retaliate. The Prime Minister, whose views in favour of free trade or protection I do not wish to refer to now, has told us fairly and frankly that he does not propose to retaliate either on the importation of food or raw materials, nor does he propose to retaliate on any of our colonies, therefore, he sets great limits to the possibilities of retaliation. With regard to the Colonies, we are apparently, so far as I can see, to take it lying down. We must therefore strike, as I understand it, at the imports from foreign countries alone, and not on food or raw material from those countries. These, then, are the limits of the policy of our retaliation. Now, my Lords, just let us see what the state of things is that we are fighting when we eliminate the imports from our colonies. The imports from foreign countries, and I take the year 1901, when they were at their highest, are returned at £417,000,000 in round numbers, of that amount, and I again take round numbers, £110,000,000 or £111,000,000 are eliminated from retaliation as raw material. £220,000,000 represent food, so that that again is eliminated from retaliation. Therefore we find that £330,000,000 odd, out of a total of £416,000,000 odd, of imports from foreign countries consists of food and raw material, and are eliminated from retaliation, and there is a miserable remnant of only some £86,000,000 or so, on which it is possible to retaliate. That may be taken to represent the importation of manufactured goods from protected foreign countries. Now, what about our exports of manufactured goods? Our exports to foreign countries of manufactured and part manufactured goods amount to £128,000,000. We all know that that sum has to be greatly increased, because the sum representing our exports does not include freight, insurance and other charges, elements which would bring that £128,000,000 up to a very much larger figure.. At any rate, the exports, it will be seen at once, are much larger than the imports of foreign manufactured goods. Therefore there are countries who take from us much more manufactured goods than we take from them. Now, supposing we were to tax these imports heavily, they have a far more dangerous weapon in their hands if they retaliate upon us; but supposing they do, and supposing we adopt this policy, does retaliation produce the desired effect? My Lords, it is easy to speculate and say that it would, and it is equally easy to speculate and say that it would not. Therefore let us take a concrete instance, and it is the only instance the best instance that I can find. In 1897 Canada offered preferential trade advantages to all countries fulfilling certain trade conditions of reciprocity; that is to say, Canada, having the weapon of retaliation in her hand in the shape of protective duties, offered to relax them in return for certain reciprocity in the importation of her goods. That is the same position that we should be in if we had imposed a retaliatory duty and offered to take it off if other countries fell in with our views and relaxed their duties in our favour. Now what was the result? Germany had a very high protective duty against the Canadian imports. Did Germany reduce her tariff in favour of Canada? We know she did not, and more than that she did not remain idle, because by the Treaty of 1865 Germany was entitled to the same treatment from the British colonies as from Great Britain, and she claimed from us the benefit of that treaty. And what was the result? My Lords, we were forced to denounce that treaty and we did denounce it in 1898. What did Germany then do? Germany immediately proceeded to refuse the benefit of the mostfavoured-nation treaty to Canada; and more than that, she is now threatening actually that if any other British colonies follow the example of Canada she will refuse the most-favoured-nation treaty to the mother country itself. Could you, my Lords, have a more speaking instance of the result of retaliatory duties? And that, my Lords, is retaliation in its least offensive form. Well, my Lords, if retaliation in its least offensive form has failed, how can we seriously argue in favour of retaliation in a more offensive form? My Lords, we are told to think Imperially. The noble Lord who has just sat down has accused us, upon these Benches, of wishing to embroil the mother country with the Colonies. I do not think that he is accusing us seriously of doing that, but merely playfully, and I take his accusation in that spirit, and I obey the almost royal command to think Imperially, and I will think of a country which is rather left out of calculation in this discussion. I will think of our great dependency of India. Now, in a minute which was dated the 22nd of October, 1903, the Government of India set out their views at length on the dangers of retaliation to them in these words "If the United Kingdom should eventually resolve to adopt the policy of preferential tariffs or retaliation it is conceivable that the device of attacking her through her chief dependencies might receive further development at the hands of foreign countries." My Lords, that is a very wise minute from a very important quarter, and, as India exports more than she imports, she is in the very happy position that the noble Lord would have this country to be in. India is a debtor country, she is paying a debt by excess of her exports over imports. My Lords, the immediate effect on that country of any retaliatory