FISCAL POLICY.

HC Deb 08 February 1904 vol 129 cc623-68

MR. JOHN MORLEY (Montrose Burghs) moved the Amendment of which he had given notice in regard to the fiscal policy of the country. He said: I am sorry to know, though this Amendment has been postponed for some days, that even now we shall not be able to have the advantage of the presence of the Prime Minister. I do not know whether he will be able to attend before the debate is concluded, but in any case, however that may be, I am sure I need not tell the House, how much, both personally and on public grounds, I regret his absence. There is one other right hon. Gentleman, only less important, if indeed less important, than the Prime Minister, whose presence I understand we are not to look for during the course of this debate. I refer, of course, to my right hon. friend the Member for West Birmingham. I hope I shall not be trespassing beyond the proprieties of the occasion if I mention that I have known the right hon. Gentleman for half a life-time. During all those years I was in close and intimate relations with him, and I do not think I will allow any differences of opinion upon public questions—and between him and me they are, and have been, profound, and never more profound than they are to-day—to prevent me from saving, if the House will permit me, that he possesses in a most marked and peculiar degree the genius of friendship—sincere, kind, and staunch friendship. Mr. Powell Williams, who, a few hours ago passed away from our great world-theatre, found friends amongst us ail. But to the Member for West Birmingham he was more than an ordinary friend. He was one who, in sunshine and in storm, was his close, faithul, and trusted adherent; and I for one, and I believe in all parts of the House hon. Gentlemen will agree with me, fully comprehend and entirely respect the feeling which has mastered the Member for West Birmingham.

It has been suggested to me that, as these two great protagonists of—I do not know whether I should call them rival policies or of identical policies—are unable to take part in this debar?, we should postpone it. I cannot myself, for one moment, think that a well-founded view. I think we are bound in this House to take the very first opportunity of bringing to the test of a discussion at close quarters the question that has agitated the mind of the country for the last four or five months, and we ought to know—it is our duly to know—where the House stands, where Ministers stand, and where the question stands. I think quite long enough, and too long, has it been the case that this House, of all places in the island, is the only place where this question has not been, and apparently is not to be, discussed. We think the House of Commons would be wanting in one of its first duties, perhaps its most fundamental duty, if it were not to take this opportunity of raising the question which arises on my Amendment. After all, its highest constitutional function is to examine the national charges, to survey national ways and means, to adjust the national burden. We are going this session to do so in remarkable—I think in unprecedented—circumstances. We have not only the well-known announcement of the Prime Minister, which I will not trouble at this stage to introduce, that he is for a deep and genuine change in our fiscal policy—that we are to annul and delete the traditions of two generations. We have also from the Chancellor of the Exchequer, the Minister who is specially responsible for the financial administration of the country, a strong declaration that "the time has come when we should make a breach with the traditions of the past"—I think he must have forgotten that he is on the Conservative side of the House—"and that we should allow ourselves to think for ourselves." That is very impressive, but does that Bench think for themselves? Then he says:—"We are making progress. "Who are" we, "and where is the progress to? The right hon. Gentleman will, no doubt, answer us those questions; but. be that as it may, it is indispensable that, if we, are to discuss our financial situation, the supreme business of the House, with real efficacy, we must know whether we have got a protectionist or an anti-protectionist Government to guide us. It is not very easy to be quite sure of that. We are apt, in this House, to regard with suspicion, and perhaps with a trace of mockery, anybody who introduces a Motion, and begins by saying that it is not a Party Motion. I venture respectfully to submit to the House that I can make that claim to day, because my Amendment will, unless I am greatly mistaken, be most powerfully reinforced, perhaps even more powerfully than we could argue it on this side, by Gentlemen who are sitting among yourselves, by Gentlemen who a few months ago were amongst your most trusted and responsible and experienced leaders and Members, That is one thing which, I think divests my Amendment of a Party aspect purely. And I would venture another, however insignificant, observation of a personal kind, that in economics and finance, so gravely do I, for my part, always regard these questions—much more gravely than purely political questions—that when the right hon. Gentleman the Member for Bristol was Chancellor of the Exchequer he will remember that I voted freely away from my friends who sit near me and that I supported the Government on the coal tax and on the sugar tax. But the last straw—the corn duty—broke my back, and I could support him and the Government no more. I do not often regale myself by reading old speeches of my own, but when I went over again the observations which I had to address to the House in moving the rejection of the Report stage of the Corn Duty Clause of the Finance Bill, I really was astonished not at my own moderation, but at my own foresight. Every observation that I made almost has been verified by the scenes of the last few months. I warned the then Chancellor of the Exchequer that he was entering upon a course which would inevitably lead him or his Party to colonial preference and to a tax noon food—to proposals for a tax upon food.

Well now, the Chancellor of the Exchequer on Tuesday last referred to some language I had used implying that the state of the industries of the country was not all that we could desire. I have always held for the last eight years the Same language. I agree with the light hon. Gentleman the Member for West Birmingham on this point. I have said it again and again both inside this House and outside this House. There is a great deal in the state of the commerce and industry, and of the employment of our population which must give every serious and observant man plenty of food for reflection. I have always in the country wound up with the declaration of the late Lord Salisbury, which was that there is ground for anxiety, that no statesman can look around and see these new conditions without anxiety; but then. Lord Salisbury went on to say— That is no reason why we should grasp at the first remedy that any man chooses to propose to us. Sir, if the House will, for an instant, pardonan historical reference: during the last sixty years, which we are going to refer to so often in the course of this debate, the first step was Sir Robert Peel's liberation from the tariff of a certain number of articles in 1842. There then followed in 1860, eighteen years afterwards what Mr. Gladstone always used to call the cardinal and organic emancipatory free trade period. During that time, first by Hit Robert Peel and then Mr. Gladstone an enormous number of articles were removed from the tariff which restricted trade, which interfered with the application of capital, and which presented the free exercise of skill and industry. I am not sure that it was 1860; anyhow by 1860 or 1866 that great emancipatory period was concluded. And these were all occasions of the most remarkable kind. And there was what the right hon. Member for Bristol will admit, a further important step taken, not in this House, nor by a statesman, but by the constituencies in the year 1874, when they by their rejection of the proposals then made to them for the abolition of the income-tax, settled finally that the income-tax was to be a permanent instrument of the national revenue. There are three or four stages of which I venture to remind the House. It may be; we do not know yet whether the new movement that began on 15th May last year was a conflagration or whether it is to prove merely the flash of a meteor; I hope that this debate will perhaps clear the air a little on that issue; out anyhow there is this peculiarity in the situation in which we have now entered. In 1843 the state of the finances of the country, the state of the industry of the country, the dilapidation of the revenue, were so marked that it was the urgent duty of the Ministry of that day at once to set to work to remedy so deplorable a stare of things. That was what Sir Robert Peel did in 1846. I here was scarcity and famine which cried aloud for legislation; and in 1860 there were particular relations between this country and France. At that moment there was also an accidental sate of things in the Exchequer which precipated the occasion of which Mr. Gladstone took advantage. Upon all those occasions there was urgency; and even, if I may refer to 1886, when a very great and important step was taken by the Prime Minister of that day which divided Parties, as Parties are divided now, there was urgency. If the Prime sinister had been here now I am sure he would have agreed with me that the solution which we then propounded to this House and to the country and which this House first and the country afterwards rejected—whether that solution of Home Rule was right or wrong—there was in the state of Ireland a condition of social order, and there was in this House a state of Parties which made it a question of urgency. But where is the urgency for the change that the Ministry now propose? What is the crisis, what is the emergency? I know that all controversies are liable to expand and to row; and after the very effective treatment which my right hon. friend the Leader of the Opposition gave to the history of this crisis last Tuesday night, lam not going to repeat it to the House. But the change, everybody knows is expressed in a sentence. This new fiscal policy was sprung upon the country. I do not use the word "sprung" in an invidious sense; but it was launched from the colonial point of view. The colonial point of view pretty rapidly disappeared. [MINISTERIAL cries of "No, no."] The hon. Member who says "No," if he takes part in the debate later, will perhaps tell us how he regards the position of the colonial policy. It disappeared, and a new case was presented. It was then that the industry and commerce of the country were languishing and declining, and demanded a prompt and immediate treatment (that was the new case), and that a remedy should be provided with the utmost despatch. It was rather odd, because it was not long before the Member for West Birmingham, who first launched the policy, had in tones of perfectly natural jubilation congratulated the country that it had been able to bear the enormous financial burden of the Boer war without turning a hair. But I see opposite to me the President of the Board of Trade. Very likely he will do me the honour to follow me in this debate. The President of the Board of Trade this time last year did not think-that there was any crisis or any emergency. This is the language of the President of the Board of Trade to his constituents on 23rd January, 1903— He confessed that he did not see any signs of the decline and ruin of British industry which was the prominent topic with the British newspapers, and though the critics might have done good by drawing attention to the shortcoming, they could have too much even of a good thing, and he was bound to say that he thought the part of Cassandra had been somewhat overdone. He thought that in this matter they could do well with a little of the optimism which distinguished Mr. Chamberlain. I respectfully ask the right hon. Gentleman to tell us when he rises whether in his view there was an emergency then. Surely not! Then what happened within three or four months? The President of the Board of Trade seems to have been led by the Member for West Birmingham into a completely new and reverse position, and we should be glad to know whether now he thinks he having used the language which I have just read to the House, that agriculture is destroyed—[Sir HOWARD VINCENT: Hear, hear!]—and all the rest of it. I should listen to him with the most respectful attention. Will he tell us why he has changed his mind, if he has changed his mind? Is there any indication or the smallest evidence of there being a crisis or an emergency except an artificial and invented crisis? The Prime Minister himself, I think at Bristol, said that he would have been very glad if circumstances—I do not know quite what the circumstances were—allowed him to leave this question, which was an urgent question, as an open question in his Cabinet. If it had been a critical or an urgent question, it would not have been an open question. There is no doubt about that. There is another point about that which I address to the President of the Board of Trade. The Government instituted what they called an inquiry—a proceeding which the Duke of Devonshire, although a party to it, describes publicly as having proved a deception. But the Member for West Birmingham speaks in the most contemptuous language of the inquiry instituted by the Board of Trade. He says that this Blue-book is the library of the free importers, meaning by that the whole contents of that, Blue-book are a library of arguments for free importers. [Cries of "No."]

