FISCAL RETALIATION.

HC Deb 28 March 1905 vol 143 cc1457-502

*MR. JOSEPH WALTON (Yorkshire, W.R., Barnsley)

said he rose to call attention to certain proposals made by the First Lord of the Treasury, and to move the Resolution, "That, in view of the declarations made by the Prime Minister this House thinks it necessary to record its condemnation of his policy of fiscal retaliation." The Prime Minister had declared that he proposed to alter fundamentally the fiscal tradition which had prevailed during the last two generations; that he desired freedom of action in order to mitigate the injury done us by hostile tariffs by the employment of the weapon of retaliation; that he wished to check the importation of foreign goods which, because they were bounty fed or tariff protected abroad, were sold below cost price here; that he did not desire to raise home prices for the purpose of aiding home production; that a tax upon food was not, with public opinion in the state in which we now found it, within the limits of practical politics. The Sheffield, Edinburgh, and half-sheet-of-paper programme on which apparently the Prime Minister proposed at some time or other to appeal to the country comprised, therefore, a policy of retaliation which could not be effectively carried out until food and raw material were taxed, and a Colonial Conference to consider a policy of preference, to which again effect could not be given unless food and raw materials were taxed. The proposals of the Prime Minister were, therefore absolutely inconsistent and impracticable. Having placed this policy before the country, the representatives of the people in the House of Commons bad a right to demand from the Leader of the House a Definite statement as to how he proposed to give effect to his policy, and that right could not be diminished by any attempt on the right hon. Gentleman's part to ride off on the plea that the present House of Commons would not be asked to deal with the question. They required concrete examples as to how the right hon. Gentleman would proceed to mitigate injury done by hostile tariffs. The House was entitled to know whether the Prime Minister intended to ask Parliament to confer general powers on the Executive Government, or whether the sanction of Parliament must be obtained in each case? He could not accept the Amendment of the hon. Member for South-East Durham because that Amendment limited the condemnation of the fiscal retaliation proposals of the Prime Minister to simply so far as it was destructive of Parliamentary control over taxation. They could accept no such Amendment because they condemned the proposals of the Prime Minister and his policy of fiscal retaliation without any limitation whatsoever.

Were the Prime Minister in his place, and he craved the indulgence of the House in the somewhat difficult position in which the right hon. Gentleman's absence had placed him, he would have asked him soma questions with the object of eliciting a definite statement as to the way he proposed to give practical effect to the proposals he had made. Would he begin by imposing retaliatory duties on imports from the highest protectionist countries, the United States of America and Russia, because if he did he might point out that more than eleven-twelths of the imports from America consisted of food, raw material, or partially manufactured material for further manufacture Indeed, America only sent us £10,000,000 worth of fully manufactured goods against which we exported to America not less than £15,000,000 worth of manufactured goods. Eleven-twelfths of our imports from Russia consisted of foodstuffs and raw material. We exported to Russia three times more manufactured goods than she exported to us. Would not both the United States of America and Russia, therefore, be in a position to hit us harder than we could hit them in any tariff war? How would he mitigate the injury crone by hostile tariffs and bounty systems of our own self-governing Colonies? What would he do with regard to Canada? We received from Canada £23,000,000 worth of food, raw material, and partially manufactured goods. On the £10,000,000 worth of exports we sent to the Dominion she, after allowing us thirty-three and one-third rebate, taxed them no less than twenty and a half per cent. The present tariff arrangements with Canada were in her favour to the extent of some £2,000,000 a year; in addition to that she granted to her iron and steel manufacturers bounties to the extent of 2½ millions of dollars. The right hon. Gentleman the Member for West Birmingham protested loudly enough against the strangling of the sugar trade of the West Indies by the sending of bounty-fed sugar to this country, but no word of protest had been heard about the strangling of the iron and steel trades of this country by this system of Canadian bounties. In addition to that the British taxpayer bore the cost of Imperial defence, and Canada enjoyed the benefit equally with ourselves at no cost to herself. In regard to New Zealand and Australia the hostile tariffs were higher than those of Canada.

There were only two courses to be pursued; one was to allow absolute fiscal freedom to every part of the British Empire, and of that lie quite approved, or retaliatory tariffs must be applied to our protectionist Colonies as well as to protectionist foreign nations. The Prime Minister asked for liberty to negotiate and for something to negotiate with. Parliament had full power of negotiation already. That was shown in the case of the Sugar Convention, and they knew the result of that interference with the freedom of trade, which was an object lesson if one were needed. The Government had full power in negotiating the Anglo-French Agreement, greater power, probably, than they would ever have again; but if that were considered from the standpoint of our commercial interests it was a most disappointing agreement. Not only did the Prime Minister acquiesce in the abolition of our treaty trading rights with Madagascar, but gave valuable concessions to France in Morocco and West Africa, and in return the Government obtained no increase whatever of trading facilities in any part of the French. Empire. How would the Prime Minister prevent the dumping of foreign goods here below cost price? A uniform tariff on all imported goods would be protective and would apply to goods not sold below cost price, but if imposed on consignments sold below cost price, how would the Prime Minister detect them? Did he propose to fix a scale of prices for all articles? This would need revision, with every improvement in machinery, with every change in the rate of wages in any part of the world? That part of the scheme was totally impracticable; it was impossible to distinguish between goods which had been and which had not been dumped.

What had been the outcome of tariff wars between other nations? Lord Monson, in his Report on Tariff Wars between certain European States, said— The results of the tariff war between France and Italy seem to have been as disastrous to the two countries engaged in it as were those arising from the war between France and Switzerland. Then, again, they had the experience of Germany, whose negotiations of her new commercial treaties illustrated in a striking way the futility of the policy of seeking to break down tariff barriers by erecting them at home. Germany had negotiated seven new commercial treaties, and in only two of those treaties had she succeeded in renewing them on the old conditions. Germany had raised her tariff wall before entering into negotiations, but unfortunately for her the nations with whom she was to negotiate retaliated by raising their tariff walls, and the consequence was that in the case of five of the renewals Germany paid higher duties than she had previously to pay under the old treaties. Another investigation showed that while on 6 per cent, of her exports Germany had secured concessions on the old duties, on 46 per cent. of the exports the tariff had been increased. Were the Prime Minister present he would ask the right hon. Gentleman whether in his opinion the result of fiscal retaliation on the part of other nations had been such as to encourage us to embark on similar adventures. Tariff wars dislocated trade, caused widespread distress, inflamed international animosities, and left tariffs at the end much the same as they were at the beginning. Did protectionist countries using retaliation obtain more favourable terms from other protectionist countries than we did? Did not we enjoy in all markets equal terms under most-favoured-nation clauses? Was not the ability of protectionist countries to gain access to protectionist markets and great neutral markets, such as China and India, less than ours, owing to low cost of production arising from our system of free imports?

A policy of retaliation would, in his opinion, ruin the trade of this country. In 1902 the orders for finished iron and steel in this country required not only the whole production of pig-iron in the United Kingdom as well as the stocks on hand, but the importation from other countries of 1,500,000 tons of iron and steel mainly in a partially manufactured state. The great and most serious difficulty which confronted the iron and steel industry of this country was the alarmingly limited resources of iron ore and iron stone. The 1,500,000 tons of partially manufactured iron and steel which was supplied to us was largely supplied at a less cost than we could produce it at, and if protectionist countries like Germany and America, through their protectionist policy, made their own people pay a higher price and enabled us to purchase here at less than cost price, and enabled our iron and steel works to be fully employed, in his opinion it would be an absolutely fatuous policy to prevent the influx of such supplies by any system of fiscal retaliation. The right hon. Member for West Birmingham had said in 1903 that the British market was to be invaded by the dumping down of millions of tons of American iron and steel, but as a fact we had imported less from, and had exported more to, America in 1904 than we had done in previous years. That was another instance of the baseless prophecies of the right hon. Gentleman the Member for West Birmingham. The shipbuilding trade depended for its prosperity on having cheap iron and steel, and it was due to our free imports that we could build ships 40 per cent, cheaper than any other nation in the world. It was on our policy of free imports that we had built up our great shipping industry, and it was owing to that that we were at the present time the carriers of more than half the trade of the world.

