BRUSSELS SUGAR CONVENTION.

HC Deb 24 November 1902 vol 115 cc251-320

* (2.35.) THE PRESIDENT OF THE BOARD OF TRADE (Mr. GERALD BALFOUR,) Leeds, Central

In moving the Resolution which stands in my name, I venture to express a hope that on one point at least connected with the sugar question the great majority of hon. Members on both sides of the House may find themselves in agreement. Great differences of opinion may, no doubt, exist with regard to particular provisions of the Convention. There are many people who may object to the appearance in it of a penal clause. I believe there are certain persons who regard countervailing duties as a kind of damnable heresy—an unclean thing which this country ought never to look at, much less to touch or handle. I do not myself agree with that view, which appears to me to be the outcome of an exaggerated economic prudery. But I am not concerned for the moment to defend the penal clause, although I shall return to the subject later. What I wish at the present to emphasise is a point of agreement; and I hope that I am right in believing that the large majority of people in this country, however divergent their views may be on other political and economic questions, are at least agreed in thinking that sugar bounties are a bad thing, and that the abolition of sugar bounties would be a good and desirable thing. I am aware that this opinion is not absolutely unanimous. There is a section—I believe a very small section—who hold that the existence of sugar bounties is a good thing, and who would be sorry to see them abolished, even by the voluntary action of the bounty-giving Powers; and who are a fortiori opposed to any action on the part of this country which would tend to promote their abolition. But I think all those who have studied the history of the question will agree that that position is absolutely inconsistent with the policy steadily pursued by both parties in the State for the last forty years.

It is perhaps unnecessary to labour the point as far as the Party now in power is concerned. But the Liberal Party are quite as much committed to the general principle that sugar bounties are a bad thing, and ought to be abolished, as the Conservative Party itself. The question of sugar bounties first rose into international importance in the early sixties. In 1862, when Mr. Gladstone was Chancellor of the Exchequer, a conference was called, on the invitation of France, to consider the question of sugar bounties. To that conference, France, England, Belgium, and Holland were parties; and it resulted in a Convention which, unfortunately, was never given effect to, but respecting which we have the opinion of Mr. Gladstone placed on record. The object of the Convention was so to equalise the duty on sugar and the drawback given on the export of sugar as to destroy any advantage or bounty to the exporter. Mr. Gladstone declared in 1866 that that was a very beneficial arrangement in the interests of the consumer, the importer, and the refiner alike; and he gave as his reason that the Convention would tend to equal trade. But while Mr. Gladstone, thus early in the history of sugar bounties, committed the Liberal Party to the view that the abolition of sugar bounties was desirable in the public interest, the Convention was interesting for something more. It contained a clause which pointed to the possible application of countervailing duties as a remedy for the inequalities produced by sugar bounties. That clause of the Convention ran as follows:— The high contracting Powers reserve to themselves to agree as to the steps to be taken for obtaining the adhesion of the Governments of other countries to the arrangements of the present convention. In the event of bounties being granted in the said countries on the exportation of refined sugars, the high contracting Powers will be at liberty to come to an understanding as to the surtax to be imposed on the importation of refined sugar of and from the said countries. The surtax to be imposed on the importation of refined sugar was really a countervailing duty under another name. I only refer to this in passing because my present object is not to defend countervailing duties, but to point out that from the first the Liberal Party has been committed to the policy of abolishing bounties, at all events as far as that end could be accomplished by remonstrance and negotiation.

I pass on to the year 1879. During the intervening period many conferences had been summoned to consider the question, but all these conferences had, unfortunately, proved abortive. In 1879 a Committee of the House of Commons was appointed on the Motion of my right hon. friend the Chancellor of the Exchequer. That Committee reported in 1880 infavour of a further attempt to obtain the suppression of the bounties by means of international agreement. The Committee also reported, or rather stated that they would have reported, in favour of countervailing duties but for one difficulty—the difficulty which might arise in connection with the most-favoured nation Clause in international treaties. In 1881 Mr. Gladstone endeavoured to give effect to the Report of the Committee by summoning a conference. That conference proved as abortive as its predecessors, because France insisted as a preliminary on the acceptance by this country of the principle of countervailing duties, to which the British Government of that day were unwilling to consent. [Sir WILLIAM HARCOURT: Hear, hear!] The right hon. Gentleman cries "Hear, hear!" Yes: but let me draw the attention of the House to the language again used in 1881 by Mr. Gladstone with reference to the bounties. On 18th May, 1881, in answer to a deputation, Mr. Gladstone used these words— We do not regard with any satisfaction the system under which an artificial advantage is given in our markets to the products of foreign labour, the principle to be observed being that of equality. Some people say it is a good thing because the consumer gets the benefit of it; but I do not think that any benefit founded on inequality and injustice can bring good even to the consumer. It is thus apparent in 1881 that Mr. Gladstone, speaking with the full authority of the Prime Minister, continued to hold the same opinion as he had expressed in 1866.

I pass on to the year 1899. Very important developments had taken place in connection with the sugar question in the interval between 1881 and 1899. Germany and Austria, in consequence of the bounty given to the producers of sugar, had been gradually gaining upon France, and had become the largest sugar exporting countries on the Con[...]nent. Sugar bounties, which up to 1880 had affected refined sugar rather than raw sugar, now began to pres ever more and more on raw sugar also, and thereby in particular upon the sugar industries of our West Indian colonies. In 1889 another conference was summoned—this time on the invitation of Lord Salisbury—and that conference resulted in a Convention. There is no doubt that this Convention did bring us nearer to the abolition of the sugar bounties than we have ever been until the present year. That Convention, however, also failed, and once more chiefly because France refused to come into line with the other bounty-giving countries. Although by this time the bounty-giving countries appeared more and more anxious if possible to come to some arrangement by which they should be relieved of the heavy yoke which the bounty system placed upon them, the failure of than conference was, as a matter of fact, followed by large increases in the bounties given. In 1896 and 1897 both Germany and France doubled their bounties, or nearly doubled them. In 1897 the United States adopted the principle of countervailing duties—that principle from which this country had so long shrunk—and shortly afterwards their example was followed by the Indian Government. In 1899 a Vote of Censure was moved by the Opposition on the Government in consequence of their having approved the action which had been taken by the Government of India. A very instructive debate followed, a debate which turned not so much on the condition of things in India as upon the merits or demerits of countervailing duties as a remedy for the evils of the bounty system. The right hon. Gentleman the Leader of the Opposition summed up the debate, and while condemning the adoption of countervailing duties as a remedy for the sugar bounties he was careful to guard himself against any suggestion that hon. Members opposite were not as keen and as anxious for the abolition of the bounties as we on this side of the House. The right hon. Gentleman used these words— The noble Lord the Secretary of State for India invited my right hon. friend the Member for Wolverhampon to go to the country in defence of the system of bounties. but the noble Lord must know perfectly well that we are as much opposed to the system of bounties as he is. I agree with my right hon. friend in regarding bounties as merely another form of protective duties. We need not speculate as to which is the worse of the two. These bounties appear to me to be had. They disturb trade and hinder the development of the country; so that I do not see what there is to be side in favour of them. There is no quarrel between us upon that score at all; where we differ is as to the remedy to be applied. I think I have shown that the Liberal Party, no less than the Conservative Party, is committed to the principle of doing whatever can be done by remonstrance and negotiations, at all events, if by no stronger means, to get rid of the sugar bounties. They may differ from us with regard to the means which may be advisable or desirable to use in order to secure this end, but they agree with us in desiring to see the end secured.

Leaving this part of the subject I come to the considerations which have determined this almost unanimous consensus of hostility to the sugar bounties. I believe there are some people who are in favour of getting rid of sugar bounties, not because they think the bounties, not contrary to the interests of this country, but because they believe them to be contrary to the interests of the countries which impose them. I admire such cosmopolitan benevolence; but I admire it at a respectful distance. If British interests were not involved, I, for one, should not think that British statesmen were under any obligation whatever to assist the nations of the Continent in extricating themselves from the difficulties which their own policy, deliberately adopted, has brought upon them. But British interests are affected. In the first place they are involved in a general way, because we are, I think, entitled to hold the opinion that any such notable advance in the direction of cosmopolitan Free Trade, as would be necessarily involved in the abolition of the sugar bounties, would be in the long run and in one way or another, possibly working through channels the exact course of which we may be unable to trace out exactly beforehand, in the interests of British trade and enterprise. But, in addition to that general consideration, British interests of a particular and special kind are involved. When I speak of British interests, I need hardly say that I include the Interests of the Empire as well. Imperial interests are British interests, and are indeed among the most important of British interests. First of all, there is the case of the sugar refiners. I think their case is a hard one, and I do not suppose any one will dispute the unfair character of the competition which they have had to face from foreign refiners who have got the long purse of their Governments behind them. The sugar-refining industry is being gradually supplanted by foreign produce, and it appears to me, as it appeared to Mr. Gladstone, that our sugar refiners have very serious grounds of complaint. But while the sugar refiners have suffered, and are suffering, and certainly deserve our sympathy, the case of the West Indian colonies is so grave and so urgent, that I am bound to say I think they have the first claim upon our sympathy and attention. How grave and how urgent is the case of the West Indies was made apparent five years ago by the Report of the Royal Commission which was specially sent to the West Indies to investigate the question, and of which the right hon. Baronet the Member for Berwick was a member. Let me draw attention to one distinction between the case of the sugar refiners and the case of the West Indian colonies. In the case of the sugar-refining industry, even supposing that that industry is altogether squeezed out of existence by the unfair competition to which I have referred, it would be still possible for those who were engaged in it to be gradually absorbed in other occupations. The case of the West Indies is different. We have there to deal, not merely with a section of the population engaged in one among a large number of different industries, but with the condition of whole societies. What is at stake in the West Indies is the fate of entire communities under the British Crown. Take away the export trade from the West Indies, and you take away form them the means of maintaining a civilised Government. Of all the exports of the West Indies, in the majority, at all events, of the islands, sugar is by far the most important; so much so that if you were to destroy the sugar industry you would practically destroy the Power of those Governments to raise a revenue or to carry on the work of administration in a proper and efficient manner. I do not wish to inflict more quotations than are necessary on the House, but the result of the destruction of this industry has been described in such vivid, and at the same time measured, language by Sir Henry Norman, who was chairman of the Commission, that I venture to read it to the House. Sir Henry Norman said— I think the British Public hardly realise the ruin that must follow a collapse of that industry. Such a collapse would seriously affect even the West Indian colonies which have other industries to fall back upon, such as Trinidad and Jamaica; but British Guiana, wish nearly 300,000 people, Barbados, with 180,000, and all the Windward and Leeward Islands, excluding Grenada and Dominica, and perhaps Montserrat, may be said to have nothing to export except the products of the sugar cane. The inhabitants of those colonies would, therefore, be without the means of purchasing imported articles of food, or of paying taxes, the bulk of which are indeed derived from Customs duties levied on imports or from Excise. The planters must be rained; many others who have drawn incomes from sugar properties will be seriously affected; the tradesmen, artizans, and labouring classes will suffer Privation and probably become discontented and restless, and the revenue will be so crippled as to render it impossible to carry on the Government, even on the most economical scale, in any condition at all approaching to efficiency. Nor will it be practicable to meet obligations for interest on debt, or to provide for the relief of the poor, maintain the hospitals and schools, or to pay the police force, while in Guiana, and possibly in Trinidad, there would be a demand for the repatriation of large numbers of Indian coolies, to meet the cost of which measure funds would not be forthcoming. Such were the dangers which five years ago the Royal Commission declared to threaten our West India Islands. Since that time we have been endeavouring, I will not say to avert the calamities that were imminent, but, at all events, to suspend them, by means of that most unsatisfactory of palliatives, the payment of Imperial subsidies. If those dangers were imminent five years ago they are still more imminent now. For on what does the prosperity of the sugar industry in the West Indies depend? First of all, of course, it depends upon the price which sugar will fetch in the market, and in the second place on the eommand of capital, or, in other words, the credit possessed by the producers. As regards price, at the time the Royal Commission reported the price stood at about the figure at which sugar could be brought from the West Indies to this country without actual loss to the producer. That was about 10s. per cwt. It had fallen from 21s. to 10s. per cwt. between the years 1882 and 1897. That was the Price— just about the cost of production—at which sugar stood when the right hon. Gentleman the Member for Berwick and his colleagues reported. Last September the price had fallen to about 6s. In other words, in September of this year sugar was actually being sold in the London market at 30 percent. less than it costs to produce and to bring it to England form either Germany or the West Indies.

An HON. MEMBER

What is the Price now?

* MR. GERALD BALFOUR

The price has risen since September, but it still is considerably below the cost of production. So much for Price. As to credit, credit was precarious at the time the Royal Commission reported; it is now practically a vanished quantity. Anyone interested in this matter can judge for himself by reading the Blue-book containing the correspondence with the West Indian colonies relating to the Sugar Conference. From almost to every colony in the West Indies the same bitter cry rises—that the existing crop will not pay expenses, and that for the coming crop no advances are available. This condition of things has been much aggravated by the appearance of a new form of indirect bounty in Austria and in Germany, the result of which has been enormously to increase the already large direct bounty given by those two countries. I refer to what is known as the Cartel system. The Cartels are trusts or rings which by combination between producers and refiners of sugar succeed in securing a monopoly of the home market— Practically determining the quantities to be sold in the home market and the price at which it is to be sold—and, basing them selves on the enormous profits which they make out of this monopoly, they are able to export the surplus at actually less than it costs to produce. The success of this system, however, depends upon the difference between the Customs duty and the excise duty being so great as to enable the Cartels to force up the price of sugar of home consumption to an abnormal level. The House will, therefore, see that the success of the Cartel system depends on two elements; first a successful combination between producers and refiners; and secondly, a large difference between the internal duty and the Customs duty. The insidious character of this system will be obvious, and its effectiveness in creating bounties may be judged from this fact—that, calculating upon the system laid down by the Convention as the basis for estimating the amount of the bounty, the German sugar bounty arising from the Cartel system amounts to no less than 3s. 10d. per cwt., and in Austria to 4s. 4d. per cwt. As the direct bounty given in Germany at present stands at 1s. 2d. per cwt. and in Austria at 1s., the House will see that the total bounty on the export of sugar in Germany amounts to no less than 5s., and in Austria to no less than 5s. 4d. There is no Cartel system in France; but in France the Indirect and the direct bounty taken together amount to very nearly 4s. Thus those three greatest sugar-producing and sugar-exporting countries on the Continent give bounties which allow a margin of artifical advantage of 4s. to over 5s. per cwt. to the producers and exporters, a margin with which they can play to the detriment of sugar-producing countries which have no bounty. It is certainly not to be wondered at, in view of disadvantages of this kind, that the sugar producers of the West Indies have been well nigh reduced to despair, and I think it will be clear to everybody that, unless we can come to their aid by securing the abolition of those enormous bounties, there is practically no hope that the sugar industry in the West Indies will survive. There is still time to save it. I do not suppose that the palmy days of that industry will ever return; but if the bounties were abolished, I see no reason whatever for doubting that a large proportion, at all events, of their old prosperity might be restored to the islands. That is not merely my own opinion, but it is also the opinion expressed by the Royal Commission. Not only did the Royal Commission take the view that the restoration of the sugar industry to a condition in which it could be profitably carried on was possible and probable if bounties were abolished, but they held that there was no other way of restoring the industry. [An hon. Member dissented.] I am correct in saying that the abolition of bounties was the only remedy which the Royal Commission declared could be expected to have a permanent and lasting effect. It is in the Power of the House by its vote tonight to render the Convention null and void. What course will it pursue? If it refuses its approval to the policy embodied in the Convention, what justification will it have for that refusal?