I will not detain the House long in arguing the second clause of my Amendment, namely, "that the removal of protective-duties has for more than half a century actively conduced to the vast extension of the trade and commerce of the nation." You may dispute, if you please; I fully admit how many other elements there are that have entered into that most prosperous and satisfactory state of things which, until the other day, we were all agreed in recognising. Of course there were oilier elements which may have entered, but any hon. Member who endeavours to make an adjustment of the degree to which this prosperity is due to free trade, or to other elements, I warn him that he will enter upon a task of the most intricate and complex character. This I do venture to say, without fear of contradiction from hon. Gentlemen opposite or anywhere else, that the condition precedent to this country's being able to avail itself of the various other elements, such as railways and other things which have been good for the country, was free trade. If I may be allowed to indulge for a moment in a philosophical reflection, you may say, if you please, that the decision, by the repeal of the Corn Laws in 1846, to make the ideal of those islands a manufacturing community, instead of an agricultural community—you may say, if you like that that was a wrong decision. But I am no great idolater of the factory system. I think it has produced, and I refer to them in my Amendment, a state of things which needs manifest and urgent remedies. I remember Mr. Mill, formerly a Member of this House and much more than a Member of this House He used to tell us that if the alternative was between Socialism and the, evil social condition then, as now, prevailing in many parts of these islands, though against Socialism, he would rather face Socialism with all its risks than acquiesce in the subsisting state of things. But it is not worth arguing now. If England is to be characteristically a manufacturing community, the man who denies that free imports actively conduce and not only conduce: but are indispensable, to our commerce and the welfare of our population—I say such a man whoever he may be, shows himself so grossly ignorant of the social conditions of the country between the end of the great war and the; time of Sir Robert Peel that I will not waste the time of the House in arguing against him. Then there is another position taken by same of the disputants in this controversy—I will not argue with them if they say it is matter of history and fact that protective duties were removed oil the faith of anticipations and prophecies of imitation by other countries do make that assertion is to be guilty of a ludicrous falsification of all you will read in speeches by Sir Robert Peel, Mr. Cobden, or anybody else; it is not worth argument. The effect of protective duties had been so examined by the country, had been so repudiated by the country, that the free trade policy, which was not only passed in this House in 1846, but was ratified by the general election in 1847, was hell fast to a through the years from 1847 to 1852, when there was another general election, and the country still repudiated, having had bitter experience, anything like a return to protective duties. Mr. Disraeli himself, the Leader of your Party, said the country had decided, and therefore it would be a culpable waste of time to argue whether the country had good or bad reasons for its dislike of protective duties.

I am not going to take the House—and I am sure they will thank me for if—into all the controversy, or points of controversy even, in the discussions that have taken place during the last few months in the country; but I should like to call the attention of the House to what I call general fallacies—not fallacies of statistics, though they were fallacious enough—but general fallacies that seem to me to have pervaded these discussions. It is a very short list, though I do not believe there is a single fallacy that has not found illustration in speeches from hon. and right hon. Gentlemen on that Bench. This is the method. You take every case that is hypothetically possible, theoretically imaginable or conceivable, and immediately treat that as if it were an actual case and an urgent case. Then you begin with the economical argument, and when you find that the ground will not bear you you then change ground suddenly, and, dropping the economical argument, take refuge in sentimental, idealist, or political arguments. The third method, which has struck me very much, is that you show that circumstances might arise which might justify a tariff as the proper expedient, and then you proceed to infer that the argument is exactly as valid for existing circumstances, though these are entirely different from your hypothetical case. Then you state a fact, and if that fact is completely demolished in two or three days, you then say that it was an. illustration, not an argument. I have read a number of speeches in which hon. Gentlemen opposite have been literally guilty of supposing that a protective duty is the same thing as a revenue duty, though, of course, a protective duty is the exact opposite of a revenue duty and thoroughly ill-adapted for all the purposes of a revenue duty. And then about the consumer and imports strange language has been used. The consumer has been spoken of as if he were a sort of habitual inebriate, and every import as if it we o an affront to the British Empire. There is one argument I wish to deal with, the argument that times have changed and that conditions of industry have altered in our day. That is not at all an unnatural position to take, but I submit boldly to the House that not one of the changes that have taken place since 1846—I think there is not one which does not make against protection and in favour of free trade. I maintain further that protection will aggravate every one of the mischiefs of which you complain. The first argument is. "Oh, since then—[Sir HOWARD VINCENT, Hear, hear!]—there have spiting up great rivals." The hon. and gallant Member for Sheffield ironically cheers that. Does he suppose that any statesman dreamed in 1813 that Great Britain was going to be the manufacturer to all eternity for the whole universe? [Sir HOWARD VINCENT: Mr. Cobden said so.] I probably know a great deal more about Cobden than the hon. and gallant Gentleman, and I say that so far was he from saying that that he said exactly the opposite. I am promoted by the interruption of the hon. and gallant Member to read an extract of a few sentences from Mr. Cobden. When I regard the contemptuous language used about Mr. Cobden by men who are unworthy to loosen his shoe latchet, I venture to recall to the House language—very beautiful language, well worthy of his genius—used by Mr. Disraeli. Standing, I suppose, at this box, when Mr. Cobden died, Mr. Disraeli said— Thus our great men, when taken from us, are not altogether lost. Though not present, they are still Members of this House independent of the caprice of constituencies independent of dissolutions of Parliament, independent of the course of time. Their example wall long be referred to and appealed to, and their words will often be quoted. This was the language used by a. Leader of your Party, a Leader who really led. Now, in reference to the hon. and gallant Member's statement that Mr. Cobden held out the expectation that this country would remain without manufacturing rivals, I will ask the House to listen to this extract— Looking at the natural endowments of the North American continents at the boundless expanse of the most fertile soil in the world, at ! he inexhaustible mines of coal, iron, lead. Looking at these, the writer reiterates the moral of his former work, declaring his conviction that it is from the silent, peaceful rivalry of American commerce, and the growth of American manufactures, and so on, that the grandeur of our commericial and national prosperity is most endangered.

SIR HOWARD VINCENT

What is the date of this statement of Mr. Cobden's?

MR. JOHN MORLEY

I cannot say offhand, but I will satisfy the hon. and gallant Gentleman. It was the base of the whole policy, and it is, I hope, the base of the policy of us who sit on this side of the House, that it is exactly because you have this formidable competition to face that you should pursue a policy of peace, of reduced expenditure, and a policy of national education. That was the base of the whole of Mr. Cobden's national policy. But I must hurry on. The more formidable the competition is, the more reason is there why you should leave as much freedom as possible for the application of capital, for the exercise of skill and industry, and the general operations of trade. The second change is that you have all over the land enormous aggregates of population in manufacturing towns. Is that an argument for protection? Is it not an argument, the strongest you can use, for leaving all the channels by which food and raw materials find their way to our shores not narrow, not blocked? There is no argument for protection in that change. Then there have been, no doubt, enormous developments in steam locomotion and in telegraphic communication, having the effect of producing enormous mobility of capital and rapidity of transit of products from place to place. Granting all this, how can these great changes, these great material changes, be utilised to the uttermost unless you have open ports? Every change of this kind, if it means one thing more clearly than any other, means that protection in any form would be the most ruinous step you could possibly take.

