Book VI: Mr. Chamberlain’s Programme, Chapter I: The Protectionist Tradition in England

Adam Smith’s pessimistic forecast—No Free Traders without exception—Influence of the economic reaction abroad—Fair Trade—Commission on trade depression—Two reports—Optimism of the Cobden Club—Made in Germany—Protectionist campaigns—Memoranda of the Board of Trade—Colonial Conference of 1902.

Mr. Chamberlain’s programme may now be spoken of as an historical phenomenon belonging to the past: no one now believes in its success except M. Méline, and he thought he had invented Colbertism. But Colbertism is old, commercial freedom young. Thus Adam Smith, when he published the “Wealth of Nations” in 1776, says: “To expect, indeed, that the freedom of trade should ever be entirely restored in Great Britain is as absurd as to expect that an Oceana or Utopia should ever be established in it. Not only the prejudices of the public, but, what is much more unconquerable, the private interests of many individuals, irresistibly oppose it. . . . The member of Parliament who supports every proposal for strengthening this monopoly is sure to acquire not only the reputation of understanding trade, but great popularity and influence, with an order of men whose numbers and wealth render them of great importance. If he opposes them, on the contrary, and still more, if he has authority enough to be able to thwart them, neither the most acknowledged probity, nor the highest rank, nor the greatest public services can protect him from the most infamous abuse and detraction, from personal insults, nor sometimes from real danger, arising from the insolent outrage of furious and disappointed monopolists.”

This, is indeed, the psychology of Protection, but Adam Smith did less than justice to his countrymen. They had not only adopted Free Trade principles in 1846; they now regarded them as indisputable as the rule of three. Gladstone said wittily, “All Englishmen without exception are Free Traders, but they are not all Free Traders without exception.” Protectionists were already putting forward pretexts to try the ground, for the economic reaction which appeared in Germany in 1879 under Bismarck, and in France in 1877, showed itself in England after 1880 in the expression “Fair Trade,” and in the growth of a movement strong enough to cause the appointment of a Commission into the causes of trade depression. There were two reports: that of the majority was for Free Trade, the minority report recommended a 10 per cent. duty on manufactures and on such articles of food as could be produced by India and the other colonies. A small number of landowners, as a tribute to tradition rather than from conviction, continued to protest against Free Trade. In 1896 the Cobden Club celebrated its jubilee: its principal members did not trouble to conceal their contempt for continental Free Traders, and the sense of security inspired by their own indisputable success. Nevertheless, a certain member of Parliament, Mr. Howard Vincent, got an Act passed, obliging all goods to carry a mark of origin—German goods being stamped, “Made in Germany.” Under this title Mr. E. E. Williams, a Fabian, published a book showing that many small objects of everyday use were made in Germany. Out of his surprise box he produced the German bogey, and many grown-up children retain their childish fear of the bogey; it is a necessary part of their scheme of existence.

A series of articles appeared in the Contemporary Review by E. J. Dillon and an anonymous writer called Ogniben, in 1901 and 1902, bearing the burden “of the cry.” “Our agriculture is going down, that of France and Germany is going up; our industry is going down, that of Germany and the States is going up”; and weeping over the decline of the carrying trade. To maintain the impartial character of the Review, however, the Editor asked me to reply to these articles, which I did in July, 1902, replying at the same time to a book on “Protection,” written by a German called Byng, who owned English factories. The sententious arrogance of its arguments was based on the theory of the Balance of Trade, and collapsed when it was touched.

In 1901 the Board of Trade commissioned Sir Alfred Bateman to issue a Memorandum on the Comparative Statistics on Population, Industry, and Commerce in the United Kingdom and some leading foreign countries. The American having succeeded the German bogey in 1902, a fresh Memorandum was issued for the United States. As early as 1896 Mr. Chamberlain had proposed an Imperial Customs Union: on June 30, 1902, the Colonial Premiers took part in a Colonial Conference, where Mr. Chamberlain declared that he wished to establish Free Trade within the Empire, while recognising the special needs of new countries; and he drew attention to Canada’s offer of preferential treatment to English goods.

Of the resolutions finally arrived at, the first recognised the stimulus given by preferential tariffs to commercial relations; and though the second declared that the adoption of a general Free Trade system between the mother country and the oversea colonies was impracticable, the third affirmed the desirability of the granting of substantial advantages to British goods in the Colonial tariffs, while in the fourth the Colonial Ministers respectfully demanded from His Majesty’s Government favourable treatment of colonial manufactures.

The details of this movement had been little followed in England. Two speeches made on May 16, 1903, by Mr. Balfour and Mr. Chamberlain came as a thunderbolt.