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I believe, belong to any other civilised community. I will explain, and justify this statement further on.

Such being some of the hindrances to production and manufacture at home, what are the hindrances to the exchange of the commodities produced ? Does free trade exist in the exchange of them? So far as exchange at home, in goods produced at home, is concerned, exchange is perfectly free, but not as regards all goods pro-duced abroad and imported into the country. Several descriptions of such goods are taxed, and highly so, when they are imported and exchanged for consumption. Such are tea, tobacco, wine, foreign spirits, coffee, cocoa, and some sorts of dried fruit. These goods are all taxed before they are delivered for consumption.

It would appear then that we are deceived if we suppose that free trade principles are completely established in this country in either our home or foreign trade. A State which imposes a tax prior to consumption, equal to five hundred per cent. on the value of one article manufactured at home-plain spirits—and of five hundred per cent. on the value of another article-tobacco-imported from abroad, and puts on taxes equal to a less, but still high, percentage on the value of some other goods manufactured at home or imported from abroad, cannot be said to have established free trade, nor indeed, strictly speaking, to have acted on free trade principles.

This country might have freed trade if it had been thought expedient to do so. It might have raised the whole revenue of the country by direct taxation, as it already raises—including local and imperial-nearly one-half of it on that principle. That it has not done so has been solely on the ground of expediency, not principle. And it is on the ground of expediency alone that it is constantly varying the proportions of the revenue raised by either process.

What is it then that we have got which we suppose to be free trade? We have got, so far as it is within our own power to obtain it, an open competition trade, and anti-protection principles applied as strictly and conscientiously as are able to apply them. Let me try to define what I understand by anti-protection principles. I mean an effective agreement that no

man shall be given by law an advantage over another in the prosecution of any work, trade, manufacture, or other form of profitable labour, at the expense of the rest, or of any other section of the community. The best illustration that can be given of this principle is in a violation of it which existed under the old law which taxed the consumption in this country of all agricultural produce imported from abroad. The effect of this law was, that agricultural produce at home having become more or less insufficient for the sustenance of the people, and importations being required to supply the insufficiency, the tax levied on the foreign supply raised the price not

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FREE TRADE PRINCIPLES AND TAXATION.

THERE

THERE is no expression more constantly used by speakers and

writers on questions of commercial and fiscal interest than that which I place at the head of this paper. The statesman, to whichever party in the State he may belong, when addressing an audience at Manchester, Birmingham, or elsewhere, exclaims, 'I am a supporter of free trade principles. The chambers of commerce throughout the kingdom echo the cry. The writers in the public press do not venture to dispute the efficacy of free trade. No one seems to dissent from principles so well established, so universally acknowledged to be sound. And yet when these votaries of free trade are engaged in discussing details and results arising out of the principles so named, it becomes at once apparent that they are not agreed in the meaning which they attach to the term they use.

Before proceeding further, let me try to define the meaning which I attach to the term free trade.'

I understand by it a trade free from any hindrances applied to it by the Governments of the people who carry it on; freedom from restraints, direct or indirect, total or partial, in the production of goods; and freedom from interference, direct or indirect, in the exchange of one article for another article, whether one of them be money or be not money.

What then is a hindrance to the production of any article?

It is obvious that a prohibition of its production is a complete hindrance. A fine or tax levied op its production is a minor bindrance. A fine or tax levied on any of the facilities and processes which are requisite for its production is a less hindrance, but still a hindrance. For examples. The growth of tobacco within the British islands is prohibited by law. The use of chicory after it is grown is only permitted on payment of a tax on its further preparation for use. The malt tax is a hindrance to the manufacture of beer. The tax on spirits is a hindrance to the consumption of spirits. The tax on gold and silver plate is a hindrance to their use. According then to my definition, free trade does not exist at home in the production or manufacture of any of the articles above enumerated.

The hindrance to production, however, created by a fine or tax on facilities and requirements for production and manufacture does not in this country exist. By facilities and requirements I understand and include everything that is necessary for the application of mental and bodily labour to the task of production. These facilities and requirements are here free and untaxed, the result being a condition

I believe, belong to any other civilised community. I will explain, and justify this statement further on.

Such being some of the hindrances to production and manufacture at home, what are the hindrances to the exchange of the commodities produced ? Does free trade exist in the exchange of them? So far as exchange at home, in goods produced at home, is concerned, exchange is perfectly free, but not as regards all goods produced abroad and imported into the country. Several descriptions of such goods are taxed, and highly so, when they are imported and exchanged for consumption. Such are tea, tobacco, wine, foreign spirits, coffee, cocoa, and some sorts of dried fruit. These goods are all taxed before they are delivered for consumption.

It would appear then that we are deceived if we suppose that free trade principles are completely established in this country in either our home or foreign trade. A State which imposes a tax prior to consumption, equal to five hundred per cent. on the value of one article manufactured at home-plain spirits—and of five hundred per cent. on the value of another article-tobacco-imported from abroad, and puts on taxes equal to a less, but still high, percentage on the value of some other goods manufactured at home or imported from abroad, cannot be said to have established free trade, nor indeed, strictly speaking, to have acted on free trade principles.

This country might have freed trade if it had been thought expedient to do so. It might have raised the whole revenue of the country by direct taxation, as it already raises—including local and imperial--nearly one-half of it on that principle. That it has not done so has been solely on the ground of expediency, not principle. And it is on the ground of expediency alone that it is constantly varying the proportions of the revenue raised by either process.