There is another change. The Colonies have accomplished great permanent power and prosperity. Yes, but I invite attention to this. Suppose that the policy of protection should tend to diminish the protective and accumulative power of this country, and should impoverish this country, what worse thing could happen to the Colonies than such an event as that? The Colonies have almost more to lose than we have by our impoverishment. Diminish our plentiful supply of capital, or our cheap and rapid means of locomotion, and all these boons which we are able to place at their disposal would be either stopped or limited; and I say that the demands of the Colonies are one of the strongest arguments for an anti-protection policy. There is another great change—the transfer of politic d power, since 1846, from the old £10 householders to the artisans of the towns and the labourers of the fields. I am not going to argue the effect of free trade upon political peace, but I would submit to the House that it, cannot be quite an accident—it cannot be a fortuitous coincidence—that the great free trade country of Europe is the one great country of Western Europe which since 1846 has never known even a shadow of a civil convulsion. There is no great country in the West of Europe which equals us in the absence from class division, class envy, hatred and strife which unfortunately prevails in some other countries. It cannot be that that circumstance is entirely unconnected with our fiscal policy. There is one other change of great importance, no doubt—the Suez Canal. That has made an enormous difference in many ways and the effect upon the international trade of the world and the effect on our position as a great distributing centre has been of course enormous. But will the President of the Board of Trade tell me accurately, with chapter and verse, how a scientific tariff which is to affect the wool market or the tea market is to prevent that from having changed the position in London as I understand it has. This is the thing. You hear of the Suez Canal doing this or that in the redistribution of commodities, and then you say, "the thing is wrong, we will put it right," but a scientific tariff would not put it right. How could it? Many Members of the House who are well versed in these things will perhaps tell us. I will listen with absolute interest and candour to any demonstration they can offer that a tariff can affect this matter. A scientific tariff means really a tariff arrived at from a judicious computation of conflicting interests. I do not think that would do any good in this case.

Perhaps the House would now like me to turn to the question of the policy of the Government. We are opening a discussion which is no abstract economic discussion. In some ways it is only secondarily an economic discussion at all. We are face to face with a political situation, and it is of great importance that we should have that clearly examined. The Prime Minister, speaking at Bristol, said— Did any body ever hear of a. Cabinet which was not merely agreed upon a policy but was also agreed upon every principle upon which that policy was supposed to depend and upon every conclusion to which those principles might be pressed? I cannot find the Cabinet are agreed upon any policy which deserves to be so called in any better sense than tactics of Party managers and Party wire-pullers. They are the tactics of make-believe—make-believe that a Party which is divided is not divided. You cannot call these tactics a policy. You take great care that even as a make-believe you do your best to prevent anybody being taken in by it. The Prime Minister said it was— Most unreasonable to come forward and taunt us because my colleagues who are agreed upon a policy do not pretend that they are agreed upon every conceivable development of that policy which that policy might under given circumstances take. What is curious is that all the eloquence and all the energy is given to the "conceivable development." I would now ask the House to consider this agreement upon policy in the light of two or three utterances of important Gentlemen opposite, and I will begin, as indeed I ought, with the President of the Board of Trade. Speaking in October last, the President of the Board of Trade-used this language— For the present, at all events, he did no! consider it would be in the interest of the Party or of the policy they were recommending to include in the official programme (there were it appears, two programmes) of the Government. a preference carrying as it did with it taxation of food. That is the President of the Board of Trade. But then there is the Parliamentary Secretary to the Board of Trade. He uses somewhat different language. He says he really believes that a trade preference to the Colonies is an essential part and would be an inevitable result of any change in our fiscal policy. He sympathised with Mr. Chamberlain's proposals. The President of the Board of Trade said one thing and his Parliamentary Secretary said quite the opposite. Then we come to the Postmaster-General who said that with Mr. Chamberlain's scheme of preferential tariffs he could not agree. Then the noble Lord the Under-Secretary for Foreign Affairs made some very remarkable declarations indeed as a member of a Government which has quite agreed on its policy. He individually believed P. Mr. Chamberlain's corn taxation proposals, and he said unhesitatingly that he believed it would be to the advantage of the country to adopt them. He frankly confessed that he did not think they would really benefit the agricultural industry at home. "For all his objects"—let the House notice this—let hon. Gentlemen opposite who are thinking how they will vote on this Amendment mark this—"for all his objects Mr. Chamberlain carries with him the hearty approval of his colleagues in the Government he has left."

* EARL PERCY

Objects, not methods.

MR. JOHN MORLEY

I invite the noble Lord in the course of this debate to draw a distinction between his sympathy with the objects of the Member for Birmingham and his disapproval of his methods. Then there is the President of the Local Government Board. I scanned his utterance very closely because he had taken the very striking step of going down to a constituency represented by a Conservative colleague and doing his best to turn that Conservative colleague out. He said it was not an inconsistent declaration for him also to say that while with his present information he was against the taxation of food—what is his present information? I wonder what information he does want?—while his present information is against the taxation of food, he could conceive the arrival of a time when Mr. Chamberlain's policy would be satisfactorily developed and the proper system discovered by which it could be applied.

THE PRESIDENT OF THE LOCAL GOVERNMENT BOARD (Mr. WALTER LONG,) Bristol. S.

Is that not an extract from the speech of a Gentleman who had spoken before me and which I used as a quotation.

MR. JOHN MORLEY

I gave the right hon. Member my most studious attention, and I can assure the right hon. Gentleman I think not. Is a satisfactory development a development that ends in the taxation of the people? Then there is the Colonial Secretary, who went down to Leamington and recalled graceful reminiscences of Carlyle and Ruskin, and how they had overcome what he called the gloomy doctrinaires from Manchester. The gloomy doctrinaires of Manchester made short work of the sentimental idealist from Leamington. Does the right hon. Gentleman forget that if the Corn Laws and the whole policy of protection had two men more thoroughly opposed to them than Carlyle and Ruskin. I should he very much surprised? Carlyle's most saturnine, caustic, and picturesque descriptions are directed against the Corn Laws and against the Party of the kind of gentlemen who are now wanting to bring the Corn Laws back. The right hon. Gentleman shakes his head as if he did not want to bring the Corn Laws back. The right hon. Gentleman said he thought the ends of the right hon. Member for Birmingham were right and good ends and he accepted as the expositor of those ends Mr. Charles Booth. Mr. Charles Booth is a protectionist. [No.] Is he not for a 5 per cent. duty? The right hon. Gentleman ought not to deny it.

THE SECRETARY OF STATE FOR THE COLONIES (Mr. LYTTELTON) Warwick and Leamington

Deny what?

MR. JOHN MORLEY

That you are a protectionist. To finish the extracts, I think they are most pithily summed up by the Secretary for the Local Government Board as follows— Some people said that Mr. Balfour and Mr. Chamberlain were in opposition. Others said that their policy was the same. He submitted that the true ease was this—that Mr. Chamberlain was weaving a second string of the Government bow lest the negotiation string should snap before its work was done. When these are the responsible governors of the country can you wonder (hat Consols are down to eighty-seven? I leave this part of the business with a quotation which expresses my view better than I can express it from the right hon. Member for Birmingham in a speech made in 1885— I will say that Lord Salisbury does intend —and here I think he was unjust to Lord Salisbury— to pat a duty upon corn, though he does not think it convenient at the present moment to say so, and although he allows some members of his Government to argue in favour of it in one place, he enjoins upon other members of his Government to repudiate it in another. Remember, this is not a question upon which the Government can be allowed to have two voices. If you are going to tax the bread of the people you will affect every household in the land; you will throw back the working classes of the country to the starvation wages and the destitution from which Mr. Gladstone and Sir Robert Peel have relieved them. What is meant by retaliation? The word "retaliation" is used, I observe, by many gentlemen as a sort of formula by which they can escape the labour of a close examination of what the issue really is. Last summer, in this House the Prime Minister said— If other methods fail I do not shrink from retaliation, but I am not certain that there are not other methods. I suppose he meant by "other methods" diplomatic negotiations of the ordinary sort. A case was brought my notice the other day arising out of the reciprocity treaty between the United States and Cuba. Liverpool, Manchester, and, I think, the London Chambers of Commerce carried on a correspondence and had an interview with Lord Lansdowne, representing to him that the arrangements under that treaty would be extremely prejudicial and would in fact practically close the door to British manufacturers in Cuba. I wonder what "other methods" the Prime Minister would apply to a case of that kind? But now let us suppose a real case of outrageous unfairness perpetrated against us by a foreign Government. I am myself unable to find evidence of there having been any outrageous case of unfairness. [Cries of "Oh!"] I know some hon. Gentlemen regard a high tariff as an act of outrageous unfairness, but that is not what the Prime Minister means. If there be a case of outrageous unfairness the Minister of the day has only to satisfy this House of three conditions, and I am perfectly sure this House, whichever Party be in the majority, would support the Minister. What are the three conditions? The first is that the Minister would have to satisfy the House and make good the case on the facts, that outrageous unfairness had been or was being perpetrated; secondly, he would have to show that he had got a plan for reprisal that would effectually stop it; and, thirdly, he would have to persuade this House that his plan of reprisal not only was likely to effect the special object he had in view, hut was not likely to do a great deal more harm in another way. If those conditions were satisfied, I do not think there would be any difficulty in carrying through this House whatever retaliatory powers were necessary. But do you mean power to impose a retaliatory duty independent of, outside of, and beyond Parliament? The Emperor of the French, in 1860, was able to carry the Cobden treaty with this country, though his two Chambers were both of them strongly and stoutly opposed to anything like free trade, because, happily for him and for us, there was a clause in the Imperial Constitution which allowed the Emperor to make a tariff binding if it was part of a treaty Is that what you want? Ho you want to be put in the position of the French Emperor? It s extravagant and absurd, the notion of any Minister having the power with his two Chambers both opposed to him, by decree to set up a tariff. I was much interested in another plan set out in a candid and well-argued book called "The Tariff Problem," by Professor Ashley of Birmingham University. What is his idea? He says—— What seems dictated by the requirements of the ease is a statutory authorisation of the Executive to impose the duties that may be required from time to time as circumstances arise. It will not be safe to wait until the need arises before appealing to Parliament, for the mischief is of a kind that can be accomplished in a very brief period. Does the House really apprehend what is proposed by this excellent writer, who lives very near the centre of authority, very near to Mecca? To carry out the policy, in order to secure an economic revolution, it is proposed to make the most astounding political revolution in our history since the time of the Civil War. The writer supposes cases so urgent that you cannot wait from August or September, when Parliament rises, till January, when if reassembles. I cannot for my part realise any of those cases. What sort of powers of negotiation do you want? Let us suppose that the Steel Trust of the United States announced, projected, and carried out the landing of an enormous stock of their goods at a low-price upon our shores. What are you going to do? I suppose Lord Lansdowne would invite the very distinguished man who represents the United States in this country to an interview with him at the Foreign Office. Lord Lansdowne would say to Mr. Choate, "Unless your Government put a stop to a certain set of traders sending us billets and blooms so cheaply we will impose a duty, or even prohibition as well, so as to close our markets to you."

