Safeguarding and Free Trade
DURING the last few days of the election campaign the Protection and Free Trade controversy was brought, by accident or arrangement, into more promi- nence. Throughout the campaign, no doubt, a good many Labour candidates and all the Liberals had accused Mr. Baldwin of working for Protection by stealth. There was a Tory conspiracy, they said, to deceive the public, and to fasten Protection upon it before it was aware of what was happening. There was very little response to this exaggeration in most of the constituencies ; it seemed to make hardly a ripple upon the water. In the end a controversy generating more heat arose out of Sir Herbert Austin's statement that he might have to "close down" his motor works if the McKenna duties were repealed. But no one who was not a Parliamentary candidate could be expected to ruffle himself over the general issue between Free Trade and Protection to quite the degree that seethed natural to some candidates. On the platform it was hardly permissible, or perhaps hardly Possible, to treat any economic conclusion as being, what it generally is, a balance of pros and cons.
There is no longer any room for a Free Trade dogma which must be accepted as true without exception.
Such a dogma served us extraordinarily well when Great Britain was in process of becoming a great manufacturing country and had hardly any serious competitor, when she exported coal in ships which brought back the raw materials of her industry. Never, except perhaps in the United States of to-day, was such an era of rapid profit-making. The passages of British ships paid both ways. Whatever we did, Providence seemed to be playing into our hands. Our great shipping predominance, resulting from, and helped by, our geographical position, made London the natural centre of the money world. Those times can never be wholly reproduced. We have handled our coal business badly, and foreign consumers have learned, partly by necessity and partly by inven- tion, to be far less dependent upon our coal than they used to be. The War has left us with a dreadful problem of unemployment which cannot possibly be dealt with by merely mumbling the comfortable old economic doctrine that a pool of unemployed labour is essential for the sudden expansion of rising trades. We admit that the unemployment figures are to some extent mis- leading. They include women who used not to be included in the pool at all ; and they include many workers whose occupations are seasonal, who are necessarily out of work at certain times of the year, and who, in the old days, would not have dreamed of describing them. selves as unemployed. But when all admissions have been made we do live in abnormal times.
Our own general bias is strongly towards Free Trade. We should regard it as a tremendous and quite unjusti- fiable risk to scrap a system under which we built up our wealth, and under which we supported with money our Protectionist Allies in the War, who would otherwise have collapsed. Besides, this system is still serving us on the whole extremely well. We always made reserva- tions in our Free Trade creed, even in the most pros- perous days. We saw that there were certain industries which ought not to be exposed to the. doctrine of the "line of least resistance." We felt, that is to say, that we ought not to abandon to their fate certain manu- factures, even though foreigners might be able to provide us with them much more cheaply. For those "manufac- tures were necesary to the safety of the nation. - Granted that it would cost us more to insist on the production at home of what we could not produce conveniently" or cheaply—still, the extra cost was worth while. Long before the War we would have applied our reasoning to the dye industry, if we had had enough knowledge to foresee that Germany was gathering the dye industry into her hands because she could rapidly transform dye factories into munition works.
To-day the argument from the point of view of military safety no longer has its old force. We have not an enemy in the world, and we had much better, even from the point of view of military safety, recreate our wealth than maintain a technical superiority in armaments over merely putative enemies. Our present danger is quite different. We are inclined, therefore, to transfer the safety argument from military affairs to social affairs. If a Safeguarding duty can guarantee existence to an industry which on all counts is of great national usefulness, and which by failing would plunge a whole district or the greater part of a county into dislocation and distress, we think a fair case can be made out for propping up that industry. Let us never forget, however, that those who demand a Safeguarding duty are neces- sarily asserting a private interest without reference to wider national considerations. Their case may indeed be indistinguishable from the good of the whole nation —if their case is sound this must be so—but men who want their industry protected do not generally bother about the effects on other industries. Still less likely are they to reflect upon an even more important matter—the relations of Great Britain with other countries.
Every measure of Protection, however small, lets loose the grabbing instinct. A visit to Washington when a new American tariff is in the making might be a salutary experience. Every trade which thinks it may be affected by the tariff sends its representative to do his best for his own people. He has no other object. There is nothing like this concourse of self-seekers, except when a new President takes office and every post in the Admin- istration has to be refilled. In every British constituency at a General Election the possibility of Protection creates an undesirable relation between candidate and voter.
The candidate is in the position of the old Roman whose electoral announcement was delightfully blatant : "Vote for me and I will vote for you."
We are under the disadvantage of writing before the result of the General Election is known, but whatever Party may be returned to power the Free Trade and Protection controversy will continue. It is quite unnecessary to defend Mr. Baldwin from the accusation that he is a Protectionist. He has always said that he was.
What he steadily promised, however, after his Protec- tionist disaster of 1923, was that he would allow the country to be guided by experience. If it was impressed by tiny measures of Safeguarding it could decide to go further ; if it was unimpressed it could decide to call a halt. This was perfectly fair, and Mr. Baldwin has scrupulously abided by his promise.
The country is really saved from a danger of thorough- going Protection by the apparently unchanging deter- mination of the people not to have the cost of food increased. Without a tax on foreign food and raw materials, it would be quite impossible to have such a scheme of Tariff Reform for uniting the Empire as Mr.
Joseph Chamberlain conceived. For the Dominions and the Colonies, in the main, send us food and raw materials.
That kind of Tariff Reform, so far as we can see, is finally excluded. The better way for knitting the Empire together is sentiment and good salesmanship. These truths have been revealed to the Empire Marketing Board, which has done magnificent work, in spite of all predictions to the contrary. All that Mr. Baldwin has proposed for extending the experiment of Safeguarding is that the tribunal should be made accessible to every applicant. The conditions under which a claim for Safeguarding would be satisfied would remain virtually unaltered. A trade, before having its claim granted, would still have to prove that a duty would not injure any other trade. There could be little danger of a flood of new duties. Take the iron and steel industry for example. Its products are the raw materials of hundreds of other trades. These would all be hit by the Safeguarding of iron and steel. We confess that if the tribunal accepted the case of the iron and steel industry the door would be wide open to a general tariff. We cannot think that in that event a Government bent on Safeguarding could possibly accept the decision of the tribunal without reference to the country. Other great basic industries—cotton, coal, shipbuilding—would not be helped by Safeguarding, and would be extremely unlikely to make a claim. On the whole it will be seen, when the deflected judgments of the General Election are forgotten, that the Unionist Party is still an immensely long way from a general tariff. Only the Liberals_ are committed to a pure and unbend- ing dogma of Free Trade. The Labour Party, though not officially Protectionist, is almost Protectionist by logic. It is not a long step for those who protect their labour to demand protection for the results of their labour. It is significant that in the past few months cer- tain trade unionists have been demanding Safeguarding for the woollen, worsted, and lace industries.
We trust that it will always be remembered that even when an unanswerable case on particularist grounds has been made out for Safeguarding at home, Great Britain has still to think of herself as related to other nations. Perfectly rational men would surely agree that after the devastation of the War the only sensible thing to do is to restock a depleted world as rapidly as possible. For that purpose it is necessary to pull down all the high walls which stand in the way of free exchanges. The Economic Convention under the League of Nations told us the simple truth in this matter. Yet since the War more tariff walls than ever have been built. It is mad- ness. But even if we cannot do away with this madness let us so shape our own policy as to help a mad world back to sanity.
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