Retaliatory duties would inevitably increase prices and injure the home consumer; they would reduce the quantity consumed and increase the number of unemployed. If one trade was protected, how could similar protection be denied to all other trades and to agriculture? Would agriculturists allow every trade to be protected whilst foodstuffs came in free? The right hon. Gentleman the Member for Sleaford, in a speech at the London Chamber of Agriculture in 1903, said with regard to the Government policy of retaliation— There must be a general scheme in which agriculture as well as the manufacturing interests of the country must be considered. He asked the meeting to— make it perfectly clear that in any changes which are to be made agriculturists expect and are determined that they shall be taken into account. This was the opinion of another great statesman— As to the prospect of any return to protection in any shape or form, I think it is inconceivable that the agricultural interest would allow manufacturers to be protected while food imports went free, and I think it is equally improbable that the working classes of this country will ever again submit to the sufferings and to the miseries which were inflicted upon them by the Corn Laws in order to keep up the rents of the landlords. If that is the programme of the Tory Party, we have only, in answer to it, to recall the history of those times when protection starved the poor, and when the country was brought by it to the brink of revolution. Remember the description which was given in the verse of the Corn Law Rhymer of the sufferings endured by the people and of the burning indignation the sufferings called forth— 'They taxed your corn, they fettered trade, The clouds to blood, the sun to shade, And every good that God had made They turned to bane and mockery, They knew no interest but their own, They shook the State, they shook the Throne, Oh, years of crime! The great and true, The nobly wise—now, not the few— Bid freedom grow where Corn Laws grew, And plant it for eternity.' That is not a retrospect which I think would be favourable to any Party or any statesman who should have the audacity to propose that we should go back to those evil times. Those were the words of the right hon. Member for West Birmingham, spoken at the Eighty Club on April 28th, 1885. It might be said that that was ancient history. He observed, however, that the right hon. Gentleman, in the interesting correspondence between himself and Lord Salisbury, was, as usual, wrong in his dates. He made a quotation from a speech which he said was delivered by the late Lord Salisbury in 1895, but which was in reality made in 1885. The right hon. Gentleman said that Lord Salisbury approved of retaliation, but he concealed from us the kind of retaliation contemplated by Lord Salisbury, which was made clear in his speech of May 19th, 1892, when, referring to the use of the weapon of retaliation, he used these significant words— We may fairly use our power over an importation which merely ministers to luxury in order to maintain our own in this great commercial battle. This showed that he had not the intention of placing retaliatory duties on our imports of food or on manufactured goods, but only on luxuries.

There was no intermediate course between adhering to the present system of freedom of imports and the adoption of the policy of the right hon. Member for West Birmingham. Retaliation was required, but it was not the sort proposed by the Prime Minister. We needed to retaliate by the adoption of an educational system superior to that of any competing nation; by the adoption of up-to-date methods and machinery in our manufactories, by a better knowledge of chemistry, by the employment of an increased army of experienced commercial travellers, by the reorganisation of our Consular Service, and by the employment of efficient trade agents in our self-governing Colonies, where foreigners had a Consular Service, and we had no trade representatives whatever. By those measures our commercial prosperity would be genuinely increased. Our commercial salvation depended on the maintenance in its entirety of our system of free imports, which enabled manufactured goods to be produced at a low cost. As a result of the policy of free imports our exports at the present time equalled those of the United States and Germany combined, though they possessed three times our population; and by that policy we were able to retain a predominant share of the trade of the great neutral markets of India and China. The policy of the Prime Minister was ignominiously rejected at the Southampton Conference, only receiving thirteen votes, yet subsequently to that the Prime Minister, addressing a Primrose League meeting, said, referring to his political leadership, that his task would have been impossible without the loyal and affectionate support which he had never been denied. Then came the letter of the Tariff Reform League of March 14th, which described the policy of the Prime Minister as a colourless production, and as the putting of a Departmental blunderbuss against a foreign Maxim gun, and continued— We should say frankly and honestly that retaliation is damned; it is hopeless, viewed from any aspect, and the sooner it is dropped the better for the Unionist Party and for all concerned. Then there was the situation at Greenwich, where the right hon. Gentleman the Member for West Birmingham advised the starting of a tariff-reform candidate against the Government candidate. And yet the Prime Minister took it all "lying down." In his Sheffield speech the right hon. Gentleman said— I have been asked to give a lead. I think that is a reasonable request. A man who, however unworthy, is called upon to lead a Party must lead it, and so long as I am in that position I mean to lead it. If it was necessary to give a lead at Sheffield, how much more necessary was it on Wednesday night last, when the policy of the right hon. Gentleman the Member for West Birmingham was under consideration. The whole nation felt that on that occasion the Prime Minister displayed an unworthy lack of courage—["No"]—but to-night the House was confronted with a still more extraordinary political situation, when the only lead given to his followers by the Prime Minister was the recommendation to take a night out. Possibly the tariff-reformers had paired with the "half-sheet-of-notepaper" men. He hoped the Prime Minister was spending the night in meditation, and that, as a result, some beneficent influence would exorcise the evil spirit of retaliation which had possessed him too long. The House had witnessed many adroit manœuvres, subterfuges, and evasions recently on the part of the Prime Minister, but surely the climax had now been reached when he had found it needful to resort to the discreditable and un-English device of withdrawing the entire Unionist Party from the House—["No"]—to prevent its disruption. Attacked by a numerically smaller force, at the cry of "hands up!" they had capitulated bag and baggage. Was ever a great political Party placedin such a humiliating and ridiculous position? Perhaps the Prime Minister preferred to give further enlightenment to the House and the country by means of another shilling pamphlet. Whether that was so or not, his refusal to be in his place to meet and answer the criticisms levelled against the fiscal changes he himself had propounded was treating the House, of which he was the Leader, with contempt. The right hon. Gentleman had shown a lack of courage and of straightforward statesmanship, and a flagrant disregard of constitutional and Parliamentary traditions which the whole nation would deplore and resent. A blow had been struck at the dignity and efficiency of the House of Commons as a deliberative Assembly which would lower the whole tone of Parliamentary life. His conduct had confirmed the growing feeling that the policy of retaliation was never seriously intended, that it had been advanced, not as an honest and practicable policy for the State, but merely as an ignoble Party expedient, and it deserved the emphatic condemnation of all who had the well-being and prosperity of the country at heart. He begged to move.

*MR. MOULTON (Cornwall, Launceston)

It would be difficult to frame a Resolution which I could feel more pleasure in seconding than the one now before the House, which, in perfectly simple and unqualified terms, denounces fiscal retaliation. I regret, for the sake of the House, that the debate is being carried on in the absence of the one Member who is responsible for agitating the country from one end to the other by the suggestion of this as the future policy of England. The withdrawal of the Government from the House on the present occasion cannot be defended. The withdrawal of last week might have been defended on the ground that the Resolution was directed against the policy of a private Member; but to-night the Motion impeaches the official policy of the Government, for which the head of the Unionist Party is certainly going to ask the support of his followers and of the country. It is the goal towards which he has represented himself as striving, and that he should think that the one place where even-handed debate is possible is the one place where it is prudent not to be present to defend that policy, shows that he realises that the triumph of last week over the fiscal policy of his—shall I say "colleague" or "rival"?—was only the prelude of what is to be the verdict of the House on his own. But to me the chief interest of the present occasion does not turn upon the conduct of the Government or its Head. It does not really matter who it is who has propounded the policy of retaliation. The whole thing is so hateful that one is almost glad to have an opportunity of publicly examining its nature and methods and of reminding the nation of the policy by which it has gained its greatness, and making clear to it what it is that is proposed should be substituted for it.

I refuse to deal with the question in a purely dialectical manner, as though I were a philosopher discussing the possibilities of one system or another in imaginary realms. The question is "what is to be the fiscal policy of England?" and in answering this it is necessary to consider from what we start. What is the United Kingdom now? It is a free-trade country, enjoying the advantage of the most-favoured-nation clause throughout practically the whole world. The result is that it is a country in which the cost of production is the smallest, which has accordingly unchallenged superiority in neutral markets and is able to base this its commercial superiority on no starvation or underpayment of its working classes, but on favourable conditions of labour and the payment of wages which I believe are higher in their purchasing value than those paid in any other portion of the world.

MR. HUNT (Shropshire, Ludlow)

Then what about the 12,000,000 starving people?

*MR. MOULTON (continuing)

I submit therefore that this being the present state of affairs, we have a right to demand that, before the existing system is abandoned, the supporters of retaliation should show us "a more excellent way." What is that more excellent way? The proposal is that we should adopt as an integral, nay, as a fundamental part of our fiscal policy—retaliation. Tariff-reformers declare that the country is being ruined by hostile tariffs, and that fiscal retaliation, and it alone, can rid us of them. Let me examine for a moment the first of these propositions. Is it a fact that hostile tariffs do us so much harm? I have given considerable thought to the matter, and I doubt whether any more advantageous position is possible than that of being the one free-trade nation in a world where the great producing countries are protectionist. English manufacturers make many a bitter lament that the United States market is closed to them by hostile tariffs. But if the United States had taken up free trade twenty years ago, what proportion of trade in neutral markets would this country have had? The position of that great country in regard to the amount of its exports, with its genius for organising industry and production on a large scale, is pitiable as compared with the position of Great Britain, which in later years has not shown anything like the industrial genius of her transatlantic cousins. Why is it? Because the United States, having adopted the principle of inflating profits at the cost of the community by protection, is unable to compete with this country in cheapness in foreign markets. No doubt the adoption of protection by the United States has been an injury to the world in that it has cramped and fettered the production of that great country, thus making less the total amount of commodities to be divided amongst and enjoyed by the people of the world. But it has increased the fraction of the total production that Great Britain has enjoyed. It is a fallacy to think that we suffer a special and peculiar injury from the protective tariffs of the great producing nations. On the contrary, our free trade and their protection combine to enable us to produce at lower cost than our rivals, and under the working of the most-favoured-nation clause this gives us a commanding advantage over all of them in each neutral market, and over all but the home producer in each protected market. I therefore have a feeling of comparative content, in spite of the unwise laws, as I consider them, which different countries have made to prevent imports.