taxation by foreign countries against Indian imports to them, would injure if not wreck the financial stability of the country. Take the case which has already been mentioned in this debate, a small case, that has been urged in favour of retaliation. Take the case of the Sugar Convention. In the course of the negotiations which took place on that Convention, we undertook to prohibit the importation of raw sugar coming from any country which imposed a bounty. We had a contest with Russia as to whether or not she did give a bounty. We held that she did, she held that she did not, but we, holding that she did, prohibited the importation of Russian sugar. We thought it was a very innocent thing on our part, because we thought that really she was exporting nothing but the minutest quantity of raw sugar into this country. What was the result. She retaliated and raised her duty on Indian tea, which was already 250 per cent. ad valorem. It is quite true, my Lords, that the importation of Indian tea into Russia is a very small amount, but the financial adviser of the Indian Government, in the memorandum which has just been published, pointed out that, though small, it was a growing trade, and I do not think the Government were aware when they prohibited Russian sugar that in fact 800,000 lbs. of Indian tea goes to Russia annually, though it goes through London and Germany, but however it goes it gets there. Now this action on the part o Russia stops the growing market of the 120 millions of the greatest tea-drinkers in the world; people who might very likely, in times ahead, be clamouring to drink the greatest product that India can produce, her tea, and the result of this insane act, as I call it, financially insane on the part of the Government, has been to put an absolute stop to the growth of the trade. What is the result, we propose to put back again—it is like a game of tennis, we propose to put back again a higher duty on the importation of Russian petroleum into India, thereby making petroleum much more expensive to the Indian, the poorest subjects in the King's dominions. And so, my Lords, the game goes on. What has been the net result of these contentions. We have both entered into a retaliatory war, and there is no prospect even now of drawing closer to the ideals of free trade, which is, I believe, the object noble Lords put before them as the ideal for their action. Now all these theories about retaliatory duties assume that you will conquer your opponents when you But supposing put your duty on. you do not, and if noble Lords opposite think that is absurd, will the noble Lord who is going to reply to me quote to us a single concrete case in which the imposition of retaliatory duty has led to the withdrawal of the duty which it was intended to combat. If the noble Lord can do this, he would advance his argument some way; if he cannot, how can he prevent us from believing that the duty we impose will not have the desired effect and therefore will remain. But we shall have a tariff war, and in the meantime large vested interests will arise through the industry protected by the duty, which will clamour loudly of the extinction of their industry when the duty is finally taken off. I do not wish to enter into a general discussion now, but I think these questions have a bearing upon the whole subject and I shall be very glad if the noble Lord can answer any one of them. THE My Lords, he quoted the despatch of the Indian Government, but quite forgot to mention that Sir Edward Law, the financial member of the Council, goes through the countries with which India is trading, and shows how impossible it would be for any of those countries to retaliate against India. Further, in the Blue-book, there is a case of the effective result of negotiations between France and India on the lines of Mr. Cobden's French treaty, which enabled India, at a small sacrifice, to gain a considerable advantage. In respect to that story of the tea, although the noble Lord quoted the despatch of the Government of India with approval in one place, he forgot to mention that his views with regard to the tea controversy are not those of the Government of India. He then asked, as clinching his argument, whether I could name a case where retaliatory duties had been imposed and were successful in their object, and were finally withdrawn. Yes, my Lords, I can quote a case. I do not quote it with approval, I quote it as an historical answer to the Question of the noble Lord. I refer to the famous tariff war between Russia and Germany. In that case a retaliatory duty was imposed; a tariff war ensued, negotiations supervened, an arrangement agreeable to both countries was arrived at, the duties were withdrawn and a great increase in the volume of trade followed. I think that is a fair answer to the Question. * THE FIRST LORD OF ADMIRALTY (The Earl of SELBORNE): I cannot make any complaint as to the Question that has been asked me by the noble Lord opposite, but I think I shall be able to show your Lordships that the noble Lord has very far from presented the whole case, and that there is an answer to the Question that he has asked. He began by asking against whom the Government proposed to retaliate, and how they proposed to do it; and he then went on to show by the process of exhaustion that the possible area of retaliation was reduced to about £86,000,000 of foreign imports into this country. I have no means of checking