FISCAL POLICY.

HL Deb 18 February 1904 vol 130 cc132-227

THE EARL OF CREWE, in pursuance of Notice, rose "to ask His Majesty's Government what steps they propose to take to give effect to the policy of 'negotiation and retaliation' announced by the Secretary of State for Foreign Affairs on 2nd February; and to move that no duty upon imports into the United Kingdom from foreign countries, or from British colonies and dependencies, should be imposed, modified, or removed without the formal consent of Parliament to each such proposal." He said: My Lords, it often happens in the progress of the business of your Lordships' House, that Questions are put and Motions made rather with a view to exciting discussion than of obtaining information, and I have seen it stated that on this occasion our object in bringing forward this subject is not so much to obtain information as to start a debate. It seems to be assumed that our demand for information is not a genuine one, and that our ignorance of the intentions of His Majesty's Government is comparable to that which is sometimes announced by learned Judges on the bench who, for an I object which I have never been able to understand, sometimes profess to be unacquainted with the most elementary and notorious facts of ordinary life. But I can assure your Lordships that with us that is not the case. We are genuinely desirous of obtaining information from His Majesty's Government on a subject which we consider to be of the first importance, and upon which, in spite of a long political campaign during the recess, and in spite of a brilliant though rather one sided debate in another place lasting upwards of a full week, the intentions of His Majesty's Government are still to a great extent undeclared and obscure.

I propose mainly—almost entirely—to deal with what are known as the Government proposals for retaliation and negotiation. At the same time, it is so uncertain whether those proposals are in fact to be taken as standing alone, or whether they are to be taken in connection with the wider proposals of Mr. Chamberlain, that I cannot affect to be surprised if in the course of the debate other noble Lords—particularly those who left the Government on account of those very proposals of Mr. Chamberlain—allow the discussion to range over a somewhat wider field. It is perfectly true that at this moment Mr. Chamberlain's proposals are less in evidence than they were in the autumn months. Their distinguished author has gone abroad in search of a well-earned holiday, after the fatigues of a campaign which, though we cannot regard it with sympathy, we regard at any rate with admiration for the combative energy which sustained it. It is also true that during the debate in another place there was not much outside defence, if I may use the phrase, of those proposals of Mr. Chamberlain. It is also true that when a by-election takes place, and the travelling mountebanks of the Tariff Reform League swoop down upon the constituency, the distracted Government candidate offers them, so to speak, 6d. to go and perform in the next street. But, after all, Mr. Chamberlain will return, as we hope, restored in health after his foreign tour; and so long as the Parliamentary candidates who adopt Mr. Chamberlain's programme in its entirety receive, as they have been receiving, the special benediction of the Prime Minister and of His Majesty's Government, and so long as among the few voices raised on behalf of Mr. Chamberlain's policy in the debate in another place, there are voices which come from the Treasury Bench, and, above and beyond all, so long as the finances of the country-are committed to a gentleman whom we all respect, but who has adopted in their entirety the proposals of his distinguished father—so long as that condition of things exists, we certainly shall maintain that any public dissociation of the Government policy from the policy of Mr. Chamberlain is merely collusive and probably only temporary. I remember some years ago I took part in an inquiry, in the course of which it appeared that certain great companies were obliged by Statute, when asked by those who dealt with them, to supply certain information. It also appeared that when that information was given it bore very little reference to the actual facts of the case. We asked the learned counsel who appeared for the companies how this could be explained, and he informed us that the reply of the companies was what was known as a technical reply. This is an agreeable phrase which I propose to adopt on this occasion, and I say that any statement of the Government with reference to their dissociation from Mr. Chamberlain's proposals can only be regarded as being of a merely technical character.

I do not propose in the remarks I have to make to your Lordships to touch—except possibly by way of illustration—upon the question of colonial preference, of a food tax, or of a general tariff. I propose to confine my observations to the question of retaliation, which is understood to be in some form or other the policy of His Majesty's Government. Retaliation may be a very great matter or it may be a very small matter, and our object in initiating this debate is to discover whether the Government mean it to be large or small. So far as could be gathered from the remarks of Mr. Balfour during the recess, I should certainly have concluded that he regarded it as a great matter. At Sheffield, on 1st October, among some statements which were not over clear, Mr. Balfour made one very clear statement. He put it in the form of a question and answer, which seems to have been adapted from the service for the Ordination of Priests and Deacons in the Church of England. He imagined himself to be addressed by some hierarch of protection, such for example as Mr. Henry Chaplin, who maybe held, I think, to possess the apostolical succession from Lord George Bentinck, both as a protectionist and in other and more cheerful fields of enterprise. Mr. Balfour supposed himself to be asked, "Do you desire to alter fundamentally the fiscal tradition which has prevailed during the last two generations?" The answer is, "I do." From that it is necessary to assume that Mr. Balfour, at any rate at that time, regarded this policy of retaliation as a sort of "wayside inn" at which he and his Party could pause on their way to the goal represented by the larger proposals of Mr. Chamberlain. It is hardly possible, I think, that Mr. Balfour when he made that statement merely meant that at some time or other—he had not settled when—he would bring in some proposal—he had not settled what—for dealing with tariffs in some country—he had not settled where. Therefore, subject to any attentuation of his views which Mr. Balfour may have made in later speeches—and I do not think he did attenuate them greatly—we must regard him as being one of the extreme school of retaliationists.

There is no doubt an entirely different point of view from which this question of retaliation can be approached. There are some undoubted free-traders, who thoroughly believe in the principles of free trade, but who conceive that occasions may arise when retaliation might usefully be applied in our dealings with foreign countries. Among those, I suppose, must be ranked the noble Duke opposite. It was at Liverpool, I think, that the noble Duke expressed an opinion in favour of retaliation, largely on the ground that the adoption of that doctrine would interfere with Mr. Chamberlain's preferential proposals, and his proposals for a general tariff. It is no doubt the case that if retaliation were adopted, Mr. Chamberlain's scheme as announced at Glasgow could not be taken up in its entirety. If you introduce retaliatory duties which are to be taken off when the desired concession is made by the foreign power, you clearly cannot have a complete scheme of colonial preference. But, on the other hand, it certainly seems to me that there would not be very much difficulty in combining a retaliatory scheme with Mr. Chamberlain's proposals. What I suppose he would do would be to institute three tariffs. If I might illustrate what I mean, I would do so by suggesting an analogy, which is not a perfect one, but which I think has a bearing on the case as between these possible tariffs. What is done by railway companies in fixing their rates? Railway companies can fix their rates in three different ways. They may fix an ordinary competitive rate they may fix a specially low rate for special classes of goods; and, where they possess enough of a monopoly to do it, they may fix as high a rate as the traffic will bear. In a similar way I conceive that Mr. Chamberlain would fix three tariffs. He would have a special tariff—or no tariff at all as it might be in this case—in favour of the Colonies. He would have an ordinary tariff applicable to foreign countries in general; and he would have a specially high tariff which could be put on at will by way of retaliation. Consequently, although no doubt the adoption of retaliation would in some degree complicate Mr. Chamberlain's scheme, it would not, I think, in any way make it impracticable; and I am afraid the noble Duke has been somewhat over sanguine in believing that the adoption of retaliation, as a principle by Parliament, would seriously interfere with the progress of Mr. Chamberlain's proposals.

Now it is assumed by some that, after all, you may threaten a duty without ever having to impose it. Free-traders are to address foreign countries in the well-known phrase which was applied to the French revolutionary: Soyons freres, ou je t'assomme. "Swear fiscal brotherhood, or in the name of Mr. Cobden I shall break your head with a tariff." Of course, if it were likely to be the case that a duty would never really have to be imposed, I suppose that nobody, however orthodox a free trader he might be, would object to threatening to impose it. The Society of Friends object to war, but I do not know that any Quaker, however strict, would object to threaten war if he was absolutely guaranteed that war would never take place. After all, that is only a policy of which we have heard lately in another connection, it is the policy of bluff. It may succeed once, it may succeed twice. It might be possible to pick out an instance in which sooner than engage in a tariff contest with this country, some foreign country would consent to reduce its own tariff. But the mere fact of that having happened once would make it less likely to happen another time. You would be tempted on and urged by traders interested in some other commodity to engage in a contest and make the same threat in an article where your case was not quite so strong. Then at last the time would come when the tax would have to be imposed, and I confess that it seems to me absurd and unreal to attempt to argue this question on any other basis than that of having under certain circumstances to impose a tax upon foreign commodities. But then it is argued that although your duty may have to be put on you can take it off whenever you like. The duty is, so to speak, to be placed in a compound like a Chinese labourer at Johannesburg, and when its work is done, like that unhappy Oriental, it is to be placed in a coffin and shipped off again. I do not know, my Lords, whether you will succeed in keeping the Chinamen in the compound, but I am perfectly certain that you will never succeed in keeping these duties inside a compound. Those who believe that the duty can be put on and taken off at will seem to me to forget that, although your intention may not be protective, yet the effect of the duty is protective, and you will very likely have the most powerful trade interests doing their utmost in and out of Parliament to prevent a duty which is bringing them wealth from being taken off, and that they will be able to point out with considerable force that on the faith of that duty they have enlarged their trade operations and invested large sums of capital.

But there is another consideration in this connection which I have not seen pressed, but which seems to me to be important. The noble Marquess opposite, in a phrase which I am afraid he must be getting tired of hearing, alluded to a revolver It seems to me that his weapon is not going to be a revolver with which you can shoot at sight; it is to be a duelling pistol which has to be used with all the punctilio and delay of a duel. You cannot say to a foreign country, "Unless you reduce the duties on certain of my commodities I shall begin to tax your commodities the day after to-morrow." Out of ordinary international courtesy you must give some fair notice of your intention. During the period of that notice, what happens? The goods of the foreign country are poured into this country, with the result that it is some considerable time before your duty begins to have any effect at all. That happened in Germany, in 1879, when Prince Bismarck first imposed high tariffs on foreign goods. At that time the mills of Bradford and the West Riding of Yorkshire—so I have been told by gentlemen engaged in the trade—worked day and night pouring woollen goods into Germany with the result that it was between two and three years before the German woollen manufacturers derived the slightest benefit from their high tariff. I can give another case much more recent and nearer home. I noticed the other day that a meeting was held on 16th, December of a great firm of sugar refiners, of London and Liverpool, namely, Crosfields. Ltd. In the course of his statement, the chairman attributed the depression in the sugar trade to the fact that continental nations had a large stock of bounty-fed sugar on hand, which they had unloaded on the English market, and that consequently the anticipated rise in the price of sugar had not taken place. It stands to reason, therefore, that if you take your duty off very hurriedly when a concession is made, you may be doing ! infinitely more harm to the trade which you wish to protect than if you had never entered into negotiations at all.

