Problems of Empire/Tariff Reform and Agriculture
TARIFF REFORM AND AGRICULTURE.
Speech at Catsfield, July 28th, 1903.
I propose to make a few observations on two subjects which are of considerable importance to all those engaged in agriculture. First, as regards agricultural co-operation, I would like to take this opportunity of saying to you, many of whom were present at the meeting held in Battle last February, when Mr. Leacock, who is here, came down and gave an address, that the committee that was appointed on that occasion did not see their way to make any practical recommendations. The committee consisted entirely of large farmers, most of whom were deriving, as individuals, much of the benefit that would accrue from the wholesale purchase of foodstuffs, manures, or implements.
Agricultural organization. Perhaps the most remarkable incident in our proceedings was the fact that one of our members presented, for our consideration, the report of another society carrying on business in another county, of which he himself was a member, and from which, he asserted, he derived considerable benefit. This gentleman was opposed to the starting of an Agricultural Supply Society in Sussex, but yet he was a member of a society in another county, doing exactly the same sort of work which I hoped would have resulted from the establishment of a similar society in East Sussex. The matter will not be allowed to rest where it stands at present.
The County Councils are now permitted by a minute of the Board of Education to make a grant for the purpose of giving instruction in the principles and practice of agricultural co-operation. The Agricultural Organization Society, to the chairmanship of the committee of which I have recently been elected, has received a donation of 100l. to be devoted to this purpose in Sussex. We have asked the Education Committee of the County Council to supplement this donation by a grant of an equivalent amount, and I hope that those of you who are County Councillors, and those of you who are not, will bring pressure to bear to secure this grant. No harm can be done by education on this question.
Meanwhile, I am glad to be able to report to you that the movement is making good progress in other parts of the country, the most noteworthy societies formed during the last few months being the Midland Counties Agricultural Supply Association, which was the outcome of the indignation aroused by the hardships imposed on the farming class by a ring of implement makers, and the Farnham Farmers and Hopgrowers' Association. I attended the inaugural meeting of the latter. The original members represented, I was told, a capital of about 200,000l., and these gentlemen proposed in the first instance to buy the kulm for drying their hops by the train-load. Presently they possibly may undertake to deal with their products. Object-lessons on the value of agricultural organization are thus accumulating. We are slow to move in Sussex, but for that reason, perhaps, we move more surely.
Tariff Reform. To turn to Tariff Reform, which is of even greater public interest at the present time. I have taken an interest in this question for many years, ever since I had an opportunity of discussing at Cape Town with Mr. Hofmeyr, the head of the Afrikander Bond, the proposals which he had just put before the first Colonial Conference of 1887. It is idle to deny that the reform proposed by Mr. Chamberlain involves a departure from Free Trade principles, from those principles which have governed our fiscal policy for many years past. But I have asked myself for some years whether all of these rest on a really solid basis.
Cheapness of production and of food not dependent on Free Trade. }The enormous growth of the export trade of Germany and the United States since their adoption of a highly protectionist policy, compared with the comparative stagnation of our own, make one doubt the truth of the Free Trade theory, that cheapness of production is dependent on a free trade. Certainly these two countries produce as cheaply as we can. Again, any one who has studied the prices of wheat during the nineteenth century, must admit that the history of those prices tends to disprove another great theory of the free traders, namely, that cheap food depends on free trade. The price of wheat touched as high or higher prices in the twenty-five years after the introduction of free trade, and fluctuations in price were as great in those twenty-five years as they were in the twenty-five years before the introduction of Free Trade. I have in my hand a letter from a gentleman, not known, perhaps, to many of you, but well known in the co-operative world, who has taken all his life a great part in promoting the welfare of his fellow-countrymen, and no apology is needed for reading a few extracts from his letter. The fall in prices, which hit all those interested in land so heavily, landlords, farmers, and labourers alike, did not take place till thirty years after the introduction of Free Trade, and was mainly due to the cheapening of the cost of transportation, which brought the virgin lands of new countries into close proximity to the markets near at home. I therefore assert that neither cheapness of production nor cheap food are absolutely, and perhaps not even mainly, dependent on free trade.