So much for the alleged wrong. Now as to the suggested remedy. What is to be done under this system of retaliation? We are not talking about insolent tariffs, things of the nature of the Berlin Decrees, where a foreign Power combined fiscal policy with national insolence towards Great Britain as a nation. Questions of that kind do not belong to fiscal policy, but concern the dignity of the nation. What we are dealing with is the case of a nation which, in the exercise of its undoubted powers as a sovereign State, has chosen to adopt in its fiscal system an import duty on certain subjects of commerce, pointed not at this country only, but at the whole world outside its own realms. No doubt such a duty handicaps us in that market as against the home producer, but every one of our competitors, with the exception of the home producer, is similarly handicapped thereby. But, if we object to the duty, how does retaliation help us to get rid of it? Are we to put a retaliatory tax on those goods? Nonsense. Those goods, by very hypothesis, wore goods that we exported, not imported. Some other goods have, therefore, to be chosen on which to retaliate. What goods are those to be? They may, I suppose, be any goods, provided they are malevolently chosen. But when the tax is put on, against whom is it to be imposed? We cannot insult a nation by putting the tax only on goods coming from it; the tax must be imposed on all goods of that particular kind, wherever they came from, and so our great system of so-called justice would be inaugurated by punishing the innocent with the guilty, and making all nations which feed us with those particular goods bear a retaliatory tax which, even according to the theory of the Prime Minister, only one of them has merited. And who is it, after all, that we have punished? We have punished our own fellow-subjects by not allowing them to buy those goods as cheaply as they might otherwise have done, and we have not directly interfered with or hurt any foreign person. It should be noticed, too, that we have not even retaliated unless we have put on a protective tax. If the goods are goods that we cannot produce, the imposition of the retaliatory tax handicaps alike all the producers who send those goods to us, and by handicapping them alike punishes no one.

The only way in which retaliation can be effective is that the duties imposed should be protective, that they should be in respect of goods that we can and, under those circumstances, will produce for ourselves. Free-traders who are hesitating on the edge of retaliation should therefore remember that even on the contention of its supporters retaliation can only succeed where it brings with it the favouritism and corruption of protection. It we tried to make our retaliation more pointed, and were mad enough to put the tax exclusively on goods coming from one nation—which had done us no wrong as compared with the rest of the world—the consequences would be far more serious. Even if it did not resent the treatment as a national insult we should incidentally lose the advantage of the most-favoured-nation clause. This would bring on us higher duties on all sorts of other things, the retaliation in respect of which would affect a larger and larger ring of nations, and we should be in an embroglio the end of which no one could foresee. No. Retaliation is impossible in a free-trade nation. It is possible only if we begin by making the nation a protectionist nation, and then proceed to bargain with one nation and another to take oft those protective duties in the hope that we shall induce them to treat us more favourably. That is the only possible method of working retaliation, and I ask the House to compare England as she now is with England as these retaliating tariff-reformers would make her. We have now the cheapest production, and we hold our markets by offering to other nations goods cheaper and better than they can be obtained from countries where prices are artificially swollen. To what should we then trust for our markets? We should have to trust to intrigue, treaties, and diplomacy, and we should no longer have the advantage of cheapness of production which has kept us so high above our rivals. And we should not use our new weapons well. As long as England retains her great qualities she will be beaten at the game of commercial diplomacy. I shall never forget a business man saying to me, in an injured tone, in reference to our rule in Egypt— Sir Evelyn Baring ought never to be left there. Look here, representatives of other nations use political influence, but he will not; he leaves me to my merits. So long as England has that sense of fairness which prevents her using political influence in the way other countries have too often used it she will always be beaten in the attempt to get by diplomacy the advantages which at present she secures by efficiency. Moreover, the advantages gained would be distributed by the Government among those trades which, it had chosen to foster, and thus favouritism, corruption and every one of the other evils which free-trade Members opposite had denounced as following protection must come in with retaliation. It is idle for the Prime Minister to talk about using retaliation as a means of lowering hostile tariffs, and to say that in so doing he is not introducing protection because, if we threaten, they, like the coon in the story, will come down at once. The right hon. Gentleman has no such reputation as a dead shot, and he would find that he could not bring down Germany, France, the United States, and other protective countries by merely threatening to use his weapon, and if we once adopt protection even for the purposes of retaliation we cannot drop it again. If the Government used the weapon of retaliation, started protection, unnaturally fostered the development of trades, secured the investment of capital in those trades for national purposes and then proposed to go back to free trade, what would be the cry? The trades concerned would say, "You have used us for your national purposes; you have secured advantages for other trades by our investment of capital in the prohibited industries, and now you want to throw us over and leave us to bear our loss ourselves. "How will you meet such a claim? Is this to be the "more excellent way" for which this country is to be asked to abandon the dignified independence she now enjoys with all its glorious success in the world of commerce? Are we to engage in the perpetual struggle with other nations, using as our sole arm the vile thing protection which takes from the whole nation and puts into the pockets of the favoured few? When the question of the Prime Minister's official fiscal policy is discussed in the country I believe the answer with regard to retaliation will be as sharp and as decisive as it has been in reference to the suggestion of protection.

Why is it that this thing, which is so impracticable, has become a matter imperatively demanding consideration? Purely because of the political exigencies of the moment. I remember that two years ago when the right hon. Gentleman the Member for West Birmingham made his celebrated protectionist speech, I had just been reading a charming Japanese book on wrestling, where I learnt for the first time that the Japanese possessed a most magnificent school of wrestlers. They were well-nigh irresistible, and for this reason: they never opposed an attack; they yielded to it, and by yielding overthrew their opponent. For two years the country has witnessed an admirable wrestling match between the right hon. Gentleman the Member for West Birmingham, with his direct attack and strong intellectual muscles, and the far wilier antagonist who has upset him completely by yielding. No example of Jinjitsu—of "conquering by yielding" could be more perfect. We all remember how the right hon. Gentleman the Member for West Birmingham propounded his present scheme of protection. At first it hardly went beyond colonial preference, then 10 per cent, duties all round to support colonial preference, then the pathetic appeal as to our dying industries, and so on. It was started at a moment when the Prime Minister had been giving forth some strong free-trade utterances and yet to the surprise of the country they found the Prime Minister agreeing and agreeing with the Member for West Birmingham in each fresh development of his protectionist policy, till at last, although he painfully parted company with him, it was only in the way in which one says good-bye to a comrade who is going to do a difficult work which home duties prevent one's doing one's self, with whom one has the deepest sympathy, and for whose success one offers up the warmest prayers. Protection had won all along the line! The Prime Minister had capitulated to the Member for West Birmingham. That was how it appeared to be at first—and certainly the attack was a strong one. It was not the first time the Member for West Birmingham had tried to get a relatively greater importance in his Party by starting new doctrines which he trusted would not be acceptable to his nominal leaders; he is a master at that game, he has met with hard knocks in it in the past, but this time, the extraordinarily rapid acceptance by the Prime Minister of all that he put forward must have made him think that he was going to have an easy victory. But he is on his back now! The result has convinced me that the Japanese are not only amongst the first military nations of the world, but are by far the most dangerous wrestlers. It was in the process of this wrestling bout that the suggestion of retaliation as our future fiscal policy was devised, and the more I ponder over it the more keenly do I feel how admirably it suited the position and the purposes of the Prime Minister. It has enabled the right hon. Gentleman to rule a Party composed of people holding diametrically opposed opinions. If he turns to the protectionists he can say, "What more can you want? I say retaliation must be introduced in order to stop tariffs which kill our industries. You point out that all our industries are dying, so that it is obvious that retaliation means universal protection." Then turning to free-traders he can say, "Retaliation is a thing of which we must regretfully contemplate the possibility. But I am not going to use it protectively; I will use it only where it is sure to succeed. So that protection will never be more than a threat. You as free-traders are able to judge how sure it is to succeed; if you think it will never succeed, you may be sure I shall never use it." In that way, while in form he condemns free trade, speaking of it as a fiscal policy which must be utterly reversed, he is able to treat it with the most extraordinary leniency in any and every concrete instance. He has never stated any one case in which he would use retaliation. The country has always been, and still is, left to conjure up fiscal nightmares in the hope of discovering what would induce the right hon. Gentleman to put his new system into operation. If, being an incurable lawyer, I may describe in legal phraseology his treatment of free trade, I should say that the Prime Minister has tried free trade, and found it guilty, but instead of passing sentence has bound it over to come up for sentence when called upon, which, as everyone acquainted with the effect of that legal formula knows, means that it was let off entirely.

