FREE TRADE IN SUGAR.
[TO THE EDITOR OF THE "SPECTATOR."]
SIR,—The following concise problem in economic science and free- trade principles arises out of the state of facts disclosed by the diplomatic correspondence relative to the Sugar Convention of 1864. French refined sugar receives a bounty on exportation, and within the limits of such bounty undersells the produce of the English refinery. The raw sugar of the world being admitted duty-free into this country, the English refiner has access to un- limited supplies of the raw produce, and competition among the refiners secures to the consumer the full benefit of these natural advantages.
State interference in any form with the natural channels of industry in this country is Contrary to the cardinal principles of our free-trade policy ; it matters not whether the interference comes from our own or a foreign State. A bounty on exportation is, if I may use the term, aggressive protection practised by one country against a rival industry in another,—a form of protection which, according to Bentham, "prohibits A from producing superior articles, for the purpose of helping B to get rid of his inferior articles." But how is this country to prevent a foreign State from thus tampering with the natural channel of our industry? There are only two ways :-1. Meet bounty with bounty, State aid with State aid, aggressive protection by aggressive protection. 2. Neutralise the injurious operation of the bounty by intercept- ing it through the revenue for the taxpayers generally, instead of letting it fall into the pockets of a limited class, viz., the con- sumers of the State-aided commodity. The objection to the first mode is that we should inflict upon our revenue a loss equal to that sustained by the foreign revenue ; the objection to the second mode is that we should deprive the consumer of the bounty which enabled him to obtain his commodity at less than the natural price of free-trade competition.
I think, however, upon examination, so far as principles of free trade apply, a countervailing duty is the proper way to neutralise a bounty, inasmuch as it pockets for our revenue the foreign "tribute," reinstates the rival industries upon the fair level of their natural advantages, and secures to the consumer his full right to have prices regulated by fair, free-trade competition, although it may deprive him of the temporary bribe for which he was expected to barter his free-trade inheritance.—I am, Sir, &c., W. P. B. S.
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