Grounds for Mr. Chamberlain's action. Now, Mr. Chamberlain's reform of our fiscal policy is put forward for three main reasons. One of those is of especial interest to you, but the others are not. Still, it is worth while that I should mention them here. The first is retaliation. The immediate cause of Mr. Chamberlain's action, I take it, was the treatment of Canada by Germany. In 1897, Canada gave a preference to the goods of the mother country, as well as of those colonies and foreign countries which admitted Canadian goods free, or practically free. Germany, in consequence, excluded Canada from the most favoured nation treatment. I will read to you what Lord Lansdowne says on this point in a dispatch published in the Parliamentary papers just issued. 'That action,' says Lord Lansdowne, 'has incontestably had the effect of bringing about the loss by Canada of the relatively advantageous position which she occupied prior to 1897, a loss which she has sustained not because she had imposed upon German imports custom duties exceeding those to which they were previously subject, nor because she had treated Germany differently from other foreign countries with whom she had commercial relations, but because Canada had refused to extend to Germany a special concession made by her to the mother country, in pursuance of a policy deliberately adopted for the purpose of promoting the national trade of the British Empire.'
Canada replied to Germany's action by imposing a special penalty on German goods. The German Government, in their dispatch of June 29th, announced: 'That if other British self-governing Colonies should follow the example of Canada, and accord national treatment to British imports, the German Government might find themselves compelled to refuse not only to those Colonies, but to Great Britain herself, the treatment which, in view of the liberal terms upon which German imports are admitted to this country, we are entitled to expect upon the most ordinary grounds of reciprocity.' I think, gentlemen, you will agree with what I understand to be the general opinion of the country, that the threatened action of Germany with reference to Canada, and the threatened action of Germany with respect to ourselves, constitute amply sufficient grounds to justify a departure from our existing fiscal policy.
Development of American and German Trusts The next ground on which the reform in our fiscal policy deserves attention is the development of the American trusts and the German trade combinations. These trusts and trade combinations, owing to the high protective duties, are enabled to make a large profit on the goods they sell in the home market, and then, in order to spread the general charges on their business, they sell their surplus abroad at or below the cost of production. In the debate in the House of Lords, Lord Lansdowne quoted figures showing that a German trade combination sold its production in the home market at 120 marks a ton, and sold its surplus abroad at 85 marks a ton. Against competition of this character, which is justly described as unfair competition, I hold the opinion, rightly or wrongly, that it is well-nigh impossible, at any rate it is exceedingly difficult, for British industry to hold its own on a pure free trade basis.
Preferential trade within Empire. Now we come to the third ground on which reform in our fiscal policy is urged, to promote preferential trade within the Empire. In a paper read before the Colonial Institute, in November of last year, when I had not the remotest idea that this question would soon become one of practical politics, I showed what is in fact obvious, that a commercial federation which did not impose a tax on Russian and American wheat for the benefit of the Canadian wheat-grower, and on meat for the benefit of the Australian and New Zealander, would have been of little value to the Colonies. Mr. Chamberlain, in his celebrated speech in the House of Commons on May 29th, frankly acknowledged that preference must be given either on food or on raw materials, or on both. He then went on to say that 'so far as I can see it will not be necessary to impose any tax on raw materials.' A tax on raw material, which would cripple any British industry, is totally opposed to the spirit of Mr. Chamberlain's policy, and if it was ever contemplated by him, as it was by me, then I can confidently assert that it is not contemplated by him any longer. What is Mr. Chamberlain's policy? It is to impose a moderate tax on foreign foodstuffs imported into this country, with a preference in favour of the Colonies. That makes a present to his opponents of the splendid election cry, 'The dear loaf.' To those who suspect Mr. Chamberlain of ulterior motives of some kind or other in having raised this question, I reply no statesman would make his opponents a present of such a splendid election cry unless he was prepared to hazard his own political position for what he believed to be the true policy in the best interests of his country. There is no one who has been in the past a more vigorous opponent of Mr. Chamberlain than I have been, but I would like to give him the credit due to him for the courageous position he has taken up on this question. Mr. Chamberlain has gone into no details, he has submitted no plan, but is wisely awaiting the results of the inquiry and discussion which is now so vigorously proceeding in various parts of the country.