I see that this Motion is to be met by a direct negative. I cannot help regretting it. I regret it partly because I am sorry that there should be any opposition to this Resolution at all, and I also regret it because I think it would have been advantageous that we should have had on record on the face of the proceedings of this House a reasoned statement of the grounds upon which that opposition is going to be based. As it is, I am left to conjecture the reasons which the right hon. Gentleman is going to give for the course that he and his friends intend to adopt. But one ground, it appears to me, they are hardly in a position to put forward. They can hardly contend that this Resolution should be opposed because the interests of the consumers and the sugar-using industries of this country are involved. The economic effects of the abolition of bounties would be the same, whatever means are employed to secure the consent of the bounty-giving Powers to that abolition. I think I have already sufficiently shown in the opening portion of my speech that the Opposition as a body are committed to the principle of the abolition of bounties. The right hon. Gentleman the Member for Stirling Burghs says there is nothing to be said for bounties; the only question was as to the means to be employed. The economic consequences of abolishing sugar bounties were fully and frankly faced by the Royal Commission. They recognised that the suppression of bounties would probably, nay, almost certainly, be followed by some rise in price, but that did not prevent the Royal Commission from recommending the abolition of bounties. I hope that the right hon. Gentleman the Member for Stirling Burghs, like the Royal Commission, will have the courage of his opinions, and that he, too, being an advocate for abolition of bounties, will not shrink from the economic consequences which must follow from that abolition. If he has, as I hope I may assume he has, the courage of his opinions, he and those who think with him will not claim to resist this Resolution on behalf of consumers of sugar, or of the industries which use sugar as a raw material. No doubt a direct negative to the Resolution will bring into the same Lobby with the Leader of the Opposition those who, unlike himself, are out-and-out supporters of the sugar bounties, and desire to see sugar bounties ratained, but I think I am entitled to say that although the out-and -out supporters of the sugar bounties may be found in the same Lobby with him, they will not be there for the same reasons.

Now let me turn to the argument of those who are out-and-out supporters of the sugar bounties. I believe they are comparatively a small minority, but I am sure they are sincere, and the arguments they use are arguments with which we have to reckon. Speaking for myself, I entirely agree with the Royal Commission that even if the interests of consumers of sugar and users of sugar did, to some extent, suffer from the abolition of bounties, that abolition would still be an object for which we ought to strive. But I cannot help feeling that the fears that are entertained with respect to the rise in prices that may possibly follow the abolition of bounties, have been very much exaggerated. I will even go so far as to say that in the long run the abolition of bounties will not injure the consumers, but possibly protect them from the danger of a still greater rise in the price than is likely to follow the abolition. It is no doubt true that the abolition of bounties will be followed by some rise in price, if present prices are taken as the starting point from which the rise is to be measured. At the present moment the price of sugar is below that of the cost of production. It mush be obvious that if anything like free trade in sugar is established it would be absolutely impossible for the price of sugar to permanently continue under the cost of production. Such an anomaly as that is only possible under the bounty system.

But what guarantee is there that the present price will continue? I think anybody who carefully examines the history of prices during the last twenty years will come to the conclusion that the bounty system, by encouraging over production, has a tendency to cause violent and unnatural fluctuations in prices, and that if the price is very low now it may sometime in the not very remote future be very much higher than it is at present. In September last the price of sugar was 6s. per cwt.; is now 7s. 10d. That is, that between September and now there has been a rise of something like 2s. That may be taken as an illustration of the rapid fluctuations which occur under the bounty system. But if we want a fair estimate of what the price of sugar is likely to be after the bounties area abolished, what we mush look at is, in the first place, the average price during the past ten years, and in the second place the cost of production at the present time. Now the price of sugar in the London market is practically determined by the price of what is called 88 per cent. beet free on board at Hamburg. The average price of that sugar has been 10s. 6d. per cwt., or £10 10s. per ton, during the last ten years. I venture to make the confident forecast that the average price of sugar during the coming ten years, if bounties are abolished, will not exceed the average price during the ten years that are passed, but will in all probability be less. On what do I base this forecast? I have taken a great deal of trouble to ascertain the cost of production of sugar both in the West Indies and in Germany, and I think the House may take as fairly accurate the figures which I am about to give. The cost of producing 88 per cent. beet sugar in Germany and carrying it to the London market may be put at £8 15s. per ton. The corresponding price of sugar from the West Indies, after the proper allowances are made, is about £8 10s. perton. But let us neglect the small difference of 5s. per ton in favour of the West Indies, and assume that the cost of producing sugar and bringing it to London is £8 15s., both from Germany and the West Indies. Under a free trade system in sugar you would have to add to that a sum representing reasonable profit in order to arrive at what I may call the normal price. I am informed that a reasonable profit on sugar may be put at from about 20s. to 30s. per ton, Let us put it at 25s. per ton, and add that to the £8 15s. representing the cost of production and carriage per ton, and you arrive at the figure of £10 per ton. That figure of £10 per ton will be the normal and natural price of sugar, so long as the cost of production remains the same. We may take it, on the basis of this calculation, that £10 a ton is likely to be the average price of sugar during the next ten years in the London market if bounties are abolished, and therefore, having regard to the fact that during the last ten years the average price has been £10 10s. per ton, I am justified in the forecast that during the coming ten years the average price of sugar will not be more than it has been during the past ten years. In fact, I think it is almost certain to be less, because in making this calculation I have not allowed for possible improvements in manufacture, which during the last ten years have been considerable. I see no reason to suppose that the same process of improvement will not continue during the next ten years, though possibly in a less degree. If it does, then we are justified in saying, not merely that the probable average price of sugar during the next few years may fairly be put at £10 a ton, but that it may be put at that figure minus whatever may be gained by improving the processes of manufacture. It may be said that if bounties continue the average price will be even less than the figure I have named. I think that is very possible, and even probable, during the first year or two after the abolition of bounties, but will it continue? What will be the ultimate result? It must be remembered that even now the strain put by the bounty system upon the west Indies has practically reached breaking point, and if things continue as they are that souree of supply, at all events, is almost certain to be cut off. I do not say, as some have urged, that the bounty-giving countries on the Continent have deliberately aimed at that result; on the contrary I think myself it is merely an incidental consequence of the mad war of bounties which they have waged, and are still waging, against each other. If anyone will take the trouble to look at Czernikoff's circular of last Friday week, he wil see that at the present time Austria and Germany are the only countries on the Continent Supplying the British market. None of the other sugar-producing countries— France, Belgium or Holland— can afford to let their sugar go at the same low price. That is a state of things which cannot be expected to continue indefinitely. One of two things will happen—either under the stress the bounty system, even without the action of this country, will break down, or else, and this is quite as probable, Austria and Germany will secure the supremacy over all their rivals, and then will follow a condition of things under which the price of sugar is likely to rise far more than is probable merely as the result of the abolition of the bounties.

Now, Sir, I have given my reasons for believing that the consumer and user of sugar will not be nearly so hardly hit by any possible rise in the price of sugar as many of them appear to think. That is my general answer to what appears to me to be the exaggerated fears that have been expressed on their behalf. I have however been informed that they are beset by a special and peculiar apprehension. Russia is outside this Convention, and they are afraid that it Russian sugar is excluded from the markets of the Contracting Powers, it will pour into Switzerland at the low price rendered possible by bounties, and Switzerland will in this way become an even more formidable competitor with the British sugar-using industries than she is at present. I think those who are alarmed by his prospect may be reminded that the export of sugar from Russia at the present moment is not so much to European as to Asiatic countries. If Russia really desires to export the surplus of her sugar produce to Europe, it is far more likely that she will join the convention and there by be enabled to export her sugar to this country, where, ex hypothesi, according to the fears which have been expressed, the price will be higher than it is at present. As a matter of fact, Switzerland never has taken, and does not now take, any appreciable quantity of Russian sugar. Switzerland is a large importer of sugar, but not from Russia. Unless the surplus produce of Russia was sufficient to supply Switzerland with the great bulk of what she requires, the price of sugar in Switzerland would be determined, not by the price at which bounties will enable the Russian exporters to place their sugar on the market, but by the price which would have to be paid for the larger supply of sugar from else where. These considerations convince me that this fear, arising from the suggestion that Russia will flood Switzerland with cheap sugar for the benefit of the Swiss manufacturer—

SIR J. BLUNDELL MAPLE () Camberwell, Dulwich

That is after bounties are abolished?

* MR. GERALD BALFOUR

Yes, assuming bounties are abolished. It seems to me that that fear is nothing but an unsubstantial bogey. But if it should prove a reality, I would remind my hon. friend that this would be just one of the things for the permanent Commission to consider. As Switzerland is surrounded by France, Italy, and Germany and Austria, all of which are parties to the Convention, and as all these countries would be equally injured with ourselves if cheap sugar was poured into Switzerland, I think we may fairly rest assured that the Commission would take such steps as were necessary for their protection.

I have now dealt with the arguments with reference to the interest of the consumer and the user of sugar in this country, but I have not Yet reached any objection which, as it appears to me, the Opposition may legitimately urge having regard to the attitude they have taken up and the statements they have made on this subject in times past. I suppose, however, they will concentrate themselves on the penal clause. Under the penal clause, the parties to the Convention are bound either to prohibit the entry of bounty fed sugar or to impose upon it countervailing duties which will be equal at least to the bounties given in the country of origin. No doubt, if it had been possible, we should have been very glad to get the bounties abolished without the insertion of a penal Clause Unfortunately, that was not possible. It was a cases of "no penal Clause, no Convention."

We were obliged to take both or neither, and if that is to be the issue between us tonight we are perfectly prepared to abide by it. The House will observe that the penal Clause offers two alternatives. It will be open to this or any other country which is a party to the Convention either to prohibit the entry of bounty-fed sugar, or to impose countervailing duties upon it. Personally, I imagine that prohibition would practically in every case be sufficient for the object in view. I do not know whether hon. Gentlemen Opposite consider prohibition preferable to countervailing duties. Perhaps I may assume that they do. I am, however, quite ready to rest the defence of the Clause on the supposition that counter vailing duties may possibly have to be resorted to, and if that defence is successful, I may, perhaps, fairly take it for granted that it will cover the cases of Prohibition also.

I understand I am to be followed by the right hon. Gentleman the Member for West Monmouthshire. who will probably favour the House with one of those portentous disquisitions—[OPPOSITION Cries of "Oh"]—well, let me change the adjective, and say one of those admirable disquisitions on the virtues of Free Trade with which he has on more than one occasion made us familiar. I am afraid I may shock his susceptibilities when I say that it appears to me that no great advantage is to be gained by discussing the question from that purely abstract and theoretical standpoint. The question whether countervailing duties are or are not consistent with Free Trade principles is one which may be discussed to the end of time and answered in the affirmative or in the negative according to the definitions of Free Trade with which the disputants start. Even the right hon. Gentleman himself, I think, will not deny that the abolition of bounties constitutes an important step in the direction of Free Trade, and if the threat of countervailing duties secures that abolition, countervailing duties must, to that extent at all events, be regarded as an instrument of a Free Trade Policy. But the further question whether the use of that instrument is or is not in harmony with Free Trade principles is one which, as I say, will be answered in accordance with the definition of Free Trade from which we start. Whatever you put into a definition you can get out of that definition. If you hold that an essential element of Free Trade consists in the attainment of the natural price of a commodity, then it must, I think, be obvious that countervailing duties are not only consistent with, but almost enjoined by, Free Trade. If on the other hand, you regard as an essential element of Free Trade the Keeping open of the cheapest source of supply, no matter how artificially that cheapness may be produced, then countervailing duties are not consistent with Free Trade. In favour of both of these definitions very high authorities may be quoted. The former definition is that Which commended itself to Mr. Cobden, and apparently also to Mr. Gladstone. The second definition is that which found favour with the late Lord Farrer, and I suppose finds favour with the right hon. Gentleman the Member for West Monmouthshire himself. But for my part I confess the whole discussion appears to me to be very little more than a war of words, and I think it better to leave such barren controversy and consider the question from the practical point of view. I am glad to hear that cheer from hon. Gentleman opposite, and I hope they will take the same view when the question of free trade and countervailing duties is discussed from the Front Bench on their side. My own desire is to discuss this question from a purely practical point of view, and for that purpose to examine the reasons, and I will do so very briefly, which have been adduced by the Royal Commissioners for thinking that countervailing duties are inadvisable and inexpedient as a remedy against the inequalities of the bounty system.

SIR J. BLUNDELL MAPLE

asked whether the right hon. Gentleman would first explain what would be the feeling of Russia and other countries with regard to the most-favoured-nation Clause if action was taken under this convention.