Mr. Choate, however, has a very easy reply to Lord Lansdowne. He would say "How can the American Government prevent a commercial company from selling so cheaply to British markets?"

Then supposing statutory authorisation were obtained, and suppose Mr. Secretary Hay said of Mr. Choate, "Are we to instruct him to come to you who are so famous for selling cheap all over the world, and to say, 'if you do not give up selling cheap we will exclude you from the United States market.'" [MINSTERIAL cries of "They would do it."] You have only to come to close quarters with the subject to see how absurd it is. There is tremendous suffering at this moment in Lancashire it is not due to the Americans selling goods too cheap, but to the making of cotton too dear. What are hon. Gentlemen who suppose that by some formula you are going to remedy all the evils of the commercial system going to do about cotton? Are you to request the President of the United States to get Congress to pass an Act to prevent gambling in cotton? The idea is absurd. Then it is said that you want something to bargain with. This is the process I think that the Prime Minister has in his mind. But how do you start? Are you to set up a general or all-round tariff, to build up a general Customs wall with the view of frightening the foreigner into lowering the general level of his adverse tariff? The Prime Minister said in his Sheffield speech that he did not intend to set up a general tariff. What the Government is going to do is to set up a combative tariff, to start with a heavy duty on all manufactured imports. The Prime Minister is against that because he thinks it would be a disturbance; of the existing practice, and would lead to the disorganisation of trade; therefore ho abandons the general tariff. What does he say next? For a man so clear of speech, when he likes, this is the most nebulous declaration I remember to have seen from a man in a great station. He sees the objection to the combative tariff, but says—— I see no such objection to our proceeding, so to speak, from the other end; and if we thought we could do so without disadvantage to ourselves, we might inform any foreign country that we thought they were treating us with such outrageous unfairness that, unless they modified their policy to our advantage, we should feel ourselves compelled to take this or that step in regard to their exports. I call that nebulous. I want to know what steps? When the Prime Minister announces a revolution in policy surely we have a tight to expect that he should ell us what he intends to do, what "this or that step" is going to be. We have a right to ask also what is his "method." of settlement with a foreign negotiator. [Cries of "Speak up."] I suppose it would mean a threat to say to Russia to this effect, "Unless you reduce your general tariff we will impose an adverse discriminating duty on your wheat and hemp and other products," having; free trade with the rest of the world. I do not know how that will work or what the effect would be on the corn market; but what is to prevent Russia from sending her grain through Holland and reaching us in that way? In the Napoleonic wars English goods got into the Continent despite all hindrances and therefore we, wish to know accurately what "step" it is that the right hon. Gentleman means.

There is another vital question I wish to put. Is this change to be a permanent or a temporary tariff? After all, that is the great issue. Do you want to put on duties to bargain with and after making your bargain and frightening the foreigner into lowering his tariff are you going to take them off again? Are you going to dismantle your fiscal batteries and to shut up your Custom's house? I will not argue the point or dwell upon its prospect of success, but I think it will create a frightful dislocation of trade as well as embarrassing your Budget from year to year unless you know what all these extraordinary operations are to be. This is an urgently important point with regard to the political situation, because this policy of a temporary dealing with the tariff is absolutely inconsistent with the policy of the right hon. Member for West Birmingham. You do not believe in a permanent tariff; but he does. He wants a scientific protective tariff; but you dc not tell us what it is you mean. The right hon. Gentleman appeals to the protective policy of the United States of Prance, and of Germany, and he recites how they passed tariff after tariff. It was not a haphazard policy; it was a deliberate policy to use tariffs to increase home trade and, if you like, to exclude foreign trade. The right hon. Member for West Birmingham says these foreigners are not fools, and he winds up by asking about this foreign policy. "Has it succeeded? It has succeeded." Those who consider that they are not voting for a protective policy when supporting with cheers and enthusiasm the right hon. Gentleman the Member for West Birmingham cannot have read his utterances. Now what is your attitude towards these proposals? What, however, was the Government attitude? The Prime Minister's language is obscure and ambiguous; still he leaves room for some expectation that he is not committed to protection. But his language is one thing and his action is another. When a candidate stands for Norwich the Prime Minister sends down his blessing with the watchword "Union and fiscal reform." This gentleman at Norwich was a complete fiscal reformer in its extreme length; and that has been the attitude of the Prime Minister ever since the controversy arose. The great difficulty is to know whether you are men in masks or whether you are straightforwardly telling the country and the House what it is you want.

Now is the moment for hon. Gentlemen to make up their minds and for every individual Member to ask himself whether he is for protection or whether he is against it. It is in the highest degree distasteful to me to place any difficulties by the form in which I venture to put this question to the House in the way of hon. Gentlemen who, to their great honour and to the credit of English public life, have made the greatest sacrifices that any public men can possibly make. I think the case was worth the sacrifice. I do not believe there has ever been a more irresistible demand upon all of us for manliness, frankness, and moral courage; and I hope these hon. Gentlemen will not flinch from the views they have advocated with all the strength of their experience and responsibility. Pet them ask themselves this question, "Am I going to vote for confidence in a protectionist Government or for confidence in an anti-protectionist Government." They will shirk the prime duty of political life at this moment if they are not satisfied on this point, and guided by the answer they give, to themselves when they go into the Lobby. I, for my part, am not at all careful as to the numbers in the division when the division is taken. After all, what is important is this—What will be the result of that far greater division in the country when it takes place? I will not venture to predict, but I shall be very much surprised if the constituencies, when the time comes, express confidence in the Government at a time like this, when we have just barely emerged from the financial confusion and embarrassment caused by the late war, and when we are face to face with events threatening, or, I am afraid, I must say, events now happening, which, beyond almost any set of circumstances which have arisen in our recent history, impose the necessity on Great Britain, at all events, of keeping her powder dry, and of keeping her resources in steadfast charge. I say that if the country gives its confidence to any Government at a moment so grave as this, it will not be, to a Government which, upon the plea of an emergency which does not really exist, and on behalf of a thing called fiscal reform which they cannot—I know they cannot—explain or define, are ready to plunge the country into confusion, and to pave the way to ultimate disaster.

Amendment proposed, at the end of the Question, to add the words— But it is our duty, however, humbly to represent to Your Majesty that our effective deliberation on the financial service of the year is impaired by conflicting declarations from Your Majesty's Ministers. We respectfully submit to Your Majesty the judgment of this House, that the removal of protective duties has for more, than half a century actively conduced to the vast extension of the trade and commerce of the realm and to the welfare of its population; and this House believes that, while the needs of social improvement are still manifold and urgent, any return to protective duties, more particularly when imposed on the food of the people, would be deeply injurious to our national strength, contentmet, and well being."—(Mr. John Morley.)

Question proposed. "That those words be there added."

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

It is a matter much to be regretted that the Leader of the Opposition did not see his way to accept the offer of the Home Secretary of facilities for carrying on this debate at a time when the Prime Minister would have been able to be in his place—all the more so as unfortunately we, are also deprived of the presence of my right hon. friend the Member for West Birmingham in connection with circumstances to which the right hon. Gentleman has made allusion in feeling and appropriate language. I cannot help thinking that the right hon. Gentleman himself shares this regret, notwithstanding the somewhat hollow, if he will allow me to use the word, explanation which he gave both the other day and again to-day in defence of the course which has been adopted. The right hon. Gentleman tells us that discussion in the House of Commons on this subject has been so long delayed that the impatience of the public would brook no further postponement. I do not at all agree with him. I believe that the public would receive with perfect equanimity the postponement of this debate for two or three weeks in order that the Prime Minister might be present in his place. I must say I think it is permissible, at all events, to suspect that there was some other motive besides that which the right hon. Gentleman has stated to account for the course now taken. We all know that this Amendment is carefully designed with a view to capturing what I may call the extreme right-wing of the Unionist Party—a perfectly natural object. Hon. gentlemen opposite think that they have got the Party which goes by the name of the Free Food Unionists in a difficulty [Cries of "No" and "The Government"]. In this carefully framed Amendment they have devised a net for these Gentlemen, and they are unwilling to abandon such a monument of ingenuity. Whether they will be successful in capturing my hon. friends or not I am, of course, unable, to say, but I shall be surprised if they do not find, before this debate has come to a conclusion, that they have somewhat overreached themselves, and that the course they have taken, the some what paltry manœuvre which they have adopted will have defeated its own object.