This leads me to ask whether it is the intention of His Majesty's Government that retaliatory duties should be strictly of a reciprocal character, or whether they intend to use one article as a lever for getting a duty taken off another article. That is to say, if you wish to have the duty on English iron reduced, do you propose to tax only German iron, or to threaten to tax German iron, or are you prepared to tax German toys, or some other German article of manufacture, in order to get the duty on English iron reduced? Upon the answer to that question depends to some extent the point I have just raised as to the effect upon the English market, and the delay which must necessarily take place before any duty is actually brought into operation.

My Lords, the practical difficulties in the way of placing the fiscal policy of this country on a retaliatory basis are surely very great indeed. It is argued that it must necessarily help, in making a commercial treaty with a foreign Power, to have this weapon at hand. As an abstract proposition that is no doubt true. You will find it admitted in the text books of the straitest sect of political economists. But I do not know that the mere statement of that fact is any great help to the argument. It no doubt would be true that, if instead of having four or five ArmyCorps on our home establishment, we had fourteen or fifteen, we might, when engaging in certain international discussions, carry greater weight than we do in the councils of Europe: but the objections to having fourteen or fifteen Army Corps may be so great as to outweigh any conceivable advantages that could be gained. Similarly with regard to this retaliatory power. It surely is a remarkable fact that, as a matter of actual experience, other countries who have the power of putting on duties do not find that in consequence other nations are willing to lower their duties against them. That is a matter of experience. It is exceedingly difficult, I think, to find any instance whatever to the contrary, and, so long as that fact remains, it appears to me to outweigh any amount of theory on the subject. The reason of that I take to be this—and lit is a fact which must prevent us, as it seems to me, from ever deriving any great advantage from retaliatory duties—that in the minds of foreign Powers whose avowed policy is protection it is a matter of much less importance to lower duties against themselves than to foster their own manufactures at home. Their object is to develop those manufactures, and consequently they would sooner run the risk of losing a certain portion of our trade than weaken or destroy their own maufactures at home—artificial manufactures set up under protection—by lowering their duties to any serious extent in our favour.

Then, my Lords, there is another point. It seems to me that, compared with the Constitution of other countries, our Constitution is curiously unsuited to deal with these matters. All of us in this House have heard the late Lord Salisbury state his opinion that in certain international negotiations, particularly where there was any prospect of going to war, our habit of free Parliamentary discussion and—I do not know whether he added, but he might have added—our unmuzzled Press, places us at some disadvantage as compared with foreign countries living under a different Constitution. That surely applies very strongly indeed to this question of retaliation. At any rate, if it happened, that in answer to a duty of ours some retaliatory duties were imposed by a foreign Power which seriously hampered or injured some industry of our own, the outcry in the Press and pressure in Parliament might be so strong that it would be impossible for the Government of the day to maintain their position. In some countries on the continent of Europe that cannot happen. In the country against which I suppose retaliation is most aimed—Germany—the conditions are very different indeed. The Government there docs not change. Pressure can be placed on the Government only by whole classes of the people, such, for instance, as the Agrarian party. With us, where a Government have not a large majority, it might easily happen that the votes dependent upon some particular industry would become so formidable to the Government of the day, that they would be compelled to relax the pressure which, for the mere purpose of negotiation with a foreign country, they would wish to maintain.

Then I come to a point which seems to me of the first importance, viz., what is, and what is going to be, the attitude of the agricultural community towards these proposals of His Majesty's Government? I have here a quotation, merely a typical one, from a meeting of the Farmers' Club held on 1st February. It is a typical but an interesting one, because such gentlemen as Mr. Martin Sutton and Mr. Clare Sewell Read were present, men whose names are household words in the agricultural world. At this meeting a gentleman read a paper, in the course of which he said that— Mr. Balfour's policy of retaliation, in the present condition of the industry, would be the last straw required for breaking the camel's back. A duty on American machinery, so-much used on lighter soils, must raise the price to the farmer, and home-made machinery would be more expensive, as the restoration of the manufacturing interests would tend to raise wages by absorbing the labour supply. The Government policy of retaliation should, therefore, be opposed by every farmer and landowner, not only in his own interest, but in the interests of the nation at large. Mr. Chamberlain's policy showed a wider grasp of the situation.

Then he went on to explain that the one blot on Mr. Chamberlain's proposa was that it did not include some duties on colonial produce. In the course of the discussion Mr. Clare Sewell Read said that— Mr. Balfour was on the right track if he would go far enough.

Of course, we all know what the agricultural community think of these proposals. They are to some extent attracted by the proposals of Mr. Chamberlain, but they are absolutely repelled by those of the Government. I should like to find any noble Lord on the Front Bench opposite who would go down to an agricultural constituency and make a speech expounding this retaliatory policy of the Government, and clearly explaining that under no circumstances is it to be allowed to go beyond the limits expressed by Mr. Balfour. I know one Minister who will not do that, and that is the Minister for Agriculture, whom I do not see in his place. When he has made a speech on this subject he has been in the fortunate position of being able to express by no means veiled sympathy with Mr. Chamberlain's proposals, consequently I have no doubt that he has had, at any rate, a very fair reception on those occasions when ho has had to address agricultural gatherings.

I do not wish to weary your Lordships by going into matters which in the course of the long discussion on this subject have become so familiar to us all, viz., as to the possibility of retaliating or of not retaliating on certain countries. As we all know very well, the United States send us-£127,000,000 of exports every year, only £10,000,000 of which we could use for purposes of retaliation. The case of Russia is stronger still. Russia sends us £25,000,000 of exports, on only about £40,000 of which we could retaliate. Germany, I dare say, offers a somewhat stronger instance for retaliatory purposes. Germany sends us about £40,000,000 a year of manufactured goods—and when I say Germany I include Holland and Belgium, because at present it is useless to attempt to separate the exports from those countries, though I am glad to know there is a good prospect of an arrangement being made which will enable us to do so. We send to those three countries about £30,000,000 of exports. Therefore, as we import £40,000,000 and export £30,000,000, it does not seem that even in the case of Germany there is such a very strong possibility of retaliation. The strongest case on our side is no doubt France. But it is a curious fact that in the course of this discussion we have not heard much mention of retaliating on France. It is nearly always Germany that has been mentioned in the speeches of tariff reformers. France sends us £27,000,000 of manufactured goods, of which £18,000,000 are represented by articles of wearing apparel of different kinds, depending, I suppose, very largely on the caprice or the dictates of fashion, and which are bought by the people of this country simply because they prefer them to those which are made elsewhere. We send to France only £10,000,000 of manufactured goods; consequently it is quite conceivable, if it is worth while to embark on retaliation for that purpose only, that we might be able to come to some terms with France in a commercial treaty.

Now, there is this further point which I should like to put to His Majesty's Government. Do they not think that if we begin this policy there is some risk of special retaliation taking place against us? When I say "special retaliation," I mean retaliation which is intended merely to injure us—which does not involve duties imposed as foreign duties now are, not to injure us, but in order to benefit the traders at home. Two trades strike me as being exceedingly and peculiarly vulnerable. One is the shipping trade, and the other is the fishery trade. As regards fisheries, we export to Russia and to Germany a very large quantity of cured herrings. To the two countries it is, I think, a matter of £3,000,000 in the year. Those herrings are subject in Germany to a low duty of 3s. a barrel. In Russia the duty is higher-—as all duties are—but it is not a protective duty, because there is no Russian product which competes with this particular commodity of cured herrings. In the herring trade we are closely competed with by Holland and Norway. I should like to ask His Majesty's Government whether it is not conceivable that under circumstances of a tariff contest with a foreign country such as Germany or Russia, it might suit that foreign country, even at some inconvenience to certain of its inhabitants (who would not be allowed to express their feelings too strongly), in order to ruin our fishery trade, to impose even a prohibitive duty upon our herrings in favour of the herrings from Holland or from Norway? We are sometimes asserted to believe in the theory of the transferability of labour; that is to say, that if a man is thrown out of work because he is not allowed to make one thing, he can immediately start making something else. I will certainly make noble Lords opposite a present of the opinion that it would not be an easy thing for a Peterhead or a Yarmouth herring fisherman immediately to start to make either watches at Prescot or cheap jewellery at Birmingham.

Now, my Lords, I ask, if this retaliation policy is one which can be so properly and easily adopted, why does not somebody present us with a concrete case? I quite admit that it is not fair to ask noble Lords opposite, members of His Majesty's Government, to state a case in terms. If they were to say, "We should like to impose such and such a duty on such and such a commodity imported from a particular country, or at any rate to threaten to do so, in order to get other duties removed," the obvious reply would be, "Why do you not bring in a Bill with that object?" But even if it is too much to expect that noble Lords who are members of His Majesty's Government will give us information, there surely must be some of the great tribe of experts outside who would be willing to do so. That leads me to ask, what is an expert in this matter? What is an expert who may claim the real Birmingham hall-mark'? We know there are certain things that he is not. He must not be a student of political economy. There are many in your Lordship's House who even from their college days have studied political economy; there are some in this House who know as much about it as any professor at any University; but they, I am afraid, cannot be regarded in this particular matter as being exports. Then, again, I fear that no lawyer can be regarded as an expert according to the Birmingham standard. I am sure it would be a matter of profound regret to us if the supposed inability of the legal mind to grasp these matters should cause such diffidence in the mind of the noble Earl on the Woolsack as to prevent him taking part in this debate.