That is the history of the introduction of retaliation into the arena of politics. It shows the reason this question has been brought up, and I believe that when the political exigency which made it needful has passed away, the talk about retaliation will pass away also. But at the present moment the language of the Prime Minister with regard to free trade is minatory in the extreme, the only redeeming feature about it being that he laboriously assures us that he does it all out of love for free trade. The Prime Minister describes himself as so devoted to free trade that he would sacrifice anything for it—even free trade itself. That was the position so far as he was concerned. That, however, troubles my mind very little, but what does trouble me is the attitude of certain public men of to-day with regard to it. I am not speaking of protectionists, because they are perfectly right in welcoming retaliation. The more utterly retaliation fails in its object and the more foolish it is proved to be as an expedient for maintaining free trade, the more rapidly will it lead to what they wish to obtain, namely, protection throughout the land. Therefore I do not appeal to them. They neither understand nor sympathise with the aims or the beliefs of the free-trader, and if they are prepared to face the injustice inflicted on the home consumer by protection, I cannot say anything that would move them either on ethical or economic grounds. But it is the free-traders who dabble in retaliation about whom I feel concern. They are rarely to be found on this side of the House but many of those who have most stoutly championed free trade among the Unionist Party have gone perilously near to accepting retaliation as a compromise. I sympathise with their anxiety not to break up the Unionist Party. I accept the doctrine that at times great sacrifices are made and ought to be made to preserve the unity of the Party because Party in England means disciplined action. But the fundamental principles of a Party determine its very identity and when these are attacked or tampered with there is no place for such sacrifice. Principles of that importance ought to be avowed and lived up to every moment. I know that the Prime Minister has frowned upon those who are hearty free-traders. It is perfectly true that belief in free trade is not considered a mark of disloyalty to the Party opposite; it is only the honest avowal and the courageous defence of those principles of free trade that is considered disloyalty. I do not forget or undervalue all that Unionist free-traders have suffered in this way. But nevertheless they ought not to countenance those subtle devices by which the Prime Minister has succeeded in maintaining his position at little cost, in fact with nothing but the trifling sacrifice of a few of his most loyal colleagues and supporters. The evil free-traders are doing in dallying with protection is immense. I know that they guard themselves in words, but in political life conduct is more important than language. No doubt they think they are doing little harm because they thoroughly believe that the thing is impracticable. [No, no!] Yes, it is impracticable in the sense that a mountaineer would call an ascent of a mountain impracticable, not because you cannot go up that way but that you will break your neck if you do. In that sense retaliation is impracticable to a nation. But it is not impossible that a mad Prime Minister, supported by a foolish Party, might some day plunge them into retaliation, and bring upon this country all the national disaster which that policy would entail. Retaliation is impracticable as a working policy, but not impracticable as a policy which a foolish Party might attempt to carry out. By allowing this policy to be talked of as possible without expressing their dissent freetraders in the Party opposite are gradually giving strength to the idea that England may look to retaliation for its success in the future and anything that turns the British nation aside from looking solely to its own self-reliance and its own industry for its future success is an evil and a danger to the country. By allowing retaliation to be talked about in this way they are gradually sapping the independence of the British nation, and what is going to be the consequence of it? The consequence would be that they would gradually lose that which had given them their great commercial position in the past. Great Britain has shown to the nations of the world that it can get the greatest security at home by giving the widest freedom. It has shown that it can get the firmest consolidation of the Empire by giving the greatest independence and the most perfect self-government to its units. What I ask is that in its fiscal policy you should also cling to the great traditions of England, and trust its commercial greatness to the solid foundation of the efficiency of its service to the world. Our huge markets are open without fear or favour to those who will sell the cheapest, that is to say, to those who will require of us in return the least sacrifice. We in our turn ask only that our goods should be bought because we offer them at prices which entail the least sacrifice to the buyer. In that way this country won its position, and it will keep that position if it is content to continue in the same path and undisturbed face the difficulties that arise from the fiscal expedients of others, and not attempt to get acceptability abroad by irritating its rivals. We need have no fear of the future, so long as we thus rely solely on the efficiency of our own work, for the favour of the world will, in the long run inevitably fall to the lot of those who do it the best service.

Motion made, and Question proposed, "That, in view of the declarations made by the Prime Minister, this House thinks it necessary to record its condemnation of his policy of Fiscal Retaliation."—(Mr. Joseph Walton.)

MR. LAMBTON (Durham, S.E.) moved, as an Amendment, the addition of the following words at the end of the Motion:— "in as far as it is destructive of Parliamentary control over taxation." He said that it was a great disappointment to free-traders on that side of the House that now, at last, when, after many urgent inquiries, they were being allowed to have a free discussion of this question, their enemies, or, he would say, those who differed from them, were not there to meet them. They had loudly attacked them in the country; they were very dumb to speak in that House. He would like to meet them there personally, for there were many things one would like to say to their face which one did not wish to say behind their backs. But it was their duty as free-traders to proceed in a quiet way with the propaganda of free trade. His noble friend the Member for Greenwich, last Wednesday, compared the collapse of the Tariff Reform Party to the; retreat from Moscow; but it would not do to forget that after the retreat from Moscow there was a battle of Waterloo. He would not say anything in disparagement of those Gentlemen, but would strictly adhere to the old saying, De mortuis nil nisi bonum. The right hon. Member for West Birmingham, speaking on the Motion of the hon. Member for Oldham, had said that the free-fooders accepted the Government policy, and he himself had thereupon interjected the remark that they did not all accept it. The right hon. Member for Birmingham replied that there were very few of them who confessed that in the country. If it were not too egotistical, he would inform the right hon. Gentleman that in June last year he had a correspondence with the Conservative Association in his constituency, and the letters were published in the newspapers. The chairman of this association asked him to explain why, on three different occasions, he had voted against the Government which he was returned to support, the three occasions alluded to being the Morley Amendment, and the Pirie and Black Motions. In regard to his vote upon the last Motion the letter from the chairman of the Conservative Association in his constituency stated— It is difficult to reconcile that vote with the speech you made at Wingate on the 23rd of January last, in which you are reported to have stated as follows:— As regarded Mr. Balfour's policy he (Mr. Lambton) would support it as far as he understood it, the policy of free negotiation and of retaliation against any country treating us in an outrageous manner. He (Mr. Lambton) was quite prepared to say to Mr. Balfour—We will give up the idea that no tax is to be imposed except for revenue purposes. You may impose a tax upon foreign goods if we are outrageously treated in the countries from which they are sent, but you will have to come to the House of Commons to get it passed. If the House of Commons found that there was a good case, no doubt it would agree to such a tax. Beyond that he was not prepared to go.' To that letter he replied in the following terms— I have no report of my Wingate speech referred to by you, and the points you give seem substantially correctly reported; but of course they are only extracts, and do not cover my whole argument. I remember saying, that 'if Mr. Balfour's fundamental change in our fiscal policy only meant that we might abandon a tradition that every tax must he absolutely and pedantically for revenue alone, I had no objection, and as for negotiation End retaliation, that I believed we had the power now.' I also said that if the Sheffield policy was used to abet in any way the Birmingham policy I should vote against it. He thought his Amendment was an improvement upon the Resolution before the House. He had not upon this occasion come down to the House to support hon. Members opposite, but to support free trade, and he believed that the Resolution as it stood upon the Paper would hinder free trade. He could not agree with what was said by the seconder of this Resolution, for he did not believe that any hon. Member opposite would be able to go to any constituency in the country and honestly state that retaliation was an utterly impossible thing under any circumstances. What was fiscal retaliation? It was commercial war after all. They all knew the horrors of war by arms, but to tell him that in any part of England they would be able to find people ready to say that under no circumstances should this country indulge in a commercial war was, to his mind, a great mistake. [OPPOSITION cries of "No, no!"] The horrors of war were great, but there were worse things than war. At the present moment they were taxed to the extent of £60,000,000 a year for the purpose of retaliation, because, after all, the Army and the Navy were nothing else but weapons of retaliation. If they were outrageously treated by some foreign country, and treated in an insulting manner, they were ready to spend any amount of money upon retaliation. Retaliation, they were told, was impossible unless it was protective. He thought retaliation might be prohibitive, but that would not be protective. He did not wish to argue in favour of retaliation, but he thought that it was impossible for any statesman to lay down the principle 'that under no circumstances would he ever be able to propose in this country that they should undertake a commercial war against a foreign nation. He agreed that if any Government did undertake it, the Prime Minister should come to the House of Commons, produce his weapon and his estimate, and show exactly how he proposed to enforce his policy against the foreign country concerned. No doubt retaliation would put a tax upon this country. The Prime Minister had never yet told them how he intended to work his policy of retaliation. His view on this question was that they should be told plainly in the House of Commons whether the Prime Minister intended that retaliation before being applied to receive the approval of the House, or whether it was to be a weapon left to the Executive Government of the day to use. Last year they had some sort of an explanation from the right hon. Gentleman the Home Secretary, who defined the Prime Minister's policy as follows— The principles of the policy are that the Government, when conducting negotiations with foreign countries, should have the power when necessary to threaten retaliation, and that when the threat is insufficient that they should have power to carry it out. To his mind those words conveyed the impression that the right hon. Gentleman meant that this power should be vested in the Government of the day without coming to Parliament at all. The Prime Minister had told them that the policy he recommended was one which would enable the Government to deal, as far as retaliation could deal, with hostile tariffs, and to deal, as far as fiscal arrangements could deal, with the great evil of dumping. That statement showed conclusively that the Prime Minister did not regard retaliation in the same way as he did. His Amendment simply pointed out that it might be possible at some future time that Parliament would desire to retaliate against some foreign country. He insisted that the Prime Minister should be forced either to declare that he wished powers greater than the mandate of the House of Commons, or that his policy was distinctly a protective one with which free-traders could have nothing to do. He begged to move.

