BOOKS.
THE FORGOTTEN CHAPTERS OF " THE WEALTH OF NATIONS."* [COMMUNICATED.]
WHEN the Tariff Reform discussion began in 1903 the Free- trade protagonists made three errors in tactics which they have since had occasion to revise. They were inclined to base their case too much on supposed immutable laws of economics ; they were consequently apt to put it rather high, and to admit no exceptions ; and they consistently underrated the idealism, even the sound political instinct, which lay behind the fallacies and exaggerations of their opponents. They drew the lines of their defence too wide, and naturally it was pierced at certain points where the reserves were weak. One result of this mistaken dogmatism was that the great economists of the past were exalted by those who denied their authority into monstrous and dismal bogies, whose decease, as Bagehot said, the world could not be expected to lament. But the desiccated cosmopolitan of Protectionist controversy is a gross caricature of the greatest of them all, Adam Smith, and it is Professor Shield Nicholson's aim in this brilliant book to put his principles in their true political light. He shows that Adam Smith had all the Imperial idealism of the modern Tariff Reformer, but that he sought his end by other and less disputable methods. He shows that he was a great humanist and a great nationalist, who, like Burke, realised that "we do not love our country merely as part of the great society of mankind ; we love it for its own sake." Nor was he the narrow • A Project of Empire : a Critical Study of the Economics of Imperialism, with Special Reference to the Ideas of Adam Smith. By J. Shield Nicholson, Professor of Political Economy in tiro University of Edinburgh. London : Macmillan and Co. [7e. 6d, net.]
individualist and anti-militarist that some have proclaimed him. He thought that defence was more important for a country than opulence, and he wanted universal military training. Above all things, he was a great Imperialist, a practical Imperialist, who wished to transform what was in his day, and has remained till ours, a mere " project of Empire " into a splendid and concrete reality.
Professor Nicholson's method has the appearance of art- lessness, but in truth it is cunningly contrived. He does not expound his author in a thesis. He allows him to argue in his own words, and fills up the gaps between the quotations with a quiet cogitative exposition which is both very clear and very convincing. He tries, in the first place, to put his master's chief economic doctrines in their historical light. Adam Smith was the opposite of a dogmatist. His reasoning was always inductive in its foundations ; his data was experi- ence, the world as it revealed itself to his age. He anticipated whatever is of value in List, who misunderstood him. He had none of the shallow individualism of the Riccardians, and never subscribed to the fallacy that the unchecked pursuit of private interest must infallibly promote the common good. He considered that agriculture was a more productive employ- ment than any other; that the home trade was more pro- ductive than a diverted foreign trade, and the latter than the carrying trade. And the basis of these views is that in his scheme a clear distinction is made between profit and advan- tage. The most profitable employment of capital may not be the most advantageous, and it is advantageous employment that the nationalist-economist chiefly aims at. This is no negative doctrine of laissez-faire, and it may well be asked why, holding these ideas, he laboured to destroy the mercantilist system of his day. The answer, says Professor Nicholson, is "that in his view protection to the home market was in general either hurtful or useless, and that the monopoly of the colonial trade was injurious to the economic interest of landlord, capitalist, and labourer, and a source of national weakness instead of being a source of strength." He opposed Protection as a nationalist and an Imperialist. He saw the advantages of foreign trade as an augmentation of industry and an increase of consuming power on the part of the masses of the people. But he always insisted that the " local habita- tion of the capital during the process of consumption and reproduction is of fundamental importance. The employment of a given amount of capital in home trade and industry is so far directly more advantageous than its employment in foreign trade and industry, although the latter may yield equal or even greater profit." He objected to Protection precisely because it acted chiefly to the increase of "profit," not of "advantage." He would not quarrel with the aims of our Tariff Reformers, but with their methods. A man who admits the value of his opponent's ideal, and then shows his methods to be unworkable, is a far stronger controversialist than the man who blunderingly attacks both ideal and methods.
We have no space to follow Professor Nicholson in his summary of Adam Smith's answer to various Protectionist arguments, his admitted exceptions to Free-trade, and his famous "negative argument" against Protection. The moral he draws is that the whole doctrine of The Wealth of Nations is based upon an appeal to experience, and that the best way to reconcile the confusion of economic theory to-day is to forget dogma and repeat this appeal. He argues strongly, as the Spectator has often done, for the reference of the whole question to a Royal Commission. " If there is no real fundamental opposition in ideals, if the dispute is only as regards methods, then a reconciliation ought to be possible after a scrutiny of facts by impartial authority." We turn to what is the main purpose of the book,—the exposition of Adam Smith's "project of Empire." He was the most thorough- going of Imperialists. He foresaw, for example, that Britain might not always be the Imperial centre of gravity. " The seat of the Empire would naturally remove itself to that part of the Empire which contributed most to the general support and defence of the whole." He foresaw the awakening of the Far East and the consequent change in Imperial problems. He had none of the mercantilist notions about the Colonies as a British trade preserve ; indeed, his theory of the Colonial status might have been set down to-day. But he • saw one thing which only a very few moderns have seen as clearly. Britain was halting, he said, between two opinions,
and either she should frankly face disintegration or advance to some effective unity. She must make Empire a reality, or " endeavour to accommodate her future views and designs to the real mediocrity of her circumstances." We are still halting between the two opinions ; or, rather, while we have rejected the first, we are disinclined to act upon the second. We have still only a " project of Empire," not a reality. Adam Smith would have the whole Empire united in one polity. There should be Free-trade between every part, and one Imperial Legislature and Executive for Imperial affairs. The funds for defence and Imperial administration should be raised by Customs-duties and by Land-taxes. The advantages which he thought we should gain were many. The power of the sea and the defence of our territory would be upheld, not by the United Kingdom, but by a united Empire. We should have a wider field for the settlement and employment of the people of our country, and by organising emigration within the Empire there would be no waste of man-power. Further, since he maintained that home trade was more profitable than foreign trade, because it meant the replacement of two capitals instead of one, such an Empire would give us what was virtually an enormously increased home trade. In his concluding chapter Professor Nicholson adapts these ideas to modern conditions. We cannot follow his argument in detail, but we commend these remarkable pages to any one who is seriously interested in the future of his country. For such an Empire the essential is internal Free-trade. A uniform tariff against the foreigner is probably not workable, and certainly is not necessary. The ideal might still be realised if Britain and the Colonies alike retained their present systems. In any case, the Imperial tariff would be for revenue only, for Professor Nicholson explicitly repudiates any scheme of Imperial Protection. He admits the difficulties in the way of the realisation of the dream, but he insists on its possibility. "It will cease to be impossible as soon as it seizes the imagination of a great Colonial leader of the order that believes in a thing because it is impossible." That we believe to be true and finely said. We quote the concluding words of a book which should give its readers as "furiously to think" as any political treatise of our generation :-
" His [Adam Smith's] project was outlined when, by the stress of events, the choice seemed inevitable between disintegration and real union. It is not often, in the history of nations, that such a choice is twice offered; yet to-day it is offered to the British people under circumstances that once more convert the project of Empire into a practical proposition. In parting, let us look at the main objects free from detail: imperial defence, to which every nation or dominion or commonwealth or dependency or possession contributes its share ; a system of representation by which every responsible constituent of the Empire has a voice in the control of the concerns of the whole ; an immense internal market for every part of the produce of all the constituents ; a customs union and a common policy in commercial relations with other countries ; a policy adverse to any kind of monopoly, and favourable to every- thing that increases the revenue and prosperity of the great body of people throughout the Empire?'
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