THE LORD CHANCELLOR (The Earl of HALSBURY)

Hear, hear!

* THE EARL OF CREWE

I am delighted to gather from the noble Earl's cheer that he proposes to enlighten us later on. What then, is an expert? An expert is, I suppose, a business man. But he is a business man of a peculiar kind. He is a business man whose business is going or has gone to the dogs. If he has succeeded in business his opinion on these important matters is taken as one which is of by no means the first value. I frankly admit, my Lords, that I do not believe that in the conditions of British commerce this retaliatory policy can be properly or reasonably applied in any way to the advantage of this country. I desire very strongly to protest against the mischievous belief which has been encouraged by some speakers in the course of this campaign, viz., that, because it is possible to show that you can damage foreign countries to some extent by imposing a duty on their commodities, we must necessarily gain by it. Of all the mischievous fallacies which have been propounded in the course of this great discussion, it seems to me that the most mischievous is the assumption that the measure of the foreigner's loss is necessarily (he measure of our gain. Of course, it may be said that special circumstances may arise, to meet which, in spite of all difficulties, special measures should be taken. There is no doubt that in the past we have done some curious things in the way of retaliation. Some of your Lordships may have heard of what was knowm as the Jesuits Bark Act. That was an Act passed in the year 1808 as a sort of reply to the Berlin and Milan decrees of Napoleon in 1806 and 1807. By that Act it was stated that no quinine, or Jesuits bark as it was then called, or cotton-wool, should be allowed to reach the Continent of Europe unless accompanied by a certain proportion of British goods. That has always seemed to me to be one of the strangest measures ever placed on the Statute-book. It passed both Houses easily, but I do not know that it was ever actually brought into operation. Although the idea of using the necessities of your fever-stricken enemy as a means of increasing your foreign trade is not an agreeable one, I do not draw from the fact that the Bill was passed, the conclusion that our grandfathers were less humane than we are, but simply that they found themselves in a very tight place and took what they conceived to be natural measures for meeting an exceptional difficulty. Consequently, if some extraordinary condition of affairs arises, and if His; Majesty's Government choose to bring in a measure to meet that contingency, all we can say is that the House will no doubt consider such a measure on its merits. As I have already stated, as matters are at present I am not able to conceive or to devise a case in which a retaliatory duty could be profitably brought in, but if noble Lords opposite think differently by all means let them bring in a measure and submit it to the judgment of Parliament.

This brings me to the subject of the Motion with which I propose to conclu le, viz., the methods by which it is proposed to proceed with this retaliatory policy. So far as I know, there are only three possible methods by which this can be done. It may be done, in the first Instance, by bringing in a Bill stating the details of each case in which it is proposed to retaliate; or, in the other extra me, it may be done by bringing in a Bill to give general powers to His Majesty by Order in Council to impose any duties that the Government may think fit; or it may be done by a sort of compromise between those two methods—that is to say, by passing a general tariff through the House, dealing either with all possible subjects of import or with a few subjects of import, and giving the Executive power to apply that tariff at discretion. These, as it appears to me, are the only conceivable methods by which His Majesty's Government can intend to proceed. I do not propose to dwell any further on the question of proceeding by Bill in each case. I have stated my opinion that I am not able to conceive such a case, but, of course, if His Majesty's Government introduce a Bill, Parliament is bound to consider it on its merits. It is quite clear that it is impossible for the country to give what is called a mandate on a matter of this kind if the intention is to proceed by Bill, because it is impossible for the country to bind Parliament in any way to pass a particular Bill without knowing what the provisions of that Bill may be.

Now, as regards proceeding by Order in Council, there are, as many of your Lordships know, strong precedents for adopting that course. The whole history of the Navigation Laws depends upon the principle of proceeding by Order in Council. There is no need to trouble your Lordships with any description of what took place under the Navigation Laws, but I confess that I was surprised to find, on looking into the matter, that at present powers do exist by which, in cases of what is considered unfair treatment of our shipping, His Majesty's Government can by Order in Council impose countervailing duties upon foreign ships or upon goods carried in foreign ships. Those powers, which are of very long standing, have never been repealed, although the Acts in which they appear have been amended on several occasions, the last being, I believe, in the year 1876. I make noble Lords opposite a present of that fact, because it does not seem to me particularly relevant to the present issue. The fact that these powers still exist must be taken in connection with the whole history of the Navigation Laws, and accompanied by consideration of the special reasons which led Parliament to treat the shipping of this country in a more privileged manner than any other trade in the country. It is also a fact that, although, as I say, these powers have remained on the Statute-book, at any rate for the last fifty years, and, I think, for a great deal longer, no attempt has ever been made to use them, and I think one is pretty safe in declaring that in the present day no Government would venture to use them. I do not think that any Government would now venture to impose a duty of this kind under the powers which it possesses in these Customs Consolidation Acts, because the surprise which would be caused, even to a tolerably docile following in another place, would be so great that I am afraid the Government which attempted it might find the results very serious indeed to their own existence. I do not dwell any longer on this question of proceeding by Order in Council, because, so far as I was able to follow the opinion of His Majesty's Government as explained in another place, they do not propose to ask for a general power to impose duties of any magnitude and of all kinds simply by Order in Council.

Thus, there is left the third possibility as the only one; that is to say, that Parliament should be asked to sanction a tariff on certain goods, to be applied at discretion by the Executive, if they cannot succeed in obtaining the object of their desires by negotiation. When one comes to think of it, although this sounds a more moderate scheme than that of proceeding by Order in Council, there is no very great difference between the two, for this reason. If you are going to retaliate to any purpose, you must be prepared on occasion to impose very high duties indeed. Professor Ashley, who is the great stand-by among the economists—indeed, almost the only stand-by among the economists—of Mr. Chamberlain's proposals, in his very interesting book, after stating the facts relating to dumping, and the extent to which some commodities are sold under cost price in this country, goes on to say— To meet such prices duties of 50 per cent. or 75 per cent. ad valorem may be needed, or even prohibition. I think it stands to reason that if you are going to give the Government discretion to impose duties up to 75 per cent., or even to prohibit, there is not much object in passing a preliminary Bill. It comes to very much the same thing as if you give them general power's by Order in Council. Consequently I do not see, although this mode of proceeding might appear to be some concession to the desire which has been expressed that Parliament should have a distinct voice in the matter, that the concession would be a real, or, in any way, a valuable one. I venture to press His Majesty's Government, with great respect, for a categorical reply to the Questions I have placed on the Paper, with a view to arriving at a conclusion as to whether the opinion of your Lordships' House should be taken upon this matter. It is possible, of course, that noble Lords opposite may accept the Motion in the terms in which it appears on the Paper. If they do, nobody will be more pleased than I. If they do not, I fear we should be obliged to take the sense of your Lordships' House on the proposal. Now, I honestly confess, that I do not know in what terms His Majesty's Government are likely to meet this question. It appears to me to depend whether at the moment they appear in the character of Mr.Jekyll or in the character of Mr. Hyde. Many of your Lordships, I dare say, have read and remember that famous allegorical fantasy. Its hero or central figure used to appear as Dr. Jekyll when he wished to put on a respectable face before the world, but at other times, when he desired to indulge the biddings of his lower nature, he appeared as Mr. Hyde. At first, the transformation took place easily, and the retransformation was effected also without difficulty, but as time went on the return to the respectable appearance became more and more difficult, until at least it became impossible; and it was only by suicide that finally, fixed in the form of Mr. Hyde, the hero of the story was able to escape the vengeance of the public. The parallel between his position and the position of His Majesty's Government seems to me extraordinarily close, and I shall not be at all surprised if it is carried out to the very last chapter. More and more closely, as it seems to me, His Majesty's Government must be drawn to protection. The fact is that retaliation is not a policy. It cannot be made into a coherent policy upon which the opinion of the country can be taken. Retaliation can be nothing more than an incident. It may be an incident which some consider desirable and others think disastrous. On the other hand, protection is a policy, and it is a policy which I am afraid always has obtained and always will obtain a considerable measure of support in the country. It is, as I say, a policy towards which I believe His Majesty's Government, unless at the eleventh hour they have the courage to break with it, are being, perhaps insensibly, but still closely and pretty rapidly, drawn. That, my Lords, is a policy which we on this side of the House, and I am glad to think a good many noble Lords on the other side, are pledged to resist to the utmost. We intend to resist even the first steps which may be taken towards the abandonment of that free system under which our trade in the main has prospered, and which in addition has made this country the great commercial clearing-house of the world. I beg to move the Motion which stands in my name on the Paper.

Moved to resolve, "That no duty upon imports into the United Kingdom from foreign countries, or from British colonies and dependencies, should be imposed, modified, or removed, without the formal consent of Parliament to each such proposal."—(The Earl of Grewe.)

LORD BALFOUR OF BURLEIGH

My Lords, I hope the House will not think I am putting myself unduly forward or in any way taking too much upon myself in rising at once to intervene in this debate. I think it right to say that I asked the Leader of the House whether it was intended to put up any member of His Majesty's Government to answer the noble Earl opposite, or whether it would be agreeable to them before any member of the Government spoke that I should say what I desired to say to the House on this occasion. It is in accordance with the answer I then received that I now venture to ask the House to listen to me for a short time.