* MR. GERALD BALFOUR

I propose dealing with that as part of the question on which I am now entering. The Royal Commission gave certain reasons for holding that inconveniences and disadvantages would follow from the adoption of countervailing duties. On that I would remark, in the first place, that the question the Royal Commission had to decide was entirely different from the question which this House is asked to decide this evening. The Royal Commission had to consider whether they should recommend countervailing duties taken by themselves as a remedy for the evils complained of. What we have to consider is whether countervailing duties are justifiable, not taken by themselves, but as part of a Convention to Which all the great sugar-producing countries are parties. And this, let me observe, makes the entire difference. If countervailing duties were to be imposed in the absence of any agreement with the principal sugar-producing countries, it is obvious that these countries, it is obvious that these countervailing duties would have to be a reality, and a possibly very formidable reality, inasmuch as they would have to be imposed against the very countries who are now imploring us to adopt such duties as a protection to each other against the unfair competition of each other's sugar in the British market. Countervailing duties, as part of the Convention embracing all the principal European countries except Russia, are obviously very much more in the nature of a threat than a reality; a threat which it may possibly be unnecessary ever to put into execution.

Now, Sir, it will be seen, when I come to the objections urged by the Royal Commission, that this consideration really, takes away or greatly diminishes, the force of every one of them. The first objection raised by the Royal Commissioners was that The levy of countervailing duties of varying amounts, according to the country of origin, would give rise to disputes and delays which must to some extent have the effect of harassing and impeding trade. Obviously there can be no question of countervailing duties between ourselves and the great majority of the countries in Europe who are parties to the Convention, and therefore that objection is reduced almost to the vanishing point.

SIR J. BLUNDELL MAPLE

How about Russia?

* MR. GERALD BALFOUR

It must be obvious to my hon. friend that, in regard to any inconveniences of trade arising out of countervailing duties, if Russia, which hardly exports any sugar to this country at all [An HON. MEMBER: It may.] were the only country concerned, these inconveniences would be much less than if the duties had to be levied against Germany, Austria, France, Italy, Belgium, and Spain.

SIR J. BLUNDELL MAPLE

But your own colonies might be concerned.

* MR. GERALD BALFOUR

The second objection urged by the Royal Commission was that— The levy of the countervailing duties in the United Kingdom would also probably involve the imposition of similar duties in India and in some of the colonies of Australia, both of which countries at present receive supplies of beet sugar. As we all know, India has already set the example of imposing countervailing duties: and, as regards the Australian colonies, it is open to them to join the Convention, and if they did so, it would be a matter for congratulation and not for regret. The third objection is that The levy of countervailing duties on the bounty-fed sugar might raise serious difficulties under the operation of the most favoured-nation clause in commercial treaties with foreign nations, and it would not be to the advantage of the United Kingdom to encourage any laxity in the interpretation of that clause. The fact that countervailing duties are levied under a Convention reduces this objection almost to nullity. The question cannot arise between us and the other parties to the Convention. The only important countries with which, as far as I can see, it is possible that it could arise are, first of all, Russia, and, secondly, the United States. ["Hear, hear" from the OPPOSITION Benches.] Yes, sir, but the question has already been raised with Russia in consequence of the action of the Indian Government; and three years ago Russia was informed that the Government did not consider that countervailing duties were inconsistent with the most-favoured-nation clause, and it was further intimated that, if the Russian Government unfortunately would not accept that view, we were prepared to denounce the commercial treaty between Russia and this country. That seems a sufficient answer with regard to Russia. The United States have themselves been the first country to adopt countervailing duties; and, therefore, so far from its being likely that we shall have a difficulty with the United States, it is clear that the United States are agreed with His Majesty's Government that these duties are not inconsistent with the most favoured-nation clause. The fourth and last objection is that a doubt exists Whether in the general interests of British trade it would be wise, on this issue, to open so large a controversy, which may possibly spread so far and lead to a war of tariffs. Again I say that the very existence of a Convention embracing all the most important countries in Europe, With the exception of Russia, is itself a guarantee that no such serious consequences are likely to follow. It is obvious that there is not the least likelihood of a war of tariffs with any other country in Europe.

Now, sir, I have done, and I really must apologise to the House for having taken up so much of its time. The problem presented to His Majesty's Government in connection with this difficult and complicated subject was this: Were we to forego the success of the policy which has been pursued for the last forty years by every Government, Liberal and Conservative, in turn—were we to forego the success of that policy at a time when the fate of the West Indian Colonies was hanging in the balance, in deference to economic scruples, which appear to me to have been at all times greatly exaggerated, but which under present conditions have really lost almost all their force? We have seen what many have wished to see, but it has not been given to them to see—a concert between all the principal European Powers for the abolition of all bounties on sugar, direct and indirect, provided this country will consent, by the insertion of a penal clause into the Convention, to give to the agreement an effective sanction. If we had allowed this opportunity to pass by a very heavy responsibility would have been thrown upon our shoulders. It was in our opinion our duty to take advantage of it, and I trust that this House will give our action its support and endorsement by its vote this evening. I beg to move.

Motion made and Question proposed, "That this House approves the policy embodied in the Convention relating to Sugar, signed at Brussels on the 5th day of March, 1902, and, in the event of that Convention receiving the ratifications required to make it binding, is prepared to adopt the necessary measures to enable His Majesty to carry out its provisions."—(Mr. Gerald Balfour.)

(2.58) SIR WILLIAM HARCOURT () Monmouthshire, W.

I think it will be to a certain extent a relief to the House that there is a change of the drama this week. We have before us a question which is not involved in any religious difficulty. Not but what there are heresies in trade as well as in religion. I can relieve the right hon. Gentleman who has just sat down of the fears he entertains that I am going to enter upon a "Portentous" discussion of an abstract question. I never had the smallest intention of doing anything of the kind. On the contrary, I shall endeavour to rival the concise and lively discourse of the right hon. Gentleman. The question is not a small one. That, I think, the House must understand. The instruction to the delegates who negotiated this Convention was to confine themselves to, or to make it their object, at all events, to deal with the case of the West Indies and the case of the sugar refiners. If that was the only matter for consideration under the Convention it would be a very narrow issue. But that is not the issue at all that is raised by this proposal. And here I am happy to agree with the right hon. Gentleman that what we have to consider are the interests in this matter of the British Empire at large. I hope that is a good Imperialist sentiment. It is one, at all events, I entertain. it is from that point of view I desire to examine this Convention, and from that point of view alone. I shall, I trust, be allowed to include in the British Empire the United Kingdom. I have myself always considered that England, Scotland, and Ireland are parts of the British Empire, and that their interests are not matters to be neglected.

Having said this much, I would refer only for a moment to a point on which the right hon. Gentleman has laid a good deal of stress, and that is, the action of the Party that sits on this side of the House in the year 1881. Well, Sir, that was the year in which I first became a responsible member of the Cabinet in the Liberal Government. I had a distinguished colleague who was President of the Board of Trade, and, therefore, if the opinions of the Government of that time are to be taken, they must be taken from the President of the Board of Trade in the year 1881 as the exponent of the views of the Government of that time. The right hon. Gentleman quoted some passages form speeches, but this is not a passage from a speech; it is from a memorandum issued on this very point by the then President of the Board of Trade. It contains an expression of the views of the Government of that time. I am not going to enter upon any tu quoque argument. I am going to read two or three sentences which, in my opinion then and in my opinion now, express a sound view upon this question. In that memorandum I find this: As the Policy of this country has been for many years to prefer the large consuming interests of the whole community to the small producing interests of any single class, the Government was not prepared to recommend any remonstrance to foreign Governments regarding their bounties, on!the ground of alleged injury to the trading interests of this country. Then there is one other sentence which expresses the considered view of the Government of that time:— Protective duties in foreign countries are even more injurious to the interests of this country than bounties, since they operate no less than bounties to the disadvantage of our producers, whilst, unlike bounties, they confer no benefit on our consumers. If duties are to be imposed to counteract foreign bounties, a fortiori, ought they to be imposed to counteract foreign protective duties? To impose countervailing duties in order to neutralise the indirect bounties would, therefore, be to take the first step in reversing that Free Trade policy which was adopted on the clearest grounds of argument, and has conferred immense advantages on the industrial classes of this country. That is all it is necessary to say to make clear what was the view, expressed by its authorised exponent, of the Liberal Party in the year 1881. In that year the right hon. Gentleman the Present Colonial Secretary refused to attend a meeting of the anti-bounty agitators in Birmingham, and wrote as follows:— I regret that the Birmingham Trades Council should allow itself to be made the instrument of what is essentially a class interest. If you were, unfortunately, to succeed in imposing countervailing duties on foreign sugar, the effect would be that the consumers in this country, principally of the working classes, would, according to the figures supplied by the sugar refiners themselves, have to submit to a tax of something like £1,000,000 sterling per annum, in order to put this sum into the pockets of the West Indian planters and a few sugar refiners in the United Kingdom. These are the views which the right hon. Gentleman the President of the Board of Trade thinks it worth while to recall to the attention of the House, and to make a great part of his argument when referring to the views entertained, as he said, by Fr. Farrar, and (he paid me the compliment to say) by myself; but neither Mr. Farrar nor myself, who entertained these views, could have expressed them with the force and lucidity which characterised the utterances of the Colonial Secretary.

Now, Sir, I promise the House that as regards what me may call general principles, that is all I intend to say on the subject. I desire to address myself solely to the practical consequences of this Convention. I need not say that I have, in common with all the rest of the House, an entire sympathy with the distress now existing in the West Indian Colonies; but what we have got to determine is whether this is the best method of redressing and repairing that distress consistently with the general interests of the British nation in all parts of the world. It is not a narrow issue upon the mere situation of the West Indies. This House has already this year shown its readiness to give its assistance to a large extent. We may desire the prosperity of the great sugar refiners as of all trades in this country; but what we have to consider is whether the course adopted for the benefit of the sugar refiners may not be injurious to other interests which are equally important—indeed more important than that of the sugar refiners. I want to place before the House that what we have got to determine tonight is a matter affecting the policy of the greatest commercial nation in the world. It is an issue of very great extent, which will have very serious consequences.

The essence of this Convention is what had been properly called the penal clause, and the question is—What is going to be the effect of your introducing into it a penal clause which does not exist in your present system, and which will have an important bearing in relation to your commerce? The penal clause is, of course, one of the most serious parts of this Convention. Now, the fundamental principle of our Customs duties is that they are raised for revenue alone. They are not raised for what I may call the incidental purpose of raising the price of commodities. Now, the object here has been to raise the price of the commodity in order to benefit the West Indian sugar interest. Our Customs duties are not raised to protect a particular interest. That is the Protectionist theory. That is not the theory of the Free Trade policy, which is the policy of this country. We are never tired of boasting, and truly boasting, of the "open door." We are preaching it to all nations, and I am happy to say that at present we practise it ourselves. But this is a Convention to shut the open door. Under what conditions are we called upon to shut the open door? Under the open door there is no question as to the goods brought to us. There is no question of certificate of origin. We do not ask where the goods come from. We ask what the goods are. We do not ask what is the domestic and fiscal policy of the country from which they come. We have nothing to do with that. They present their goods to us and we accept them if we consider that they are worth our acceptance and worth our dealing with. We profess to be the free market of the world. But this is a Convention which is to restrict the freedom of that market, and to place the commodities brought to our markets under examination to see whether the policy of the country that produces them is a wise policy or not—to examine into the character of these goods, where they come from, and under what conditions they have been produced. But that is not to be determined by our-selves. We are not even to be allowed to judge of that. The judges of the policy we are to pursue, the duties we are to impose, and the prohibitions we are to declare, are to be a permanent Commission consisting largely of our rivals in trade. We are to be there with a single vote, with a standing majority of seven against us, upon those questions which are finally to decide what is to be our system of taxation, and what is to be the rule of our trade.

Now, that is a much larger question than the distress in the West Indies. Those are the things we have to decide, and it is a decision of the most momentous character as affecting the trade of this country. You are going to put the key of the open door into the hands of a great European syndicate—a syndicate that may create a trust which may be injurious to your trade when you have abandoned the autonomy of your commerce, and when you have abandoned the system which has brought to you the greatest prosperity, and to the people of this country the greatest comfort and the greatest support. This is not a small question which has to be decided upon by the vote tonight. What a satire it is upon the open door that when goods are brought to you you say, "Oh! no, we will not accept them. They are too cheap. Why! you are selling them for less than they cost." That is the open door! Of course, he sells them to us at less than the cost. But he will have to pay for them by taking goods from us which we sell at more than cost price. That is what I call good trade for us and very bad trade for him. It is a very simple commercial principle, which I thought would have been understood by the President of the Board of Trade. I am speaking in the general interests of the British Empire. In our private transactions I am not aware that any of us complain of our tradesmen supplying us with goods at less than cost price. The foreigner offers us goods under the market rate; that is a thing that we forgive.

But there is another matter involved in this question. It is not only a disturbance of our trade in that respect, but it is a question of finance. It destroys the independence of our finance. I see the Chancellor of the Exchequer there. I ask him what would become of his Estimates? Who is to determine the rate and character of those Estimates if he is not to go to his advisers to know what is likely to be the yield of the sugar duties, but that is to be settled by a permanent Commission? The President of the Board of Trade asked whether we preferred prohibition to countervailing duties. Well, prohibition has been pressed by the Government into this Convention. It was not suggested by any of the other parties; it was the Government that insisted on prohibition. What is the effect of prohibition? Countervailing duties leave you the sugar which you want; they are open to great objections, but at all events you get the sugar and you get the revenue; but under prohibition you get neither the revenue nor the sugar. Therefore, if there is a country which commits the terrible sin of offering you a commodity which you want, and which is the food of the people, you have bound yourself, under covenant, to prohibit these goods coming into this country at all. Of course, nobody would have preferred countervailing duties to prohibition. The Government knows perfectly well that when you come to countervailing duties the confusion will be such in your finance that it will be impossible to deal with it. I will show you what has happened under countervailing duties. The right hon. Gentleman the Secretary for India introduced countervailing duties in India two years ago, and a nice mess he made of it. A more ignominious collapse could not have happened. The Chancellor of the Exchequer will be no longer master of his own Budget. He may make Estimates which may be entirely defeated either by countervailing duties or by prohibition; and therefore the Estimates of his revenue will totally fail. Now, these are matters which are very large, matters which are far beyond the question of the West Indies. I am glad to see, speaking of the West Indies, an account in the newspapers of the extremely flourishing condition of the principal island in the West Indies, Jamaica.

THE SECRETARY OF STATE FOR THE COLONIES (Mr. J. CHAMBERLAIN,) Birmingham

That is not quite accurate, I am sorry to say.

SIR WILLIAM HARCOURT

I read it in the newspapers this morning or yesterday.

MR. J. CHAMBERLAIN

I beg the right hon. Gentleman's pardon. What I meant to say was that that description only shows that the island, after the greatest difficulty and economy has been able to make the revenue meet the expenditure. That does not mean prosperity.

