FREE-TRADE AND THE SUGAR-BOUNTIES COMMITTEE.
WE cannot quite understand the passion with which the question of the operation of the European Sugar Bounties is treated by some of our contemporaries,—a question which seems to us one of the most purely intellectual econo- mical questions of the day except so far as one or two great interests are affected by it, and which should be for all of us decided by purely intellectual considerations even in its bearing on those great interests. We could understand the organs of the sugar-refiners or of the sugar-planters treating the subject with some warmth ; but why the discussion of how to give effect to the most perfect Free-trade, when the principle to be adopted is already settled, and the only question is how it may be best carried out, should be treated with so much heat, we do not clearly understand. The truth is, that it is not always very easy to decide which is the more effectual mode of applying a true prin- ciple, and in the present case there is some real difficulty in the matter ; but that is no reason why those who take One view should fling hard words at those who quite as honestly take the other. It seems to us that the statement which has been made that the Report of the Committee on the Sugar Indwitzies is "a formal recantation of Free-trade," is quite at variance both with the facts of the case, and with the whole tenor of the argument of the Committee. Of course, assuming Free-trade doctrines as the basis of argument, it is aryttabk enough that the Committee have come to a wrong conclusion ; nor should we think of suggesting that the minority of the Committee were virtually recanting their Free-trade principles in the view which they took. But then it teems to us even more easily arguable, on the same principles, that the majority of the Committee came to a right conclusion ; and whether this be so or not, it does seem perfectly plain that the assumptions on which their report is founded are completely and honestly in harmony with Free- trade views. We will state as briefly as we can the issue between the two parties, as we understand it.
1. We do not understand that either party questions the absolute inconsistency with Free-trade principles of the finan- cial policy of giving bounties on the export of a commodity pro-. duced in a particular way. Mr. Courtney himself would, of course, eagerly condemn this ;—he would be the first to protest against our own Government declaring a bounty on any conceivable form of British product or manufacture. And if he condemns this in our own Government, he must equally condemn it in the French or Austrian Government. We may, we suppose, then, assume that even Lord Frederick Cavendish. and Mr. Courtney, if they could, by a wish, modify the French, Austrian, and other tariffs imposing a bounty on the export of home- made sugar, would at once extinguish it.
2. We doubt whether even Mr. Courtney or Lord Frederick Cavendish would contend that, as a matter of fact, the development of the European Beet-root sugar production has not been artificially stimulated by the system of bounties, though they did propose to deny,—as it seems to us, in flagrant opposition to all the facts of the case, except only on some most unnatural construction of the words,—that "the development of the sugar-growing in- dustry of our Colonies has been checked " thereby. We presume that they regard the small growth of our colonial sugar in- dustry in recent years, which has gone on side by side with the great strides of the bounty-fed sugar, and with the very great increase of the general demand for sugar, as proving that it has not been checked. Just as well might it be said that if a stunted child grew half an inch, while a healthy child grew an inch and a half, there was no " check " to the former's develop- ment on the ground that some growth was visible. In 1871 the total production of cane sugar in British possessions was 319,380 tons, and in 1878, 393,536 tons ; while the production of beet-root sugar had in the same time increased from 873,300 tons to 1,420,827 tons. In other words, while the cane-sugar produced in British Colonies had increased something like 23 per cent., the bounty-fed beet sugar had increased 63 per cent. If we take into account the other cane-grown sugar besides that of British Colonies, the case is still worse. The quantity grown by all the other cane-growing countries (excluding our own) had increased only from 1,280,108 tons in 1871, to 1,305,207 tons in 1878. It is only in the British possessions that the cane-grown sugar has even held its ground in proportion to the total production of sugar, while it hairnet held its own ground at all in proportion to the beet-grown sugar. It does seem impossible, under such circumstances as these, to maintain that the artificially stimulated sugar owes nothing to its artificial stimulus ; and very paradoxical to main- tain that the production of the sugar which has had no such artificial stimulus has not been " checked " by the artificial -impulse given to its rival.