I can assure the House that it is from no desire or anxiety to speak that I am here. I am actuated solely by a desire to explain to the House and to the many personal friends I have in the House, the reasons which guided me in taking the step which I thought it my duty to take during the recess. I am told that it is customary that some such explanation should be made, that it is a duty to the House in which a resigning Minister sits, and perhaps it is in no small degree due to the Minister himself. My Lords, I desire to avoid—and I think I can avoid—personal references of every kind. I certainly do not desire to make them, and although I cannot promise to avoid altogether controversial topics, I shall endeavour to treat them in such a way as to deepen and widen as little as possible the differences which may exist between those who so recently were my political colleagues and who still, I am proud to say, are without exception my personal friends. I do not ask in any formal way for the indulgence of the House. I do not share the condemnation which it is too often the custom to pass upon the method in which this House listens to those of its Members who address it. I do not agree with the somewhat severe judgment passed upon us on the first night of this session by the noble Earl who leads the House. I think we are sometimes a little unjust to ourselves in this matter, and that we make believe that we are much harder to address than is really the case. I think—and I speak, I am sorry to say, from much personal experience—that it is a kindly and tolerant audience, and that, if only the House becomes confident that one of its Members who rises to address it, has something to say and will sit down when: he has said it, it is not only a kind and tolerant, but a generous and even sympathetic audience. I know I shall get the indulgence of the House, because I know that every one of your Lordships present to-night must feel that the task which lies before me cannot be a pleasant one and that it is one not altogether easy adequately to discharge. No man separates himself from colleagues with a light heart. No one willingly breaks those Party ties and Party friendships which form so large a part of the political life of this country. Certainly it is not to be done from any selfish or unworthy motive, nor is it to be done for personal convenience. If it is done at all, it must be done, in my opinion, from a sense of duty. If duty to oneself is so presented that such separation is demanded by it, and if at the same time one's conception of one's duty to the country also demands it, then I venture to say that your Lordships without exception will agree that no other consideration ought to be allowed to prevail for a moment.

What was the cause which in my opinion made it my duty to ask to be relieved of the office which I had held for some eight years? I am, of course, provided with the usual gracious permission to give any reasons that may be necessary, within the usual limits, to justify the position I took up, but I am glad to think that, at any rate on this occasion, I shall have no cause to avail myself of that permission, because I think, in fact I know, that I can find in the published speeches of the Prime Minister and of Mr. Chamberlain and in their letters sufficient in which they concur to justify the course which I thought it necessary to take. The Prime Minister in his second speech at Sheffield—his speech to the overflow meeting—used these words— I am one of those—I admit it—who when this topic was recently started and when it became a matter of common debate in the country would have been quite content to see it left an open question among members of the Government and among Members of the Party, but neither my colleagues in the Government nor the House of Commons nor the country would support that view. The same statement was repeated in almost similar words at Bristol, with the addition that the Prime Minister thought that the old position should be maintained under which the fiscal question was regarded as an open question in the ranks of the Party. I quote these words not because I in any sense disagree with them as an accurate statement of the fact, but because I agree with them entirely, and because it seems to me that, in the very fact that it was thought possible for these great questions to be left open questions, one of the reasons which justify the course I took is to be found. The circumstances are not parallel. I know—I have known for years—that many of those with whom I have been acting had predilections in favour of another fiscal system. That was well enough so long as the system which prevailed in this country was accepted, but it seems to me to make all the difference when a prominent Minister proposed to reverse that system, and to bring it into discussion as a matter of practical policy. I venture to say to the House—I do not set up to be a great constitutional authority—but I do say that the established doctrine, the prevailing doctrine, the better doctrine, is that those who are responsible for a I Government should speak with one voice on matters of that kind. But to under-stand how we really arrived at the position described by the Prime Minister, it is necessary to glance very shortly at some of the events of last summer. All your Lordships will remember that in the month of May an important speech was delivered at Birmingham. I re-read that speech the other day to refresh my memory. It had for its subject questions affecting the future of the Empire, and I will say for myself—and I believe I express the feelings of many others—that in my opinion no fair-minded man who reads that speech can deny that it is inspired by a lofty ideal or that its dominant idea was to secure a closer union within the Empire. Mr. Chamberlain no doubt expressed his disbelief in the continuance of the unity of the Empire unless it was cemented by a commercial union. He complained that some of his colleagues had refused to allow him to use the then existing corn duty for purposes of preference, and he contended that the community of sacrifice necessary for a closer union could only be got through preferential treatment in commercial matters, and he demanded then—I think it was the first occasion on which the demand was publicly made—an inquiry and discussion into these matters. I may just mention in passing—for I think it is important in regard to some of the later developments—that he then categorically said, "I am perfectly certain that I am not a protectionist." So far as complaint was made that some of his colleagues would not allow the corn duty which was then existing and about to be repealed, to be a vehicle for preference. I venture to think that, whatever may be the opinion on the larger merits of the preferential question, those of us who took that view were entirely right in the objection which we took. Whatever may be thought about it on its merits, it seemed to me then, and it seems to me still, to have been far too large a question, far too great a departure from the existing system prevailing in the country, to have been brought in, and the principle so to speak given away, by a mere clause in a Budget Hill dealing with a shilling duty on corn. I will revert again to this point in a moment, but I just want to complete my account of the history of the summer. That speech was followed by a speech in the House of Commons in which the idea of a corn duty was developed. The amount was left vague, but there was to be enough of it to provide a considerable revenue which was to be devoted to the provision of old-age pensions. Later than that, partly in speeches at the Constitutional Club, in a meeting at which I myself was present, and partly on other occasions, we found a raising up of uneasiness about the state of trade in this country, and that culminated, as all your Lordships know, in the announcement that there was to be on this important matter an inquiry or a discussion—sometimes the one word, and sometimes the other was used. This House discussed the subject The noble Viscount behind me introduced a Motion in regard to it. Your Lordships will remember that discussion, and others in which several members of the Government took part. I myself defended the idea of an inquiry and a discussion, although I am bound to confess that though I determined to, and I hope did, approach the subject with a fair mind, I never expected that that discussion would lead me seriously to modify my attitude towards the fiscal policy of this country. Time went on, and we arrived at that period when it was necessary to settle what was to be the policy of the Government. There were then, as is perfectly well known, three main subjects of discussion. There was the question of preference to our Colonies, there was the question which is more particularly the subject of the noble Lord's Motion today—the subject of retaliation, or as, perhaps, it is more fairly and fitly termed, freedom of negotiation? and kindred to that, and alongside of it, there was the matter of "dumping" as it is called—I think the word has now-been accepted into the English language—which certainly is a branch in close connection with the subject of retaliation. But at that time, neither in the Cabinet nor out of it, had we ever heard, I believe, of the average 10 per cent. duty on all imports into this country.

On the question of preference, of which the main advocate and proposer was the late Colonial Secretary, I wish to say a few words. I admit that it is not raised definitely in the Motion of the noble Earl, and I can only say what I want to say by the indulgence of the House, but my own explanation would not be complete, and I venture to think that the House itself could not fully understand the position of matters unless, by that indulgence, I am allowed to touch briefly upon some of the points involved in that question. It always seemed to me that this suggestion of a colonial preference was no light demand to make upon this country. At any rate, there can be no question whatever that it is an abandonment—a complete abandonment—of the existing fiscal policy of the country. It may not be wise to pin oneself to any particularly abstract doctrine on the subject, but I venture to say that if there is one abstract doctrine which it is less unwise to pin oneself to than another, it is that taxation should not be levied except for revenue purposes. I say that on this ground—not on account of the great authorities by which it is supported, not on account of the length of time during which it has been the accepted policy of the country, but because, in my humble opinion, as a practical policy it is the best policy for this country, on this ground if upon no other namely, that by that principle, and under that principle, you secure the end that the burden which you lay upon the consumer or upon who ever pays the tax (it does not matter to me for the moment who it is) will be, as a whole, transferred to the Exchequer. The point, then, that we had to ask ourselves in the summer was this: "Is there anything in our present circumstances which demands this great change? Is it in the interest of this country, looked at in its widest sense, that this great change should be made? Is it above all things necessary, as is suggested to us, for the maintenance of the Empire? My Lords, I claim humbly to be as good a friend of the cause of the maintenance of the Empire as anyone else, but I venture to say that there has been no evidence whatever presented to us that this particular change is required, or even that it would promote the unity of the Empire. I know it is alleged upon great authority—upon the authority of Mr. Chamberlain, who, in my opinion, has rendered very great services—but I am not prepared, upon a matter of this kind, to accept or to advocate such a change, upon any authority, unless evidence in support of that authority can be adduced. I venture to add in proof of the fact that I desired to consider this with an open mind, that I asked certain questions, the object of which was to find out what amount of trade with the self-governing colonies it would be possible to acquire under a preferential system, and precisely what we were expected to do, or to bind ourselves to do, to get that trade. I was told that was not a wise way to approach the question. I was told that it would be an insult to the Colonies, that it would be improper, at any rate, to ask the Colonies to commit themselves until we had shown a readiness to meet them at least half-way. I was also told that we should be rejecting offers which had been made to us, unless we took the course that was proposed. I have never been satisfied that anything which could properly be described as an offer on the part of those who are authorised to make an offer, has really been transmitted to this country. I know there have been statements by individuals; I know there have been aspirations that it would be desirable to have a preferential system, and to bind the different parts of the Empire more closely together by that means, but I think it is stretching language and going beyond the actual facts of the case, to say that anything that could fairly be described as an offer in this matter has ever been made to this country. At any rate, I venture to say that if such exist, it would materially assist our deliberations if the actual text of those offers were communicated in a formal and deliberate manner to Parliament, in order that they might be considered upon their merits. I certainly would be glad, as I am sure many of your Lordships would also, to give such consideration to them. I venture to say, however, that it is a great deal more than doubtful whether this commercial union would be a better basis of union than the ties that already exist. I think the danger of differences would be very great. The case with us is not parallel with that of either the United States or Germany. We have no one authority which could settle the fiscal policy of the country. In the far future we may have such an authority, but it is perfectly certain that we have not got it at the present time; and until we have it, I venture to think that the danger of differences would be greater than with the complete freedom which we at present possess. I do not want to weary our Lordships with quotations, but on 20th August, a speech was made by Sir Wilfrid Laurier, Prime Minister of Canada—who, if there is a real Imperialist amongst our colonial statesmen, is that one—and in that speech he said— Canada values too highly the system which made her what she is, to consent willingly to part with any portion of it for whatever consideration, or even for the maintenance of the British Empire. I think it would be a most evil thing if any of our colonies were to consent to part with any of their legislative independence, nor do I believe that in order to make such an arrangement of a commercial nature as I have spoken of some time ago, we should be called upon to make any sacrifices of dignity or independence. We must make a sacrifice of freedom, and the Colonies must make a sacrifice of freedom, if they are to bind themselves by any arrangement whatever, of the nature which has been indicated.