those figures, and I assume they are correct, so that the noble Lord's conception is that that sum represents the limit of our influence in this matter. If it were so, that sum is no small one, but the fact is that the trade with the United Kingdom is as a whole of infinite value to those nations, which have far more to lose than we have, if we look at the markets open to them. All that side of the case is ignored by the noble Lord. Then he takes the case of Germany and Canada. I may point out that the interest of Germany in Canadian trade is very little compared with the interest of Germany in its trade with the United Kingdom. Then to my astonishment the noble Lord went further and said that Germany was far from giving way to Canada, for Germany actually threatened to retaliate against this country if any other of our Colonies offered us special preference. My Lords, that is quite true. Germany did threaten, but when we showed we would not submit, Germany withdrew her threats. That is an absolute instance of what may be done, not only by retaliation, but by the mere whisper of retaliation. Then, my Lords, the noble Lord proceeded to state the case of India. I agree with him in so far that the Indian case has not received the attention it deserves. In dealing with this question, we cannot be too careful to bear the interests of India in mind; but, my Lords, I would ask those who have not yet had the opportunity of reading the despatch of the Indian Government on this subject, to suspend their judgment until they have done so, because the presentation of the case by the noble Lord falls very far short of completeness. The noble Lord, Lord Avebury, in the cours of his speech-I do not the most-favoured-nation clause was the quote his exact words-implied that sheet anchor of British commerce. I do not believe there is much truth in such a suggestion. I believe that that belief is a delusion, and for the reason that when Continental nations make those treaties the very last country whose interest they consider is the United Kingdom. France, when she makes a treaty with Germany-I take a hypothetical case here of the course she would take with regard to the woollen and cotton industries--she not only makes terms which are convenient to herself, but she very carefully considers whether those terms will give as little advantage to British woollen and cotton goods as possible; and the extreme sub-divisions with regard to this class of goods are such as to make it possible to make a treaty of no advantage to any country but the contries who are parties to the making of the treaty. The noble Lord was guilty, if I may say so, of the same inconsistency that I detected in the speech of Lord Tweedmouth. The noble Lords say, suppose you put on a retaliatory duty, and after some time you withdraw it, having gained your object, think of the difficulties of the industries which have grown up under that treaty, and the difficulty of the capitalists and the employment of the workmen! But, in the next breath, they tell us that dumping is good for this country and they never think of the capitalists who are undersold, or the workmen who have lost employment, through dumped goods. What is sauce for the goose is sauce for the gander, and the same interest as is shown in the industry fostered by retaliation should attach to the native industry undermined by dumped goods. Lord Avebury made the point that our trade is bigger than that of Germany; so it is, but how much bigger was it twenty-five years ago? I will come to that point at more length presently, but in the whole consideration of this question the Government take their stand on what the Prime Minister said, that we have to study on this occasion the dynamics and not the statics of the case. between us. You do not believe in the policy of retaliation, we do. You want to wreck it; we want to preserve it; and therefore we consider and study your arguments and cross-examinings from that standpoint. Now my Lords, I must ask your Lordships to pardon me if I try to establish what I may call the basis of the Government's position in this matter, and also the basis of the opposition of our opponents. Our opponents say the country is in a state of great prosperity, why not leave things alone? We admit that prosperity. You ask us still more pointedly, "Then why not leave things alone." We ask you, "Are there no bad signs; are there no signs so bad as to be absolutely omnious"? After all, in private life, if on a summer's day a black cloud comes upon the horizon it is not considered to be the most sensible thing for a man to say, "It has been fine; it is fine, and therefore it will be fine." Of all the optimistic statements that I have heard for some time the statement of the noble Lord, Lord Avebury, was the most optimistic, and I shall ask your Lordships to consider with me at some little length whether there are signs which can fairly be described as ominous and foreboding. Lastly, my Lords, there are those among your Lordships, who say Even if there are bad signs the remedy proposed is worse than the disease, because the whole of the prosperity of this country is founded on a system of free imports." Indeed there are people-I do not say there are any in your Lordships' House-who are so prejudiced upon this subject that they would lead one to think that every step in the development of the human race from the conception of the Ark to the discovery of radium was due to free imports. I ask your Lordships to consider with me, is this a true description of the basis of our prosperity, and whether there are or are not ominous signs on the horizon. 