Amendment proposed— At the end, to add the words 'In as far as it is destructive of Parliamentary control over taxation.'"—(Mr. Lambton.)

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

MR. LLOYD-GEORGE (Carnarvon Boroughs)

said that the Amendment as well as the views of the hon. Member were entitled to the respectful consideration of free-traders, for he was one of those who had not been content merely to give lip service to the cause of free trade, for whenever there had been any Motion before the House bordering on free trade he had always given his vote for it regardless of the consequences. He regretted, however, that the Amendment had been moved, for it tended to confuse the issue. The hon. Member had dealt with a problematical state of affairs. Retaliation was war, and war was not a policy; it was the breakdown of policy. The Prime Minister had been dealing with the present state of affairs, not with what I might happen. The right hon. Gentleman said that owing to the tariffs which foreign countries levied against our goods I this country was being injured, and we I ought to have a weapon which would enable us to reduce foreign tariffs. That was a totally different state of things to that which was contemplated by the mover of this Amendment. The Prime Minister was dealing with the present I state of affairs. It was the right hon. Gentleman's policy that they were condemning, and it would be much better for the House to confine its condemnation to the fiscal policy of the Prime Minister without entering into the question of what was or was not likely to arise. But the Prime Minister declined to discuss this question in the House; so did the right hon. Member for West Birmingham. The discussion, however, was going on in the country. Fiscal reformers were circulating leaflets and making speeches; the fiscal flying squadron was still raiding the country; but they did not face their critics in the House. The Prime Minister had tried many a formula in order to secure unity; at last he had obtained one. He and his Party could not unite in a fighting policy, but they could all unite in running away. The Prime Minister had invited discussion of his views in the House and out of it, but when his opponents took up the challenge and offered discussion in the House the right hon. Gentleman said, "Discussion is a trap," and he warned his friends not to nibble at it, otherwise they would be caught. What a squalid ending to a great campaign. They all remembered with what pomp and circumstance the right hon. Gentleman the Member for West Birmingham started this campaign not very long ago, and how he received the blessing of the Prime Minister when he started. Wherever the right hon. Gentleman went fashion and wealth and rank rallied round him— The Assyrian came down like the wolf on the fold, And his cohorts were gleaming in purple and gold. What had happened now? And the tents were all silent, the banners alone, The lances unlifted, the trumpet unblown. Yes, even the trumpet was silent to night. He really condoled with the hon. Gentleman the Member for Sheffield. His affections had been trifled with in a very cruel manner, and continuing the quotation it might he said— And the idols are broke in the temple of Baal. That was the end of this great campaign. Not merely the right hon. Gentleman the Member for West Birmingham, but the Prime Minister was in it. The Prime Minister made speeches about the trade of the country; he said there was great danger, he talked about the peril to our Empire, and to our industries and he also had his remedy—retaliation He observed from a letter written by Lord Salisbury that that remedy was taken out of the family medicine chest Both of the right hon. Gentlemen had abandoned the controversy after barely eighteen months discussion.

The right hon. Member for West Birmingham once compared himself to Bismarck, who welded the German Empire together, first of all, by means of commercial unity—the man of blood and iron. What had happened to Bismarck now? He had fled from Gravelotte with his army at his heels. And there was the Prime Minister, who had been described by one of his admirers as the greatest military strategist since Wellington. What had become of Wellington to-night? He and Blucher had fled. It was true they had fled in different directions, but they had gone from the field of battle and left it entirely in the hands of the foe. What a contemptible ending to all the talk about the danger to the Empire and the method of federating it! Supposing it had been a, success instead of being a great failure, supposing the country had accepted it and the by-elections had gone their way, those tales of distress in our industries and about the unity of the Empire would still have been heard. But purely and simply for Party exigencies, purely and simply because the thing had proved unpopular in the country, they had abandoned the policy which eighteen months ago they regarded as essential to the industry and commerce of this country. This was a great change.

When this question was started the Prime Minister wrote a pamphlet upon it. [An HON. MEMBER: Two.] The right hon. Gentleman published one and the other was withdrawn. He had now withdrawn the second after an eighteen months run. That pamphlet was worthy of perusal at the present moment, not from the point of view of the supporters of the Prime Minister, but from the point of view of those who criticised him. The Prime Minister had a way of imagining that all difficulties disappeared by committing his reflections on the subject to writing. That was the case with the War Office. He undertook to rearrange the whole of the tactical defence of the Empire. He wrote, but did not publish, memoranda upon the subject. There were Parliamentary difficulties in that case exactly as there were here, and the moment they appeared he contented himself with the memoranda, and thought the whole subject was solved. The right hon. Gentleman could no more deal with the commerce of this country in a pamphlet than he could defend India by memoranda on the subject of military strategy. The way the Prime Minister had treated a first-class question of this character was really a degradation of the institutions of the country. When he started the question he talked about the peril to our industries; then when he found the new policy was not acceptable to the country he said it was a bore. There were hundreds and thousands of people to whom the question of the proper system of trade and commerce for this country was a matter of food and clothing and shelter. It was not a bore to them, at my rate, but that was the way the Prime Minister had thought fit to treat it. [An HON. MEMBER: He never said it was a bore.] He said soin a speech delivered at Glasgow. He said the whole subject was a bore. The hon. Member who interrupted him did not even know what his leader had said on the subject.

The Prime Minister's record on this subject was an extraordinary one. First of all he promulgated a policy upon this matter of life and death to the industries of this country, and then, having placed the policy before his Party, he ran away from it. What a leader for a Party! What a Tsar! He allowed his subjects to defy his ukases and even to fire at each other in the street; they could plot to assassinate each other round corners, they could do anything so long as they maintained him on his throne, and the House of Commons supported the Ministry. It was good enough to keep them in power and vote their salaries, but the House of Commons was not fit to express an opinion on the trade, industry, and commerce that affected their constituencies. This was treating the House of Commons with contempt. The country was taking note of the action of the Ministry in this matter. It had been the death of fiscal reform. It had brought fiscal reform into contempt. It could not have brought the Ministry into greater contempt than it was before; but this was not the way a great question ought to be treated by the Prime Minister of the country. When the Government had to decide between trade and the Empire on the one hand and a longer existence for itself on the other, the Prime Minister, with the desperate greed of a miser clutching at every extra day to add to his hoard, said, "Let trade and Empire go, and give me the extra eighteen months of power," There was a time when the Ministry which ought to be there, but which had now run away, represented all that was patriotic, all that was efficient, all that was courageous in the country, and to doubt it was almost equal to treason. What did they represent now? He knew of no greater criticism upon the democracy of this country than that it had taken seven years to discover the men who now governed it.