There is one more point in connection with that matter to which I would allude. We are asked for a mandate, but it has never been authoritatively stated what is to be the extent or limit of the mandate which we are asked to give. It is suggested that the mandate should authorise, as I understand it, negotiations for a preference, with a duty of 2s., or something of that kind. But there is no security at all that that sum would be sufficient. What sort of a position would we be in, if in a year or two, after negotiations had been taking place, and after this mandate had been given, we found that a 2s. duty was not sufficient, and we had to make it 4s. or 5s.? What would be the position of this country? We should be asked: "Are you really going to sacrifice the Empire for the mere difference between 3s. and 5s.? Is a difference of 3s. to make the difference between unity and separation?" The only safe course to take is not to commit this country until you know the limit to which you are likely to be asked to go, not to depart from the principles which have regulated the policy of the country for so many years until the extent of the journey that you are asked to travel can be defined. We are now told that before a mandate can be asked for this proposal, there are to be two, or perhaps three, general elections. I do not know whether that is to be so or not, but if it is, is not that fact in itself a most complete and absolute justification of the line which those took who refused to allow the Government, and, so far as we could help it, the country and Parliament to be committed upon this question before any election at all had taken place? I pass from that; I will say no more about it; I am not going to discuss the question of which Minister was committed to this policy; it is certainly not my business to do that; it is sufficient for me that these things were before the Government, and that it was suggested that they were to be open questions. In my opinion, for those of us who are not able to accept the policy, it was impossible on that ground that we should continue to be members of the Government.

I pass to the question of retaliation or freedom of negotiation. It will not be difficult to show that the question is in a somewhat different position now from what it was in those days. I certainly have no doubt in my own mind that such arguments were used in support of it, and that such admissions were wanted about it, that if, so far as the arguments were concerned, we had admitted them, or if, so far as the admissions were wanted, we had made them, we should have been logically committed to a very large departure indeed from the principles of free trade. If I wanted a proof of that fact I could allude to the exact language used at Sheffield, where it was announced that the policy to be recommended to the country was to be a reversal of the existing policy, and subsequently at Bristol, where it was announced to be a great and serious change. On one point I do not agree with the noble Earl who spoke a few moments ago. I do not believe that it is fair to say that the Prime Minister is in any sense an advocate of protection. He has uniformly—publicly, and, I may say, privately—argued in favour of this policy, as a means of getting what he calls freer trade. I therefore feel bound to say that I do not think the remark which was made can fairly be applied to him.

* THE EARL OF CREWE

I do not think I ever described the Prime Minister as being an advocate of protection. I said he was being drawn towards it.

LORD BALFOUR OF BURLEIGH

Of course I accept the correction, but even in its modified form I do not think it is accurate. My recollection of what the Prime Minister has said in public and in private is to this effect, that if his policy involved a sort of flavour of protection, it was to be accounted as one of the disadvantages of the policy rather than as one of its advantages, and that be was not going for this policy because it was protective, but that he did not think its protective flavour was so great a disadvantage as to deter him from endeavouring to get the benefits which he hoped to obtain. I hope I am stating it correctly, but I am only endeavouring to state it in order to say that I do not agree with the position thus taken up, because I think the protective flavour which is about some of the proposals that are made, is so disadvantageous that the disadvantages overbalance any advantages that might possibly obtain from them. I want to say this: I did not understand in August, and I do not understand now, if the policy of liberty of negotiation is to go no further than seems to be fashionable at this moment, why any mandate for it is required—if it is to be under the control of Parliament, as I understand is now admitted, although there seems to be some hesitation in accepting the control of Parliament in every case. That is, as I understand, what happened in another place, but I am looking to this debate for light on that point. What I want to press on the House and upon the Government is that retaliation in itself is, as the noble Lord opposite has said, not really a final policy. It is an act of commercial war. I am not prepared to exclude war as a matter of policy cither from wider politics, or from commercial concerns, but if it is really the case that those who are in favour of this policy are heart and soul intending to use it for the purposes of getting freer trade, then I would look at any rate with a tolerant eye upon it. But what made me doubtful in the autumn, and caused me to feel that I could not continue to advocate it, was not only the want of limitation, the want of actual definition of the objects and the methods which were set before the Government, but the fact, as I have said, that arguments in favour of it were used which seemed to me to lead to the direct reversal of the traditional policy of this country. It is a different thing to express a willingness to support those whom you trust on general grounds, even if you do not thoroughly understand at the moment everything they are proposing, than to remain a member of the Government undertaking to advocate a policy which you do not fully understand, and of which, as in this case, you have doubts as to the practical efficacy. This may be, as I have said, a free-trade policy for free-traders, but I have great doubts whether it is really a policy which, taken by itself, can effect the object in view. I hope before this debate closes the Government will tell us with absolute distinctness how they propose to carry this policy into effect. What do they intend to retaliate upon. We are told absolutely distinctly that their programme does not extend to the taxation of food or of raw materials. But are raw materials and food to be subject to retaliation? If they are, that is an extremely serious step, but if they are not, the revolver of which the noble Marquess spoke last summer will, in a great majority of cases, be an extremely harmless weapon, and he might as well load it with snipe shot and take it for the pursuit of big game in Central Africa.

But I have another difficulty. This policy maybe a free-trade policy for free-traders, but I am speaking in the presence of some who do not regard it as a step towards freer trade, but as a step—perhaps a very short step, as some of them say, which is so insignificant as to be almost contemptible—leading to another and a very different policy. I hope His Majesty's Government will make it clear that they do not intend to be dragged along that path. Some of them I think, if I may say so in all friendliness, have gone rather too far along it at the present time. But I do not want to press matters too much, and I shall be only too glad to have an assurance that that is not to be the policy of His Majesty's Government. I recognise the difficulty of asking them for a concrete case in regard to the subject of retaliation, but there is this kindred subject of dumping. There are no 'international questions involved in that. Could not the Government mention some one of the trades which are especially affected, and which they desire to protect from dumping? Surely in regard to that we might have one or two concrete cases—cases put forward, not with the exaggeration of Party warfare, or, if I may say so without offence, with all the clap-trap of political oratory, but cases carefully selected, thoroughly investigated, and presented to Parliament in a form in which they can be discussed, in a serious and anxious spirit. I admit that the difficulty and intricacy of the question is very great, but every trade which is distressed is not the victim of dumping, nor is every individual in every trade which is distressed the victim of dumping. These things require the most careful and anxious investigation. It is almost impossible without personal inquiry by some agent to get at all the facts in every case. I have no doubt that most of your Lordships have read the chapter in the fiscal Blue-book which deals with dumping. There was attached to it, when first circulated, an explanatory memorandum by somebody at the Board of Trade—I really do not know whom—but it was an exceedingly clever and good statement of the difficulties of getting at the truth in this matter. It was not intended that it should be circulated, because it was part of the canon of making up that book that nothing but facts—no individual opinion of any sort-—was to be put forward. I think that was a wise rule under the circumstance; at any rate I myself was a party to it, and I make no complaint whatever about it. But this particular Paper to which I refer, although not circulated at the time, seemed to me so worthy of consideration that I would venture to ask His Majesty's Government whether they would consult the President of the Board of Trade with a view to publishing hereafter that Paper, upon the understanding that no member of the Government is committed to the opinions expressed. It seems to me that it would be so useful a guide that it would be for the advantage of Parliament and the country in considering this subject that that Paper should be in the hands of a much wider circle than at the present time.

But I come to what is to me a graver matter still, and that is the average 10 per cent. duty all-round. I know quite well that I shall be told that is not a part of the policy of His Majesty's Government at the present time. But can we be told distinctly by a representative of the Government from his place in Parliament what is the attitude of the Government towards it? I know it is not their policy, but are their convictions settled in regard to it. How can we be sure that it never will be their policy? As I have said, I am afraid that some members of the Government have accepted it and have protectionist leanings. I make that no subject of reproach, for I recognise the right of everybody to have their own opinions upon that matter. I think, however, that, in a subject of such importance, Parliament and the country have a right to know what is the settled policy of the Government in regard to it. I venture to say that the country is thinking more about that at this moment than it is about the mere policy, the official policy, of the Government. I am afraid that too many of the supporters of the Government regard that as the most important part of tariff reform. Supposing the sympathy which is now expressed for this policy is translated into practical shape, and supposing we find at a subsequent time that a majority of those with whom we would like to act, find themselves in fact committed to that policy. I know quite well that it is unusual to give an illustration in this House, but there is a story going round at the present time which very well illustrates my position in this matter. I am told that a short time ago an American couple landed at Liverpool, and upon arrival at that port the husband received a message that his mother-in-law had died, within the last few days, while they were crossing the Atlantic, and he was asked to telegraph an answer to the message stating whether she should be buried, cremated, or embalmed. The husband went to the Post Office and telegraphed the following reply— Better try all three: take no risks. That policy of protection is one, with which, so far as I am concerned, I am not prepared to take any risks, and what I am afraid of is that it will swallow up every other policy which is put before the country, and that it will be a sort of Aaron's Rod, which will devour every other question which comes into our public life so long as it remains there. The Government may not like it, and they may even shut their eyes to the fact, but I believe that it is that policy which is really before the country at the present time, and, that being so, I say, in my humble opinion, that the present position in which some of us are placed is not altogether a fair one. It is not fair to those of us who are loyal Unionists, and who remain free-traders to be left in the state of difficulty and uncertainty in which we are placed at the present time. I also venture to say that it is not altogether fair to Parliament itself. I am certain it is not fair to the constituencies who ought, in a matter of this kind, to have a clear and distinct lead from those who are the leaders of the people; and I am not quite sure that it is quite fair to the members of His Majesty's Government themselves. In spite of the precedent of the Home Rule Bill, which is sometimes put forward, I say that this state of uncertainty is, in my opinion, contrary to the best traditions of our public life. One of the things that public men are distinguished for in this country is that we take a definite line, make it clear, and stand up and argue for it, and after declaring our opinions we take the consequences of them whatever they may be. Upon this question we must stand somewhere, and as far as I am concerned I am profoundly convinced that any departure from the policy of free trade or free imports, if you like to call it by that name, will be the first real blow to the prosperity of our British commerce; and that, so far from cementing the union of our Empire, it will render that union more difficult to maintain because it will be more complicated; and while holding these opinions I claim to be one who is as loyal a supporter of the unity of the Empire as any of His Majesty's Ministers themselves.

