3 SEPTEMBER 1881, Page 7

LORD GREY ON COMMERCIAL TREATIES.

T.4 01W GREY is not afraid to take the bull by the horns: Just when, for one reason or another, most people are bemoaning themselves over the probable or possible failure 9f the commercial negotiations with France, he comes forward to proclaim his hope that no more will be heard of the Treaty,. He does not quarrel with this or that treaty, but with all. They are violations of the true principles of Free-trade, and as such,. they are to be abhorred of all faithful economists. This coun- try has passed, he says, through three stages as regards its commercial relations with foreign countries. There was the period from 1815 to 1846, during which the aim of English statesmen was to obtain "reciprocity,"—to gain an entrance for British goods into this or that foreign country, in return for a corresponding admission of the goods exported by that country. This was followed by a period during which no duties were levied, except for revenue, and the goods selected for taxation were those from which it happened to be most convenient to raise revenue. This period lasted till 1860. In that year we turned our back upon our own convictions, and arranged the duties on French goods with a view to ob- taining certain reductions in the duties levied by France on English goods. In so doing, we made, as Lord Grey thinks, a. very great mistake. It is true that the reduction of the duties on silks and wines was a financial success. The lower duties yielded a larger revenue than the higher ones had yielded.. But this result came directly from the fact of the reduction, and would equally have followed from it, if no treaty had been concluded with France, and no corresponding reduction made in French duties. The consequences that followed directly' from the conclusion of the Treaty were, in Lord Grey's opinion, all evil. The circumstances under which the Treaty was con- cluded made it unpopular in France. We have offended other nations by giving France a preference, and prevented them. from making changes favourable to England in their tariff, which but for the undue favour shown to France they might have been inclined to do. We have given colour to the notion that we have repented of our adoption of Free-trade, and thus checked foreign countries in their progress towards a better mind on fiscal subjects. Consequently, we have lost, as regards our other customers, what we have gained as regards, France. The partial opening of the French market has led. to the tighter closing of the German and American markets. We do not deny that there may be some little force' in 'Lord Grey's argument. No one contends, probably, that cora,. mercial treaties are good things in themselves, if only nations would be sensible enough to do, without oommereial treaties, what they make commercial treaties the. excuse. for doing. It would be very much for our own interest and for that of our customers if foreign nations would lazy no duties except for Revenue, and leave the. trade betweea,us and them to find its natural level. Bnt.circumstances,aome. times compel us to put up with expedieata which are.very,fas

from being the best possible. A disease may have a palliative as well as a cure, and when the cure is not to be had, a pallia- tive is not always to be despised. In order to prove his point, Lord Grey must show ground for believing that the volume or the value of British Trade would not have been less, if we had left France to go her own way. In that case, we should, in all probability, never have had the favourable terms accorded which we have enjoyed since 1860, and for ten at least of the inter- vening years we should probably have been in a worse position than we were in 1860. Napoleon III. showed plainly enough what he thought of his subjects' attitude towards Free-trade, by his method of negotiating the Treaty ; and if he could not trust them to like the opening of their markets, when it was conceded in return for specific ameliorations of the English tariff, what chance would he have had of making them like it, when he had not even these specific ameliora- tions to point to as the consideration-money which Eng- land had paid? The Treaty of 1860 was popular with cer- tain sections of the French nation, and in consideration • of this fact, the Emperor ventured to offend certain other sections. But it was only popular even with these because it enabled them to dispose of more of their goods in Eng- land, not because it committed France to even a partial adop- tion of Free-trade. Therefore, if the partial adoption of Free- trade had been unaccompanied with any lowering of the English duties on wine,—in other words, if the tariff embodied in the treaty had been introduced without a treaty,—it would have found no friends in France, except among scientific economists ; and in that case, Napoleon III. would have had no adequate motive for introducing it. This might have been the worst that would have happened, so long as the Empire lasted. Under the Republic, however, there is every reason to suppose that the duties which it is now proposed to levy on English goods would have been levied ten years earlier. After the war of 1870, even the modified freedom of trade introduced by the treaty was unpopular. It subjected French manufacturers to severe com- petition, at a time when they were just recovering from tremendous disasters. It prevented the imposition of fresh duties on imports, which seemed the readiest and least burden- some method of meeting the enormous liabilities which the war had entailed upon the nation. It can hardly be doubted, therefore, that the Republican Government, then under the absolute guidance of M. Thiers—himself a convinced Pro- tectionist—would have done in 1871 what it is seeking to do in 1881. It would have greatly increased the duties on French ha- ports, and thus pleased every manufacturer of similar goods, while soothing the producers of materials for export with the thought that the money which had to be found somehow was being raised in a way which they would only feel, if foreign countries happened to follow suit.

In saying this, we assume that these duties might have been reduced before 1870, which is what Lord Grey seems to believe, when he says that so long as we left other nations to themselves, "there were obvious signs that the tide of opinion was turning against the restrictions upon trade known as pro- tecting duties, and that our example in getting rid of these duties was having a powerful effect upon other nations." But it is an immense exaggeration, to say the least, and we suspect a complete mistake, to suppose that reaction in favour of Protection, which has been almost universal outside England, is due to the fact that we lowered the duty on one class of imports rather than on another, in order to obtain a corresponding advantage for our own exports. If to do this is to be unfaithful to Free-trade, Free-trade must be more exacting than ever mistress was ; and even if Free-trade is thus exacting, it is hard to believe that the nations of the world were so logical in their view of the question as to alter their whole attitude towards protective duties, upon so slight a cause as this small and scareely per- -ceptible aberration from the narrow path of the high-and-dry economical theory on the part of Great Britain. We see no reason, however, to believe that the French duties would have been se- duced without the treaty. Napoleon HI. did not think so, or he would never have concluded the treaty, and he was more likely to know the temper of his subjects than any English observer, however competent. Even if the disposition to- wards freedom of trade were really as genuine and serious as Lord Grey supposes, it may very well have proved only tempo- rary. France, and in various degrees all the other leading nations, stand in a very different relation to England and Eng- lish goods to-day from that in which they stood twenty years ago. The industries which they now wish to protect were then in their infancy, and before Protection could be prudently asked for them, a great deal had to be done with which Protection would have interfered. The machinery without which they would have to remain in their infancy had to be obtained, and at that time the only way of obtaining it was to import it from England. Consequently, the very manufacturers who are now anxious to close the French market against English cotton and woollen goods, were then anxious to open it to the instruments by which they hoped to make cotton and woollen goods of their own. Without these instruments, they could not make their industries conspicuous enough to dispose the French consumer and the French pro- ducer of raw materials to grant them protection. Before " the tall chimneys could smoke" and impress the popular imagina- tion, there must be the furnaces by which the smoke is generated, and the machinery for which the furnaces exist. This con- sideration seems to supply a far more natural explanation of the check to which the progress of foreign nations towards Free-trade has unfortunately been subjected, than the doctrin- aire one suggested by Lord Grey, and it is one which abundantly justifies the policy of sound commercial treaties.