MR. JOHN MORLEY

Will the right hon. Gentleman describe a little more fully what the paltry manoeuvre is?

* MR. GERALD BALFOUR

I did not wish to convey any offence in using that phrase, but by paltry manœuvre I meant a manœuvre intended to make it difficult for the extreme right wing of the Party to avoid voting for the Amendment and against the Government.

MR. JOHN MORLEY

Does the right hon. Gentleman contend that it is a paltry manœuvre to introduce such an Amendment as this on the Address? (Cries of "Withdraw.")

* MR. GERALD BALFOUR

I am quits prepared to withdraw the words if they give offence, but what I was referring to was not the bringing forward of an Amendment of this character on the Address, which, of course, is a perfectly natural and proper thing to do, but the insisting on taking the discussion at a time when my right hon. friend the Prime Minister is necessarily absent although they might have taken it at another time.

MR. JOHN MORLEY

Could it have been amended if it had come in another form?

* MR. GERALD BALFOUR

It might have been amended. With regard to the Amendment itself, I hardly know whether it is directed against the policy of the Government or against, the policy of my right hon. friend the Member for West Birmingham. With the exception of the first sentence, there is nothing in the Amendment to which those Gentlemen who accept the policy announced at Sheffield but decline to go further could not subscribe to. I will go so far as to say that, with one exception, there is very little in the body of the Amendment to which I myself should object. But there is a strange preamble attached to this Amendment—— But it is our duty, however, humbly to represent to Your Majesty that our effective deliberation on the financial service of the year is impaired by conflicting declarations from Your Majesty's Ministers. I listened with some attention to discover what it was the right hon. Gentleman intended to convey by those words. How can our discussions on the financial service, of the year be impaired by differences of opinion between His Majesty's Ministers in respect of a question which is not now before the House as a practical policy? What bearing can these conflicting opinions possibly have upon the financial service of the year? The right hon. Gentleman says we must know whether we have a protectionist or an anti-protectionist Government to deal with. Well, I say in the most unhesitating manner that the policy of the Government is not protectionist. At a later period of his speech the light hon. Gentleman again returned to this question of the conflicting statements of Ministers, and he read out a series of extracts from speeches by myself and by hon. and right hon. friends of mice to show what? To show that outside the official policy of the Government—I am not ashamed of the phrase—there are great differences of opinion among Gentlemen who sit on this Bench. What is there reprehensible in that? Surely outside the policy which the Government has deliberately adopted and included in its programme any amount of difference of opinion may be allowed. Throughout the course of British history you have had Differences of opinion outside the immediate policy of the Government. I really cannot understand what it is that the right hon. Gentleman objects to when he says that, in consequence of these differences of opinion, it is impossible for us to adequately discuss the financial service of the year. It is possible that the right hon. Gentleman may have had something rather different in his mind from the mere conflict of opinion between Ministers in a matter which is quite outside the policy of the Government. He has on other occasions been very eloquent in denouncing the Prime Minister for his opportunism in the question of fiscal reform for having one policy for the Government, and at the same time holding an opinion which went beyond that policy. No doubt it is perfectly true that many of the colleagues of the Prime Minister also sympathise with a fiscal policy which goes beyond the policy officially accepted. I quite admit it. But is that an uncommon circumstance in our political life? Surely hon. Gentlemen opposite-must be aware that there are many subjects on which they themselves are not wholly agreed. What of disestablishment? We know perfectly well that many right hon. and hon. Gentlemen opposite strongly hold that the Church should be disestablished. Are they therefore bound, is there any obligation on them, to include that in their programme? What of Home Rule itself? Is Home Rule at the present moment a part of the programme of the Liberal Party? Is it not true that in the minds of at least some hon. Gentlemen opposite Home Rule has been rapidly degenerating into something like a pious opinion, and if they are entitled to hold pious opinions are not we also? There is an even stronger case than Home Rule. The noble Lord who was the latest Prime' Minister of the Liberal Party has taken upon himself to sweep the whole of the Newcastle programme off the board. Is the Newcastle programme part of the programme of the Liberal Party or is it not? Surely these are all cases in which matters of very great moment and importance are held to be, by important members of the Opposition, outside the policy of the Party. It is exactly the same with us. The policy of preference which has been advocated by my right hon. friend the Member for Birmingham has the sympathy of a great many members of the Government, but it is not included in the policy of the Government, and I cannot see what there is reprehensible in having an official policy and holding an opinion which goes somewhat beyond it.

The right hon. Gentleman asks, Where is the urgency? So far as the colonial policy is concerned, the urgency arose when the Colonies offered us a preference. [OPPOSITION cries of "When?"] That occurred two years ago at the Conference of the Colonial Premiers. The urgency arose when the Colonies offered us a preference, and when it was made perfectly clear that they at least hoped that they would enjoy some preference in return. Bur it is not merely the question of preference that was urgent. The question of retaliation also became urgent the moment an important country on the Continent intimated to us that if this police-of preference, were persisted in, not only our Colonies, but even the Mother Country might be deprived of the most favoured-nation treatment. There was the further urgency arising from this, that many Continental countries were already constructing new tarifs de combat, and if we were not in a position to bear our part in the discussions preliminary to the framing of new commercial treaties, our interests undoubtedly would have to go to the wall. Those were the causes which made this matter urgent; but I quite grant this to the right hon. Gentleman—that unless matters had been ripe in the country for a policy of this sort, the incidents to which I have referred might not have been sufficient to raise the question in all the fulness which has been given to it. For a long time past I believe this question has been ripening in the minds of the people—not perhaps the policy of preference, that is of course of comparatively late date, and has it-origin in the action of the Colonies: but as far as a free hand for negotiation, as far as what is called a policy of retaliation is concerned, that has been silently growing in favour for a long time past. The Prime Minister has stated that: twenty years ago he expressed his opinion strongly in favour of what is now called the policy of retaliation. My own belief is that it will be found on looking at the speeches delivered by many of my hon. friends about the same time that they also expressed similar views. I did so myself, and I have never changed my opinion, that in itself the power of retaliation was a desirable power for this country to possess. Therefore, when the suggestion of fiscal reform was started by my right hon. friend the Member for West Birmingham and by the Prime Minister, the response of the country itself forced the question forward and made it a practical question. We could not then have set it aside even if we had desired, but we did not desire because, as I said, many of us had long been converts to the view which regards retaliation as a policy in it self desirable, if the country was prepared to accept it.

The right hon. Gentleman referred to a speech I made at Leeds. I am quite willing to agree that it was a very apt quotation from his point of view. He asks me whether I have changed my opinion sine then. Well, if I had modified my opinion in the light of a further study of this question I certainly should not be ashamed to acknowledge it. It is true that I have modified my opinions to this extent, that I do now attach greater importance to, I regard as of graver effect, certain tendencies which analysis reveals in British industry and commerce. I do think that to some of the signs to which I now attach importance I did not attach quite sufficient importance when I made that statement. In other respects I do not, withdraw a word of the quotation which the right hon. Gentleman has read to the House. I do not think the ruin of the trade and industry of this country is impending. I do not see how it is possible to affirm that we are on the brink of ruin if you examine the facts and figures. But that is not in itself a reason against fiscal reform. We must look at tendencies, and if we see that those tendencies are drifting us in a dangerous direction it is our duty to take precautions against such a result. I agree that there has been probably a certain exaggeration of statement with respect to the present condition of our trade. [OPPOSITION cries of "By whom?"] But has the exaggeration been all on one side? From the way many hon. Gentlemen talk you would think that the whole prosperity of this country rested upon free imports. [OPPOSITION cries of "Hear, hear!"] Some hon. Gentlemen say that is so. Any body who has given study to this subject knows perfectly well that though free imports may have been an important element in the amazing growth of prosperity in this country during the last fifty years, they are only one element. I should say myself that the progress of invention, the cheapening of freights, and the large extension of the area under wheat in the United States are all three of them causes which have contributed more to tie general prosperity and well-being of the country than the particular fiscal policy which we have followed. THIS prosperity, undeniable and great as it is, is snared by other countries also which have not adopted our fiscal policy, and I think that ought to be borne in mind by those hon. Gentlemen WHO a minute ago cheered the suggestion that our whole prosperity must be due to the free trade policy of the country.