*MR. HUNT

said that they had been told that if retaliation were resorted to we should create animosities and irritate our rivals. Was not all commercial rivalry really the same as commercial strife? Did it make that strife less because we allowed our rivals to put their heels upon our necks? Was it not merely humbug to cry peace when there was no peace? In the fiscal debate last week those who believed in retaliation were subjected to the most fierce criticism that could be thought of from both sides of the House. They were told that they were afraid to face the question in the House of Commons, although they paraded their policy in the country. He begged to state that they were not the least afraid. They thought that they had got a good cause which was gaining ground every day in the country. It seemed to him that the reason their opponents were so desperately anxious to get the Government out was that they were afraid the country was being educated into understanding the folly of the free import system, and that their pet cries of big loaves, chained Chinamen, and dear sugar were beginning to be found out to be political humbug. Radical orators went about the country preaching the blessings of free trade which we had never had. What Mr. Cobden meant by free trade was free exchange between nations, not this one-sided absurdity which we had got at present. Go and ask any shopkeeper if it was any use being able to buy, however cheaply, if he was unable to sell. Surely this was the case with Great Britain to-day. Hon. Gentlemen opposite were apparently so thick in the head that I they could not see it. As we could not have real free trade, why should I we not take our share in regulating trade by retaliation, and getting back the power of bargaining possessed by every other nation? America had real free trade within her huge land boundaries? Why should not we get as near real free trade as possible within the limits of the British Empire, with the ocean for our highway? Other nations had used their fiscal weapons to the utmost, while ours were lying idle by our side with the greatest and best market in the world to back them. They had been called "whole-hoggers" and "little-piggers." It seemed hard that the free-fooders should not have a name too. Might he suggest that they might be called the tiny-winy wee-wee little piggy-wigs of all? Runtlings they called them in his part of the country. He thought when next they went to market they would have no new policy to offer for the present commercial stagnation, they would find no buyers, and be turned out into the wilderness to try and learn to look a little further than their noses.

The free-fooders had complained bitterly of the attacks made on the Unionist free-fooders by tariff-reformers, but had not the attacks in the House and out of it made by the free-fooders been very strong and very bitter? Had not the noble Lord the Member for Greenwich invaded Shropshire during his free food advocating tour? Might it not very well be that the shock of his oratory had blown the hon. Member for Shrewsbury off the fence on to the free-food side. Were tariff-reformers not to be allowed to retaliate? They had been told that retaliation in the form of taxing those who taxed us was a quack remedy. It was very curious that the huge majority of the doctors were on the side of the quack remedy. In 1880 Mr. McKinley said "The weight of nations is overwhelmingly on one side." Which was right—the British Government or the whole of the rest of the civilised world? Did it ever strike the noble Lord the Member for Greenwich and hon. Gentlemen on the other side of the House that it was possible that the free import system might be a quack policy and that the other policy might be the regular and the right cure? It had been stated that any form of protection, of which retaliation was one, would corrupt our public life, make people look after their own interests more than now, and divide classes. Did the people who employed this argument know that the chief reason why the American farmers were tumbling over the Canadian border was because the laws of Canada were strictly and fairly enforced whilst the laws of America were not? Yet Canada was a country which encouraged her own industries, protected her own workmen, and was ready to retaliate, when hit. It appeared to him, too, that even in this free-importing country that people took pretty good care to look after their own interests. Did not some shipbuilders strongly advocate the free importation of foreign manufactured products, because it was an advantage to them in building their ships? British industries might be ruined for all they cared, so that they could get their cheap foreign materials. The jam manufacturers wanted their sugar under the cost of production, and had no objection to the wages of their factory hands being kept down by the importation of foreign aliens. People with their money in foreign industries fought for free imports, because they were afraid that if British industries got fair play that their foreign securities would go down. The head of a great chocolate manufactory, which had protection, which was very flourishing, and gave regular work and good wages, gave not long ago a large sum to the free-import party, but we had not heard that he had petitioned the Chancellor of the Exchequer to take the protection off his chocolate. This all seemed very human and very natural. But should we be less human and less honest if all our industries were protected from unfair competition and dumping?

They were told that industries of this country were flourishing, holding their own, and doing well. How was it that Mr. Leonard Courtney, one of the great free-traders, bemoaned the fact that America and Germany had both passed us in two of our great industries in which not so many years ago we were ahead of both countries combined? He wept over the fact but proposed no remedy and left them to their dying. The tariff-reformers proposed a remedy and a cure. They were told that tariff reform was not only dead but had become a laughing stock. He disagreed entirely. Time was on their side, and the sound common sense of the British people. Those who had been to school knew that the boy who never retaliated when he was kicked was the one who got the most kicks of any boy in the school. Lord Lansdowne had said that the way of the nations was practically the same, and that in commercial matters we were the nation that got far the greatest number of commercial kicks. They were accused last week of taking the denunciation of their policy lying down for one short part of an evening. The free importing Party had taken their commercial kicks lying down for the last twenty-five years. He thought it would be remembered that last year the right hon. Member for West Bristol, the leader of the Unionist free-traders, explained in the House that we might get great commercial advantages from America by taking off a tax of 2s. a quarter from American wheat, but that this would cause great trouble in this country as we should not be able to do it on Canada's account, and that this was one, at all events, of his great reasons for sticking to one-sided free trade, but it surely showed the power of retaliation. Some eight or nine years ago the Canadians sent a deputation to Washington to ask for better terms for trade and commerce, and the Americans would have nothing to do with it; but directly after the right hon. Gentleman the Member for West Birmingham delivered his first speech on tariff reform, the leaders of American commerce met together and agreed that as the right hon. Gentleman's scheme was very dangerous for American commerce they had better send as soon as possible to the Canadians and offer them the best possible terms before the patriotism of Mr. Chamberlain bound Canada to the great British Empire for ever. So that it was evident that even the threat of the right hon. Member for West Birmingham was enough to make the Americans climb down and make a better offer than the Canadians had asked for in vain eight or nine years before.

The American Press had pointed out what would be the effect if the scheme of retaliatory tariffs and colonial preference were carried out. One American paper went so far as to say that it would be worse for America than a civil war, and, according to one of their loaders, even the German Socialists held the same opinion. Even in the far off wilds of America, among the haunts of the cariboo, the moose, and the grizzly, an Englishmen and a German when they met could not keep off the tariff question. The German trader said to the Englishman, "If your Mr. Chamberlain gets his way it will kill me dead." It seemed curious that during the five years before Canada gave us a preference, our exports to Canada went down from 68,000,000 dollars to 29,000,000 dollars, whilst German and American exports were going up during the same time. The reason of that had been sent to him the other day by a man who had been travelling in Australia, New Zealand, and South Africa for the last two years. He said that wherever he went he was followed by German or American travellers; and if they could find out the price he had offered to supply his goods at they at once offered to do it for 5 per cent. less. The American manufacturer had a certain surplus to dispose of, and must do so at any price. His home market had paid for the surplus goods, and the proceeds or most of them were pure profit. The American travellers frankly admitted that that was true, and said that they were going to sweep the trade of the British Colonies into their hands out of the hands of the British manufacturers and merchants. Under the free imports system there were firms in England now doing a big business by importing into this country American and German dumped goods, repacking them, and sending them off again as British made; but the making of these goods did not provide any wages for the British workman. About 3,000 men had been thrown out of work within the last few months near London and at Dundee from the failure of jute mills; yet they found that eight gentlemen of the historically free-trade name of Gladstone were shareholders in mills in India and were doing well. If our industries were all doing so well, how was it that these gentlemen could not find investments at home? Was it because we had no security here, while India had a tariff and the power of retaliation? Was it a case of rats leaving a sinking ship?

Now, he appealed to the representatives of labour; did they think that our system of free imports, was good for them? [OPPOSITION cries of "Time" and "Divide "] The Report of the United States Tariff Commission in 1882 pointed out that English markets were being swamped with dumped goods, while English capital was being removed to the Continent to be employed in foreign manufactures. Removing English capital to the Continent had secured a profitable home market, while England was near with widely opened ports to serve as a dumping ground to unload surplus goods made by foreign labour superintended by English skill. In this way English markets were swamped and her labour undersold. He asked the Labour Members opposite whether they were quite sure that they were doing right in refusing to consider the tariff question? Trade unionists had told him that the right hon. Gentleman the Member for West Birmingham had been thought to be their leader and was going to do a great deal for them. The Home Rule split knocked all that on the head, and the trade union leaders had never forgiven the right hon. Gentleman. Therefore, a great deal of the hostility of the trade unionists to retaliation or tariff reform was really personal hostility to the right hon. Gentleman. A number of industries and millions of capital had gone out of this country to get behind the foreign tariff walls and provide work and wages for foreign labour. One firm of thread manufacturers alone employed 12,000 men outside this country and paid foreign workmen £500,000 a year in wages. That was all because we had not got the power of retaliation. [Loud OPPOSITION cries of "Time" and "Divide."] He did not often trouble the House. It was said that import duties always made things dearer, and that the consumer always paid the tax. Now, in New Zealand there was at one time no duty on matches, and the price, when importation was free, was 4s. 9d. per gross; but when two or three manufactories were started in Wellington and a tariff of 25 per cent, was put on against imported matches the New Zealanders got their matches cheaper, and employed a great number of hands at very good wages as well. The fiscal question was an Imperial one. Some of our colonial brethren thought that the Liberal Party had gone stark staring mad, or else that they could think of absolutely nothing else except how cheaply they should get their "vittles," and how cheaply they could get their drink. Could not the representatives of labour see that under the present system of free imports and non- retaliation, our workmen were exposed to the competition of goods made by the black and white convict labour of America, and the sweated labour of the Continent? Could not the trade unionists see that, though they could and did protect their labour against the British employers, they were absolutely helpless against the foreign employers? If they had the black and white convicts over here with their employers, and the foreign employers with their cheap workmen, the rank and file of trade unionists would very soon stir up their leaders to do something; but because these foreign labourers and employers were across the seas and could not be seen, the trade union leaders blindly followed the policy of the man who said he would rather live under the rule of a savage South African potentate than under the tyranny of trade unionism.