* THE MARQUESS OF SALISBURY

There is a special reason why I should ask the kind indulgence of the House, because it is not only the first time that I address your Lordships, but the first time that I have spoken with the dignity of a representative of the inner circle of the Government; and last, but not least, I am called upon to follow two noble Earls of tried and approved skill in your Lordships' debates, and to do what I can to satisfy your Lordships that the policy which has been criticised and attacked can be fully justified. I think all of us who sit upon this side of the House listened to the speech of my noble friend who has just sat down with feelings of the greatest sympathy. If I may echo his words I would say that he remains a friend, and I wish he had remained a colleague also. He has addressed your Lordships in a tone of such moderation that I shall feel it beyond my duty to criticise what he has said in any very hostile manner. Indeed to a large extent my Lords, he was in agreement with His Majesty's Government. Upon retaliation he evidently thought that there was a great deal to be said in favour of it under certain circumstances and limited to certain conditions. I admit that the noble Lord did not go so far as we do in regard to retaliation, but with respect to the rest I really see no difference between ourselves and my noble friend. He spoke of this as being an open question when he left the Government. As far as I am aware it is an open question in the Government now. He also spoke of protection. Protection forms no part of the policy of His Majesty's Government. I do not pretend myself to have any prejudices on the subject, but protection appears to me to involve that everything should be dearer, while on the other hand there appears to be no reason to suppose that anyone would be richer. Therefore, my Lords, that policy is unacceptable. At any rate it forms no part of the policy of His Majesty's Government. But, my Lords, our agreement with the noble Lord goes further. He has referred to what has taken place in another place with regard to the policy of preference. There is no question about preference for it forms no part of the policy of the Government. And lastly we are not here to defend the policy of a very distinguished statesman, I mean Mr. Chamberlain, but we are here to defend our own proposals and nothing else. I noticed that the noble Earl at the commencement of his speech seemed to intimate that he was only going to discuss our proposals, but I appeal to your Lordships whether he did not extend his purview far beyond that strict limit. I think he called upon us to defend a certain duty, namely, the quinine duty, passed in the year 1808. Then he discoursed at some length upon the Navigation Laws, and lastly he went in great detail into Mr. Chamberlain's proposals, which he seemed to know a great deal more about than I do myself. We are not here to defend any of those things. Speaking personally, I do not agree with Mr. Chamberlain, but I confess I do not think that any very great advantage is gained by the kind of language which the noble Earl used in reference to those who do agree with Mr. Chamberlain, for they are not mountebanks, and I do not think an expression of that kind is appropriate in the least to the very many distinguished men who share Mr. Chamberlain's views.

* THE EARL OF CREWE

I must be allowed to explain that my allusion was to those who had been in the habit of giving magic lantern lectures and other entertainments in constituencies in which by-elections have taken place. My allusion did not in any way apply to those gentlemen who speak on the public platforms.

* THE MARQUESS OF SALISBURY

I am glad that I have succeeded in obtaining from the noble Earl that explanation. I do not think he is so familiar with elections as I am, but if he were he would know that, even from the point of view of Liberal candidates, magic lanterns are not unusual, and they are often introduced by the friends of the noble Lord to persuade the electors that we are in the wrong and they are in the right. Noble Lords who have spoken seem very anxious to have the details of the policy of His Majesty's Government. I am very much obliged to them for having suggested to us a great number of different policies which we might adopt, but I am not going, nor is anyone on this Bench going, to inform this House what the details of the policy will be, which it will be our duty to propose to Parliament should we be successful at the next election. These details must depend upon a great number of different circumstances. [A NOBLE LORD: Upon whether you are successful?] Yes, they must depend upon whether we are successful, or not, as the noble Lord opposite says. They must depend in the second place upon what the action of foreign Governments may be, and over that we have, of course, no control. I think I may be forgiven for not thinking it necessary to defend the details of the policy of His Majesty's Government, that is the policy of negotiation and retaliation, because the noble Earl and his friends are not yet convinced of the principle. Why should we be at the pains, now, to elaborate the details of a policy of retaliation and negotiation when it is perfectly evident that the noble Earl and his friends would not accept such a policy whatever the details might be? What we shall do when the proper time comes is this, we shall appeal to the electors of this country to say "Aye" or "No" to the question whether they are in favour of a policy of negotiation and retaliation or not, and upon their decision the subsequent details of this controversy must depend.

I now turn to the Motion of the noble Earl which is before your Lordships at this moment. That Motion has evidently been drawn with great care, and I should like to compliment the noble Earl upon the ingenuity with which it has been drafted. It is so elaborate, and has so many limitations and conditions, that it would be more worthy of a conveyancer guarding against a possibility of some fraudulent misuse of a trust, than a Motion submitted to your Lordships' House. It is, in fact, obvious that the noble Lord and his friends are hostile to the policy of the Government, and that they have so little trust in the Government that they desire to bind them down to the smallest detail. It is, therefore, a vote of want of confidence in His Majesty's Government, and as such we shall resist it. It is, if I may say so with great respect, rather a remarkable Motion to submit to your Lordships' House, for it does not deal with matters which are generally the subject of our detailed consideration. It has to do with the fiscal policy of the country; it has to do with the limitations upon the taxing power of Parliament which are generally discussed rather in the other House than in this. I hardly like, after what I have said, to dwell upon the wording of the Motion, but I should, however, like to say that the word "each" in the last line, although its object is quite obvious, is rather unmeaning It is well known that no proposal in regard to taxation can be enacted in this country without the assent of Parliament being given to such proposal. That is involved, of course, in the prerogatives and privileges which Parliament possesses. Then the words of the Motion go along way. The noble Lord, although he talked at great length about the policy of the Government and about the policy of Mr. Chamberlain, did not go into details as to the meaning of his own Motion, and the word "proposals" seem to go a very long way, because certainly, unless it is very carefully explained, it would almost seem to preclude the Government from entering into any negotiations without the leave of Parliament, which they obviously must do in many cases. They must enter into the necessary preliminary negotiations before Parliament could be asked to allow them to use the weapon of retaliation to enforce the policy which those negotiations were intended to secure.

Under those circumstances, my Lords, I have to acquaint your Lordships with the method in which His Majesty's Government intend to treat this Motion. We are as anxious as any of your Lordships to safeguard the rights of Parliament, and we are fully aware that Parliament is sensitive, and very rightly sensitive, upon any proposals or any policy which would have as their object or their effect the invasion of the privileges and prerogatives of Parliament over the taxation of this country. We are not going to oppose any such words in the noble Lord's Motion as would involve that proposition, but we prefer to put our meaning into words of our own, and I shall move on behalf of the Government an Amendment to the noble Earl's Motion in the following terms— This House, while affirming the constitutional doctrine that, all fiscal arrangements of this country must be subject to the full and effective control of Parliament over taxation, is not prepared to lay down rules for the guidance of future Parliaments as to the exact method in which such control should be exercised by them in cases which may here after arise. Now let me say one or two words upon the discussion and upon the policy of the Government as I have stated it to be. I think that the great difficulty which stands in the way of the critics of the Government is that they are all bound to admit that the state of trade in this country is not altogether satisfactory. Is that denied? Are any of your Lordships prepared to say that the state of trade in this country is wholly satisfactory? It is obviously not the case, and it has been frankly admitted both in this House and in another place that the state of trade is not wholly satisfactory. Mr. Motley frankly admitted, only the other night, that he had repeatedly called attention to the unsatisfactory condition of trade, and the noble Earl who leads the Opposition, on the first night of this session, himself gave utterance to a similar sentiment.

EARL SPENCER

With regard to competition, I said that we were in very keen competition with other nations and that we had not education sufficient to combat that competition.

* THE MARQUESS OF SALISBURY

The noble Earl, I think, admitted that some changes might be necessary, and I gather that the changes he would desire are not what we would desire. We go further than the noble Earl. Just as Mr. Morley admits in another place, the noble Earl admits that changes are necessary. I notice the noble Earl who opened this discussion seemed to admit also that some changes were necessary, and that he even went so far as to convey that retaliation might be useful as a means of promoting the trade of this country. If the noble Earls opposite have taken that view, so also have right hon. Gentlemen and noble Lords who belong to what is called the free-food section of politics in this country. Your Lordships are no doubt aware that Sir M. Hicks Beach admitted in the strongest and most emphatic manner, not only that the state of trade was unsatisfactory, but that retaliation was an appropriate and becoming method of resisting the aggression of foreign powers and thereby improving the state of our trade. I was glad also to notice that the noble Duke who sits below the I gangway, the Duke of Devonshire, not only admitted that there was a call for change, but he even went so far as to confess that his own view of retaliation had been modified since ho left the Cabinet, and modified in the direction of thinking that retaliation was more useful than he had at that time thought. Speaking at Liverpool, he said that the policy of the Government might be summed up as asking for the power of negotiation and retaliation, and he went on to say that, while he did not believe so firmly as the Prime Minister did in the probable efficacy of such a policy, he was more disposed than before to approve of the object of that policy.

THE DUKE OF DEVONSHIRE

Yes, the object.