The right hon. Gentleman referred to the inquiry undertaken by the Government. It is curious how very many different estimates have been formed of tee value of that inquiry. The right hon. Gentleman quoted from the Duke of Devonshire to the effect that this inquiry was a deception, and if I remember rightly the Duke of Devonshire also described the Blue-book which embodied the results of the inquiry as an ill-digested collection of statistics. On the other hand, Lord Rosebery spoke of it as "the exhaustive investigation of the Board of Trade," and hon. Gentlemen opposite have certainly in their speeches in the country not spoken of the Blue-book as if it represented a mere illusory investigation. I should just like to say a word as to the way in which the Blue-book was framed. The basis of the inquiry was laid by questions set by Ministers to the Board of Trade. We answered these questions to the best of our ability, and, so far as the inquiries remained obviously incomplete, the Board of Trade officials, in connection with myself, did their best to fill up the gaps. It is quite true that the Blue-book is a quarry from which both sides can extract material, and from which both sides have extracted material; but it can hardly be brought against it as a reproach that it is sufficiently impartial to supply materials to both sides. This is a most complicated question. There is a great deal to be said on both sides, and if the Blue-book which embodied the result of the inquiry had not been a quarry in which both sides could mine with effect, it would certainly not have fulfilled the object for which it was designed. The right hon. Gentleman opposite pressed us to give a more definite statement as to the procedure and the machinery by which we propose to carry out our views. I am bound to say that the request is not altogether a reasonable one. On one point, however, I can satisfy the curiosity of the right hon. Gentleman. He asked us whether we proposed that the Executive should have the power of imposing retaliatory duties without the consent of Parliament. No, Sir. That has never been contemplated by us. We have never suggested or proposed that Parliament should be invited to divest itself of its power of control over taxation, or that it should transfer to the Executive or the Privy Council the power to impose taxes.

SIR H. CAMPBELL-BANNESMAN (Stirling Burghs)

Does the right hon. Gentleman mean that the authority of Parliament will he required in each particular case, or that a general statute may be passed giving general powers to be applied at the discretion of the Executive Government in any particular case?

* MR. GERALD BALFOUR

In our view no tax could be imposed unless the consent of Parliament had been obtained. [An HON. MEMBER: In each case?] That is asking rather too much. I do not think it is fair to claim beforehand that we should go so far into detail as to pledge ourselves that the consent of Parliament shall be required item by item. I do not think we should be asked to go into farther detail. Hon. Gentlemen opposite complain of that, but it would be impossible to go further into this matter without going into every detail of the plan by which retaliation would be carried out; and that I decline to do, and, I think, reasonably decline. All precedent in this matter is on our side, but I will refer to only one which is really a classical precedent, and it has determined, in my judgment, for all time, what is and what is not obligatory on a Government in the way of disclosing details of a policy beforehand. I refer to Mr. Gladstone's action in connection with the Home Rule Bill. Let us consider what the circumstances were. In 1886 Mr. Gladstone's Bill was thrown out on the question of the position of the Irish Members in relation to this House. Everybody knew that that was the crucial question in connection with Home Rule. Mr. Gladstone had no second opportunity of bringing in a Home Rule Bill until seven years had passed. Everybody knew that there were only three possible courses open. One was known as the "all out" policy adopted in the Bill of 1886, another was the "all in" policy, and the third was the "in and out" policy. Again and again Mr. Gladstone was pressed by the Unionist Party to disclose his intention in regard to this crucial point, and he always refused. Now, Sir, I say you could not imagine a ease in which there would be a stronger claim for the disclosure of the details of a policy before an appeal was made to the country, yet Mr. Gladstone never consented to reveal the details of his policy.

MR. GIBSON BOWLES (Lynn Regis.)

Is that a precedent the Government are going to follow?

* MR. GERALD BALFOUR

My hon. friend asks whether that is a precedent which the Government are going to follow. I say that precedent determined for all time what can legitimately be refused so far as such a point can be determined by precedents.

MR. JOHN MORLEY

I should like to ask the right hon. Gentleman, and I really think that after all he has said of Mr. Gladstone's action when in opposition I am entitled to press him—the right hon. Gentleman tells us the Government are going to take a certain general line of action. We ask him very innocently, and that is what I want to know, whether Parliament is to be informed before or after this action has been taken? Surely that is a vital question.

* MR. GERALD BALFOUR

My reply to that is that we ought not to be pressed before an appeal to the electors is made to lay before the country all the details of our plan, and I appeal to the example of Mr. Gladstone, and I say it is conclusive on that point. Mr. Gladstone was placing a great policy before the country, and we are placing our policy before the country.

SIR H. CAMPBELL-BANNERMAN

The right hon. Gentleman has volunteered to tell us the manner and method by which this policy is to be applied. [HON. MEMBERS: No.] Yes, he is engaged in doing it, and we ask him one or two questions across the Table which ar3 absolutely essential. He is speaking for the Government. He is not in opposition. He is not announcing a programme to the country. He talks about the electors. We know nothing about the electors.

* MR. GERALD BALFOUR

I cannot see that that has anything to do with the matter. Mr. Gladstone had a policy to put before the country. We have a policy to put before the country. He refused to go into details, and we are entitled to follow his example. But if hon. Members are really anxious to press this matter any further, all I can say is that it is a pity they should not have waited until such time as the Prime Minister could be here. At all events, I and my colleagues on this Bench must decline, and, in my judgment, properly decline, to go either behind or beyond the policy as laid down by the Prime Minister.

I should think a greater compliment has hardly ever been paid to a statesman in this country than the concentration of attention which has been bestowed on the policy of my right hon. friend the Member for West Birmingham. It is not the policy of the Government. Everyone knew that if an appeal were made to the electors and a majority were returned in favour of the Government policy, that would not entitle us to go further and carry out the policy of preference. Notwithstanding all that, here you have nineteen-twentieths of the flood of oratory poured forth in the recess directed to the policy of my right hon. friend.

LORD HUGH CECIL (Greenwich)

You have Conservative Members opposed by Cabinet Ministers.

* MR. GERALD BALFOUR

I say that is an extraordinary testimony to the force of character and energy awl ability of my right hon. friend. But I think there may have been other causes at work. In the first place it is a policy much more easy to attack than that of the Government. The proposal to tax food is not prima facie likely to be a popular policy. Whereas the police of retaliation is one, you may almost say which is natural to any Englishman. Then again, my right hon. friend has done what we have declined to do. He has given a somewhat detailed account of his proposal, and a detailed account of a proposal is to an eager Opposition like a pot of honey to flies in summer. You have only to look at the treatment which my right hon. friend's scheme has received in order to judge of the wisdom of a premature disclosure of details. Then I think it is also possible that my right hon. friend's policy, rather than that of the Government, has been accentuated in Opposition speeches, because hon. Members opposite think that by so doing they may succeed in detaching from the main body of the Unionists those who doubt whether to carry this fiscal reform so far as my right hon. friend proposes to carry it is wise in the best interests of the country. Whether the line taken by hon. Gentlemen opposite has really been prudent, in the interest of the cause which they champion, I am somewhat inclined to doubt. The effect of the course they have pursued has been to give, the utmost possible advertisement to the policy of my right hon. friend. The right hon. Gentleman the Member for Fife says that was the last thing that was needed. I quite agree that any policy taken up and propounded by the right hon. Member for West Birmingham is certain to attract the attention of the country without any adventitious aid, but I think that in his exertions he has been greatly assisted by the activity and energy of hon. Gentlemen opposite. Besides, it has had another effect, for in their hot haste to blacken the policy of my hon. friend the policy of the Government has been made to shine quite bright by comparison. Hon. Members opposite laugh at that, but let me quote a passage of the speech delivered by the Duke of Devonshire last mouth— All that I have to add to what I said on another occasion is that while I do not believe so firmly as the Prime Minister does in the probable efficacy of such a policy, I am more disposed than I was to approve of the object of that policy. I do so because it was a policy not only differing from, but absolutely opposed to, the more dangerous and more mischievous policy of Mr. Chamberlain. [Cries of "Do you agree?"] Then the heart of the hon. Member for Oldham warmed so much to the Government policy in his frenzied opposition to the policy of the right hon. Member for West Birmingham that he actually went the length of saying that the policy of the Government was interesting but not very important.

MR. WINSTON CHURCHILL (Oldham)

Hear, hear!

* MR. GERALD BALFOUR

I think-there is a certain humour in the phrase of my hon. friend applied to what the Prime Minister described as a reversal of the fiscal traditions of this country. How far has my hon. friend travelled, even since last session when he opposed, tooth and nail, the Sugar Convention, which proposed in a modest way and in an isolated case the principle for which we now ask general approval.

MR. WINSTON CHURCHILL

I said the policy of the Prime Minister was not very important because it was not the issue before the country.

* Ms. GERALD BALFOUR

I beg leave to differ from the hon. Gentleman. It is the policy before the country. I think the real explanation of the language of my hon. friend is, that he, like others, can see nothing in fiscal reform except protection. Protection occupies the entire field of his vision, and my hon. friend is not alone in this because there seems to be something like an organised conspiracy to represent the issue before the country as an issue between free trade and protection. I absolutely deny that. I quite admit there is a natural temptation so to represent it. The old proverb, "Give a dog a bad name and hang him," has no doubt a good deal in it. If you can not only give your adversary a bad name, but retain a good one for yourself, double advantage is secured. But this way of presenting the issue is absolutely superficial and misleading. Let us look more closely at the various classes of opinion respecting this fiscal question existing in the country and this House at the present time. There are, at least, four such classes. First you have the, free importers; next, those who approve the Government policy, who ask for a free hand to negotiate, and, if necessary, to retaliate; thirdly, there are those who follow the right hon. Gentleman the Member for West Birmingham, and who favour preferential arrangements with the Colonies; and, lastly, there are the protectionists. Anyone who is a protectionist will probably also be in favour of preference and of a free hand in negotiation: but the reverse by no means follows. There are many who are in favour of free hand in negotiation who do not advocate preference, and others who advocate preference, but are by no means protectionists. The various distinctions have been so loosely appreciated in discussions on the platform that it is advisable to endeavour to define a little more precisely the essential characteristic of each class of opinion.