Suggested duties. I will venture to make three suggestions or observations as to what I believe the character of the duties imposed should be. The tax on foodstuffs must not be confined to corn. If only corn is taxed, you will only benefit one class of British farmer, and you will not give any preference worth having to the Australian or New Zealander. As in the corn duty now abolished, the tax on flour should be higher than the tax on corn, otherwise you will not restore the milling business to this country, and you will not have a supply of cheap offal. Thirdly, the agricultural produce of the Colonies should not be admitted free, as has been so frequently assumed in the course of this discussion. All agricultural produce should be taxed, with a preference in favour of those Colonies who give a preference to the goods of the mother country in their markets. If Colonial produce is admitted free you would not in the long run benefit British agriculture, and you would have nothing in hand with which to negotiate with the Colonies for the lowering of their duties against British produce.
Cost of living. It is naturally the object of Mr. Chamberlain's opponents to concentrate public attention on the proposal to tax foodstuffs, and they freely assert that his policy will result in raising the cost of living. Mr. Chamberlain has declared in the most express terms that the cost of living will not be increased for the people of this country unless the people themselves wish it. He is prepared to do one of two things: to use the revenue derived from the duties imposed on corn and meat or other agricultural produce to reduce the duties to even a greater extent on tea, sugar, coffee, and so forth. If this is done, the cost of living will not be increased. Or, if the people so prefer it, he is willing to utilise the money derived from these additional duties for the purpose of providing old age pensions. Mr. Chamberlain is constantly misrepresented. I ask you to bear in mind exactly what Mr. Chamberlain has said, and to examine his proposals carefully for yourselves. I repeat now what I said at Battle during the recent election. I look upon tea and sugar as being as much necessaries of life as wheaten bread was sixty years ago, and if we are to raise any revenue from indirect taxation, as I believe we must, it is better to raise it upon an article we can produce in this country rather than on things we cannot. In the former case we, at any rate, derive an indirect benefit from the encouragement of an important industry and the additional employment afforded to British workmen.
Importance of question. The decision which the British people have to take on this question is a most momentous one for the future of the Empire. I would not support this proposal on Imperial grounds alone, though I believe unless we do we shall lose Canada, and by-and-by our other Colonies as well. It is we in this country who have to run the risk of the adoption of this policy, and I agree with the Duke of Devonshire that it must be judged mainly from the point of view of the people of this country. From our point of view there are three things to be considered. I have already spoken of one, the danger to British industry from the development of the American trusts and the German trade combination.
Food supply. Another consideration which has had a most powerful influence in bringing me to my present opinion is the danger to which we are exposed in depending to such a large extent on the United States for our supply of food. I believe that it is true to say, as I have said on other occasions, that we are absolutely at the mercy of the United States as regards our food supply, and that is a position which no great Empire ought ever to be in.