After all, the Empire belonged to the working classes just as much as to any class. Their grandsires spilt their blood to gain and keep it. Were they going to let their grandchildren say of them that, for a supposed mess of pottage, they deliberately threw away the greatest inheritance that had ever been left to any people? Did the labour representatives really think that they knew better than all the rest of the working world; or were they being led away by the Liberal Party, which turned the fiscal question into a Party question for the sake of uniting their scattered and shattered forces. What mattered it to them so that they did not have to spend the rest of their valuable lives in opposition! They were the Party of "Make-believe." They tried to make the British people believe that they knew better than all the rest of the civilised world; that Chinamen were imported into South Africa, chained together, like slaves of old; that the free import loaf was gigantic and the Chamberlain loaf barely visible; that the Sugar Convention was a device of the Government for making sugar dearer. The fact was that they would practically say almost any thing which they thought would help their reckless, feckless, divided Party to crawl on to those Government Benches for a few miserable months.

MR. ASQUITH (Fifeshire, E.)

I shall not attempt to follow the hon. Member in. the speech which he has just delivered. I could not if I would, and I would not if I could. But I think it may remain on record as the low-water mark of argumentative humiliation to which tariff reform has been reduced. This is the third occasion in the course of as many weeks in which this House, after a prolonged spell of enforced silence, has been given the opportunity of challenging the policy which goes by the name of tariff reform. We began appropriately with the proposal for colonial preferences based on the protective taxation of food, because that proposal is first in importance, inasmuch as its adoption would be most fatal in its results. We were not allowed to come to a definite decision on that occasion. But the evening was not thrown away, because it afforded to the world the unique, and, I think, unforgettable, spectacle of the evangelists and apostles of a new faith voting with one accord in favour of the previous Question. Then last week, on the invitation of one of my hon. friends, we took up the case of the 10 per cent, tariff on manufactured goods, an integral part, let the House observe, of the same scheme, because the fiscal gap created by colonial preference could only be made good out of the toll to be paid by the foreigner on commodities which were to come into the market for purposes of revenue, and to be kept out at the same time for the purposes of competition. On that occasion, a week ago, one single solitary voice of protest—a voice from Sheffield—was raised. The hon. and gallant Gentleman is not any longer in his place. It was the voice of one crying from a deserted camp in favour of the policy so boldly proclaimed elsewhere. On that occasion there was not even an attempt to rally the supporters of the Government and the tariff-reformers on this question. The Prime Minister blew his bugle and the tariff-reformers of every shade and hue—from the most full-blooded to the most anæmic —took to their heels and fled.

To-night my hon. friend has raised a third issue, distinct from those that have gone before but not less momentous, because it is the one point in the policy of what is called fiscal reform on which the Prime Minister, whose presence we miss, has definitely and unequivocally committed himself. The House remembers that it was described by him not less than two years ago as involving a fundamental reversal of our existing system. It is an extraordinary and unprecedented thing in the history of the House of Commons that when a challenge of that kind is made the Prime Minister should not condescend to be present. We have had in this matter a crescendo of evasion. We have had the Leader of the House and the author of the policy which is impugned by this Motion of my hon. friend putting a climax to his two previous performances and absolutely, with the whole of his colleagues, boycotting the House of Commons. This is a matter which goes far beyond the immediate issue. Everywhere else in the world but here the policy of the Prime Minister may be canvassed and criticised—in our Colonial Legislatures, upon platforms in this country, in articles in the newspapers and magazines, in letters to the Press, in pamphlets to be found on every railway bookstall. The one and only place in which, so far as the Government is concerned, free discussion of their policy is excluded is the only place in the whole country where, with the full sense of responsibility, the main combatants can meet face to face in the clash of arms. I venture to say, and I am sorry there is no one upon the Treasury Bench to hear me, but I say it not merely to the Party which sits behind the bench, but to the House of Commons in its. Corporate capacity and to the country at large, that even the Prime Minister has never gone so far in flouting the authority and impairing the dignity of this. House.

As for the question of retaliation, the case against it has been admirably and exhaustively stated by my hon. friend who moved this Resolution. If I devote a few sentences to it, it is only out of respect to the hon. Gentleman opposite who proposed the Amendment, and whose services on behalf of free trade we on this side gladly and gratefully recognise. I venture to say to my hon. friend opposite no one alleges or has ever alleged that there may not be, under peculiar circumstances which have never yet been described, a conceivable instance in which, possibly, by the deliberate action of the Legislature, some, form of retaliation may not be imposed. But I have never met any concrete instance stated where these circumstances would be fulfilled. The case against retaliation is overwhelming. It may be summarised in two or three propositions. In the first place, the need for it is absolutely unproved. We get as good terms without retaliation as the most retaliatory country gets with it. In the second place, retaliation, if it is ever to become an effective weapon capable of being applied to practical uses, necessarily and inevitably involves the creation of a general tariff to be applied or to be removed at the will of the Executive of the day. That is a constitutional innovation of the gravest and most dangerous character. In the third place, experience shows, and no experience more clearly than the recent history of Germany, that a tariff put on For retaliatory purposes is always retained in the long run for the purposes of protection. The interests which grow up under the shelter of retaliatory tariffs become too strong to permit the walls to which they cling ever to be pulled down. Lastly, of all countries in the world this United Kingdom, of whose exports not less than four-fifths are manufactured goods, and of whose imports no less than nine-tenths consist of food, of raw material, and half made-up materials, stands to gain less and lose more by the adoption of the system of international reprisals. That is the unanswerable case against retaliation. At any rate, it has not been answered to-night.

It is a significant fact that when an issue of this kind—which was declared by the Prime Minister himself in the September of 1903 to be an issue which involves a fundamental reversal of the whole fiscal policy of this country—should for the first time be raised in the House of Commons, there is not a single man upon the benches opposite, with, the negligible exception of the hon. Member for Ludlow, who is prepared to advance a word in its favour. It is very difficult to carry on debate under such conditions. We have no arguments to meet. The oracles so eloquent in the country are dumb here. I do not think there are even any unregenerate souls to convert. No; the hon. Gentleman the Member for Sheffield has left the House. Under these circumstances, I feel as one sometimes has felt at the end of a choral service, when the minister mounts the pulpit for the sole purpose apparently of edifying the faithful and says: "You might as well do without a discourse and conclude at once with the Benediction." I venture to appeal to my hon. friend opposite who has moved this Amendment, important as he must admit it to be, as a strong and convinced free-trader, that this House should, if possible, have a unanimous declaration of its opinions to-night, that he might withdraw the Amendment he has proposed and allow us to take a direct and simple issue upon this policy of fiscal retaliation, which, for the reasons which my hon. friends have put forward, and which I have endeavoured to summarise, would, if it could be carried into effect—I do not believe that to be possible—be fatally injurious in its consequences to the trade of this country, would involve us in a long series of unprofitable and wasteful commercial wars, and would undo the great results which have been achieved during the period since Mr. Cobden and Sir Robert Peel began to preach the doctrines of free trade.

