BOOKS.

FREE-TRADE IN BEING.*

Ma. RUSSELL REA has done well to collect in this little book some of the articles and letters he has written and lectures he has delivered during the last five years. The reasoning in nearly every chapter—Mr. Rea is a very close reasoner—was employed to meet particular arguments which were current among Tariff Reformers and were carrying weight with them at the time. Thus in a way the book is a record of the running fight which Mr. Rea has conducted with notorious gallantry and ability; it reflects the progress of the Fiscal dispute. If Tariff Reformers have sometimes changed their ground, no such thing can be said of Mr. Russell Rea. It is a fact of which be may be proud that when be has made prophecies he is able in the light of events to let his words stand exactly as he wrote them. It is something to be a Free- trader, because even one's prophecies—last resort of reckless- ness though prophecies be—are almost certain to come true. They are based on sound principles, and in the rigorous domain of economic or commercial fact these can hardly fail. What Mr. Rea wrote four years ago of Mr. Balfour needs no word of apology or extenuation to-day. And we venture to say that if Mr. Balfour holds to what appear to be his prin- ciples, and Mr. Rea to what are certainly his, Mr. Rea could repeat his feat to-morrow or any day with similar success. Mr. Rea writes here avowedly from experience as a practical man ; he does not parade abstruse technicalities or juggle bewilderingly with tables. Adam Smith propounded his Free-trade theories academically, and necessarily based his arguments on the common principles of human action. Since then the opposing policies of Free-trade and Protection have been practised simultaneously in . the sight of all men, and the dispute about them naturally and rightly proceeds on different lines. Mr. Rea, as a shipowner and man of business, would have a title to be heard in any case, but he has made that title trebly good with his month and his pen.

* Free Ti•acie in Being. By Russell Ilea, MP. London: Macmillan and Co. (2a.13d. nat.]

Mr. Rea can hit hard when he pleases, but in general be has much of that reasonableness which •Matthew Arnold knew to be infinitely more potent than vehemence. He is fond of admitting that some argument of Tariff Reformers is natural or attractive, and then showing that even if it were true it could make no manner of difference to the truth of Free-trade principles; or he proves that what is true in an immediate sense ceases to be true in all subsequent conjunctions. The latter principle is of very great importance in economics, because the truths of Free-trade have to be perceived, as it were, at one or two removes. If man were bereft of all power to reason ahead, of all foresight, there would be more persons than now who allow themselves to be guided only by what is under their noses,—who say :—" This thing could be made here in England. Why should we buy it from the foreigner? Why should we not put on a tax to keep the foreigner's article out, and then it would be made here." No doubt it is a pity that an argument which is superficially so logical should be such utter nonsense, but it is really worth while, when an Imperial question of such high importance is at stake, to pull one's reasoning faculties together and judge of things as they will appear at the next step but one in the chain of commercial exchanges. As Mr. Rea says in his reasonable way-

" The theory of Free Trade, we must acknowledge, does not appeal to the natural uninstructed person—its benefits are diffused and general, its inconveniences are personal and visible ; the theory of Protection, on the other hand, as popularly pre- sented, appeals to every unregenerate sentiment—its benefits are personal and particular, its inconveniences diffused and invisible to the vulgar, and it gives infinite play to the passions of private greed and public revenge."

The inconveniences of Protection are indeed "invisible to the vulgar," and we thank Mr. Rea for the phrase. The instructed Free-trader knows well that he is often consenting

to losses in order that he may make considerably greater gains. Some British markets have been restricted and others lost, and of course the persons immediately injured cry out; but the fact that foreign tariffs to some extent govern the distribution of capital and labour in Britain only means this, that British markets have an elasticity, an alertness, and a power of expansion which they would lose under different conditions. Are window-frames imported at ridiculously cheap prices ? The men who made them formerly in England

have certainly to be employed on some new job, but the whole building trade has received an impetus which causes more employment than the cheap frames ever caused unemploy- ment. Were sugar refineries closed ? The trades which sprang out of cheap sugar employed vastly more men than were dismissed from the refineries. In short—and this is, above all, true because our national character is what it is— we are better suited by a continuous series of challenges and new incentives than by the existence of trades in a state of stable somnolence,—which is really what Tariff Reformers offer us. A curious fact is that though Free-traders to-day must sometimes cast their bread upon the waters in order to find it—and much more—after many days, the original appeal of Free-trade, when the Corn-laws were repealed, was to the sense of immediate benefit,—to the very human nature which Tariff Reformers play upon when they speak of dumped goods and unchecked foreign competition. If all that is changed to-day for Free-traders, and they can no longer use so freely the obvious and powerful appeal to self-interest, but must point rather to the tremendous antedated advantages of their principles, this is still only a slight charge upon reason and imagination. The facts work out with the same invariable conclusiveness in favour of Free-trade. Consider the working of the American tariff and its effect upon us. The United States by the McKinley Tariff at first reduced our visible exports to her by fifteen millions, or thirty- three per cent.; but after the temporary shock, the British figures began growing again in spite of the tariff. Six years later she introduced the Dingley Tariff, with the same results.