SIR WILLIAM HARCOURT

All I want to say is that I read in the newspapers about the great prosperity of Jamaica. The right hon. Gentleman knows a great deal more about it than I do. I hoped it was the case, and I am sorry to hear it is not. The right hon. Gentleman said a great deal on the subject of bounties. It is perfectly true that I, and most of my friends, do not approve of the principle of bounties. It has been truly said that a bounty is a form of protection, and I disapprove of all forms of protection. I disapprove of bounties because they partake of the character of Protection. I entirely concur that bounties are a bad thing for the people who give them. They do not exactly participate in the quality of mercy, as described by Shakespeare, because, although those who receive them are blessed, they curse those who give them. In that respect they differ. That they are bad things for the people who give them everybody must agree; they are good for the purpose of subsidising particular interests, but a very bad thing for the rest of the community. I hope we shall never adopt the principle of bounties, though I fear nowadays the proposal for subsidising particular interests is too readily entertained. I hope we shall never allow any system of bounties in this country. But bounties differ from Protective tariffs in this respect. Protective tariffs injure both those who make them and those who are subject to them; but in the case of bounties the injury is to one party only, and they more or less benefit the other party. Now, the policy of bounties in the countries on the Continent of Europe has been a policy of what is called "cutting rates." They have endeavoured to compete for our market and have consequently given these bounties against one another, hoping to secure the control of that market. Well, like all false principles, like everything partaking of the character of Protection, that has turned out a failure; in the long run they have to go from bad to worse, and at last these bounties have become so oppressive to these countries that they are determined to get rid of them. It has cost them millions. They have paid too dear for their whistle; and consequently they want to get somebody to help them to get rid of them. That is their affair, and I entirely agree with the President of the Board of Trade that that is not the principal consideration by which we ought to be governed. We ought to look at this matter and other matters of business as to how it affects British interests. That is the only point of view in which I desire to regard it. As good neighbours we should be very glad to assist these foreign countries in any way that does not injure us in any form; but when we are asked to pay a price which is injurious to us, in order to enable those countries to deliver themselves from the unwisdom they have practised, that is another thing. There are many relations of life in which the unwisdom of men redounds to the advantage of those who have been wiser. That is the case with reference to bounties, as with reference to everything else. But what is the price that we have been asked to pay, and which, under this Convention, we do pay? We have heard of the advantages that we are to gain under this Convention, and of the disadvantages that we should experience under Prohibition. Now, the first advantage that is offered to us under this Convention is that sugar should be dear! Well, on the face of it, that does not seem to be any great advantage to anybody. Cheap sugar is, on the whole, a good thing. It is one of the principal articles of consumption of the people, and the fact that this Convention is to make sugar dear does not, on the face of it, appear to be of any great advantage, But if it does not make sugar very considerably dearer, it is of no good to the West Indies at all; and, therefore, the whole thing to determine is, how much dearer is it going to make sugar? Anyone who knows anything of trade, still more especially of the sugar trade, must say that the Government ought to have avoided such an indiscretion as that. At all events we know what is expected in the West Indies and what was predicted by the minority of the Commission. It is that the price of sugar will be increased by a halfpenny a pound. That is a very considerable increase on the present price of sugar, and I imagine that that is the real view of the Government, because I think the Colonial Secretary said, speaking in July last on the subject of the Vote for the West Indies, that bounties were measured at £5 a ton.

MR. J. CHAMBERLAIN

I do not think that I could have said that. I think if I said £5 a ton, I referred to that as the maximum. Then I should surely have gone on to argue that you measure any possible bounties not by the maximum but by the minimum bounty.

SIR WILLIAM HARCOURT

But you were speaking of the West Indies, and the bounty has lowered the price of sugar by £5. I wish only to remark that £5 does represent the halfpenny a pound of which I spoke, and therefore that is the figure which the West Indies seem to think is the only thing that can be of real service to them. This is the opinion of Sir Henry Norman, the Governor of Jamaica:— It must be admitted that if countervailing duties are levied and have the desired effect, the people of the United Kingdom will have to pay more for their sugar than they do at present, perhaps to the extent of a halfpenny a pound. Let us see how that works out. I am asking whether it is worth our while to pay the great price, or any price at all, to bring about a change which will raise the price of sugar to the extent that the West Indians demand. That is the real principle; it is not a question whether it is a good thing for these countries to abolish bounties; it is whether it is worth our while to pay this heavy price. What will be the result upon sugar? The total import of sugar into the United Kingdom is, I think, 1,600,000 tons, and the West Indies send us 46,000 tons only. The total production of the West Indies, which is the point with which you have to deal here, is 240,000 tons. There is a certain disproportion of interests at stake. If you have regard to British interests at large you must have regard to the interests to be benefited and the interests which will be injured by the course you pursue. It is a very serious matter to raise the price of a commodity of which you take 1,600,000 tons by a halfpenny a pound. That means a sum of £7,000,000 or £8,000,000 a year which has to be paid by the consumers in this country. Cannot you relieve the West Indians cheaper than that? This burden of £7,000,000 or £8,000,000 is coming at a time, too, of high taxation after the war, and when you have raised the duties on sugar, tea, beer, corn, and other commodities of consumption. We are not sitting here merely for the purpose of considering what relief we may give to one particular portion of the Empire; we are considering how we are going to affect the masses of the people in this country. But in addition to our own people at home there are British subjects all over the world who are interested in the price of sugar, and your object, therefore, is to raise the price of sugar everywhere. You cannot raise it in England alone; it must be raised in all parts of the Empire. The estimated consumption of sugar, I am glad to think, is 90lb. a head for every man, woman, and child in this country, and when you multiply that amount by six or seven, according to the number of a family, it becomes a sensible sum if you raise the price by a halfpenny a pound. Then there are the poor refiners. I am very sorry to think that the refiners are suffering. The only refiner I had the honour of knowing was a gentleman with whom I was associated in my official capacity to establish the Tate Gallery, and in those conversations and negotiations I did not arrive at the conclusion that the refiners were a ruined interest. At all events we cannot leave out of sight the fact that there are other trades which will be injured by the rise in the price of sugar. Every one knows that the trade connected with the manufacture of sugar, confectionery, and other industries, is a very large one. I have had supplied to me a statement showing that the number of hands employed in the various branches of this trade is not less than 200,000 persons. Therefore you have to consider, in what you are doing, whether, while you are benefiting the refiners you are not injuring a trade of more importance than that of the refiners. I say, therefore, that the making of sugar dearer is not in itself an advantage; it is of no greater advantage than it would be to make corn dearer. Do not let us be told, "Oh, you said the price of sugar would be dearer when it was taxed; it was no dearer, and when the bounties are abolished it will not be dearer." The President of the Board of Trade tried rather to "ease off" the increase of price, but the more you diminish the price the less good you do to the West Indies, and the more you raise the price for the benefit of the West Indies the more harm you do to the people here. This, indeed, is a Convention to raise the price of sugar, and it raises it by a sensible amount. We are told that the West Indies are irreparably ruined by the present price of sugar. We have been told, in the calculation of the President of the Board of Trade, that the West Indies must have £10 a ton for their sugar, that they had it once, and they cannot live on less.

MR. GERALD BALFOUR

No. What I said was that £10 a ton will leave a reasonable margin of profit.

SIR WILLIAM HARCOURT

That is to say, a living wage. Trades that do not get a reasonable profit soon come to an end, but what the Government aim at in this Convention is to give them £10 a ton for their sugar. There is a quotation ad rem to which I ask the attention of the House. It is from the Report presented to the House with reference to what has happened in Cuba. In Cuba they have gone through very much the same experience as the West Indies have gone through. The traders have been very much alarmed and distressed and almost ruined owing to the price of sugar; and a report has been presented by our very able Consul in Cuba. He says— The vitality shown by Cuba in the rapid rehabilitation of its sugar industry during 1899–1900, with practically no financial assistance from abroad, to which I called attention in my last annual report, has been still more strikingly exemplified by the remarkable progress which has been since made, in spite of the continued steady fall in the value of sugar and the discouraging prospects of the market. The crop of 1900–01, which proved to amount to 635,856 tons, realised very fair prices on the whole, averaging a little over 10s. per cwt.; but the fall which commenced in January became far more accentuated in September, and the known existence of unusually large stocks of beet as well as cane sugar in the principal markets excited the gravest apprehension among the planters. Meetings were held, and appeals, which received the active support of the military governor, were made to the United States Government to grant a reduction in the duties on Cuban sugar, in which it was positively stated that, if the existing crisis continued, a large proportion of the factories would be shut down, thousands of people would be thrown out of employment, commerce would be paralysed, the revenues of the Government would fall off, and widespread misery culminating probably in public disorders would be the result. After months of agitation in the Press of the United States, as well as of Cuba, the American Congress adjourned without having done anything in the matter, and in the meanwhile by far the largest crop taken in since 1895, amounting to over 800,000 tons, was successfully harvested and has eventually been sold at prices which have averaged a trifle over 6s. 7d. per cwt. In spite of the very low prices obtained, none of the evils which were so confidently predicted have come to pass. This is the state of things in Cuba, with sugar at £6 10s. a ton.

MR. ALEXANDER CROSS (Glasgow, Blackfriars)

Has that sugar been refined at all? I understand that to be raw sugar, which is £2 less value.

SIR WILLIAM HARCOURT

Yes. Of course all these figures relate to raw sugars, as did the figures of the President of the Board of Trade— Not a single factory," the Report continues, "failed to work to its fullest extent; the demand for labour, in view of the magnitude of the crop, was greater if anything than in previous years; and the low price at which the sugar was sold being compensated by the much larger output, imports, and consequently also the customs receipts, have shown no falling off at all—rather the contrary. Moreover, to the surprise of everybody, the threatened severe losses to individual planters have been proved to be wholly imaginary, and while the profits made have not, of course, been sufficient to meet heavy mortgage charges, I have heard of no well-appointed estates on which the working expenses were not amply covered, besides leaving in many eases a small margin of profit.' Therefore, when we are told that it is impossible that sugar can be made at anything under £10 a ton, the extract I have just read is a refutation of the statement.

Now, Sir, all I have said up to this time is on the assumption that this Convention will raise the price of sugar, but there are a great many people, and I believe the best judges, who think that that is very doubtful. What is the history of the fall of the price of sugar? It is, of course, the great export supplies of sugar from all sources. That is not the work of bounties alone or Cartels alone. It has been the work of the industry and skill and science of the people. Why is it that beet sugar has come into this overwhelming competition with cane sugar? It has been, as everybody knows, by the science that has been applied in Germany, France, and Austria, and, above all, the chemical science, in the production of saccharine from beet. These are the sources of the success of the beet sugar, and you will not destroy that by doing away with the bounties. Every year there will be more and more of this beet land brought into cultivation. Do you suppose that the United States are going to rely ultimately on those countervailing duties? No; in this very correspondence of the West Indian Planters' Association there is a statement that they expect very soon that the United States will produce all their own sugar. Where will a Convention of this kind be when Cuba can produce 800,000 tons, three times the whole of their production? Therefore I say the assumption that this is going to raise the price of sugar in a manner which will repair the losses of the West Indies is not well founded, as some people imagine. Let us see if countervailing duties will succeed. The House three years ago authorised the establishment of countervailing duties in India in the interests of Mauritius, who complained that they were beaten out of the field by the beet sugar. What happened? In the first year before the duty operated the beet sugar stood at 1,526 tons, in the second year it was reduced by the operation of the countervailing duty to 872, and in the third year, under the operation of the duty, to 2,900. That is to say, it was three times as great in the second year after the imposition of the countervailing duty as it was before. What is the condition of the cane sugar industry of Mauritius? It has not increased at all. In the last year it was rather less than before the countervailing duty was put on, whereas beet sugar was very much larger. The Mauritius people say that in spite of the countervailing duty imposed in 1899, beetroot sugar is enabled by direct and indirect bounties to flood the Indian market at prices with which it is impossible for them to compete. This is the state of things produced under countervailing duties authorized by the Government in order to save Mauritius, that— One-third of the crop can find no purchaser except at prices which will be disastrous to the planters. Was there ever such a ludicrous. failure? But they say—"Oh, there is the Cartel; that must be dealt with." And this Convention professes to deal with the Cartel. There is a long letter from Mr. Martineau pointing out that the Cartel will operate still, and you will find, and this is most remarkable, that the Indian Government, which imposed these duties, in two despatches this very year have repudiated your Convention and said they will not be governed by it. The Indian Government," they say, "is unwilling to bind itself unreservedly to accept the decision of the conference as to what are and what are not to be regarded as bounties in the case of countries which did not participate originally in the Convention. So the Convention is condemned by your Indian Government.

Let me say that there is one article in the Convention that I certainly do not complain of; on the contrary, if the right hon. Gentleman will allow me, I should like to compliment him upon it, because I think it is a very favourable omen. I refer to the article that covenants that you are not to grant preferential duties to colonial sugar. I am glad that the policy of preferential duties is not one that commends itself to the Board of Trade. The worst part of the Convention undoubtedly is the obligation it imposes upon us for suppressing bounties against a non-signatory State. That covers the question of indirect bounties, and that is a question which you are not to decide, but a permanent Commission. Then there is sub-Section (d), which says: —"Advantages derived from excess of yield" Is that an advantage that you are to legislate against, because a country has an excess of yield, or because by its chemical skill more saccharine can he extracted out of the crop? I should like to have some explanation of that; it is the most extraordinary provision, I think, that was ever put into a Convention. Any one who wishes to form a real judgment of this Commission should read Article VII. of the treaty. That any British Government with respect for its trade or finance, should ever have allowed to be imposed upon it conditions which will destroy altogether the independence of its commerce or its finance, is a thing that to my mind is absolutely astounding. They say it is done by a majority, but remember you are in a minority of one. Then, by Article VIII., you are bound "to take the necessary measures to prevent bounty-fed sugars which have passed in transit through a contractingry count from enjoying the advantages of the Convention on the market to which it is being forwarded," so that you are not only to ask the country of origin, but by what route it has been taken. Is it possible to conduct trade under conditions of that kind? It seems to me to be injurious in the greatest degree.