* THE MARQUESS OF SALISBURY

I think the natural meaning of his words was that he saw more in the policy of retaliation than he had done at a previous period. I think I may sum up the situation as far as I have gone to this extent. It is admitted, practically on all hands, that the state of trade and especially the state of our export trade to protective countries is not satisfactory. Many of those who who do not see eye to eye with the Government are yet prepared to admit that there is something in the policy of retaliation, and I think that is a considerable step forward. I venture to say that if anyone had been rash enough, two or three years ago, to have asked any of the noble Lords whose opinions I have quoted whether they would look, even to that extent, kindly upon the policy of retaliation, they would have repudiated such a suggestion. And when we find people blaming us for the extent to which the present agitation has gone—and I regret it equally with many of your Lordships—when they condemn it, I wonder whether they really put the blame altogether upon the right shoulders. Surely those statesmen sitting on both sides who obstinately shut their eyes to the obvious signs of the times, and, although they admit trade is bad, are determined that nothing will induce them to do anything to better it; who admit that the policy of foreign countries towards our own country is unfair, and yet will not stretch forth a finger to induce those foreign countries to give us better terms—I say that those statesmen are more responsible than anyone else for the length to which the present agitation has gone. People say it is all Mr. Chamberlain, but what nonsense; Mr. Chamberlain is a man of great eminence, but even a man of his great eminence could not produce the effect that has been produced unless public opinion had been undermined altogether already, and it has been undermined because there is a profound feeling of resentment at the manner in which we have been treated by foreign countries, and that resentment extends to all classes and is even more widely extended in area than your Lordships are yet aware of. It is a determination that they will not sit quiet under such aggression, but they will resent and resist it with those weapons which come most readily to their hands. It is the unconvinced Toryism of noble Lords opposite which has brought us to this pass, it is their stick-in-the-mud policy, and their defence of the privileges and exactions of foreign countries, which have made such a large number of people in this country quite unmanageable, and has driven them to an extremity of feeling which I, in common with noble Earls opposite, regret.

I do not wish to detain your Lordships too long, but I desire to say one or two words upon these specific arguments against the principles of retaliation which have been advanced by the noble Earl. He said that the imposition of retaliatory duties would give a fictitious value to certain industries, that it would lead to the investment of capital, which upon the remission of those duties would be jeopardised, and he said that was a serious blemish upon the policy of retaliation. I anticipate no such result from the policy of the Government as that which has been forecast by the noble Earl. It would be the avowed policy of the Government, if they did impose retaliatory duties, that they were only to remain so long as was necessary in order to induce the country with which we were dealing to alter its tariff in our favour. I may retort upon the noble Earl that this fictitious value given to industry, and which leads to an investment of money which is thereby prejudiced, is precisely what happens in consequence of the bounties given by foreign countries. We had an instance of i that only last year. At that time, as your Lordships well remember, we were engaged in considering the bounties upon sugar which had been granted by foreign European countries. One of the main objections to those bounties was that the industries which were created in con-sequence of those bounties rested upon a wholly fictitious basis. It was stated that the various industries which took advantage of bounty-fed sugar had grown very much, and that they had been established upon a basis which really was at the mercy of the foreign Power who gave the bounties, and that when the proper time came and all opposition had been crushed out, the foreign country would remove the bounty, and having secured the monopoly of the raw material would then proceed to crush the industry which relied upon this fictitious foundation. Then, my Lords, there was another argument put forward by the noble Earl, who seemed to say that the high tariffs of a foreign country were a positive advantage to this country. He said there had been certain high tariffs imposed by Germany, but I did not catch exactly when. It is not, however, difficult to find an example of high tariffs imposed by Germany. He contended that the consequence had been a great increase in the manufacture of a certain commodity, and he spoke of people working night and day in this country to throw that commodity into the German market just before that tariff came into force, and he seemed to think that that was a benefit to ourselves. In my opinion it is that very uncertainty of industry which is so bad for us. A sudden increase of that kind forcing an industry to work night and day and inducing it to temporarily increase its plant to cope with the trade, is, in my opinion, precisely what ought to be avoided for the steady prosperous increase of any industry.

* THE EARL OF CREWE

I am afraid I have not made my argument clear. In 1879, when the German tariff was about to come into operation, we worked night and day in Yorkshire to flood the German market with woollen goods before that tariff actually came into operation. Consequently I say that if we put on a tariff, during the period before this came into operation our market would be flooded by German goods, and the Germans would work day and night to come in with their goods before the tariff came into operation. It would consequently be some considerable time before the protected industry in England gained any advantage from the tariff we impose, and owing to that delay it might do damage to the industry to take the duty off at short notice.

* THE MARQUESS OF SALISBURY

It is quite evident from that argument that the advantage to Germany would only be of a very temporary character. I will not pursue that argument any farther, but I will go into rather close detail as to what might be the future methods we might adopt to cope with the difficulties which the noble Earl has suggested. The most important argument which he used was that other countries had tried retaliation and that it had failed. I do not agree with the noble Earl, and if he will read more closely than he has apparently done, the history of the negotiations and actions of foreign countries in relation to tariffs with their neighbours, he would not come to that conclusion. One thing is quite certain, that every foreign country believes in retaliation. They all habitually use the method of retaliation for the purpose of securing advantages for their own industries. The noble Earl himself, I think, must agree that it is a very powerful weapon, for he seemed terrified, if I may use such a word, at the effect upon this country if other countries resented our retaliation. He declared that they would themselves respond to retaliation, and that the effect would be very formidable in this country. If he himself is aware, and quite rightly, that the action of foreign countries would have such an effect upon us as to be a motive, in his opinion, to govern our policy, why is it surprising that other countries should think the same? I am perfectly confident that other countries are watching the discussion in Parliament and the country with the greatest attention at this moment, and they are well aware that, commanding as we do this great free market, it is in our power, by a judicious use of the weapon of retaliation, to inflict upon them penalties of a very severe character, penalties which they will be obliged to recognise and to give us better terms in consequence. So much for the specific grounds on which the noble Earl objects to retaliation in principle.

There is another argument which has been used in this debate. I think the noble Earl, and certainly my noble friend who has just sat down, has said that if you only mean this by retaliation, why is it necessary for you to get what is called a mandate from the country? Why don't you make your proposals to Parliament and have done with it? The question as to how great a departure from our previous practice, in regard to this policy of retaliation, is to be made is a matter of opinion. In my opinion it is a very large departure from our previous practice, but in order to show your Lordships how large a departure it is, let me consider a certain Act of Parliament to which I have already referred in my remarks. Take the Sugar Convention question and the Sugar Convention Act. That is a very valuable precedent for the policy of His Majesty's Government, but it does not go far enough, and I should like, if the House will bear with me for a moment or two, to explain why it does not go far enough. In the first place, the Sugar Convention and its consequences did not depend upon the initiative of this country. The initiative was taken by foreign countries; and I think it will be conceded that there is no reason whatever why any policy of retaliation in this country should be so limited. There is no reason why we should wait for the initiative of foreign countries. Let me say also that, above all, it is important that this country should not be hampered by any such conditions in the policy of retaliation as that. The great thing, above everything else, is to persuade other countries that you are in earnest and able to use the weapon. It has always appeared to me that the greatest advantage of this policy of retaliation is more of a preventive than a cure. It is the knowledge which other countries have or will have, supposing the Government are supported in this policy, that we are no longer passive in this matter, that we are able to resist, and that we are determined, in certain circumstances, to resist, which will make them pause before they carry out a policy of commercial aggression against us. There was another feature in the Sugar Convention. It was not merely that the initiative did not come from us, but we did not act alone. We thought it necessary to wait until we had got other countries to act with us, before we used the weapon. That appears to me to be a wholly unnecessary limitation in regard to the power of retaliation. As has been remarked in another place by Sir M. Hicks Beach, we saw, in the course of the discussion at Brussels, how very great the power of this country was. Your Lordships all know that, as a matter of fact, practically it was the power and influence of England which really carried the Sugar Convention through. Under these circumstances it appears to us quite unnecessary, in the future, to wait for other countries to move. We should desire not only to be able to take the initiative ourselves but to act by ourselves upon our own strength and upon our own resources. Then again the Sugar Convention only had to do with bounties. It was only an agreement for the purpose of putting down bounties on sugar, but we should certainly, if we got authority from this country to use the weapon of retaliation, use it not only against bounties but where need be and upon proper occasions against hostile tariffs as well. And lastly, the only weapon which the Sugar Convention permitted this country to use, or at any rate the only weapon which the Sugar Convention Act permitted us to use, was the weapon of prohibition, of total prohibition, which would evidently be inappropriate in most cases, and which therefore seems to me a wholly unnecessary limitation upon this policy of retaliation. I daresay more of these could be pointed out, but I have pointed out a great number of particulars in which the precedent of the Sugar Convention and the Sugar Convention Act is wholly inadequate in order to carry out the policy which His Majesty's Government would have in view when they submit their policy to the country at the next general election. I think the precedent of the Sugar Convention Act which I have quoted, is valuable in another direction because it shows in a most emphatic form how anxious the Government were not, in any way, to interfere with the control of Parliament over the taxation and fiscal policy of this country. I do not ask your Lordships to take it from me that the Sugar Convention and its history describe the details or correspond to the details of the policy of retaliation such as His Majesty's Government will put forward. Probably it would have to go much further than that, but I think it does show that the Government were, last year, fully aware of the necessity respecting the control of Parliament over taxation and that the same spirit which dictated our action then will dictate any other action which we may think it necessary to take in the future.

My Lords, we have been asked, as I have said, why we do not submit a concrete case to Parliament? Such a procedure would no doubt have many advantages, but I think it would have many disadvantages as well. How can we enter into negotiations with foreign countries until we know what the true mind of this country is on the subject? I recollect, when I was at the Foreign Office, being instrumental in suggesting to the Government of Switzerland that they should modify to some extent a commercial tariff which they were then engaged in promulgating, and which was, in some of its articles, very disadvantageous to this country. As a mere personal opinion, I ventured to point out that, if the aggressive policy of foreign countries continued, it was just possible, reading as I tried to do the signs of the times, that the patience of this country would be exhausted, and that a more vigorous reply might ultimately be expected. But the Swiss Government did not believe what we said. If I remember rightly, they almost laughed at the idea. They said "Oh, Great Britain will never depart from the placid attitude which has become the greatest characteristic of its commercial policy, and we shall pay no attention whatever to your remonstrances or to your anticipations." It is precisely that view, upon the Continent, which is so dangerous to the industries of this country. That is the reason why before entering into negotiations the Government desire to have the country behind them.

