the course of his article. Sir Robert Giffen asserts that the proposed preference of 2s. on wheat would be ineffectual. I believe that Sir Robert Giffen is mistaken. A leading grain merchant stated to me, and his view was confirmed by others, that a preference of 1s. to 2s. per quarter would be ample to speedily develop the Canadian North-West, and bring under cultivation all the land required to produce the bread supply of the United Kingdom. The following illustration will make the value of the preference clear. Free grants of land are given by the Canadian Government in what are known as quarter sections, or 160 acres. Assuming that on a farm of this size 100 acres are under wheat, and that the production of wheat per acre is twenty ​bushels, or two and a half quarters, if wheat rises by 2s. a quarter, the Canadian farmer will get 5s. per acre more for his produce, or 25l. in all. 25l. per annum will make all the difference to the small Canadian farmer between a struggling existence and comparative comfort. It cannot, of course, be asserted that as the result of the preference, the Canadian or even the British farmer will receive 2s. more than he does at present for his wheat. The price of wheat is liable to be affected far more by other causes than by the small duty now proposed. But it can be said with certainty that the Canadian farmer will receive 2s. more for his wheat than his competitor across the border, that he will make a profit larger by that amount than that which his competitor is making, and that he will be able to farm at a profit when his competitor is farming at a loss. The obvious and certain effect of the preference will be to tend to divert the stream of emigration from the United States, the Argentine Republic, and foreign countries to Canada, as well as to other British Colonies. Mr. Ross, the well-known Premier of Ontario, thinks that the population of Canada to-day, if Mr. Chamberlain's policy had been in force for the last twenty years, would have been twenty millions. That is the opinion of a very competent man of the material advantage to the Colonies of the establishment of a policy of Imperial preference. The material advantage to us is that every emigrant to the Colonies buys as many pounds' worth of British goods per head as an emigrant to the United States does shillings' worth, and thus provides more employment for British workpeople. It is clear that Mr. Chamberlain's policy will tend to build up the Empire.
​A policy of Imperial preference should not, however, be judged only from the standpoint of material advantages. The material value might be as small as suggested by Sir Robert Giffen, but I would still advocate the policy. It is, in my judgment, of the utmost importance that the various peoples who live under the British flag should feel that as regards trade and commerce, which are the foundations of our Empire, they are a single unit, and that the interest of no part of the Empire can be threatened by the action of a foreign Power, without the whole force of the Empire being brought to bear to protect those interests. You will remember the threatened action of Germany, owing to the institution of the Canadian preference. The tone of Germany has been absolutely changed since Mr. Chamberlain's proposals became a question of practical politics.
Food Supply. One other remark of Sir Robert Giffen I desire to refer to. 'We want,' he says, 'about 20 million quarters to displace the present foreign supply, and there is a prospect of 10 million quarters only from Canada in the next twenty years.' The net surplus of wheat for export from the North-West he estimates at about 3 million quarters at the present time. In 1903, there were 3,170,871 acres under wheat, producing 57 million bushels, or 7 million quarters. For the previous two years, two-thirds of the crop went east of Manitoba. It is generally assumed that the Provinces east of Lake Superior produce sufficient wheat for their own consumption, so that all the wheat shipped east of Manitoba should be available for export. The leading grain merchant already referred to, estimated that from the crop of 1903 there should be available for export ​about 40 million bushels, or 5 million quarters. Sir Robert Giffen's estimate is 3 million quarters. Sir Robert Giffen's eminence as an economist or a statistician I should be the last to dispute, but on the question under discussion I think that the authority of the man on the spot, with his special knowledge, is entitled to the greater weight.
As to the possibilities for the future, at a moderate estimate, there are 125,000,000 acres of arable land in the Canadian North-West. Fifteen million acres under wheat would be sufficient to produce all the wheat required in the United Kingdom. If the proposed preference is as effective as the information I gathered in the North-West led me to suppose it would be, I venture to prophesy that within ten years Canada could supply all the wheat we require in the United Kingdom from outside sources. Canada, it must be borne in mind, is not our only source of wheat supply. India has in some years sent us very large quantities, and in 1901 (a fact not generally realised) Australasia sent us about the same quantity as Canada. The idea of the Empire becoming self-supporting as regards its food supply is not the idle dream which Sir Robert Giffen would have us believe.