Then the right hon. Gentleman talked about Russia. Russia is a non-signatory to the treaty. If Russia gives a bounty you are bound to prohibit Russian trade in sugar with this country. What happens? You lose the Russian sugar, but you lose a good deal more than that. I have read, and suppose it is true, that when sugar was put under countervailing duties by the United States, Russia acted against certain trades of the United States. It is quite plain that you do expose yourself to retaliation in this matter, and are certain to suffer from it. The right hon. Gentleman talked about the most-favoured-nation clause. That is the key, really, to the commerce of this country; you have lost particular commercial treaties, but you rest on the most-favoured-nation clause, and to imperil the most-favoured-nation clause is the greatest danger and injury you can do to this Empire. I do not know whether I understood the President of the Board of Trade rightly or not, but he said the Government told Russia some years ago that if they did not take off the prohibition or the countervailing duty they would put an end to the treaty. Is that the most-favoured-nation treaty?

MR. GERALD BALFOUR

What we said was that if Russia did not take the same view as the Government—that is to say, if the Russian Government insisted on regarding countervailing duties as inconsistent with the most-favoured-nation clause, under those circumstances we would be reluctantly prepared to denounce the treaty.

SIR WILLIAM HARCOURT

Denounce the most-favoured-nation Clause?

MR. GERALD BALFOUR

No, the commercial treaty.

SIR WILLIAM HARCOURT

That is worse than ever. It means that the introduction of these countervailing duties may be fatal, and probably will be fatal in many cases, to your commercial treaties. That is too great a price to pay.

MR. J. CHAMBERLAIN

It has already been done in at least two cases.

SIR WILLIAM HARCOURT

So much the worse.

MR. J. CHAMBERLAIN

No harm has resulted.

SIR WILLIAM HARCOURT

If you are prepared to denounce the commercial treaties, how far or how fast you are going in that direction no man can tell. If you are going to force the principle of prohibition or countervailing duties in this case, I suppose you will do it in others, and the price you will pay will be to destroy your commercial treaties, and to put in peril your most-favoured-nation clause. It is a terrible price to pay for advantages of this description; never was so bad a bargain made by an intelligent nation. There has been very little said of the United States in this matter; I wonder why the United States did not join in this Conference. I observe that in one of the early letters Lord Lansdowne asks why they did not, but I never found the answer to that question in the correspondence.

MR. GIBSON BOWLES (Lynn Regis)

They were not invited.

SIR WILLIAM HARCOURT

Why were they not invited? They have the greatest market in the world.

MR. J. CHAMBERLAIN

I think they were formally invited—

SIR WILLIAM HARCOURT

The Under Secretary for Foreign Affairs. said not.

MR. J. CHAMBERLAIN

No, no; it was not the Under Secretary, it was the hon. Member for King's Lynn. I think they were formally invited, and they would, of course, have been welcome; but it was known that they did not wish to attend. If you ask why, it is because they are not an exporting country—not to any great extent.

SIR WILLIAM HARCOURT

I will tell you why they did not attend, in my opinion—because they were not prepared to place the taxation and commerce of the United States at the mercy of a permanent Commission sitting in Europe. Like the Indian Government, they preferred to govern their own taxes, to dispose of their own finance, and they were a good deal wiser than you have been in this matter. I do not believe that the citizens of the United States, who are pretty cute in these matters, would ever have accepted the government of the permanent Commission as it appears in this Convention. It is true they put on countervailing duties, but they were themselves the judges of them. If your Convention had kept in your own hands the countervailing duties and the prohibition it would have been a very different thing. The worst part of this Convention is the obligation into which you have entered. The evils of the Convention are admirably summed up by the Commission itself. The right hon. Gentleman said an extraordinary thing—that the Commission had recommended these countervailing duties.

MR. GERALD BALFOUR

No, I said they had reported in favour of the abolition of bounties. It is perfectly well known that the Chairman was in favour of recommending countervailing duties, but the majority were opposed to it.

SIR WILLIAM HARCOURT

Then I misunderstood the right hon. Gentleman. I will read the views of the majority of the Commission on this subject. They gave as their reasons for not recommending countervailing duties— The loss to the British consumer that would result from any rise in the price of sugar; the inconvenience to trade that would be caused by the imposition of countervailing duties; the uncertainty whether any such measure would permanently save the sugar industry in the West Indies (they did not believe this measure would have the desired effect of saving the West Indies); the inexpediency of raising questions connected with the interpretation of the most-favoured-nation clause, which might have the effect of weakening its force; and, finally, the danger, direct and indirect, of departing from what has hitherto been considered to be the settled policy of the United Kingdom. In my opinion it is impossible to state more truly and soundly the real objections to this policy. It is, I believe, full of danger and mischief, and no advantage can be derived from it which is at all commensurate with the mischiefs with which it is pregnant. I beg, therefore, to move the Amendment on the Paper.

Amendment proposed— To leave out all the words after the word 'House,' in order to add the words 'declines to approve of the Convention relating to sugar, signed at Brussels on the 5th day of March, 1902." —(Sir William Harcourt.) Question proposed—"That the words proposed to be left out stand part of the Question."

(5.13.) MR. PARKER SMITH (Lanarkshire, Partick)

The right hon. Gentleman has made a speech, the first part of which was hardly consistent with the finish. In the earlier portions he appeared to have swallowed whole the statements of the pamphlets which have been sent round to us lately in such numbers, and to have assented to the proposition that there was going to be a very considerable rise in the price of sugar. The right hon. Gentleman quoted that familiar casual remark of Sir H. Norman's in the Appendix to the Report of the Royal Commission. That remark was not a reasoned statement; it was not based on argument; it was merely a casual suggestion, and was quite inconsistent with the general views of the Report to which Sir H. Norman had assented. The views of the Report were those of the right hon. Gentleman in the latter portion of his speech—that as a result of the abolition of bounties there would not be any serious rise in the price of sugar; that there might be a slight rise, but not one so serious as to be a real argument against the general advantages which the Commission fully admitted would accrue if bounties came to an end. The right hon. Gentleman opposite quoted a remark of the Secretary of State for the Colonies, which has been made familiar in all the circulars. Last year the Secretary of State for the Colonies in the debate said that the highest bounty upon sugar amounted to about £5 a ton. This has been quoted as if he had made the converse statement, that if the bounty was taken off the price would rise by £5, but that has nothing whatever to do with the amount of the present bounty. If bounties were withdrawn the price would depend upon the cost of production. I claim as an authority for these views the last half of the speech of the right hon. Gentleman, where he went on far sounder principles, and in which he pointed out the very great cheapening in the cost of the production of sugar. I confess that I am puzzled as to which half of the right hon. Gentleman's speech to take seriously. He indulged in a good deal of thunder against the Government on account of the great rise in the price of sugar which they were causing; but the alternative which I understood him to prefer was that taking away of bounties is no good because it would not raise prices enough to be of any use to the West Indies. If that is so, what is the necessity for all the thundering of the right hon. Gentleman against the policy of the Government, and which we have been familiar with outside.

SIR WILLIAM HARCOURT

pointed out that even in that case the obligations of the duties would remain.

MR. PARKER SMITH

Even if the price is not raised a great deal of good will be done to the West Indies by putting the producers into a position where they will have confidence, where capital can come back, and where they can calculate with the same degree of certainty as men engaged in producing any other great staple article what the cost of production and the price is likely to be. At the present time they are thrown out in their estimates by this incalculable element, and but for this fact I believe the West Indies could enter the fight upon reasonable terms. The right hon. Gentleman adduced the Indian experience in favour of his second argument that prices were not going to be seriously raised by the abolition of bounties. What happens? The Indian Government impose countervailing duties, the price rises for a little while and then drops. It did not rise to any great extent, or to anything like the extent, feared by hon. Gentlemen opposite. It afterwards fell lower because of a fresh reason, that reason being the Cartel system, which was not in existence before, and only sprang into being in the year 1899–1900. Therefore it is really within the last two or three years that this has become such a very serious predominant factor as it is at the present moment. The right hon. Gentleman said that the Indian Government wanted protection against any interference with its fiscal policy. Of course it does, and it can be protected under the terms of the Convention. The right hon. Gentleman complained that we were altogether in the hands of the permanent Commission, and that all our fiscal dealings in the Empire were put under their control. I wish to point out that we reserve complete freedom as to our fiscal relations, and we keep that in our own hands. I would refer the right hon. Gentleman to Article XI., where the Government of Great Britain in declaring that during the continuance of the convention no preference will be granted in the United Kingdom to colonial sugars, states that this is undertaken as an exceptional measure and reserving in principle entire liberty of action as regards the fiscal relations between the United Kingdom and its colonies and possessions. That Article reserves entire liberty of action between ourselves and our colonies. There is no doubt what that phrase means. If you take that by itself it might be ambiguous. but it has to be read along with the declaration made by our representatives at the Conference. In making the announcement that this country was willing to accede to a penal Clause, Mr. Phipps added— Niil convient de dire que la Gow. britannique ne pourrait appliquer une clause pénale aux sucres des colonies on des possessions britanniques. Des motifs de politique impériale (Imperial policy) prohiberaient une application pareille." —(Proces Verbaux, 5th Seance, p. 66.)M That was taken up in the course of the Conference again and again, and we were pressed to modify it. The other Powers said they did not see why our colonies should stand in a different position to foreign countries, but we adhered to that declaration, and it was accepted and universally understood by everybody.

The real substantial question is in regard to the rise in price. It is assumed that there will be a very great rise in price. In the first place, you cannot draw any conclusion at all from the amount of the present bounties. While bounties and trusts exist as at present the fluctuations are tremendous. The year of greatest fluctuation was 1889, when it went to £28 5s. per ton, or from £11 10s. to £28 5s.; the fluctuations each year are serious, and they are more serious than in other articles of commerce because they are incalculable and depend upon Government action. But when bounties go and the wings of trusts are clipped then the cost of production comes in, and it is that cost which will govern prices. That is what it is the merchant's business to calculate. There is absolutely the same uncertainty with regard to any other article which you can name, and the clever man of business is able to perform a more intelligent and correct forecast than his fellows. But in the case of sugar, whatever the producer may do he is liable to be met by an increase in the bounty on the part of foreign governments. Sugar if you only give it a fair chance can be produced under so many circumstances and in so many different quarters of the world that it is certain that plenty of capital will flow into the industry, and not more than fair profits will be obtained by those who produce sugar in different parts of the world.

The President of the Board of Trade has gone into the question of what will be the probable cost of production. He was speaking the views of all the responsible experts when he said that he did not believe that the average cost in the future would be higher than it had been for the last ten years. I know that my opinion is worth nothing in this matter, but I entirely agree with that view. The price of the last ten years is the price under which all the confectionery interests about which we hear so much have grown up. The right hon. Gentleman opposite mentioned the probability of a lower price. If the lower price will give a living profit, as apparently it does in Cuba, so much the better. Then we shall have capital going freely into the business, and I have not the slightest doubt that we shall have in the future, as we have had in the past, improvements in production which will bring down the cost of production from time to time, while at the same time they leave a living margin for those who are engaged in the business. The reduction in the cost of production during the last fifteen years has been something wonderful. Partly, no doubt, that is the effect of the stimulus of bounties, which has turned the intelligence and attention of foreign chemists to this subject of sugar production in Europe, and the West Indies have certainly followed suit. On all the more advanced and more prosperous islands, and on all the more advanced estates there has been a reduction in the cost of production. I have had the figures of three typical Demerara estates given to me privately. On these estates, in 1886, the cost of production was £15 5s. per ton, while in 1901 the cost was reduced to £10 13s. per ton, or about 40 per cent., and it is hoped to reduce the cost of production still further in the near future. The cost of producing beet sugar has come down just in the same way, and may be put now at something between £9 and £10 per ton. I should like to know how anyone can fear, under these circumstances, that we shall go back to the old price of sugar. The Royal Commission were entirely agreed on this matter, and as their opinions have often not been fairly given or represented, I should like to quote them. They say:— It has, we believe, been argued that the reduction in the price of sugar, which has resulted from the bounty system, is such a source of gain to the British Empire, as a whole, that it would not be right for Your Majesty's Government to initiate any measures to bring about the abolition of that system. In that argument we do not concur. By far the greater portion of the fall in the price of sugar, which has conferred so great a boon on the consumer, is not due to the existence of bounties, and would not be lost if they were abolished. The fall in the price of sugar is mainly due to a lowering of the cost of production of both beet and cane sugar, and in so far as this is the case the abolition of bounties would not affect the price. … The benefit which the British Empire, as a whole, derives from any lowering of the price of sugar, due to the operation of the bounty system, is too dearly purchased by the injury which that system imposes on a limited class, namely, Your Majesty's West Indian and other subjects dependent on the sugar industry. … It is feared by some authorities that countervailing duties might cripple certain British industries. We doubt whether such a rise in price, as would result from them, would appreciably interfere with such trades as those of the jam, confectionery, and biscuit-makers, which depend upon cheap sugar. The Royal Commission, therefore, were not the least afraid of those terrible consequences, and, as the result of that view, the Royal Commission made a statement which I did not hear from the right hon. Gentleman and which has often been entirely suppressed. The best immediate remedy for the state of things which we have shown to exist would be the abandonment of the bounty system by continental nations. This change would, in all probability, enable a large portion of the sugar-cane cultivation to be carried on successfully, and would certainly reduce the rate at which it will diminish. I could quote Lord Farrar to the same effect, though I admit other utterances are to be found which do not agree. In 1897 he said to the Cobden Club— Upon that point (sugar bounties) we as Free Traders must walk warily; we must admit to the fullest degree that sugar bounties are an abomination, and we must not, because they make sugar a little cheaper in this country, say they ought to be continued. If Mr. Chamberlain were able in any fair way to get foreign nations to do away with their bounties we ought to wish him God-speed. Then a question was put by the right hon. Gentleman opposite which I have already alluded to, namely, what is the use of abolishing bounties if it does not mean a large rise in price? No large rise in price is needed to make good estates pay. The present price is not much below the cost price, although it is probably below it. What is important is the abolition of the interference from bounties, which means security and confidence to the planter, and without which, as the Royal Commission testify, the industry can obtain no credit. With things as they are at present—it has been impossible in the more backward parts to get capital in order to provide proper machinery, and to get central factories established.