What is it then that we have got which we suppose to be free trade? We have got, so far as it is within our own power to obtain it, an open competition trade, and anti-protection principles applied as strictly and conscientiously as we are able to apply them. Let me try to define what I understand by anti-protection principles. I mean an effective agreement that no man shall be given by law an advantage over another in the prosecution of any work, trade, manufacture, or other form of profitable labour, at the expense of the rest, or of any other section of the community. The best illustration that can be given of this principle is in a violation of it which existed under the old law which taxed the consumption in this country of all agricultural produce imported from abroad. The effect of this law was, that agricultural produce at home having become more or less insufficient for the sustenance of the people, and importations being required to supply the insufficiency, the tax levied on the foreign supply raised the price not

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the foreign produce competed in the home markets. The advantage of this increase of price, so created in the home produce, was the advantage of the owners, and, temporarily, of the occupiers of the land at home, by which land alone it could be produced. The disadvantage was that of the consumers, who could not live or work without eating, and were obliged to pay for so doing an increased price, which found its way, for the greater part, into the pockets of the home producer. The landholders at home were thus protected against competition by the landholders abroad to the extent, or nearly so, of the tax imposed upon the foreign produce.

The same effect was produced, with less obvious pressure, in all cases where, on its introduction, a foreign article was taxed which competed with a home article which was untaxed. Thus the shoemaker at home obtained an advantage by the tax on foreign boots and shoes, to the disadvantage of all those who wore boots and shoes, who had to pay an increased price for them. So did the hatter, the glover, and other manufacturers of clothes, by the tax on articles similar to those made by them and imported by foreign competitors. Where a tax was levied on the home-made article less in amount than that on the foreign, as was the case in the instance of brandy, spirituous compounds, and many other commodities, the British producer was protected against the competition of the foreigner to the extent of the difference in the amount of the tar. In all these cases it is obvious that the protected producer obtains an advantage to a greater or less degree in the struggle of competition, and it ought to be obvious to those who follow the reasoning, that this advantage is obtained at the expense of the ultimate consumer, who, when the article consumed is one of general necessity, represents the whole people, and, when it is not of first necessity, represents that section of the people who use it.

To this principle of anti-protection, or, as I prefer to name it, of unrestricted competition, legal effect has been given in the regulation of British industry, with at least the intention to adjust it in all cases as fairly as the circumstances of each would allow. What then we try to obtain, if my definitions are correct, is not free, but fair and equal trade, so far as we have it in our power to control it, for all classes of home producers, in the competitive struggle among themselves and with foreigners in the home market.

Before proceeding to particularise the means which have been taken to effect this object, it will be useful to consider anything which can plausibly be urged against the principle of unrestricted competition. The most plausible objection appears to be one which, while admitting that no one section of the same people should be protected against another, would contend that the whole people collectively should be protected against the competition of all foreign nations. Assuming this to be desirable, is it possible to give such

course with foreigners ?! It is obviously absurd to suppose that we should give the produce of our industry to others without receiving some return for it. That return must be in something which we desire to obtain, and, before receiving it into the country, we must settle the terms on which it is to be received, that is, whether it is to be taxed or untaxed in the interest of the whole community. Rejecting then the obsolete Japanese system of non-intercourse with the outer world, but accepting the idea that we should protect ourselves, fairly and equally among ourselves, against the competition of foreigners, would it not become necessary, for the equal protection of all home industries, that the tax on the importation of each commodity produced by foreign industry should be adjusted with perfect precision so as to protect the home producer of a similar article on terms of perfect fairness to the home producer of a different article, but one also produced by foreign industry? If so, what tax should be imposed on wheat, wood, meat, and other agricultural produce, and what on manufactures of various descriptions carried on in towns, for the purpose of placing the rural and urban population of this country on terms of perfect equality, or what they would believe and admit to be perfect equality in regard to protection ? Suppose a logician to suggest that all imported articles should be adjusted to a common standard of value and be taxed ad valorem at the same percentage. Assume this plausible and specious scheme to be adopted, and a tax at the rate of 10 per cent. imposed. Would the producer of cotton manufactures, who would be protected to that extent by a tax on a foreign commodity which comes in a very slight degree into competition with the produce of his industry, think himself placed on an equality in respect of protection with the owner and occupier of land, with whose home produce foreign produce comes into active competition ? Again, would the manufacturer of cotton think 10 per cent. on value as advantageous a protection to his industry as it would be to the manufacturer of silk ? Does the maker of cotton stockings feel the pressure of competition with as much keenness as the maker of silk ribbons ? Would any manufacturer using a raw material not produced in this country like to be weighted, in the struggle for supremacy in a neutral market, with a tax of 10 per cent. on the staple of his industry? Even on the value of each commodity, apart from the question of the degree in which it comes into competition, the same percentage would be unequal in its incidence;

? In a remarkable petition from the merchants and traders of the City of London, presented to the House of Commons by Mr. Baring in May 1820, it is observed, * That, among the other evils of the restrictive or protective system, not the least is that the artificial protection of one branch of industry, or source of protection against foreign competition, is set up as a ground of claim by other branches for similar protection; so that, if the reasoning upon which these restrictive or prohibitory regulations are founded were followed consistently, it would not stop short of

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