Decline of agriculture. To turn to the question which most concerns you—the Decline of British agriculture. What has that meant in East Sussex during the years which I can remember? It has meant, as regards the landowners, that many properties have been sold and others let. Few persons depending entirely on the land are living in the homes they resided in when I was a boy. Many farmers have lost their capital in the struggle against the bad times we have had. It means that few farmers are occupying the same farms they were occupying in my young days. And what has it meant as regards the labourer? The labouring classes are probably in a better position to-day than ever they were, but how many labourers have had to leave Sussex in the last thirty years in search of employment? I remember, it is not so many years ago—about fifteen—that the lake at Normanhurst was made by my father, chiefly to give employment to the men who were out of work. When you are thinking of the condition of the labourer to-day, remember that many a lad has had to leave this neighbourhood to earn a livelihood elsewhere. The decline of our agricultural population is not merely a question of local interest. It is one of the most serious national importance, because the increasing proportion of children which year by year are brought up under the unhealthy conditions of town life is beginning to have its effect on the physique of the people and the stamina of the race. One of the greatest, if not the greatest, statesmen of last century said: 'I look upon the decline in agriculture as the greatest danger to our permanence as a race.' It is in my humble judgment one of the strongest arguments in favour of the policy outlined by Mr. Chamberlain that it will tend to stop this decline, and for this, if for no other reason, I think you will agree with me. I beg to give you the health of 'The Tenant Farmers of East Sussex.'
The letter referred to on page 150 was reprinted in the Times of July 30th:
'35 Upper Addison Gardens, Kensington, W.
'July 21st, 1903.
'Dear Mr. Brassey,
'I was very glad to see your name appended in today's Times to the letter headed "Liberals and Fiscal Policy," in which, having called myself all my life a Liberal and something more, I entirely concur.
'When quite a young man I was a member of the Anti-Corn-Law League. I knew several of its leaders, and remained on friendly terms during all his life with John Bright.
'But I separated from the League on the question of the equalisation of the sugar duties, which, having stayed twice (for seven months each time) in the West Indies, I knew to be absolutely cruel to our sugar-producing Colonies. In fact, it is only now, after half a century, that they are recovering from the blow.
'I own I was startled by Mr. Chamberlain's throwing out the idea of an impost on corn. But, on looking at the table in Whitaker's Almanack of the "Average Prices of Wheat," &c., a quarter (which unfortunately does not come below 1865), I have been surprised to find that while the average of the seventeen years since 1845 shows a reduction of rather more than 2s. a bushel compared with the seventeen years before, there has been nothing of the stability of price which was looked forward to by us Corn-Law repealers, the figures of the post-repeal years frequently rising above those of the pre-repeal years, and vice versâ.
'Thus the highest post-repeal prices, 74s. 8d. (1850) and 72s. 8d. (1854), are actually higher than the one price in the seventeen years which exceeds 70s., 70s. 8d. for 1839 being the lowest for this period; whilst the lowest post-repeal price, 38s. 6d. in 1851, is not much lower than the pre-repeal lowest, 39s. 4sd. in 1835. (Note that whilst the 70s. 8d. of 1839 was the only instance in the pre-repeal group of a rise above 70s., the post-repeal one has two such instances.) I find myself thus compelled to admit, much against my will, that as respects stability of price, the repeal of the Corn Laws has, so far as I can judge, quite baffled my expectations. It is, of course, possible that, had I access to figures of later date than 1862, the result might be modified.
'But it seems to me quite possible that, even as respects bread-stuffs, the result of imposing a slight duty on foreign imports, with free admission to colonials, might be slighter than Mr. Chamberlain himself expects, and after the lapse of a few years become imperceptible.
'Very faithfully yours,
'J. M. LUDLOW.'
Mr. Brassey adds the following note:—'Between 1865 and 1880 the price of British wheat fluctuated considerably. In 1865 it was 41s. 10d.; in 1867, 64s. 5d.; in 1870, 46s. 11d.; in 1873, 58s. 8d.; in 1875, 45s. 2d.; in 1877, 56s. 9d.; in 1880, 44s. 4d. During the next ten years it fell gradually to 29s. 9d. in 1889. During the last twelve years it has fluctuated from 37s. in 1891 to 22s. 10d. in 1894, 34s. in 1898, and 25s. 8d. in 1899.'
- Cf. page 157.