There is one point which the right hon. Gentleman raised, upon which I would like to say a word or two, and that is the memorandum of 1881 which was issued by the Board of Trade when the right hon. Gentleman the Secretary for the Colonies was at the head of that Department. The right hon. Gentleman read one sentence of that memorandum, but he did not read the sentence before or the sentence after. The sentence before shows that the state of the facts under which that memorandum was written was something entirely different from the state at the present day. The sentence is this— At present, in the opinion of Her Majesty's Government, the effect of the alleged bounties given by foreign Governments has been to cheapen the price of sugar to the consumer in this country, while up to this time the general industry of sugar refining in the United Kingdom and of sugar production in the Colonies has not been seriously affected, though there has been some transfer of capital and labour from one branch of sugar refining to another. Then comes the sentence read by the right hon. Gentleman. That sentence, I think, is rather double-edged considering the application it has to the agitation we have had outside of the House lately. Then at the end of what the right hon. Gentleman read comes this— At the same time the Government desired for all countries, as for this country, the establishment of a policy of complete free trade, believing that in the long run absolute non-interference with trade, whether by bounties or protective duties, is the system most conducive to general prosperity. They were accordingly desirous to advocate its adoption by all reasonable means, even in a case like the present, where the immediate effect of the bounties is to benefit this country at the expense of other nations. Therefore the abolition of bounties was admitted as the ideal they were striving after. The condition of things as regards any injury having been done to refiners or producers of sugar was different, and the possibility of what could be done was different, because then no general agreement had been made by the great sugar producing countries, and if anything could have been done it would have been the bringing into force of countervailing duties in this country alone and without co-operation.

We have heard a great deal as to how a rise in price would affect the trades peculiarly interested. I think that the sentence the right hon. Gentleman quoted from the memorandum of 1881 is a sufficient answer, and that it is not necessary to pay too much attention to that. I do not believe for my part that a small rise—such a rise as could possibly follow the abolition of these bounties— could have a serious effect upon the great trades which are based upon cheap sugar. Letters were written ten years ago by certain great firms connected with the sugar industries in which they expressed their firm conviction that after a short interval this kingdom would be provided with a larger, better, cheaper, and more reliable supply of sugar. For that reason they at that time were not afraid of bounties being reduced. England will remain the great free market for sugar, and the price will be kept up abroad by surtaxes. I repudiate the claim to be guided by mere sectional interests. If you try to be so guided you certainly would be completely puzzled. You have the manufacturing confectioners denouncing those opposed to them as "a small group of West Indian sugar refiners and a few thousand Wrest India planters." The Engineering Federation is very much interested in this question and in turn takes the other side. That Federation consists of 869 engineering firms, and in a circular which they issued lately they point out that on account of the bounties the manufacture of sugar machinery and plant had fallen off in this country. This diminution means a very large loss of money in wages in this country, amounting to many millions. But interests of this kind on the one side or on the other are trifling compared with the interests of the West Indies. There are hundreds of branches of engineering in which the manufacturers and workmen may take refuge, but in the West Indies matters are entirely different. There sugar is the staple industry, and it must continue to be cultivated in order that the people may make two ends meet. The welfare of the whole population of the islands, amounting to more than a million, and not that of a few absentee planters, as is sometimes represented, depends upon the sugar industry. These people have a special claim upon us to save them from ruin and starvation—whether they are representatives of the old slaves, or are East Indian subjects whom we have planted there for our own special interest. Many recommendations were made in the Report of the Royal Commission, and a vast deal has been clone since then to develop other industries in the islands. But the industry that is best suited to the West Indies is the cultivation of sugar. We all lay claim to free trade principles, and if there is one outstanding free trade principle more than another, it is that each country in the world should cultivate that industry for which it is best fitted; and the West Indies are most fitted for the cultivation of sugar. It has been said that it would be cheaper to give these islands a bounty, and pension them off. This year a subsidy of £250,000 was made to them under special circumstances, but not without objection being made; and I should like to know what would be said if there was to be an annual vote of double that amount, which would be required if the sugar industry is allowed to die out.

Some people seem to imagine that the low prices we have at present are going to continue for ever, and that Germany and Austria will go on sending us sugar under the cost of production to the end of the chapter. That is a foolish idea, and is based upon the assumption that foreigners are fools. They are not fools. These countries are fighting for the monopoly of the British market, and are cutting rates. The object of the promoters of the Cartel is not to crush out the West Indies, for there the sugar industry is too small to be of any account to them, but to crush out France and the other European sugar-producing countries. There is so large an import duty on sugar in Germany and Austria that the Cartel is able to keep up the price of sugar in these countries to give the manufacturers a profit of £5 or £6 a ton upon the part of their production which is consumed at home. They are therefore able to sell below cost price the portion which they export and yet to make a good profit on this total production. It is perfectly certain that neither the Germans nor the Austrians, nor their Governments, desire, as a permanence, that we should have cheap sugar, and that the people of their own countries should pay an extravagant price for it. There is a very serious danger of prices being forced up if this monopoly is allowed to be established and France is driven out of competition. In that case, of course, the West Indies will have an undeserved benefit, as just now they are suffering an unmerited loss. I would like to know what hon. Gentlemen who cry out about raising the price of sugar would say in such a case. Meanwhile it is true we have been enjoying the accidental and temporary cheapness which is an incident in a great war of rates. So far we have no doubt benefited, but commercial peace and Free Trade is our permanent policy. It is wise to take this opportunity of concerted action, for if the monopolists of Germany and Austria t should force up prices to the level desired by the Cartels, there is no one who would suffer so much as ourselves.

(5.50.) SIR WILLIAM HOLLAND (Yorkshire, W.R., Rotherham)

In my humble opinion this Brussels Convention is one of the most unfortunate fiscal and political instruments, from the point of view of this country, that has ever been drafted. It is one of the poorest pieces of statesmanship that can be imagined, as it will involve the maximum of cost with the minimum of gain. It will add to the cost of the food of the people, and tax the raw material of very important industries in tins country, There is an additional aspect in which this convention fails; it is not at all certain to achieve the object intended, viz., to benefit the West Indies, while it will place the fiscal arrangements of this country very largely in the control of foreign nations. It will have the effect of relieving these foreign countries from substantial financial burdens, and from the clutches of monopolists, and cheapening the food of the masses of their people. It is no wonder, therefore, that some of these Powers are extremely anxious to have the Brussels Convention ratified, because they stand to gain by it, while we stand to lose. I hold that the action of the Government affords another illustration of the fact that the less this Government meddles with the trade of the country the better it is for that trade, for when they do meddle they usually do more harm than good, and for one ounce of benefit in one direction there is a ton of injury in another. I hold in respect to this Convention, that it would have been very much more in harmony with our dignity as a nation, and the strength of our Free Trade position if we had kept away from Brussels altogether. These foreign countries have got themselves into this mess through their bounties; therefore let them get out of it, and not, in return, drag us into it.

In my judgment, the fallacy upon which this Convention is based is that these sugar bounties are to be abolished to oblige us. If they are abolished, it must be shown clearly that they are abolished to oblige these foreign countries and not us. This country in my opinion must adopt that fiscal policy which best suits itself, without regard to other nations. That is the reason why we adopted Free Trade, viz., that we judged it to be in our own best interests. And I hold it is the only safe plan for foreign nations themselves to exercise the same freedom without any interference on our part. On our side we say that bounties are a huge financial blunder on the part of those nations which give them, but it is not our business to say that to the foreigner, because if we tell him so he will naturally suspect us of having some interest in the matter. He must be convinced himself that they are a blunder, and when he has arrived at that conviction the bounties will go without any Convention, and we shall not be sorry when they disappear. In the German Reichstag last Friday, the Secretary to the Treasury drew a doleful picture of the finances of that Empire, and said that in his forthcoming Budget there would be a deficit of seven and a half millions, and when they remembered that it was caused largely by these sugar bounties, he thought that deficit would be a more convincing argument than all the Conventions in the world. The name of Free Trade has been invoked today to sanction two exactly opposite courses. This Convention has been described by a prominent member of the Government as a victory for Free Trade, but surely never before was victory so questionable. Never before was the cost so disproportionate to the advantages of victory. A victory for Free Trade, indeed! Where is the interest of Free Trade furthered as a result of this Convention? Our Free Trade will be less after this Convention than it was before. Nor will its effect be to increase Free Trade for those countries who are signatories to it, because they still maintain the right to continue their import tariffs. In the so-called Free Trade countries we must all agree that it is the unalienable right of every person to buy in the cheapest market. I know the right hon. Gentleman who introduced the proposal this afternoon discarded the theory of cheapness and substituted for it the theory of equality of opportunity, but does this Convention secure to those engaged in the sugar trade in this country equality of opportunity as compared with those engaged in the trade on the Continent. We know the surtax and import duties which will be maintained in those countries will effectually deny equality of opportunity to those engaged in the sugar industry here. The right hon. Gentleman prophesied boldly as to the course of prices during the next ten years. If business men could share the right hon. Gentleman's power of reading into the future they would not take long to accumulate substantial fortunes; but, unfortunately, we in business know that nothing is so unsatisfactory as to forecast the course of prices, for the unexpected usually happens. If the prophecy of the right hon. Gentleman is to be fulfilled, and during the next ten years prices are no higher on the average, I should like to inquire whether that range of values will suit the West Indies. Under this Convention which we are today asked to ratify, we are to be committed to the principle of countervailing duties in spite of the hostile report of the Commissioners sent out to the West Indies, and, by being so committed, we are ipso facto committed to a policy of retaliation. After resisting retaliation for fifty years, this Government has brought us to it at last. And what a topsy-turvy kind of retaliation it is. Retaliation, not for injuries done, but for benefits received. If a man chooses to sell his goods below cost to "A," and to recoup himself that loss by overcharging "B," it is obviously the duty of "B" to put a stop to that injustice. We are in the position of "A," and the foreigners, the bounty givers, are in the position of "B," This Convention, so far as I can read it, was not meant at all for us, because in it it is stated that the object of the Convention is to promote the consumption of sugar. Every one will agree that if the ratifying of this Convention and the carrying of it into effect is to influence prices at all, that influence will be in the direction of raising prices in this country, and if prices are raised here, it is obvious that instead of being increased, consumption of sugar will inevitably be diminished.

The Convention is said to be justified by the condition of the West Indies, but the West Indies in July last had a token of the substantial sympathy of this House. Will this Convention be certain to remedy the state of things in the West Indies? The Report relating to that matter contains this passage— It is not clear if the bounties are abolished that another crisis of a similar character might not arise in the West Indies at some future day. I hold it would be fifty times better to deal with the West Indies on their merits by grants in aid, and in pursuing that policy we should be greatly in pocket. Another objection has been urged. The West Indies at present have a preferential position in regard to the great market of the United States of America and this Convention will take it from them, and to that extent place them at a disadvantage.

But besides the West Indies, there is also the position of the British sugar refiner, which is closely affected by this Convention. I have felt sometimes that the case of the British refiner, is rather hard and that he suffers whilst the rest of the community benefit, but the condition of the British sugar refiner was considerably ameliorated last year when the sugar tax was introduced. I do not ask the House to accept my dictum with regard to that. There was a prospectus issued with regard to a sugar refinery at Liverpool last year which contained this statement— Even under the old conditions considerable profits have been realised, but past figures are misleading as to what may be fairly expected under present favourable circumstances. That referred, of course, to the sugar tax that had been introduced by the Chancellor of the Exchequer, which substantially improved the prospects and the position of the sugar refiners of this country; therefore I hope that the case of the sugar refiners is not so hard as it has been made out to be, and that, even without the assistance of this Convention, the prospects referred to in that prospectus will be amply fulfilled. I will not follow the right hon. Gentleman into the question as to what is a fair business profit, because I believe his views and the views of traders on the point would probably not agree. I believe bounties, have not been prompted by any desire to injure British sugar refiners, but by a jealous rivalry between France and Germany not to 'be ousted from British markets. Hence, when one country increases its bounties, its rivals feel bound to do the same. It is a policy of what may be called "Beggar-my-neighbour." But why should we be drawn into it, and by so doing upset our fiscal relations elsewhere?

So much for the West Indies and the British refiners who clamour for this Convention. In so far as they can establish their case, I would compensate them in other ways and be greatly in pocket.

But on the other side of the account there are incomparably greater interests in this country that are involved and will be penalised if this Convention is ratified. The consumers of sugar will lose many millions sterling per annum, and the sugar-using industries be considerably hampered by an increased taxation on their raw material, and we know that above a hundred thousand people are employed in these industries. In one paragraph of the Commissioners' report it says that The abolition of the bounties was an object which should be aimed at, provided always that the sacrifice would not involve evils out of all proportion to those which it was desired to remove. and it is because we say that the higher cost of sugar to forty million customers mostly very poor, is an evil out of all proportion to any which it is intended to remove that we are against the ratification. The gravest objection to the Convention is that it ties our hands in dealing with our Colonies and forces us into a course of action in regard to foreign nations which with a free hand we should probably be disinclined to follow. We are entitled to protest against the unconstitutional proposal of the Convention to take the power of taxing the British people out of the hands of the House of Commons and put it into the hands of a new-fangled Foreign Commission sitting in Brussels. This Commission may indeed turn the scales upon ourselves, because it is obvious that they will be able to call upon this country to take off the tax on sugar which was imposed in 1901, and which the Germans insisted at the time was tantamount to a bounty. We have enough to lose by this Convention without having our hands tied with regard to our Colonies. How foreign statesmen must stand aghast at the self-imposed condition that we are to give our Colonies no preference so long as the Convention lasts. What an extraordinary noose that is for us to put our necks into! Why it was only a few years ago that we paid a high price in order to obtain a free Land in our dealings with our Colonies—the price being the denunciation of our treaties with Belgium and Germany. And we are asked now to throw away this freedom once more. I am aware that the final protocol of the Convention professes to reserve in principle freedom of action in regard to our Colonies. But of what use is a principle which is violated in practice? This country has gained enormously by the avoidance of those tariff wars which have impoverished other nations. But the Convention will drag us into them. By it we shall be compelled to retaliate against Russia, the United States, Brazil, Egypt, Argentina, and probably Queensland. I believe the best way to avoid fiscal trouble and complications with other nations is to keep full control of our own tariff in our own hands. And it is because the Convention deprives us of that right that I am opposed to its ratification.

(6.20.) MR. BONAR LAW (Glasgow, Blackfriars)

The right hon. Gentleman who introduced the Amendment began his speech by pointing out that there are heresies in trade just as there are heresies in religion. There is another analogy which the right hon. Gentleman Omitted — namely, that there are superstitions in trade just as there are superstitions in religion, and it seems to me that the right hon. Gentleman attached to the expression "the most-favoured-nation Clause" a superstitious value which it does not deserve in practice. I was pleased to notice that he hon. Gentleman who has just sat down took an entirely different view, for he considered that we ought to make our own fiscal arrangements without having to refer to foreign nations.

