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The Pamphlet Collection of Sir Robert Stout: Volume 56

"Fair Trade:" Its Impossibility. — By Sydney Buxton, M.P. — Leaflet No. XXIV

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"Fair Trade:" Its Impossibility.

By Sydney Buxton, M.P.

Leaflet No. XXIV.

Cobden Club Motto

"Fair Trade," as defined by Fair Traders, means that England "should place a heavy tax on foreign goods sent into the country, in order to retaliate on the foreigner, and to force him to adopt "Free Trade," or at least largely to diminish the duties which he now levies on British goods.

It would not be difficult to show that this plan would disastrously affect our trade and commerce, and injure us very much more than it would injure the foreigner. But it will be sufficient, if it can be shown that it is net in our power effectually to retaliate on foreign countries, and force them, against their will, to receive our goods duty free.

Protective duties abroad are chiefly aimed at English goods, and while some persons here cry out because of the import into England of a small amount of foreign manufactured goods, foreign manufacturers complain still more bitterly of the competition from which they suffer, even in their own protected markets, from British manufactures.

Unless, therefore, it could be clearly shown that the foreigner would have more to gain than to lose from accepting our terms, it is evident that he would persist in his present course of action; and, not only so, but to parry our attack, he would still further raise his protective duties, and thus still further exclude our goods from his markets. Let us look, then, into the question of the possibility of forcing foreign nations to accept our terms.

The goods which we received last year (1884) from abroad were valued at £390,000,000, the goods we sent abroad at £295,000,000. As, then, our imports so largely exceed our exports, it seems easy, by imposing a duty on the imports, to compel the foreigner to take his duty off our exports.

But before we can talk of compulsion, we must examine the question a page break little more closely, and we shall find that it is not possible to tax any large portion of the imports.

The imports may be divided as follows:—
Imports. *
Articles of Food (duty free) £133,810,000
Raw Materials for Manufactures:
Textile Fabrics £86,303,000
Ore 16,806,000
Miscellaneous 16,043,000 119,152,000
Articles of Food and Drink (dutiable):
Wine and Spirits £7,237,000
Tea 10,567,000
Tobacco 2,777,000
Cocoa, Coffee, Currants, &c. 7,844,000 28,425,000
Miscellaneous 14,140,000
Semi-Manufactured Articles 40,983,000
Manufactured Articles 53,265,000
£389,7 75,000

Now which of these items can really be taxed?

The Articles of Food (duty free) are agricultural produce, chiefly corn, with butter, cheese, hams, eggs, &c., articles of everyday food. It is almost universally acknowledged, even by Fair Traders themselves, that the "Food of the People" cannot be taxed; the dap of the dear and taxed loaf have fortunately gone by. This amount-133,800,000-must therefore be deducted.

The Raw Materials for Manufactures, consisting of wool, cotton, hemp, raw silk, copper, tin, iron ore, &c., are necessary to our manufactures, and to tax them would be a serious injury, for it would raise the cost of production, and paralyse our powers of competition in the markets of the world. This raw material—£:119,200,000—must therefore also be deducted,

The Dutiable Articles of Food and Drink, which include wine, spirits, tobacco, snuff, tea, cocoa, coffee, currants, dried fruit, &c., and which may be called "luxuries," are legitimate subjects for taxation. But we already raise about £20,000,000 a year from these articles in customs' duties alone, and it would be impossible page break even if expedient, to increase these duties to any large extent. These articles also—£28,500,000—must therefore be deducted.

The Miscellaneous Articles include live animals, oil cake for feeding cattle, and seeds (not corn) of different sorts, &c., all articles which could not be taxed. These then—£14,200,000—must be also deducted.

Thus, before we come to articles on which we can impose retaliatory duties, we have to deduct from the total imports of £390,000,000—food, £133,800,000, raw materials, £119,200,000, "luxuries," £28,500,000, miscellaneous, £14,200,000—in all, £295,700,000; leaving £94,300,000 of manufactures and semi-manufactures.