3. But the question is much more difficult as to the legiti- mate remedy. The minority of the Committee hold apparently that it is a much more serious violation of Free-trade "to adopt a fiscal measure for any other than fiscal objects," than it is to let an industry suffer gravely by the operation of a bounty which it would be possible to countervail ; and they even hold that if this adoption of a countervailing duty were admissible, it would be quite as admissible to propose a countervailing bounty as a remedy against the protective duties of other countries, so that we should be inveigled into a great war of tariffs, to which there would be no end. This is, no doubt, a consideration of much more serious moment than any other argument advanced on that side. If there were no answer to it, we should think it fatal ; for clearly there would be no end to the process of balancing every pro- tective duty imposed abroad, by bounties intended precisely to neutralise them at home. Once embark on such a troubled ocean as that, and every vestige of Free-trade would soon disappear in the confusion of chopping seas and crossing tides which would result from it. But then there are the clearest possible dis- tinctions between a countervailing duty to neutralise a bounty,. —if the best authorities hold, as they do hold, that it could be so imposed as to strike precisely those products, and only those products, which would otherwise be cheapened by the. bounty,—and a bounty intended to neutralise a foreign protec- tive duty ; and, indeed, these distinctions have been till recently very generally acknowledged. The very journal which now. declares the Report of the Sugar Bounties Committee to be P.. "formal recantation of Free-trade," only two or three years ago itself admitted that "in theory countervailing duties are quite consistent with Free-trade. If a foreign country chooses to disturb one of our home trades by giving &- bounty, we are quite at liberty to redress the balance, so far as we are concerned, by a countervailing duty, in order to preserve the trade as much as possible in its natural course.' Now no Free-trade journal would ever have said that we are quite at liberty to countervail a foreign protective duty by giving a bounty on the export to that country of the products so protected, and for the following very obvious reasons :-1. The bounty could hardly by any possibility answer such a purpose, for it would, of course, be met by an in- crease of duty which might even rise to prohibition, and you cannot force your goods into a reluctant country by bounties, though you may keep them from coming into your own country at artificial advantages by countervailing duties. 2. The bounty suggested to neutralise a foreign protective duty must be paid for by the general British taxpayer, who would thus be forced to pay for the folly or injustice of the foreigner, without necessarily having any interest at all in the pro- duction of the article thus foolishly or unjustly interfered with by the foreign tariff. Thus an innocent man would be fined year after year for an utterly impracticable purpose, which did not, or need not, interest him in the least. Now, in this respect also the proposal to give a bounty as an equivalent for the protective duty levied abroad differs totally from the pro- posal we are discussing. We can —at least, so all our Revenue
Departments concur in saying,—effectually prevent the disturb- ing effect of bounty-fed imports on our own markets by a countervailing duty. That countervailing duty would have this
and no other,—that all the sugar subject to it would still come-in which would have come-in if there had been no bounty, and no more ; and this is just what the theory of Frec- trade requires. Moreover, the cost of this fiscal operation would not fall on the wrong persons, as the cost of a counter- vailing bounty would. The countervailing duty, if im- posed, would deprive our sugar consumers of a temporary advantage, very unsettling to trade, and having a tendency to- foster unnatural production ; but in depriving them of that temporary advantage, it would confer on them the compen- sating advantage of not being subjected to needless and trying variations of price, and of not seeing a useful class of their fellow-countrymen vexatiously injured or ruined by the caprice of foreign countries. On the whole, and speaking with sufficient approach to scientific accuracy, the burden of what was done would be borne by those who could well afford to bear it, that is, by the very persons to whose advantage (if any) the bounty would otherwise conduce.. They would sacrifice the prospect of increased cheap- ness, rather than disturb the natural course of production,
and so do an injustice to a particular class of their country- men. But in the parallel case suggested by the opponents of the proposal, the taxpayers would be asked to advance, out of their own pockets, the umneasurable cost of a foreign country's caprice, instead of merely to resign the supposed advantage of that caprice. The difference between the two cases is precisely the difference between declining a bribe to yourself at the cost of your friend, and recouping to your friend the toll which somebody else, over whose actions you have no control, exacts from him. Your arrange- ments are all made to do without the bribe, and you do not want it, especially at the cost of your friend. Your arrangements are not made at all for paying the indefinite demand which may be involved in recouping the toll, especially since you know that, however much you sacrifice, you will never effect the object you have in view in that way. We cannot admit, then, that the suggested parallel between imposing a countervailing duty on bounty-stimulated export', and offering a bounty on such of our own exports as are struck by protective duties abroad, is at all just. We cannot aTdinit that ii is a true definition of Free-trade, to "say that you Should never impose a fiscal duty for any other purpose than than that of revenue. With the object of preventing an unwise interference with the natural course of production or exchange,
— an object of the very essence of Free-trade--we think it quite as legitimate to impose a fiscal duty as to take one off, — only you must take care that it has the effect you intend, and no other effect.
In relation to the other subject of the Committee's Report, the difficulty interposed in the way of a countervailing duty by the "favoured-nation clause," we do not propose at present to speak. It is, no doubt, a serious difficulty, and perhaps at present insuperable. But clearly we ought not to be obliged, by granting a favoured-nation clause, to treat nations alike under totally unlike circumstances, for that really means treating them not equally, but un- equally. And we heartily agree that if the other difficulties of the case can be got over, we ought, in renewing our com- mercial treaties with the various countries of Europe, to provide against any construction of the favoured-nation clause so harsh that it shall compel us to deal unequally with different nations, under the name of dealing equally with all.
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