Now, the arguments which have so far been directed against the proposals before the House are of two kinds—the theoretical, those based on what hon. Members opposite are pleased to call economic laws, and the practical, those based on what they consider will be the effect on particular industries in this country. The theoretical argument rests on the assumption that when a foreign country places a bounty on an article which is imported into this country it is really making us a present of the amount of the bounty, and that therefore we should assist them instead of trying to interfere with them in such a laudable practice. It assumes further that the nations which do that, do it not from any intentional generosity to us, but solely from ignorance of economic laws, which are so simple that they are well within the reach of the comprehension of every schoolboy throughout the country. That seems to me to be a pretty large assumption, and I cannot help thinking that if those who hold that view had visited, both before and after the introduction of the industry, those parts of Germany where the beetroot industry is most firmly established, if they had noticed the change in the face of the country and the improvement which has spread itself among the subsidiary industries which had sprung up in consequence, and if they had noticed further that owing to the difficulty of beetroot cultivation, and to the fact that only the most scientific methods are in use the whole system, of farming throughout the length and breadth of Germany has been improved, they would have agreed with my hon. friend the Member for the Partick Division, that perhaps these nations are not such simpletons as we think, and that possibly they know their own business a little better than we give them credit for. But I am not going to argue that. Let us even assume that these nations make a mistake, that bounties are a bad thing for them, must it inevitably follow that they are a good thing for us? If that is an economic truth it is true altogether; there are no exceptions; and I ask the House whether that is a theory we would carry to its logical conclusion. Take the iron industry; it is one of the most important industries of this country, but its relative importance has greatly changed of late. The United States now produce three times as much iron as we do. We know how that industry is controlled in the United States. It is in the hands of a few people, who are quite ready to use their power to crush competition. Suppose the same sentiment animated the United States Government, and they were to say: "We have unlimited raw material, unlimited capital, unlimited labour. We should supply the world with iron goods, but Great Britain, which has not our natural advantages, competes with us in every market. Surely it would pay us, not merely for the encouragement of our own industry, but also to kill this competition, to offer a heavy bounty on all the iron goods exported." I do not say that that would be a good thing for the United States, but what would it be for us? Would hon. Members opposite say: "They are making us a present; we are quite ready to receive it, and the more the better?" What would become of our iron industry, and of the hundreds of thousands of work-people directly or indirectly dependent on that industry for their livehood? Hon Members may say that that case has not arisen. I quite - admit it, but we are talking of economic laws. If such a thing were to happen, the men connected with the iron industry and their fellow working-men throughout the country who sympathised with them would give this House a lesson in the elementary prinples of political economy which we would not easily forget. I fully admit that the lesson would be felt chiefly on this side of the House, because it so happens that the artisan electors have placed very few Members on the other side. So far as this Parliament is concerned, hon. Gentlemen opposite, if they represent anything, represent the agricultural interest, and it is possibly for that reason that they are assuming today an attitude which, on the authority of Mr. Gladstone himself, is entirely opposed to the principles of Free Trade.

If we could not allow a vital industry of this country to be destroyed by such causes, have we not exactly the same responsibility towards an industry of one of our colonies? In one sense I think the responsibility is greater. These Crown Colonies have not the power which the representatives of industries in this country have of making their views felt on the composition of this House. That is the case of the West Indies, and with the permission of the House I will read a sentence from a speech by the hon. Mr. Graf delivered in the West Indies, which gives very fairly, and I think not too strongly, the case for the West Indies in this matter— Let me be well understood. The cane-sugar industry asks the British Government for no favour or special advantage. It must stand or fall on its own merits. But what we do ask the Government is to give us a fair field to fight the battle out squarely and fairly, and I hope and trust that the British nation will see this time that we get fair play. If not, God help the West Indies! I quite admit that to benefit the West Indies in the way they desire might mean that we would pay too high a price for it. That is the argument of the right hon. Gentleman opposite. I will try to state his argument quite fairly. He says— If you raise the price of sugar one half penny you inflict a loss of £7,000,000 or £8,000,000 on the people of this country. If you do not raise the price one halfpenny you do the West Indies no benefit at all. If that were a true statement of the case I would say at once that the price was higher than we ought to pay. But it is not a true statement of the case. It leaves out of account, as such simple calculations generally do, what is, in my opinion, by far the most important factor. Take the two sides of this proposition. I do not for a moment believe that the price of sugar will be raised anything like a halfpenny by the abolition of these bounties. In proof of that view let me say that if the hon. Gentleman who has just spoken pleased, he could at the present moment buy beet-root sugar for delivery December next year, after the Convention is in force, at only one shilling per cwt. above its present price; and that shilling does not represent the difference which it is believed will be caused by this Convention; it is really very little more than the normal difference between current price and the price of delivery so far forward. The conclusion which we derive from the view of those who, after all, should know most about it, because they make their living by buying and selling, is exactly the conclusion at which we would come on .general grounds. Why should there be such a rise in the price of sugar? The beet-root sugar producers are not going to stop at once. They are going to go through the experience that the West Indian planters have been going through. The stoppage will be gradual, and while the beet-root production is being gradually reduced the production of sugar cane is almost certain to be gradually increased.

This brings me to what I consider to be the element the right hon. Gentleman has left out. The West Indies have been brought to the verge of ruin not so much by the bounties, or the low price due o the bounties, as by the absolute uncertainty which they brought into the conditions of the trade. New capital, new energy, new enterprise, will never be put into a business unless there is a reasonable security about it, unless it has a fair chance. Was there such a fair chance under the conditions which existed before this Convention? Suppose, for instance, somebody said, "After careful calculation, I believe that by adopting the best machinery, following the most scientific methods, and using the utmost economy, even at the present price I can produce sugar at a profit," would he not be a fool to attempt it if he knew that by the time his machinery was in operation he might find that, from causes which he could not control, and which were purely arbitrary, the conditions had been completely changed and there was no possibility of making a profit at all?

I will refer to only one other aspect of the question, and that is the claim which the subsidiary industries—those of confectionery, and so forth—have in this matter. I confess I consider that claim unimportant, but it is solely owing to the action of the representatives of those trades that all this recent agitation has sprung up against the Convention. ["No."] Hon. Gentlemen opposite question that statement. Not only is it the cause of the agitation throughout the country, but it is the reason why the Party opposite as a Party have adopted their present attitude. In July last my right hon. friend introduced a subvention for the West Indies. He introduced that subvention on the ground that it was merely part of the general policy involved in the Sugar Convention. At that time not one Member of the Front Bench opposite spoke against the proposal, while the right hon. Gentleman the Member for West Aberdeen actually said that though he was opposed to the grant as a grant, he would not oppose it as part of the policy of the Sugar Convention. As I have said, not one Member of that Bench voted against the subvention, and from the point of view of hon. Members opposite, I must say the hon. Member for West Islington is the hero of the debate. He has been consistent throughout and in July last year he brought forward exactly the arguments which are now being used by the Front Bench; but at that time he had to contend against not only this side, but also two of his own leaders. It must therefore now be a great satisfaction to the hon. Member to find that his leaders have at last fallen into line, and are following him. What is there in the complaints of the confectionery and other industries? I must confess I have not much sympathy with them—not because I would not sympathise with any trade, or would not be sorry to see any trade in this country injured, but because I know they are crying out before! they are hurt, and because I believe they are crying out when they never will be I hurt. Why should they be hurt, even after the Convention? They will get their sugar more cheaply than any other of the countries now competing with them, or at least as cheaply. If they cannot protect themselves under such circumstances, do hon. Members opposite wish us to raise a special protection fund for their benefit? But there is more than that. No one in this House, and none of the pamphlets on the subject, has mentioned what I should have thought was one of the first things these traders would mention. At present they export a large part of their manufactures to countries which are to be members of the Sugar Convention. The duties imposed against them are in some cases very high: I should have thought them almost prohibitive. But by the Convention it will be impossible for those countries to put a higher tax against them than 2s. 6d. a cwt. instead of nearly 20s. as in some cases at present, so that even if they have to pay a higher price for their sugar, that is some compensation for it.

Then there is another general consideration which I should have thought would have made them think that the Convention, after all, was not such a bad thing. If it is really true that their industries depend on these bounties, what a precarious foundation they have! At any moment the bounties might be taken away—although I quite admit that, without our intervention, it is not likely that that would happen. We cannot expect the Government of a country like Germany to rise at once to the serene economic atmosphere breathed by hon. Gentlemen opposite, but they might get there by degrees. One of the first steps in that direction would be a very disastrous one to the subsidiary industries. Surely it would naturally occur to the Chancellor of the German Empire to say, "If it pays us to give a large bounty to encourage the export of raw sugar, it will pay us a great deal better to give a much bigger bounty for the encouragement of the manufactures of sugar. By that means we shall encourage not only the growth of sugar, but our own labour and industries." If they were to do that—and I am certain they would do it sooner or later—what would become of our confectionery, jams and other subsidiary industries? Where would the representatives of those industries be? It would not be difficult to answer the latter question. They would be in the lobbies, where so many of them have been lately, button-holing every Member they could, and urging him to leave no stone unturned to abolish these nefarious bounties.

(6.42) MR. ROBSON (South Shields)

The hon. Member has concluded his interesting and lucid speech with a suggestion, the fatal answer to which I should have thought he would have a once seen. He warned the trades that are protesting against this Convention that they might very well become subject to further bounties themselves—that is to say, to bounties operating against them by means of gifts to confectionery and other similar manufactures in the producing countries. Let the hon. Member consider for a moment what that kind of illustration leads him to. He has asked us to contemplate what would happen to us if there was an American bounty on exports of iron, or to English confectioners if there should be imposed a foreign bounty on confectionery and so on ad infinitum. But long before the serious consequences were reached there would be another cause operating. For instance, take Germany, with the suggested. bounty on confectionery. Germany is already staggering under the weight of her existing bounties; she already has to meet a serious difficulty and yet the hon. Gentleman tells the confectionery trade that it had better take care, because the policy which without this intervention has broken down with regard to sugar, will by Germany be extended with regard to confectionery. That is the class of illustration with which the hon. Gentleman seeks to intimidate the protesting trades of this country. He began his remarks by saying the suggestions put forward from this side were two-fold—first, that the foreigners made us a present, and secondly, that they did it from economic ignorance. Those were the two statements that he put into our mouths, and which he seemed to think were not practical arguments. But what did he say about them? Having stated them, he straightway left them, except to contend that foreigners were not such fools as we thought them. The inference from that observation is that there was some good reason for their bounties. How is it, if they are not such fools as we think them, that they are so anxious to get rid of their bounties? The hon. Gentleman opposite has stated what our objections are, but he has never met them. Foreigners are, in fact, making us a present, and they are doing it from economic ignorance, because they have found out that their economic policy is mischievous to themselves, and they have come to our Government to relieve them from the very worst consequences of their policy. The hon. Gentleman who has just sat down did not defend these bounties on the grounds of Free Trade. I must say that one is always astonished to see the way in which hon. Members opposite treat the principles of Free Trade in controversies of this kind. At one time we are told that they do not regard Free Trade as a fetish, and they say that the principles of Free Trade are old shibboleths and antiquated and economic prejudices, and then, having laid down these principles when they introduced a fiscal change, they try to show that it is in strict accord with all the principles of Free Trade. If Free Trade is really economic pedantry and old shibboleths, surely we need not have the President of the Board of Trade so anxious to prove that this proposal is a Free Trade method.

Every step of this kind taken by the present Government within the last few years has been treated as though it were consistent with the principles of Free Trade. The late Chancellor of the Exchequer revived an export duty upon coal while claiming, at the same time, to be a free trader. Then he went on to increase the sugar and bread tax in a way that gave a differential advantage to the English miller and sugar refiner in this country, and he claimed, nevertheless, to be a free trader. One really wonders what are the ideas of the Tory Party with regard to Free Trade. The Government come before us now, gravely proposing to hamper one of our greatest industries by irritating inquiries into the local origin of imported goods, and they do it in the name of Free Trade. They propose to put heavy tariff duties upon an imported article, and they do this in the name of Free Trade. They seem to think that by doing this they are helping the nations of Europe by some educational process of retaliation towards a comprehension of Free Trade. And last of all, they put our trade regulations under the control of a foreign Commission, and they do this also in the name of Free Trade. The idea among hon. Gentlemen opposite seems to be this—bounties are contrary to Free Trade, and retaliatory duties will stop bounties, therefore retaliatory duties are in favour of Free Trade. That seems to me to be a pretty syllogism; but, unfortunately, where it is not incomplete it is inaccurate.

Of course nobody doubts that bounties are opposed to principles of Free Trade, but will retaliatory duties stop them? As a matter of fact they did not stop them in the case of Russia and America. America put on countervailing duties against Russia, and Russia responded by putting a maximum tariff on American machinery. Countervailing duties did not stop bounties in the case of India. [An HON. MEMBER: Yes.] We have heard that practically admitted this afternoon. Why did these duties not stop bounties in India? For the very same reason that will operate in the case of these bounties. The President of the Board of Trade explained to us the twofold disadvantage under which our sugar refining trade lies. First of all he referred to the direct advantage of the bounty given by the Government, but there is another advantage which the foreign producer gets which is perhaps more serious; for he obtains what is called the Cartel system, which depends not upon a direct bounty but upon a Protective duty. Germany and France have a surtax on sugar. They charge so much by way of excise duty and so much by way of Customs duty in order to prevent the importation of sugar into their countries. That surtax is to be retained under this Convention, the object of the Convention being to preserve the Protective system of those countries. It is by means of the surtax that the Cartel system operates. In this way you get a syndicate which will never be subject to competition from abroad, and they protect themselves at home by means of combination, and with security from that competition they are able to raise the price against the home consumer and lower the price for export. Therefore the Cartel system will remain in spite of this Convention.