66 Now I should like to say a word or two as to the remarks of the noble Lord, Lord Tweedmouth. He compared my noble friend Lord Balfour of Burleigh to a leaf. He spoke of the divergence of opinion in the Government on this question with the sympathy which could only be shown by one who had himself passed through deep waters. He said he had not the faintest idea what the policy of the Goverament was, but he proceeded to explain that he was definitely opposed to it. noble Lord begged the whole question by My noble friend just now quoted a stating that retaliation and preference Blue-book which has had much too little both mean the restriction of wages, and attention during this controversy. I do then he passed on to press us in the form not mean the Blue-book which has just of the Motion of the noble Lord Crewe for been published, but the one published a a clear definition of our aims. Now, on year before this controversy began. The this point there is no possibility of the memorandum on British and Foreign Government and the Opposition seeing Trade published by the Board of Trade the case from the same point of view. in 1902, after comparing the decreasing Let us have that clear understanding rate of the growth of our population The My next point is a sign of this decline in our manufacturing and industrial preeminence. In 1880 I find that Germany and the United States combined did not equal our output of pig-iron. Last year they produced more than three times the quantity which we did. That was from 1880 to 1903. I find in 1890 these two countries combined made less than twice as much steel as we did, and now they make more than four times as much. That is in the space of eleven years. I find in the same Blue-book a comparison of the exports of manufactures. The five years average from 1880 to 1884 and from 1896 to 1900. The noble Lord will perhaps allow me to correct him. He said last year was our greatest year for exports. The greatest year was 1900, and therefore the years 1896 to 1900 cover our greatest period of exports. During that period the exports of France increased 12:3 per cent., those of Germany 36'6 per cent., and those of the United States 153.9 per cent., whilst those of the United Kingdom remained absolutely stationary. The observation of the Board of Trade as to these figures is as follows "The fact of large expansion in the case of Germany and the United States taken in conjunction with the stationary condition of affairs as regards the United Kingdom is not so satis factory as could be wished." The last case I will take I think is the most important of all. This is from the recently published Blue-book. All articles of British produce are divided into sections in the Blue-book, one the exports to the principal protected countries, and one to the non-protected countries and to the British Empire, and we find the exports to the principal protected countries is £100,000,000, but to the non-protected countries and to the British Empire £176,000,000, which is a complete reversal of the position of fifty years ago. Now I want to dwell upon this. Whatever the views of your Lordships may be on this fiscal controversy, not one of you will deny the enormous importance of these figures in regard to this question of non-protected and Imperial markets. By what force do we hold those markets. That is a question I particularly want your Lordships to ask yourselves. By what force do we hold those markets, which are absolutely essential to the existence of our population, because later on in the Blue-book it is shown that from one-fifth or onesixth of the whole wages bill of this country is due to foreign trade. Now I will divide these markets into three classes. First of all there are the foreign countries, like the South American Republics, which are absolutely independent. It is in their power to become highly protected countries to-morrow, and they could make a reciprocity treaty with other countries, like the United States, to-morrow. We hold those markets wholly and solely by the pure goodwill of those countries. Then there are the markets in the selfgoverning colonies which we also hold by the pure goodwill of those colonies. They are perfectly free to become more protective or to make a reciprocity arrangement with other countries, and thus ensure that the trade should pass from us. Such an arrangement between Canada and the United States has been frequently mentioned, but I hope we shall never see it put into force. But our tenure of those markets is dependent, not on ourselves, but on the Colonies. Lastly, I come to that part of the Empire which does not enjoy selfgovernment-India, the Malay States, and those tropical and semi-tropical colonies your Lordships know so well, and I class with them China and countries like her, where we hold special treaty rights in respect of trade. What is our tenure of those markets? It is the tenure of the sword and of the sword alone. We hold those markets by the strength of the right arm of the nation, and I wonder, with the Prime Minister, that it has ever been thought compatible that with a system of free imports we should have a small Army and a reduced Navy? Have your Lordships considered how many of these markets have been wrested |