The free importers are free traders in intention, but not in reality. Free trade in its essence is bilateral. The characteristic mark of the free importer is not free trade. It is the refusal to adopt any other method than that of moral suasion in order to bring about free trade. They are the Quakers of finance. Their policy is a purely negative policy; they are the peace-at-any-price party in relation to industrial affairs. When Sir Robert Peel stated that in his view the best way of fighting tariffs was by free imports, he uttered a maxim which was no doubt a maxim of expediency at the time at which he spoke; but that maxim was subsequently converted into a fundamental principle of English finance, that no taxation should be put on except for revenue purposes; and the principle itself became in turn something like a dogma, under no circumstances to be set aside or modified. You cannot hold that dogma and at the same time be in favour of freedom of negotiation; you cannot hold it to be final and unconditional and yet advocate preferential policy. A fortiori it is not possible to hold it and be a protectionist.

Let me pass to the fiscal reformers, and first of all to the protectionists. When I speak of protection I refer to the system existing at the present time in the United States of America, France, Germany, and other continental countries. What is protection? Protection is a system of artificial assistance deliberately accorded to particular industries by the State, generally by means of import duties, in order to give these industries advantages over and above what they would enjoy under conditions of natural competition. That is my definition of protection, and in order to illustrate it I should like to refer to what are called countervailing duties. Countervailing dudes are duties imposed as a counterpoise to a bounty. They have to be most carefully discriminated from protective duties. They are really duties imposed in self defence. There is an ambiguity in the word "protection," and it would be greatly in the interests of clear discussion if, when we are speaking of protection to industry by a duty which is in the nature of a countervailing duty, we were to call it not protection but defence. There is a distinction between defensive duties and protection. Defensive duties are in my opinion perfectly legitimate even as part of the theory of free trade. Protective duties stand in a different category.

We have been challenged to-night to say whether the policy of the Government is protectionist or anti-protectionist. I have already stated, I hope in clear language, that the policy of the Government is not protectionist. If I am asked, not as a member of the Government but as an individual—the distinction is perfectly legitimate—what my own view of protection is, I am perfectly willing to state it. I do not think that protection is a wise policy for this country to adopt. I do not wish to make any absolute statement of faith with regard to protection in other countries. The effect of protection is, practically, to impose a tax on the consumer for the benefit of the producer. If the extra profits resulting from protection, or part of such profits, are employed, as may easily happen, to further the development of industrial enterprise, it is possible—I believe in some instances it is actually the case—that a policy of protection may really stimulate industrial development. I think protection has probably stimulated industrial development in Germany and also in the United States. Therefore I should be extremely reluctant to say that either Germany or the United States had adopted a policy which was wrong for theS3 countries. On the contrary. I think-very likely it was right for Germany and the United States. But for our country—which had such an immense start over all others, which was a highly developed manufacturing country at a time when such a description could not, be applied to any other country—protection for such a country is, I believe, a bad policy, and I should be sorry to see a return to is now. I will even go so far as this—that if it was a choice between protection as we know it in Germany and Amend, and other countries and the existing system, I should be on the side of free imports. But, as a matter of fact, nothing of the kind is the case. It is possible to hold the views which I have just expressed and yet be a warm advocate of preferential arrangements with the Colonies. The object of preference is twofold. First, to draw closer the commercial relations between the mother country and the Colonies, and to make the exchange of commodities between them free. That is the economic object. There is also a political object namely, to draw closer the political tie between the mother country and the other parts of the Empire. What is there in these aims which has anything to do with the establishment of a protective system in this country? There is absolutely no necessary connection between the two things, unless indeed it be the circumstance that preference involves a small duty or, certain foodstuffs, a duty which hon. Gentlemen opposite have repeatedly said in their speeches in the country would practically have no protective effect whatever. [OPPOSITION cries of "Who said it?"] I have seen it stated over and over again. Lord Rosebery is among those who have stated it in very clear and very emphatic language. But then the right hon. Gentleman the Member for West Mommouthshire says, "What about the average 10 per cent. tax upon manufactured goods?" If I am to answer that question as a member of the Government and on behalf of the Government, I say that as preference is not in our programme, a fortiori any particular method of carrying out preference is not in our programme.

SIR WILLIAM HARCOURT (Monmouthshire, W.)

It is quite independent of preference.

* MR. GERALD BALFOUR

I am glad o hear that admission, because it is exactly the point which I am trying to drive home. If in my individual capacity I am asked to say what my view on the subject is, why, then, I say at once I should be very glad to see a state of public opinion in this country which would admit of the adoption of the policy of preferential arrangements with our Colonies. But in saying that I absolutely decline to pin myself to any particular method of carrying that policy out. I do not think my right hon. friend the Member for West Birmingham would say that this particular part of his plan is in his view absolutely essential to the policy preference. Why was this 10 per cent. adopted in the first instance by my right hon. friend as part of his scheme? It was because, in order to avoid the imposition of an additional burden on the working classes it was necessary to remit part of the duties on sugar and tea, and, therefore, to make good the deficiency resulting therefore to the Exchequer. But that is purely a revenue question [Laughter.] Perhaps I have not made myself clear. It is admitted that the policy of preference cannot be carried out without a tax upon certain food imports from foreign countries. The suggestion of my right hon. friend the Member for West Birmingham was that duties should be placed on corn and meat and dairy produce, and that they should be taken off tea, sugar, and coffee. As the result of that change in taxation would be to produce a deficit in the revenue, of course it would be necessary to make good this deficit it in some way or another; but the particular scheme by which my right hon. friend proposed to make good the deficit is not one which is essential to the policy of preference. For my part, speaking in my individual capacity, while I am in favour of the policy of preference, if the Colonies are able and willing satisfactorily to meet us, I am not equally bound to approve of the method of carrying it cut which has been put forward and defended with such eloquence and ability by my right hon. friend the Member for West Birmingham. If protection is not necessarily implied in preference still less is it implied in the policy of the Government. [Dissent.] Surely hon. Members have arrived at a more accurate conception of the policy of the Government than to suppose that it involves the taxation of food products.

MR. BRYCE (Aberdeen, S.)

Do I understand the right hon. Gentleman to mean that his policy of retaliation will not take advantage of any duty on food I in order to carry out retaliation?

* MR. GERALD BALFOUR

I believe it has already been stated by the Prime Minister that his policy does not contemplate the taxation of food. [A UNIONIST MEMBER: Of raw material?] Of course not; for the objections to taxing raw material are more serious than the objections to taxing food. I said a moment ago that the policy of the Government was not inconsistent with free trade principles. I think I may go even further than that, and say that those who advocate the policy of the free hand for negotiation may fairly declare that they are truer friends of free trade than hon. Gentlemen opposite, who, while they praise free trade, are not prepared to make any sacrifices on behalf of it. They have a platonic love for free trade. They will not do anything for it. They will not fight for it. But we are prepared to fight for free trade, and to that extent I think we may claim to be truer friends of free 1rade than hon. Members opposite. The line we have taken is this, that the policy of peace at any price with respect to commercial and industrial matters ought to come to an end. We are met by two arguments. We are told that we have the power to retaliate already. We are also told that if we did possess this power it would be of no use to us. As to the first argument, we are told that we have only got to come to Parliament and ask in each case for certain powers, and to act upon the powers so given. I do not think that that is an accurate statement of the position. No doubt Parliament is omnipotent. Parliament could to-morrow reintroduce the system of protection. Parliament could, so far as theory goes, restore absolute monarchy in this country. But would anybody suggest that any Ministry would venture, in any single case, to impose for purposes of retaliation a duty which was incidentally of a protective character without having first got the general assent of the country to the change of policy which that involved? Hitherto we have observed the principle that taxation should not be put on except for revenue purposes, but if we are to have a free hand for negotiation we must abandon that principle, or regard it, at least, as a principle modifiable according to circumstances. Just imagine my noble friend the Secretary of Stat for Foreign Affairs, approaching a foreign Government under existing conditions with a threat to impose this or that duty unless adequate concessions were made in favour of British interests. It would be out of question for any Minister of Foreign Affairs to do that unless he had the mandate of the country behind him, otherwise he would be making a threat which he would know perfectly well he would not have the power to carry out; and the negotiator, on the other side, would know it also, and would naturally say." Your revolver is not loaded; you talk of putting on penal taxes, but we know that that is inconsistent with your general fiscal policy. "Unless we have a mandate from the country behind us we never shall have the power to negotiate with real effect. Every Government in turn is constantly addressing appeals and warnings to foreign nations against some proposed action hostile to our interests. Thos3 appeals are hardly ever effectual, and they never will be effectual unless the foreign country with whom we are remonstrating is aware that we have got the power of inflicting a penalty if our requests are not listened to. Then it is said," It is all very well to talk about retaliation, but how are you going to retaliate against countries like Russia and the United States which send you raw material in a very much larger proportion than any other commodity? Well, of course it would be more difficult for us to apply pressure to Russia and the United States than to some other countries which could be named. But really, the passion for uniformity of hon. Gentlemen opposite seems to me to amount almost to a mania. Because a preferential tariff might affect different colonies differently, therefore we are to have no preferential arrangements at all. And, similarly, because we are not in a position to apply as severe a pressure to the United States or Russia as we should be say, to Germany and France, therefore we are not to attempt to apply pressure at all. Surely such an argument as that answers itself.