MR. THORNTON (Clapham)

said he did not presume to follow such an accomplished orator as the right hon. Gentleman who had just spoken; but he thought the debate had been taken up with the relations between free-trade, protection, and with the question of retaliation, rather than that of negotiation concerning which no one word had been mentioned, and which was the very foundation of the Prime Minister's policy. He would ask if the right hon. Gentleman who had just spoken did not believe that our markets were so valuable that under wise negotiation, followed in certain instances by retaliation, we might succeed in promoting commercial intercourse in a manner hon. Gentlemen opposite did not apparently realise. The hon. and learned Member for the Launceston Division, whose views they all respected, stated that it was impossible to start retaliation from a free-trade basis, and that it must proceed from the protectionist side. If that were so, his case fell to the ground. At present, however, they had only the ipse dixit of the hon. Gentleman, but it had not yet been proved that it was not possible to take the course advocated by the Prime Minister at Sheffield and begin at the other end. He believed it would be possible to start from a free-trade platform, and, by negotiation, and if necessary, by retaliation, be able to achieve great successes without infringing the principles of free trade. Who could be better able to express their thoughts on the question of negotiation than the learned Members for Fife and Launceston, who had exercised the art so ably in many suits and yet were reticent on this side of the fiscal question? They ought not to forget that this policy had been tried within the last few years when Germany attempted to put this country on a different footing to that of Canada. This country stepped in and was successful. He was a free-trader, but he wished, if possible, by negotiation and retaliation, to remove some of the tariffs which, in the opinion of some of the greatest thinkers of the day, had been injurious to this country. That was the contention of the late Lord Salisbury, and the Duke of Devonshire also contended for this principle; but he grounded himself really on the free-trade opinions of Adam Smith, who, at the end of the seventeenth century, wrote— There may be good policy in retaliations of this kind, when there is a probability that they will procure the repeal of the high duties or prohibitions complained of. The recovery of a great foreign market will generally more than compensate the transitory inconveniency of paying dearer for some sorts of goods. He was aware that it had been determined not to fight this principle on Unionist Party lines upon the present occasion, but nevertheless it was necessary for a private Member who had strongly advocated negotiation as a means of trade defence not to shrink from expressing his views in that House. He believed that although the constituencies would strongly favour free-trade and shrink both from schemes of general protection or protective taxation of food, they would not rally around a party which; rested content with the outrageously unfair foreign tariffs which undoubtedly did exist, and threatened the future of our trade. He would try the effect of retaliation sooner than this, but should the remedy be found to impinge on free-trade principles, as hon. Gentlemen opposite feared, the system could be abandoned. He had faith in the expert handling of negotiation and retaliation just as a country entrusted its land and sea forces to competent generals and admirals. Thus we need not injure ourselves in the manner suggested by Opposition speakers.

He agreed with the Prime Minister that they might trust to negotiation and, if necessary, retaliation, to bring down tariffs. He would ask hon. Gentlemen opposite whether, if this policy had been in operation in 1890, before the M'Kinley tariff was arranged, the United States would have imposed a duty which hampered, injured, and almost destroyed one of our industries. He alluded to the tinplate trade. He himself had met men in London who had been thrown out of employment in Monmouth and Newport as a result of that duty. Had this country at that time the power of negotiation and retaliation they would have been able to prevent all the suffering that was then caused. It was all very well to say that the recovery of this industry in new markets was all to the advantage of the free-trade system, but the same results might surely have been attained by negotiation without all this suffering. For his part he was sorry that more able exponents of the doctrine he held were not present to enforce it. They had a good case and, to use a military illustration, might have passed from their Mukden, entrenched themselves at their Tieling, and made a very good fight indeed. He was in favour of trying retaliation, but if retaliation infringed one iota on free-trade he would give it up. There existed an ample margin to retaliate upon as regarded machinery in America, and manufactured goods in Germany, and very few were the instances where negotiation could not be followed by some retaliatory action. He thanked the House for having given him so patient a hearing.

MR. ELLIS GRIFFITH (Anglesey)

said that last Wednesday the Prime Minister advised his followers neither to speak nor to vote. After listening to the speech of the hon. Member for the Ludlow Division he understood the right hon. Gentleman's advice not to speak. Before referring to the speech of his hon. friend who had just spoken and whose intervention the House welcomed, he wished to state that it was a mistake to look on retaliation as a fiscal question. It was a compromise made by the Prime Minister in order to satisfy, as far as possible, all his followers in the House. His hon. friend said that retaliation could be tried on a free-trade basis; but that was an impossible theory. The moment it was put in practice they could not get back to the status quo. The worst opponents of this country were Russia, the United States, and Spain.

*MR. THORNTON

; Not Russia.

MR. ELLIS GRIFFITH

said that Russia had gone then. How were they going to retaliate against Spain or the United States. Were they going to tax iron ore from Spain or wheat and cotton from the United States? The moment retaliation was touched by cold fact there was nothing in it. The hon. Gentleman stated that if retaliation failed he would give it up. But he could not give it up because vested interests would have been created. As a matter of fact the Prime Minister had never given any actual data as to the results of the application of his doctrine. The right hon. Gentleman referred to "outrageous conduct" in general terms, but let him give a concrete instance with which it could be effectually applied. Let him give a single instance in which retaliation had succeeded and had not done more harm to the country that applied it than to the country to which it was applied. He regretted the absence of the Prime Minister. It was not possible to misconstrue it. The right hon. Gentleman's two assets were exhausted. One was unsettled convictions, and the other was the policy of the previous Question. The right hon. Gentleman the Member for West Birmingham had said that the open mind betrayed the empty mind. He supposed the open mind led to empty benches. The right hon. Member for West Birmingham had abandoned every leader, and he would be willing to abandon the Prime Minister. But the Prime Minister would not be abandoned. "I could not love thee, dear, so much, loved I not office more." That was the position of the Prime Minister towards the Member for West Birmingham. The fact that the Government had run away must make an impression on the country. There was a man who thought that the Deceased Wife's Sister Bill was a Bill to compel a man to marry his deceased wife's sister. The Prime Minister took a similar view of the Septennial Act. He thought it was a Bill to compel a Government to remain in office for a certain number of years. He thought the vote that was about to be given would show him that the House was against him, and later on he would find that the country was against his policy.

MR. ELLIOTT (Durham)

said two speeches had been made that night in favour of retaliation, and both hon. Members had taken up a similar and very extraordinary position. They had referred to the fact that there were seasons of depression and unemployment in this country, and they assumed that if we had had the benefit of retaliation things would have been different. He commended to the notice of those hon. Members the report recently issued by the great steel trust of the United States, comparing the year 1904 with the year 1903. It showed that in the later year that great corporation had found it necessary to reduce by more than 20,000 the number of their employees, and to reduce in salaries and wages, their expenses by more than 20,000,000 dollars. And that in a country where retaliation was regarded as a principal part of commercial policy. It was useless to argue in that fashion. He had been an unwilling witness of a scene that he had never before witnessed in that House. What was almost as important as the view which the executive Government took upon this question of retaliation and the fiscal policy of the country was the view the executive Government took of the House of Commons. The Prime Minister had told them that he thought the House of Commons showed to the least advantage when it was discussing questions of political economy. He should have thought it was the business of the right hon. Gentleman to do something to raise the tone of their debates, to give the House the benefit of that knowledge and reading which he undoubtedly possessed. He observed that there was a confusion in some Members' minds between leaving open a Question on private Members' nights and the practice which on the second occasion the Government had now followed of deserting its place in the House of Commons and leaving it alone and entirely without guidance. On the old Wednesdays and Tuesday afternoons when Resolutions and Bills used to come before the House, the Government very often, and very rightly, thought it proper to leave the House to act on its own discretion. But that did not mean that the occupants of the Treasury Bench, the President of the Board of Trade, if it was a trade question, the Chancellor of the Exchequer, if it was an Exchequer question— it did not me in that the representatives of those great Departments were to turn their backs on the House altogether and leave that Assembly because it had been determined not to put on Government tellers. The view of the House of Commons and of Ministers then was that Ministers owed something to the House. Here they were to-night discussing a question of the utmost importance to the trade of the country; where was the Secretary to the Board of Trade, where was the Prime Minister? It was not that these Gentlemen had nothing to say on the subject. Why, only a few days ago the Secretary to the Board of Trade was down at Warrington supporting in a vigorous speech the policy of the right hon. Member for West Birmingham. He said that those right hon. Gentlemen owed it to the House of Commons to be there on an occasion of this kind. It was a fatal mistake for any Executive to suppose that the House of Commons only existed to discuss those subjects which the Executive out of its generosity chose to place before it. Anybody who had read English history must know that it had been one of the most cherished liberties of the House of Commons to discuss those topics which it wished to discuss, and that one great Sovereign after another had failed in this country because he was determined to do all that in him lay to confine the House of Commons to the discussion of those topics which he wished it to discuss.

What was the House to do in these circumstances? He did hope that some measures would be found to show that they not only deplored the action of the Ministry, but that as representatives of the people and as the House of Commons of the United Kingdom they resented it. How could the House of Commons continue to give satisfaction to the people? How could it go on otherwise than shorn of its strength if it was to be treated as of no worth at all by those who were not only the executive Government of the country, but who ought to be leaders of the House of Commons itself? It was a lamentable spectacle that they had witnessed, and one which he had no doubt would greatly influence the country. The country would see, as most Members assembled there saw, that the day had come when a new House of Commons should be sent to Westminster which could represent up to date the feelings of the country on these great questions, which, in spite of the Prime Minister, were before the country, and that then, and not till then, would it be possible that some sort of settled policy could be adopted and the commercial and industrial prosperity of the United Kingdom secured.

Question put, and negatived.

Main Question put, and agreed to.

SIR H. CAMPBELL-BANNERMAN (Stirling Burghs)

May I ask you, Sir, whether this will be recorded as having been passed nemine contradicente?

*MR. SPEAKER

Yes, that appears to be the fact.

Resolved, Nemine Contradicente, That, in view of the declarations made by the Prime Minister, this House thinks it necessary to record its condemnation of his policy of Fiscal Retaliation.