But the Semi-manufactures, consisting as they do of such articles as wood (sawn and hewn), hides, rags, tallow, &c., are really of the nature of "raw materials," being all used in our manufactures, and they—-£41,000,000—-must also be deducted.

Thus, of our grand total of £390,000,000 of imports, we have left but £53,300,000 on which retaliatory duties could be placed, or which in any way compete with articles of Home manufacture—not a very large amount out of a total foreign trade of £685,000,000.

But even this total is not fully available for taxation. Some five millions of these Manufactures simply pass through the country, and are re-exported elsewhere, and a tax on them would prevent them coming here at all, and we should lose the profits on transit. Again, of this total, some eighteen or nineteen millions consist of innumerable small articles, chiefly "fancy goods," taxes on which would be vexatious and unremunerative.

Thus, a further sum of £23,000,000 or £24,000,000 must be deducted from the £53,300,000, leaving a total of but £30,000,000 of Manufactures (cotton, silk, woollen, leather, iron, &c.); and this practically represents our maximum powers of attack on the foreigner.

But now we must look at the other side, and see how our trade could be attacked if we determined to enter on a "war of tariffs."

Our Exports may be divided as follows:—
Exports. (Including Foreign and Colonial produce, 62½ millions.)
Articles of Food and Drink £26,100,000
Miscellaneous (Colonial) 11,300,000
Raw Materials 43,000,000
Manufactured and semi-Manufactured Articles 215,000,000
£295,400,000
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How much of this could the foreigner attack?

We will deduct the Articles of Food and the Miscellaneous as not liable to attack—total, £37,400,000—though, even now, some of the protective countries impose import duties on corn.

A large portion of the Raw Materials—consisting as they do of coal, copper, cotton, hemp, silk, wool, tallow, wood, &c.—is open to attack, and would certainly be attacked by the foreigner determined to maintain his protective duties at any cost; while the taxes already levied in protective countries on our Manufactures and Semi-manufactures would be immediately increased. That, by so doing, those countries would seriously injure their own prosperity can be no consolation to us who depend to so great an extent on foreign custom.

We may safely assert, therefore, that our exports are vulnerable to the extent of £240,000,000, while, as already shown, the vulnerability of the foreign imports is measured by £30,000,000—the power of foreign retaliation being thus eight times as great as our power of attack

Of course we do not send all our exports to protective countries, nor do we receive all our imports from them; much comes and goes between us and the neutral, non-protective, markets of the world. But, practically, the more protective the country, the less are our powers of attack; from the most protective countries we receive the smallest amount of manufactured goods—for the very good reason, that, in consequence of their Protective duties, they cannot produce so cheaply as we can, and cannot therefore compete with us.

But without going into details as to our trade with the various countries, it is clear that however much we might desire to injure the foreigner, in order to induce him to remove his protective tariff, on powers are so very limited as to make any attempt of the sort useless.

No doubt, if we chose, we could exclude foreign manufactures from our markets; but we must not forget that the results springing from an; system of Protection—as this would be—could not be confined to the thirty millions of foreign imports, but would injuriously affect our whole foreign trade of six to seven hundred millions.

Free Trade enables us to produce goods more cheaply than any other nation in the world. Any tampering with its principle would necessarily increase the cost of production all round; and would thus not only seriously diminish our powers of competing with other nations in their own protected markets, but would imperil our supremacy in the neutral markets of the world, on which our commercial future so largely depends.

Messrs. Cassell & Company, Limited, La Belle Sauvage Yard, London, E.C., supply this Leaflet in packets of 100, price 2s.

* All the figures are taken from the official returns of the Board of Trade, which any one can obtain for himself.

Lord Salisbury, expressing an almost universal opinion, has said that "the food of the people, and the raw materials of our industries, must be held sacred" from a duty.