The President of the Board of Trade gave some figures which struck me as being very instructive. He said that there was a difference of about 3s. in one country and about 4s. 4d. in another by way of advantage under the Cartel system arising from the surtax. Therefore, although the abolition of bounties will raise the price in England, it will still leave an advantage to the foreign exporter as against the English refiner and the West Indian exporter, who will get very little benefit indeed from this Convention. I think, however, that the best way of treating the argument in favour of the Convention is to assume that the retaliatory duties will succeed to this extent, namely, that they will prevent the granting of bounties. Is it certain that if they do succeed to this extent they will therefore advance the cause of Free Trade? This Convention is expressly founded upon Protection. This Convention is a Protective document. Although we are to go on giving to Germany, France, and other Protecting countries the free run of our sugar market, yet we are not to have the free run of theirs. There is to be a Customs duty set up against us, and that is to be fixed at such a figure as any nation may consider sufficient for the protection of its own sugar industry. Just consider what that means. The German refiner has hitherto had bounties from his Government. Instead of getting bounties he will henceforth get a somewhat enhanced price from the English consumer, and it will he something about equivalent to the bounty which he previously got from the German Government. The first result of this Convention will accordingly be that the English consumer will pay more for his sugar in order to save the German exchequer. The German exchequer will consequently save a considerable amount, and the equivalent to the German producer is to be the increased price paid by the English consumer. This does not seem to me much like a triumph for British diplomacy. Heaven help us if our trade and the livelihood of our industrial population are to be placed at the mercy of that kind of diplomacy.

We have already had the German coal owner receiving a handsome bounty at the expense of the English producer, and now, apparently, the German exchequer is also to receive some benefit. Why should this relief be given to the German and French exchequers at a time when our own taxation has been burdened so much? This does not seem a favourable opportunity for us to put this additional burden on our people in order to save the exchequers of foreign countries. One might describe this as altruism run mad if it were really intended to be altruistic, and if it were intended to benefit Germany and draw that country towards Free Trade. I do not think that it is intended to draw Germany towards Free Trade, but the intention is to draw England towards Protection. The present Government have succeeded in doing what a few years ago would have been considered impossible. The signature of England has been attached to an international affirmation in favour of Protection. This Convention has been founded upon the right of each nation to protect its own market against the others by hostile tariffs; therefore it is not an unimportant circumstance that England should put its name to an international declaration of a Protectionist character. There is already a Free Trade Party, or, at least, the beginnings of one, both on the continent of Europe and in America, and that Party looks to England for example and encouragement.

I do not suppose that the governing class of any country in the world will take the trouble to master Free Trade as an abstract doctrine. Free Trade is more easily believed in if somebody else believes in it and practises it, and no doubt the principles of Free Trade throughout Europe and America have been greatly advanced by the devoted adhesion of England to Free Trade. That is now all at an end. If Protection were abandoned as a whole I think there would be a great deal to be said in favour of opposing these bounties, but Protection is not going to be abandoned as a whole. The policy of the Government is not to attack Protection as a whole, because the effect of this Convention is rather to preserve Protection. I think, Sir, that the English Government might very well leave Protectionist countries to see and feel the results of their own policy. They are beginning to see these results in the case of bounties which rest upon the same kind of fallacy as Protective duties. When once they have found out the results in the case of bounties they are very likely to find out the result in the case of Protective duties.

Why on earth should we arrest that healthy process? The Government might remember that "It's an ill wind that blows nobody good." Well, the ill-wind of Protection, bad as it is, blows us some good. [An HON. MEMBER: No.] The hon. Member says "No." Consider what the position of England is as to these bounties. England sits at her open ports to receive an enormous tribute from all those foreign nations. Can any nation pay a more humiliating tribute to another? It is the tribute of economic ignorance. But the new economy, aided, I suppose, by the new diplomacy, rejects the tribute, and does it in order to preserve the general system of Protection. By all means let us fight Protection, but let us fight it altogether. Don't let us seek to protect it against itself. Don't let us try to save it from punishment while suffering it to remain. Hon. Members opposite may say: "What is your method of dealing with the bounties? The Government have chosen the Protective method; what is the proper method?" It is by the method of Free Trade, which has brought those nations to our door seeking to be relieved from the results of their folly. In the words of Sir Robert Peel, the best way of fighting hostile tariffs and bounties is by open ports, and that is the Free Trade method. I suppose that method now is to be relegated by the Colonial Secretary to the limbo of old shibboleths. Well, it is the method by which we stand. You cannot defeat hostile tariffs by imitating them, and still less by this fatuous proposal to assist them by relieving them of their own consequences. When Protection begins to feel the results of its own folly, let us not try to save it from punishment by confirming it in its errors. Some hon. Members seem to think that Free Trade is a helpless sort of thing—a thing with no kind of fighting value. That was not the belief of the great masters of Free Trade when they laid down the great principle that the best way to fight hostile tariffs was by open ports. I do not know that it would be proper at the present time to go into the abstract reasons in favour of that maxim, but, at all events, one may appeal to the experience we have had of this policy. In the last fifty years every nation of Europe has been engaged in a tariff war with every other and today the unquestioned commercial supremacy rests with the one nation which has kept Free Trade as its defence and its weapon. There has no doubt been an absolute expansion of trade in Protectionist countries, but when you come to consider the price they have paid for it, and to look at their deficits, you will see whether the Free Trade principle has not been more efficient. You have in Germany a great population, and a better educated one, we are told, than our own. You have in France a more thrifty population than our own; and you have in America a population with every kind of natural advantage and absolutely incomparable natural resources. Yet America is not able to displace us in the sphere of international trade, great as her home trade is. Of course, if you look simply at a single trade and keep your eyes fixed on that trade, such as sugar refining at home and sugar growing in the West Indies, there may seem to be some plausibility in the reasons for retaliatory duties. The Under Secretary to the Board of Trade rather fell into the error of keeping his eyes upon the West Indies and the sugar refining industry only. We have to look beyond that. When we are invited to reverse a whole policy we must look at the industries which have gained as well as to the industries which have lost. The industry which has lost in this case consists of about 12 firms employing 5,000 men. What are the industries that have gained? Why! there seems to be no end of them. They employ something like 250,000 men. Surely we ought to consider that comparison before we throw away the advantage brought to us by the economic folly of other nations. We ought above all to consider our own trade policy and preserve it intact. If we are going to modify it, don't let us throw it aside in points that punish our opponents and benefit us. Until the nations of Europe are willing to open their ports to Great Britain let us keep the benefit of their bounties, not only because of their material benefit, but because of the stern practical lesson they are teaching to the nations which are foolish enough to give them.

(7.8.) MR. JAMES REID (Greenock)

I should like to say a few words on the subject of the sugar refiner, that much ill-used individual of whom so much has been said today. In the constituency I have the honour to represent nearly a half of the residuum of refiners who are left to us in the kingdom have their location. The town of Greenock for 130 years has been the leading sugar refining port, doing a large and prosperous business with the West Indies until it was ruined by these bounties. Hence we have in the town such names as Jamaica Street, Tobago Street, Antigua Street, and others, showing that in former times there was a connection with the West Indies which unhappily has in a great measure passed away. Of the twelve sugar refineries in the United Kingdom five are in my constituency, but these are not continuously working, I am sorry to say. At the same time, they are not by any means standing idle. Not so many years ago we had fourteen sugar houses in Greenock. We have been told by the hon. Gentleman who has just sat down that it is an insignificant industry, but it was not so until these bounties crippled it, and even now the numbers employed are not a correct indication of the employment which the sugar industry gave for many years. Thousands of engineers have been thrown out of employment, and engineering shops have been closed, because there is no longer a demand for the refining machinery. There is not so much employment at the harbour for workmen as there would be if the sugar refining trade had continued as brisk as it was in former times. We are accused of being Protectionists. The late Lord Farrar has been quoted. He at one time would not assist in any way in abolishing bounties, but he described them latterly as "an abomination, bad and foolish things, revolting to his conscience." Mr. Gladstone has been quoted. He said to a deputation of working men in the early '80's— My desire is that the British consumer should have both sugar and every other commodity at the lowest price at which it can be procured without arbitrary favour to any of those engaged in the competition. But I cannot regard with favour any cheapness which is produced by means of concealed subsidies of a foreign state to a particular industry, and with the effect of crippling and distressing capitalists and workmen engaged in the lawful branch of British trade. Is that Protection, may I ask? The right hon. Gentleman the Colonial Secretary, who possibly may have, like many another man, changed his opinion as time went along, said on one occasion— I say it would be impossible to find in the writings of any of those who advocate Free Trade any justification for the theory that bounties given in the way in which these bounties are given by Foreign Powers to the detriment of British producers cannot in some way be countervailed. My opinion of the bounty system I have never concealed, and I think that those Free Traders are very imprudent who contrive to identify the doctrine of Free Trade with the support of this abominable bounty system. The bounty system is inconsistent with Free Trade, and hostile to Free Trade, and it ought to be, I think it must be, I think it will be, soon abolished. A stalwart advocate of Free Trade, Sir Charles Cameron, formerly a Member of this House hoped the Cabinet would put an end to a system which for forty years statesmen had deplored and lamented. I think I have proved that little bit of my case, at any rate. The confectioners claim to consume 400,000 tons. We grant they may, but that only represents one-fourth of the consumption. Whence, therefore, their right to dictate, and whence their mandate to speak, as they try to do, for the 41,000,000 of our population? They want to pose as philanthropists, but their philanthropy does not go one inch further than their own pockets. At the Birmingham Trades Council Mr. Davies, a Member of the Cobden Club said— We have met to-night, not to advocate the principle of Protection, as it would have (been impossible for me to be present under circumstances of that character. I have the honour to be a life member of the Cobden Club, and I am a Free Trader, and I appear on this platform as a Free Trader advocating the abolition of the foreign sugar bounties. We are here tonight not to ask the State to fix a fiscal incubus, but to remove a fiscal incubus which has practically ruined the great sugar industry. Mr. Davies concluded as follows: — Now it appears to me that the greatest sinner of any in this matter is France. It is said that if only France would yield, then all other nations would follow. If that be so it seems to me that the Government should use its powerful influence with France in order that Free Trade with respect to sugar may be declared. The Glasgow Chamber of Commerce in a memorial to Lord Salisbury in 1899, said that The business of sugar importing, sugar refining, manufacturing sugar into confectionery, jams, pastry, etc., is large and important in Glasgow, and the West of Scotland; and their cognate trades—such as sugar making, sugar machinery for use at home and for exportation, furnishing coals for refining and manufacturing sugar, and its sea and land carriage, etc. —are of more importance here than in any other district with which this Chamber is acquainted. This Chamber has examined and given most careful consideration to the question of the effect upon British interests of the sugar bounties paid by foreign Governments, and is unanimously of opinion that these bounties have worked, and are working, great evils to the sugar trade and inter-related trades of this country, as well as vital injury to many British Colonies and Dependencies. M. Martineau, who was present at the late Brussels Conference, in an able article in the current number of the New Liberal Review, entitled "Free Trade it Danger, says, referring to the Paris Conferences of 1876–7:— Twenty-two years have elapsed since the report of the Select Committee, and bounties still go merrily on. Every attempt to abolish them has been met and defeated by the false cry of 'Free Trade in Danger.' It is those who have raised the cry who are really guilty of jeopardizing the maintenance of those essential principles of Free Trade which have played such a large part in the former greatness and prosperity of our country. Woe to them, and woe to our commercial supremacy, if they persist. Mr. Yves Guyot, editor of the Siècle,last May read a paper before our Royal Statistical Society, and in the discussion which followed he quoted Sir Robert Giffen, who in 1879–80 was a strong defender of bounties, and had since said as follows, in manfully recanting his former opinions: — He was not sure that he would have taken the same line if he had been able to look forward a quarter of a century and see what the result was to be of allowing these bounties to continue. People became wiser as time went on, and a good many of the assumptions which it was perhaps legitimate to make a quarter of a century ago had been falsified by events. But having had a quarter of a century's more experience, he was satisfied that these bounties must be treated as a great infraction of Free Trade, and that all the countries affected by them were quite entitled to take exceptional measures to put an end to them. Whatever we might gain temporarily in consequence of what foreign countries gave us by these bounties, they were not to be endured, and we should join in the general movement in favour of Free Trade. As to mineral waters, I spoke to a manufacturer as to what would be the effect of the abolition of the bounties on his trade, and he said it was all "fudge." The cost of the bottle, cork, and wire was two pence, and of the contents one farthing, and that the mineral water manufacturers lost more money in wrangling amongst themselves about filling one another's bottles than by the bounties. No trade deserves to exist which requires its raw material under cost price; or at any rate to drive a legitimate trader out of his business. What is wanted is a fair field, no favour, and an open door for imports and exports. I am aware it is said that the machinery and appliances of modern sugar refiners are not up to date. I am authorised to give that an unqualified denial, and to challenge inspection. If they are beaten in fair, honest, open competition, British sugar refiners will own it; but if beaten in unfair competition, and by nefarious bounties, they demand justice. In spite of reduced prices, increased consumption did not follow. For instance, the average price of sugar from 1872 to 1885 was 28s. 10d. per cwt. with an average increase of consumption of 32,000 tons; but from 1886 to 1898, when the average price was 16s. per cwt. the increase was only 19,000 tons. My contention is "Let justice be done, though the heavens should fall."

SIR J. BLUNDELL MAPLE

I rise to speak on this question in a clear and business-like way; but I should like to know whether it is perfectly true that the Government intend to make this measure a question of confidence. I thought that these subjects should be discussed in a free and open way, although my hon. friend below me says, "No, not at all." If the Government tell us that if in discussing this question they are beaten they shall go out of office, what is the good of our discussing this matter at all, even though it is a most vital one? We are entirely dependent on sugar grown abroad, because we cannot produce sugar in this country. The working man is the great consumer of sugar in this country, and what we have to consider is whether he can or will pay a largely increased price for that article of food. This is not altogether a question of whether bounties are carried to excess. The West Indies are only sending to us less than 50,000 tons of sugar a year, whereas we require 1,700,000 tons from the Continent and other parts of the world. It is all very well for refiners to say that they are being injured by the bounties. One would think that the refiners were doing a bad business, but look at the Tate and other sugar refining companies! I find that in 1871 600,000 tons of raw sugar were refined in England, whereas last year the amount refined was 625,000 tons, or an increase of 25,000 tons over what was then regarded as the most successful year of the trade. It is absurd to say that the refiners are suffering because of the bounties. Hon. Members who represent important working-class constituencies must be aware that the working men will rise against a proposal which is to increase the price of a staple article of food for themselves and their children by a halfpenny per pound. It seems to me that the Government is very ill-advised in bringing forward this matter at this time, which would need for its adequate discussion four or five days.

It being half-past Seven of the clock, the debate stood adjourned. Debate to be resumed this evening.