Now our exports to the United States amount to fifty-eight

millions, or eleven millions more than in the days before the McKinley Tariff. It must always be so. And meanwhile we have over and above this particular success the added advantage of a great increase in invisible exports owing to

the expansion of our shipping under Free-trade.

We must refer our readers to the book for the very practical explanations of how imports are paid for by exports; how a, British tariff on corn would infallibly fall upon the consumer ; how shipping thrives upon Free-trade; how the conditions in America and Germany make it natural that those two countries should prosper now without any particular reference to their fiscal policy ; and how the expansion of foreign trade is not a disadvantage to us, but rather an aid to our own continued prosperity. All these things, and more, are treated with a lucidity and force which confer distinction on their familiarity. We will end with a matter of great practical importance to us all. When the present Government pay the penalty of their sins, and a Unionist Government come into power, will there be any hope of the retention of Free. trade ? Mr. Rea believes that Free-trade can never be abolished, and we only wish we could agree with him. He

says it is extremely uncertain whether a Unionist Government would get a mandate to destroy Free-trade, "but," he con- tinues, "should such a Parliament, with such a mandate, be returned, my composure would still remain unshaken." He goes on :—

"In 1877, when Bismarck contemplated the increase of duties and general development of the protective system of Germany which he carried out two years later, he spoke of the task as a Herculean labour.' Prince Bismarck was a Hercules, and did not shrink from tasks to which only he was equal. But the con- struction of the tariff of 1879 was easy compared with the task of destroying the Free Trade basis upon which British commerce and industry are built. In 1880 German foreign commerce was considerably less than a third of what our foreign trade reached last year. At that time Germany was practically a self-feeding state, and her industries were for the most part infant industries. She was in the stage of development Friederich List defined as that proper for Protection. The imposition of the tariff of 1879 added considerably to the burdens of the consuming .population, but it did not upset the whole fabric of an immense and com- plicated industrial and commercial organisation. Yet Bismarck considered it a Herculean task. The difficulty of any extensive rearrangement of a tariff is great, but the difficulty of any rearrangement which involves a reversal of a national fiscal policy is almost insuperable, and can only be accomplished in response to a great national movement. Thus it is that the rulers of nations once committed to Protection can with com- parative ease add gradually to the severity of their duties, but find themselves unable, in the face of the interests built up by Protection, to reverse the process. The whole of the splendid fabric of British industries and commerce rests on a Free Trade basis. To overturn and reconstruct this stupendous edifice upon another foundation is a task compared with which the Herculean labour of Prince Bismarck was the pastime of an infant. No partial Protection would be tolerated by Protectionists—Protec- tion for agriculture without Protection for manufactures, or vice versa. There could be no favoured categories of industries at the expense of others. I believe and have no doubt, the British trades, in their infinite multitude and variety, with freedom of purchase from all the world, would thoroughly awaken for the first time when they saw a general tariff take visible form before their eyes. It would be to them a new thing. Even the manufacturers who vaguely clamour for Protection for themselves would fall away when they saw the cost of it definitely tabulated and presented to them for payment. And above all, the great con- suming public who could get nothing directly out of Protection for themselves, a majority in this as in every nation, would certainly refuse the sacrifice when the actual demand came. There is no other country in the world in which popular opinion is so quickly effective in controlling Government action as it is in this country, and in such a situation as I have described I believe a Protectionist Government majority would dissolve like the untimely snow of summer."

We hope that Mr. Rea will be justified of his optimism. We cannot join in it, for the simple reason that when a Govern- ment is faced with an enormous deficit, and the resources of direct taxation are exhausted, there is no way of raising the necessary revenue except by indirect taxation. But indirect taxation once admitted as a general principle, apart from the very strict limitations which have governed it under Free-trade principles, means the beginning of Protection. Alas ! it does not require a Hercules to introduce indirect taxation. It would be truer to say that "any fool could do it,"—and we fear will do it. When a tariff of any sort, however small, is established, we have Mr. Rea's testimony in the passage we have quoted as to what would follow :— "Rulers of a nation once committed to Protection can with comparative ease add gradually to the severity of their

duties."

Here, then, is the pathos and the crime of the situation. Without the need to raise a vast sum of new taxation the Tariff Reformers had before them a task more than Her- culean. The present Government have changed the task of Hercules into child's play.