Asquith

Trade and the Empire^*
(1903)

It is all very well to use this vague rhetorical language about negotiation and standing up to the foreigner, and not taking his insults lying down. I want to know from Mr. Chamberlain upon what is he going to retaliate. Here we come to the very crux, and, indeed, the very heart, of the whole matter. You can not retaliate effectively in this country upon protected countries without imposing a tax upon food or raw material. I give you one or two figures which have been put in very striking form by Mr. Sydney Buxton. He takes Russia and the United States, the two most protected countries in the world. Suppose you want to retaliate upon Russia. Out of our total imports from Russia, amounting to 25 millions, 23 millions, or eleven-twelfths, consist of foodstuffs and raw materials; so that we can not retaliate upon Russia without at the same time injuring either our working classes or our manufacturers, or both. What is the case of the United States? Out of 127 millions of imports from the United States in 1902, 108 millions, or five-sixths, were also foodstuffs or raw materials. The moment you begin to translate these vague platform phrases into practise, you find that they can not be carried out as a policy without doing to you here in Great Britain as great, and probably more, harm than the persons against whom that policy is used.

Mr. Chamberlain says he has two objects in view. The first is to maintain and increase the prosperity of the United Kingdom, and the second is to cement the unity of the Empire. We all agree as to these two objects, to which, I will venture to add, not by way of qualification, but simply by way of supplement, that the one end must not be sought, and can not be attained, at the expense of the other. In the long run, depend upon it, you will not promote the unityof the Empire by anything that arrests or impairs the material strength of the United Kingdom. Mr. Chamberlain says, and says truly, that the Colonies ought not to be treated as an appendage to Great Britain. I agree; and neither ought Great Britain to be treated as an appendage to the Colonies. After all—we must put in a word now and again for poor little England—after all, this United Kingdom still remains the greatest asset of the British Empire, with its 42 millions of people, with its traditions of free government, with its indomitable enterprise, with its well-tried commercial and maritime prowess. Any one who strikes a blow at the root of the prosperity of the United Kingdom is doing the worst service which can be done to the Empire to which we are all proud to belong.

Mr. Chamberlain is haunted by two specters. The first is the approaching decay of British trade, and the other is the possible break-up of the British Empire. I will endeavour to illustrate my own precepts and discuss this matter without heat and by argument Let us see if the specters are real. Let us be perfectly sure about the disease before we resort to remedies which are admittedly heroic, and may be desperate. First of all, I ask your attention to this: Mr. Chamberlain said at Glasgow the other night—and no more astounding declaration has been made by any public man within my memory—that in the United Kingdom trade has been "practically stagnant" for thirty years. Thatis the basis on which he proceeds. Let me ask my fellow countrymen to see what has been our condition during this era of stagnant trade. During that period the amount assessed to the income tax has doubled; the interest upon our foreign investments has more than doubled; the deposits in our savings banks have multiplied two and threefold; the bankers’ cheques cleared, taking the annual average, have risen in amount from 5,300 millions to over 8,000 millions sterling; and last, but not least, the wages of the working classes have risen, measured not merely in terms of money—tho there has been a considerable rise in our money wages—but much more measured in their real terms, in the terms of that which money can buy. As the Board of Trade has told us, 100s. buys as much as 140s. twenty years ago. Talk about Germany, the protectionist paradise! I hope you will compare, from the material the blue books place at your disposal, the wages, the standard of living, and the hours of labor of the German workmen and your own. Well, all that has been going on—this enormous accumulation of wealth, this steady rise in the savings of all classes of the country—all that has been going on through a period of "stagnant trade."

The truth is, Mr. Chamberlain entirely ignores the whole of our home trade, as do most of the new protectionists, and that is at the bottom of not a few of their fallacies. It is difficult to say exactly what the bulk of our home trade is; butthe Board of Trade have computed that as the wages paid in the export trade are something like 130 millions, and as the total wage-bill of the country is between 700 and 750 millions, the export trade does not employ more than one-fifth or one-sixth of the whole labor of the country. I say, then, my first point is, you can not judge of the industrial condition and progress of the country by looking only at its foreign trade. You are leaving out of sight by far the most important factor in making up the account Indeed, even a slackening in your export trade may be a proof and consequence of the activity of your trade at home. It was so in certain industries in the year 1900, and the reason why in those times exports did not increase at the same ratio as before had little or nothing to do with hostile tariffs. It was because our manufacturers and those they employed were so busy meeting the demand of the home market that they had not the time, the machinery, or the appliances to satisfy the demands from abroad. That is not all. Mr. Chamberlain begins by ignoring the home trade.

If you take the foreign trade, or, to use a better expression, trade carried on oversea, it is a perfectly absurd criterion to measure its extent or profitableness by looking, as Mr. Chamberlain does, to exports alone. It would be just as reasonable to determine a man’s wealth by the amount of the man’s expenditure without looking to his income, as to compare the profitableness ofthe foreign trade of a country by looking only at the exports. Why, if you look at what Mr. Chamberlain says, as between 1872 and 1900, there has only been a paltry rise of between 20 and 30 millions in exports; but if you look at the whole foreign trade and exports and imports together, you find a very different state of things. Take the three decennial periods. From 1873 to 1882, the oversea trade averaged 662 millions; from 1883 to 1892, the average was 696 millions; from 1893 to 1902, the average was 771 millions. In other words, if you take our trade as a whole, the annual average is considerably over 100 millions in thirty years.

