THE FALLACY OF COMMERCIAL TREATIES.
ONE of the strangest of the strange delusions of the Tariff Reformer is that trade can be made to flourish by preferential Commercial Treaties,—a delusion with which Mr. Balfour made much play in his Manchester speech. The Treaties of his thought are not, remember, Agreements like Cobden's French Treaty, in which Customs imposts were got rid, of in the case of all nations. The procedure under the new system is to begin by piling on duties against all the world, and then, after negotia- tion, to relax them in special cases. It is analogous to the practice of the doctor who had an infallible cure for fits. His habit was to bring on a fit in his patient, and then to apply his remedy. Why, for example, asks Mr. Balfour, is it that the German cotton trade is gaining on ours in the markets of Central Europe? He answers that the explanation is partly proximity, but not ins inly "Largely," he says, "I have no doubt it is due to effective Treaties." He admits that these cause " complications " and "friction," and that "the Foreign Minister would have a much harder task" if Great Britain made many of them ; but he comes to the conclusion that under the conditions of the modern world Great Britain cannot any longer get on without a regular system of such Commercial Treaties. Mr. Balfour admits so much that is damaging to his case that it seems almost, ungracious to exact more ; but really even the remnant of his argument is unsound. The Germa,u cotton trade grows faster than ours in certain places because it is in a position of geographical advantage, and because it is a smaller and younger trade. Whatever the economic principles of Germany, a young trade would be bound to have such a growth. Do the Army and Navy Stores tremble because the trade of a new shop in Victoria Street increases at the rate of forty per cent. while their own increases only at the rate, let us say, of five per cent. ? The argument against the policy of a free market, without Treaties of any kind, amounts simply to this, that that policy permits the existence of competition. Is it pretended that Tariff -Reform would prohibit it ? Of course it is not,—at least, we have not heard of any one so dishonest as to use such an argument. " Then Mr. Balfour enormously understates the degree of the " complications " and " friction " which follow Com- mercial Treaties. We do not mean friction between the parties to the Treaty, which is no doubt a working arrange- ment for the time being, though even between these friction generally comes later. But every declaration of special and peculiar trade relations between two countries is an implication of hostility towards other countries. In trade as in Nature there are laws as infallible as Newton's ; if in Nature "every action has an equal and contrary reaction," the same is true of trade. You cannot pull one nation nearer to you by special trade privileges without driving another further away to a corresponding extent. Thus the making of preferential Commercial Treaties means the declaration of tariff wars. If Mr. Balfour has watched the tariff wars of France and Italy, or Germany and Russia, he must have noticed what invariably happens. Neither side ever gains a permanent victory ; the war leaves the combatants very much in the position in which they were, except that both have done themselves enormous injury. A victory is often claimed, no doubt, but when the price paid for it is reckoned, the victor might well exclaim with Pyrrhus after Asculum : "Another such victory and we are ruined !" And. the inexorable play of economic law appears not only in trade itself, but in all the relations of international life. You cannot declare, even by inference, that other countries are your enemies without preparing to defend yourself against them. Lord Cromer once discussed this point in a speech fully and most convincingly. Free-trade means more foreign friends. Free-trade simplifies your foreign policy.
In the Times of Thursday there is a very good illustra- tion of what we mean. Under the Payne Tariff Law not only is the preferential treatment of Great Britain by Canada called in question—surely scientific- tariffs are one way of interfering in the domestic concerns of other countries !—but the proposed commercial arrangement between Canada and France. The Payne Tariff Law almost requires that Mr. Taft should regard the latter arrange- ment as showing "undue discrimination" against the United States. If he takes this view, he will be compelled to demand from Canada the same treatment as is offered to France. If Canada should refuse, the next step would be the imposition by the United States of the 26 per cent. ad valorem extra duty on all imports from Canada. But what will become of the principle which Mr. Taft lately laid down, that Canadians and Americans profit from one a,nother's prosperity and suffer from one another's depression, if checks on trade between Canada and the United States—in other words, on their prosperity—are provided instead of encouragements ?
Such checks are actually proposed, in the strange state of the latest economic thought, as though they could pro- duce the livelier exchanges which are essential to pros- perous trade. We ourselves continue to believe that a parcel of goods can be lifted more easily over a two-foot wall than over a six-foot wall, and that the ideal is to have no wall at all. The theory of promoting trade by Com- mercial Treaties is remarkably like its correlative theory, which holds the field at the moment, that you can tax a country into prosperity. Since the invention of the immortal plan by which people earn a living by taking in each other's washing, nothing so attractive to muddled heads has been laid before the country. Tax a country into prosperity, tax one man to give to another, tax land to bring it into the market, and put obstacles in the great routes of trade in order to make the traffic move more easily,—it is a wonderful development ! Consider the case of our trade with the Argentine, in the way of which busi- ness no obstacles have of course been placed. In the Times recently a correspondent pointed out "the surprising fact that the Argentine Republic exports to Great Britain greater quantities of wheat, of maize, and of frozen cattle than any other country in the world." Out of the total value of wheat exported to Great Britain from all countries, the Argentine supplies 34-2 per cent.; in the case of maize 54.5 per cent., of frozen mutton 30.8 per cent., and of frozen beef 60 per cent. It is estimated also that nearly three hundred millions of British capital are invested in the Argentine. These figures should dispose of the absurd theory (often heard of a propos of the United States and Canada) that close commercial relations must inevitably lead to political union. We have never heard it suggested that Great Britain should annex the Argentine Republic. You can do excellent business with a firm, and yet amalgamation with that firm may be the very last thing you desire. In fact, a free market is the only thing sensible people should be determined to have and to keep. If we want to buy a thing from a foreigner, we naturally want to buy it cheap, and it matters to us not at all why it is cheap,—so long, of course, as it is not produced by slave labour, if that ever is cheap. It is pretended often that the advocates of the free market desire to buy from the foreigner because they love him more than they love their own brother. The exact reverse is true ; they desire that their brother should have an advantage at whatever expense to the foreigner. This is the true way of " making the foreigner pay.' Just as taxation is fashionably regarded as an instrument of policy, instead of as only a means of raising revenue, so Commercial Treaties are fashionably regarded as a method of developing trade. In a fine frenzy of patriotism the advocate of preferential Commercial Treaties injures himself in order to benefit one particular foreign friend, and to spite all the other foreigners, whom he has theoretically marked down as enemies. "Provoke me a little more," he may soon be saying to them, "and. I will cut off my own leg to spite you !' But we dare say, after all, that he will stop short of that.
We do not intend to open our correspondence columns to any discussion of the Protectionist controversy. This, in our opinion at any rate, is not the moment for such discussion. We have made our protest against the fallacy of preferential Commercial Treaties, and with that we must be content. That for the time our protest will fall on deaf ears, just as have our protests against the Socialistic policy of the Liberals, is more than likely. We do not, however, mean to let that fact deflect us from what we believe to be our prime duty just now. As we have said elsewhere, that duty is to withstand the immediate evil, the nearest danger, and that is Socialism. No arguments, however fine drawn, will ever persuade us to choose the greater rather than the lesser of two evils.
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