Weakness of present position.To turn to agriculture. From the speeches made by Cobden and Mr. Chas. Villiers at the time of the repeal of the corn laws, it is clear that the repealers thought there was no risk to British agriculture by the adoption of their proposals. It was their conviction that the country would remain self-supporting, and it is probable that if Mr. Cobden or his colleagues could have had any conception of what would have been the condition of the country to-day, they would not have ​advocated the policy they did, and, however that may be, the country would certainly have never carried it. Another point the repealers looked to was a greater stability in price, but there has been as much fluctuation in the price of wheat since the repeal of the corn laws as there was before. The conditions have absolutely changed since 1846, and it is idle to discuss the policy of tariff reform in the light of the conditions of sixty years ago. In 1846 we produced nine-tenths of our staple food, but in 1902 we produced only one-fifth. Our dependence on foreign countries for so large a portion of our food supply has become a great national danger. As regards the supply of some raw materials, our position is little better. British cotton mills have been working short time for many months past owing to a shortage in the supply of raw cotton, and a deputation from the Cotton Manufacturers' Association of Manchester recently asked Mr. Balfour to take steps to put a stop to the gambling in raw cotton in America. For a great Empire to be absolutely at the mercy of one single foreign country for the supply of raw material for one of its greatest industries—cotton goods form a quarter of our total exports—is deplorable. The remedy is to encourage the growth of cotton under the British flag.
Decline of agriculture. It is not necessary for me to enlarge upon the way in which British Agriculture has suffered in the past sixty years. Every one who has the least acquaintance with agriculture must know that farmer after farmer has been ruined after struggling against bad times. I have made a calculation as to what has been the effect of the enormous conversion of arable land into pasture, and the enormous extent of hop ground grubbed during ​the past twenty years in Sussex, and have come to the conclusion that there is between 400,000l. and 500,000l. less spent per annum in the cultivation of the soil in Sussex alone. This is a very important point to bear in mind in dealing with the question from a local point of view. It means that enormously fewer men are employed in the cultivation of the land. At least two-thirds of the sum I have mentioned would be spent in actual wages to labourers, and if the figures will bear examination, and I am satisfied that they will, they mean that between 7000 and 8000 fewer men are employed in agriculture in Sussex than twenty years ago. The hop industry has been most seriously affected. There are 5600 fewer acres under hops in Sussex than there were twenty years ago. I can speak from personal experience as manager of my father's estate in the neighbourhood of Battle, that whereas when I was a boy there was a hop garden on every farm, there is now not a single hop garden on the Normanhurst estate. Allotments and Small Holdings Acts are suggested for meeting the difficulty. Are they likely to be of great effect? During the past six years the only business done by the Allotments and Small Holdings Committee of the East Sussex Council was to receive a formal application for the enlargement of Hailsham cemetery; there had been no applications for allotments or small holdings. I have as a landowner granted facilities for small holdings or allotments where there has been a demand for them, but I do not think much is to be hoped for from an extension of the Allotments and Small Holdings Acts until there is a greater demand for land.
The real difficulty of the farmer is the question of ​price, and it is doubtful whether any remedy will be effectual which does not protect the British farmer from the dumped agricultural produce of the foreigner. I have often said when Col. Brookfield used to advocate this policy that it was idle to advocate Protection for the agricultural industry while the manufacturing industries were prosperous, but it is within the past ten years that manufacturing industries have begun to show signs of decay, and that we are beginning to see our home market invaded by the produce of foreign Protectionist countries. There is now an opportunity for agriculturists to press their claims upon the Government, and unless Members of Parliament who represent agricultural constituencies make their voices heard in the discussion, the farmers and labourers will find themselves left out in the cold as on previous occasions.
I congratulate Mr. Boscawen most sincerely on his success in getting a representative hop-grower on Mr. Chamberlain's Commission, but I should like to say that I am not at all satisfied with the representation of agriculture on the whole Commission. It is, in my judgment, most inadequately represented, but we can only hope that the agricultural sub-committee will be enabled to get together a body of evidence which will seriously impress, not only the Government, but the people of the country.
Mr. Chamberlain's proposals.As regards the value of Mr. Chamberlain's proposals to the farmer. A 2s. duty on foreign wheat no practical farmer believes would be of much value. The duty on other articles of agricultural produce will be of more value, but perhaps the most benefit to the agriculturist will arise from the imposition of a higher duty on flour than on wheat, which will have the effect of restoring ​the milling business to this country, and so securing a supply of cheap offal.
The principal objection to Mr. Chamberlain's policy from the agricultural point of view is that the British farmer would have to pay more for his machinery. Most of the agricultural machinery imported into the United Kingdom comes from Canada or the United States. Some of the best-known firms of implement makers on the American continent are established in Canada. I visited the other day the Massey-Harris works at Toronto. I heard also while in Toronto that one of the largest firms of implement makers in the United States were establishing factories in Hamilton, Ontario, in order to get within the Canadian tariff. The British farmer will therefore be able to purchase the best of American agricultural machinery in Canada, and if he purchases it from Canada obviously he will pay no more than he does at the present time. The contention that owing to Mr. Chamberlain's scheme agricultural machinery would cost more is without any substantial foundation.
In conclusion: I have come to the conviction that some measure of protection for agriculture can be justified, not perhaps from the standpoint of the economist and not merely from the agricultural point of view, but on the broadest national grounds. I believe of England, as Prince Bismarck believed of Germany, that in the decline of agriculture there is the greatest danger to our permanence as a race.