But that does not complete the account of the matter. If you want to look at exports alone, even then you must not confine your attention to goods that are exported; because, in order to pay for our imports, we do a great deal more than send to foreign countries our goods. We perform services for them, and, in particular, we do services in performing the carrying trade of the world. Imagine a man coming before the public with the responsibility of a great statesman and telling them that trade is in a stagnant condition, when he has not even taken the trouble to bring into account the amount that we are earning every year by our shipping throughout the length and breadth of the world! I will just give you one figure with regard to that. The Board of Trade estimate of the annual earnings of our shipping comes to 90 millions a year, afigure Mr. Chamberlain has left altogether out of the account, altho it is strictly relevant to and strictly comparable with and belongs to the same class as the exports of our goods. Now, is that a growing or a diminishing quantity? I will compare the figures of the United Kingdom under free trade with the figures of the United States under protection. In 1870, just about the time that Mr. Chamberlain has taken for his comparisons, our tonnage of oversea shipping was 5,700,000; in 1902 it was 10,000,000 tons. In other words, it has increased very nearly 100 per cent. Now, in 1870 the oversea shipping tonnage of the United States was 1,500,000; in 1902 this had fallen to 880,000 tons, or a diminution of between 40 and 50 per cent. If it is true, as Mr. Chamberlain has told us, that we are sending less manufactured goods into the United States, you must not forget that at the same time we are performing for the United States, not gratuitously—great as is our affection for the United States—not gratuitously, but for value received, the service of carrying their goods as well as ours all over the world. While their shipping has declined owing to the excessive cost of shipbuilding which protection brings about, our shipping under free trade has most continuously and most prosperously increased.

My last criticism upon this part of Mr. Chamberlain’s case is this: that he has committed an absolutely unpardonable error—unpardonable in a man who has acquainted himself with theA B C of the subject—in taking the year 1872 as the starting year for his comparisons. If you had taken 1870, two years before, or if you had taken 1876, four years after, instead of finding only a growth of 20 to 30 millions, you would have found a growth of over 80 millions in exports; and, what is still more striking, if you had taken the exports of 1900 at the prices of 1872, you would have found that they amounted to 425 millions, or an increase of 170 millions, instead of Mr. Chamberlain’s 30 millions.

To sum up what I have been saying about this, I have pointed out that this allegation—that during the last thirty years British trade has been in a stagnant condition—involves at least four distinct fallacies. Let us enumerate them once more. In the first place, it entirely ignores the home trade, which is a much more important factor than the foreign trade; in the second place, it makes exports alone the criterion of the volume of our trade; in the third place, it places among exports exported goods alone, and takes no notice of the services that we render to other countries; finally, even taking exported goods as the criterion, a year is deliberately selected which is no fair test of the matter at all. Then what becomes of the case which is the foundation of Mr. Chamberlain’s contention that British trade has been in a "stagnant" condition during the last thirty years?

Then I come to the other assumption, which is: that unless we are prepared to establish apreferential tariff we must look for a break-up of the Empire. That is a pure assumption that we are asked to accept and act upon without a shadow of proof or even a scintilla of evidence. For my part, I believe it to be—I use very plain language about it—I believe it to be a calumny on the Colonies and a slur upon the Empire. Now, it is part of Mr. Chamberlain’s case under this head that our trade with our own Colonies is growing faster than our trade with the rest of the world. That is a very disputable proposition; but assuming, for the purpose of the argument, that it is true, we are all agreed in wishing that process to continue. If natural causes are already at work bringing it into operation, so much the better. But, anxious as we are to do all that is prudent and practicable to develop our trade with the Colonies, we free-traders do not believe, at least I do not believe, it is in any way desirable that we should have what is called a self-contained Empire between which and the rest of the world there are none of those commercial relations which are so fruitful of peace and amity and good will.

But quite apart from that, let me deal with this allegation: that unless something is done—and that something means taxing the food of the people of this country—unless something is done the Colonies will break away from us. No one has a higher and keener desire than I have to maintain and develop those friendly relations which of late years have so happily come intoexistence between the Colonies and ourselves; but let me point out that the Colonies have absolutely no grievance of any kind against us. We give them free admission through our open door into the largest and best market in the whole world. On the other hand, they have at home complete fiscal autonomy. For my part, I believe if they had not had it the Empire would not have kept together so long. They have complete fiscal autonomy, and in the exercise of that freedom the large majority of them have erected protective tariffs, not only against foreign nations, but also against the Mother Country. I do not complain of that for a moment. If you give your Colonies freedom, as you were right to do, you must allow them to exercise it in accordance with local sentiments and local opinion.

^* From a speech at Cinderford, October 8, 1903. By kind permission of Mr. Asquith and Messrs. Methuen&Co.