There is one other argument to which I would refer in this connection. It is perfectly true that we should find great difficulty—I fully appreciate it—in applying pressure to the United States; I believe that continental countries, which, as we all know, are equipped for retaliation, have not been successful in bringing pressure to bear on the United States. But they have successfully brought pressure to bear on other countries, though not on the United States. We have not merely to consider freedom of negotiation for the purpose of securing favourable commercial treaties, we have also got to defend our industries against illegitimate and unfair competition. One advantage secured by the Sugar Convention was that you had the representatives of all the principal commercial countries in Europe laying down the principle that high protective duties could under certain circumstances constitute a bounty. I believe that is absolutely true, and the whole system of modern dumping undoubtedly rests on the two factors—first, combination among the producers, and, secondly, the protection of a high tariff. Now, if we cannot induce the United States to lower their tariff, at least, it will be possible for us to provide against the kind of bounty which arises from the combination of producers operating from behind the shelter of a protection system. [An. HON. MEMBER: How?] It is possible to put on duties if necessary.

* LORD HUGH CECIL

On all goods of that class?

* MR. GERALD BALFOUR

I am not saying what we should do, but how it is possible—namely, by the imposition of a tax which would act as a countervailing duty, or even by the, in some way, more extreme measure of prohibition that we have taken in connection with the Sugar Convention.

* LORD HUGH CECIL

Do you mean on all goods of one class as was done in the case of sugar.

* MR. GERALD BALFOUR

I am very sensible that it is impossible to cover so vast and complicated a subject as this is in a single speech. I have not-entered elaborately into statistics on this occasion, for it is really only the policy of the Government with which I have to deal. That that policy is directed against a real and serious evil no one attempts to deny, and if I were to go through all the figures in the Blue-book bearing on this part of the subject I should only be proving in detail what is already admitted on all sides. ["No"] The hon. Gentleman must really be a very strange free trader if he does not admit that the closing of the markets of foreign nations to the exports of this country is a serious evil. Hon. Gentlemen opposite are of opinion that our remedy would be ineffectual, if not mischievous. Well, we do not agree, and we mean to ask the country to let us try the experiment. ["When?"] Of course it would be far easier to sit down and do nothing. For my own Department in particular Fiscal Reform means a vast addition of toil, trouble and anxiety. But we advocate the policy because we are convinced that it is required in the best interests of the commerce and industry of the country. I myself think that it would have an even wider influence and effect. I believe that the knowledge that the British market is always open to the exports of foreign countries, no matter what fiscal policy foreign countries may adopt towards us, has contributed very materially to encourage foreign nations in erecting those really ridiculous tariff barriers against each other and against us; and I regard it as not only possible, but probable, that if this fiscal reform, which hon. Gentlemen opposite deplore as retrograde, is adopted, it will contribute to the establishment, not, indeed of universal or complete free trade, but at least of a freer exchange of commodities than now between the nations of the entire civilised world.

* MR. EMMOTT (Oldham)

said the House had just listened to a very remarkable speech. It was extraordinary in the fact that the President of the Board of Trade had declared himself a free trader although he was sitting by the Chancellor of the Exchequer and the President of the Local Government Board, both of whom had so loudly proclaimed their sympathy with the right hon. Gentleman the Member for West Birmingham. Before proceeding to comment upon that speech he wished to express his regret that the Prime Minister and the late Colonial Secretary were not present during this debate and more particularly in regard to the cause which had led to their absence. The President of the Board of Trade commenced his speech by complaining that the Opposition had raised this debate on the Address. What were the facts of the case? Last year they were prevented from having a debate upon this question on a fair issue, because the Government were still in a state of uncertainty and had not declared their policy in any shape or form and they would only allow a debate on a vote of no confidence. Now when the policy of the Government had been declared they were challenging the protectionist views which had been promulgated by various members of the Government. The right hon. Gentlemen had imputed some paltry manœuvre to them and he said this Amendment had been designed to capture a wing of the Conservative Party. It appeared to him that if they had put down a Motion on another day they would not have been allowed to vote on this issue at all, because it would have been altered by some Amendment connived at by the Government, which would have obscured the issue. He felt some sympathy with the right hon. Gentleman in the somewhat weak defence he offered for the Government. The right hon. Gentleman said it was in accordance with precedent for some difference of opinion to be allowed to members of the Government. He himself did not think it was, when the real question they were considering was protection applied to the food of the people. No Government had any right to speak with two voices on a question of such vital importance to the people of the country. In regard to retaliation, the right hon. Gentleman had condescended to tell them that Parliament was to keep the power in its own hands of agreeing to or disagreeing from any proposals that were to be made. Surely Parliament had that power now, and he did not see what other power was wanted. When questioned further, the right hon. Gentleman said he could not say that Parliament was to have the power to deal with the matter item by item. He must say that at this moment he had not the faintest idea how the Government proposed to carry out the policy they announced. They were told that they ought to have waited for the Prime Minister. Were hon. and right hon. Gentlemen opposite such a set of weak, poor, miserable people that they could not do anything without the head of the Government? Did they not know what their policy was? If they did know, why did they not tell the House? Take the case of Russia and America, to which the right hon. Gentleman referred. The policy of the Government was that in cases of outrageous unfairness we were to be allowed to retaliate. What was generally understood by outrageous unfairness was when very high tariffs were put on the imported goods of countries like Russia and the United States. If it was difficult to deal with Russia and America, how were they going to deal with France and Germany and other countries with a less tariff? If they set up protectionist duties against France and Germany unless they agreed to our demand, and no tariff was set up against Russia and America, the position would be ridiculous. If that kind of thing was done it was perfectly certain that we were going to be landed in tariff wars, and he thought right hon. Gentlemen opposite had no idea what that meant to the trade and industry of this country. Where had retaliation been successful? What reason was there to suppose, from the history of recent tariff controversies, that retaliation would be successful?

* MR. GERALD BALFOUR

Retaliation is only a pis-aller. There is no negotiation possible unless you have the power of retaliation behind it.

* MR. EMMOTT

said he wanted to put this question: Sixty years ago, when this country had the power of retaliation, why was it given up? Why did Peel and Gladstone say they were going to fight protective duties by free imports? They slid they adopted that course because they had found that, despite all the great tariff that they had, it was no use for purposes of negotiation.

* MR. GERALD BALFOUR

pointed out that twenty years later Mr. Gladstone reversed that position by making the Cobden Treaty.

* MR. EMMOTT

said the Cobden Treaty was not in any sense directed against the principle of free trade. It made for free trade.

* MR. GERALD BALFOUR

Our object is to make for free trade also.

* MR. EMMOTT

admitted that, and went further than that. As a matter of principle, if retaliation had been successful in the past, if it was likely to be successful in the future, he fully admitted there was nothing against the principle of free trade in retaliation.

SIR GILBERT PARKER (Gravesend)

asked if there had not been a recent successful case of retaliation between Canada and Germany? Had not Germany recently made concessions in favour of Canada because of Canada's retaliatory action? He would also like to ask the hon. Member—

* MR. SPEAKER

Order, order! This kind of question would be more properly put into a speech.

* MR. EMMOTT

said the question of Canada and Germany raised a very largo point which he had not time to go into now. If Germany had carried out the implied threat of imposing extra duties against us because Canada had given our goods the preference, that was one of those cases which he would have thought was outrageous unfairness, and if there had been any means he would have gone to all lengths to stop it—any means without injuring ourselves. His constituents were vitally interested in these important matters. They were interested in two trades—the cotton trade and the textile machinery trade. In his constituency there were three men employed in the export trade for one employed in the home trade. They were told that "cotton would go, that sugar had gone, that silk had gone"—although he saw by a recent Government Return that in fifty years our exports had increased 33 per cent., whilst the exports of France had only increased by 16 per cent. It was far from his mind to say that everything was for the best in this country, and in the iron, wool, and cotton trades he admitted there were circumstances which required careful attention. But if there was reason for care and attention to these matters surely it was all the more necessary that no quack remedy should be applied. And when he was told by modern prophets that cotton would go he replied at once that cotton would go if they applied the quack remedy of protection. He saw some figures the other day which showed that to build a cotton mill of 100,000 spindles in this country cost £125,000, to build the same mill in Germany cost £185,000, in France £200,000, and in the United States £250,000. The principal reason for the difference between those figures was because here we had free trade and in all the other countries they had protection. The costs varied according to the degree of protection in those various countries. Take the case of Germany, where the cost was £60,000 more than here. The German must allow 5 per cent. for interest and 5 per cent. for depreciation. That was, he had got to make £6,000 a year more than the Englishman to get the same return, so the Englishman could afford to pay than shillings a week more to his work-people and still make as large a profit. The practical result of free trade, had been that in any open market we had practically the predominance. In India, for example, for every 100 yards of cotton cloth ninety-eight was sent from this country. Therefore we had little to gain by protection. We had £70,000,000 or more of exports that we might lose if the cost of making these goods WAS made materially dearer.

It being half-past Seven of the Clock the debate stood adjourned till this Evening's Sitting.