My Lords, that is, therefore, the policy which we shall submit to the electors. We may fail, my Lords. If we fail, then another Government will take our place, and right hon. Gentlemen and noble Lords opposite will have to deal with the difficult state of trade which they themselves have admitted. They will have to find some other remedy for the reduction of hostile tariffs if they reject the one we have submitted. But if we succeed, my Lords, if we succeed at the general election, whenever that may be, then we shall be in a position to speak with our enemies in the gate, and we shall have behind us, not merely the good wishes and support of the Conservative and Unionist Party, but also the emphatic declaration of the electors at the poll that they no longer will accept the perfectly passive attitude, but are prepared to support the Government in a policy of negotiation, and a policy of retaliation, not as a matter of bluff, but as a real and effective weapon, to be used upon such occasions as may properly offer.

My Lords, it is in that spirit that we must oppose a Resolution, of which the obvious intention is to hamper the Government, in the future, in carrying out the policy which they have avowed, and we propose to substitute for it the Resolution I have read to the House, which recommends in the fullest terms the complete and effective control of Parliament, but repudiates the limitations which the noble Earl seeks to place upon the proceedings of a future Parliament.

Amendment moved— To leave out the words after 'that' for the purpose of inserting the following words, This House, while affirming the constitutional doctrine that all fiscal arrangements of this country must be subject to the full and effective control of Parliament over taxation, is not prepared to lay down rules for the guidance of future Parliaments as to the exact method in which such control should be exercised by them in cases which may hereafter rise.'"—(The Marquess of Salisbury.)

LORD TWEEDMOUTH

My Lords, I am glad to think that, at the outset of what I am about to say, I am able to voice the opinion of the whole House when I say that it is with great pleasure and interest that we have listened to the speech of the noble Marquess who has just spoken. It is his first speech, delivered from the same place from which we so often heard his distinguished father. My Lords, the noble Marquess's father has, and long will have, a strong hold on the memory and affection of this House. The noble Marquess comes to this House with a strong prepossession in his favour, and I can wish him no more than that he may attain, in some large measure, to the fame and reputation which his father gained in this House.

Now, my Lords, I am glad also to be able to welcome the noble Marquess as a free-trader. He has made a most distinct declaration that he, at any rate, is not in favour of protection. He even went so far to say that it would make everything dearer. Well, there again I am in agreement with him. But I cannot quite agree with him in what he went on to say—namely, that it would make no one richer. I believe, on the contrary, that some favoured persons would be richer, and that, with the exception of these favoured classes, the rest of the population of this country would be considerably poorer. My Lords, the noble Marquess then went on to find fault with my noble friend Lord Crewe for calling upon His Majesty's Government to define their |proposals, and said that, in spite of his having made that, appeal, he had proceeded to criticise proposals which were not those of His Majesty's Government. I do not think any blame attaches to my noble friend for having taken that course, because he, like the rest of us, is in that position. We really have not the faintest conception what the proposals of Government are. The noble Marquess told us that, in due course, the proposals of His Majesty's Government would be announced, and that they would be announced after the next general election; that when the noble Marquess and his friends were returned to power they would then be good enough to come down to Parliament and say what they proposed to do. That seems to me to be one of the most extraordinary proposals to put before the country, that I ever heard of. My own idea is that if their proposals are not made a little clearer before the general election takes place, then the noble Lords will have a very small chance of being in a position to declare these proposals to an expectant Parliament after the general election has taken place. Then the noble Marquess said that my noble friend was rather presumptuous in bringing this Resolution before the House, because it did not pertain to subjects which were generally brought before the House. I entirely repudiate that proposition. I say that there is nothing that affects the country that is not, and cannot be, brought before the House, and upon which the decision of this House cannot be taken. It is perfectly true that we in this House cannot make changes in a money Bill, but we can reject a money Bill, and I think that one of the very objects of my noble friend's Resolution is to retain to this House the power to reject any or these proposals, if they are brought before it, because he asks that each one of these proposals should be separately brought before Parliament. It would be perfectly open to this House to reject any one of these proposals if it were brought before the House separately. I quite admit that there would be a difficulty if the proposals are to be brought up in a lump, in a single money Bill once in a year; then, I think, this House is damnified. I think my noble friend is therefore quite right in asking for separate proposals.

I am afraid that I am somewhat incapable of criticising the Amendment, which the noble Marquess has moved, as I have not read its terms. So far as I was able to gather its purport, it seemed to me, to leave the whole subject absolutely open. It professes to reserve the full effective control of Parliament, but at the same time the Government is not prepared to declare any policy whatever. In fact, what the Resolution asks for is that the present Government should be given a blank cheque in order to propose what they like at some future time, after a general election has taken place. My Lords, the noble Marquess stated that all of us on these Benches, we who have spoken here and in the other House, are against retaliation. I believe we are against retaliation. But the noble Marquess differs entirely in his opinion from the noble Marquess who leads this House and who is sitting next to him on the Government Bench. I remember on the first day of the present session the noble Lord (the Marquess of Lansdowne) taunted us with the fact that in all our speeches we had kept a saving clause with regard to retaliation, and that he had noticed that that particular saving clause was the one received with the most vociferous cheering on the part of our friends. This is only another case of the extreme difference of opinion which exists on all sorts of subjects between the noble Lords on the opposite Benches. My Lords, the noble Marquess said that all these troubles and all this agitation proceeded not from the Government, not from the friends of the Government, but entirely from what he was pleased to call the unconvinced Toryism of we who sit on this Bench and our friends. I admit that our Toryism is of a very unconvinced character. I want to know how the noble Marquess can pretend to throw upon us the responsibility of all these things, when he and his friends, who have been in office since 1886, for fifteen out of eighteen years, have had an opportunity of realising what the dangors were, and what the fearful injuries done to us by foreign nations were, and yet, having had all this time to realise that, will not tell us even now what remedy they propose, but tell us to wait till after the general election takes place upon some issue. I suppose we are to be allowed to place the issue before the electors. I really must again press to know what is the Government policy. So far as I am able to judge it may be described as Quot homines, tot sententice—so many Ministers, so many opinions. My Lords we have tried very hard to find out what are the opinions of the Government and of His Majesty's Ministers. It is not for me to enter into the domestic quarrels of the Government. I know it is a dangerous thing to intervene in domestic quarrels. Generally the quarrelers agree to fall on the people who intervene. That is a very good way of bringing about a certain reconciliation, so I am not attempting to intervene. But this I do know, that the effect of these quarrels or differences has been to strew the Back Benches of the two Houses of Parliament with Cabinet Ministers, very much the same as you see a lawn strewn with leaves after an autumn gale. And yet these Ministers strewn about the two Houses are not amongst the leaders least trusted by the people, not amongst the least able, and not amongst the least experienced. My Lords, when we can remember that there are some eight or nine Ministers strewn about the two Houses who have been colleagues of the present Cabinet Ministers, it does seem to me that it is natural that the thought should arise in one's mind that if, as we say in Scotland, there has been a "purging of the roll," at least the Ministers who are left should have one mind and might be in a position to state clearly what their policy is.

We have had no opportunity of hearing in the Houses of Parliament what the Prime Minister's opinion is. I am sorry for that, and still more sorry for the reason of it. But we do know that he declared in favour of the reversal of the fiscal system which has obtained during the past fifty year. It is said that the Prime Minister does not favour protection, but I should have thought that protection was very much involved in a proposal to reverse the fiscal system of the past fifty years. He takes the very period during which the free-trade system has been in force, for that system was introduced fifty years ago. It is, therefore, evidently the free-trade system that the Prime Minister proposes to reverse, and we are justified in believing that until he proves the contrary by producing another policy which does not contain the idea of protection. We have not had matters made much clearer by the proceedings during the long debate in the House of Commons. During that debate the President of the Board of Trade made a strong free-trade speech, something in the tenor of that the noble Marquis has just delivered. But he was shortly afterwards thrown over by his own Under-Secretary, who made a strong protectionist speech. We have seen Ministers standing on protectionist platforms in the country and actually attacking those who had been their own friends as to their free-trade opinions. One of those Ministers made a speech in the House of Commons, and from that I really could not make out what his own personal opinion was. Then we had the new Colonial Secretary, who proved himself an out and out protectionist. We then had a speech, the set-off, from the Irish Secretary, who declared the policy of the Government to be a great departure, not from the traditions of free trade, but from the routine of Budget-making. My Lords, what does he mean by a departure from the routine of Budget-making? That is a cryptic saying on which I shall be glad to receive some enlightenment. Then we finally had the Home Secretary declaring himself to be in favour of free trade. The Government has been asked its policy on the most important question which has been before the country for the past fifty years, and all I can say of its utterances is that it either cannot or will not reply. It is then left to us to conclude what their policy is in the best way we can from these varying utterances. If I may paraphrase a sentence of the main agitator, the main cause of this causs teterrima belli, I might say: "Colonial preferences are gone; taxes on food are gone; retaliation is threatened." And, my Lords, where is it more proper to raise the question of retaliation than in this House, where stands the champion of retaliation—the would-be owner of the big revolver. The noble Marquess is hardly suited to figure as a good Claude Duval. I do not think he would find the attire of a highwayman, ready to produce his pistol to some foreign country and call for their money or their lives—I do not think he would find that position a very comfortable one, or one that would fit his figure. I am tempted to give the noble Marquis my own personal first experience of a big revolver. Many years ago—more than thirty years ago—I went off on an expedition to America. I was going into a wild part of the country, and was given a beautiful and big new revolver by an affectionate relative of mine. I went first to stay with the Seventh Cavalry on the plain, and was then going to the wild part of the mountains in Colorado. I was very proud of this revolver, and showed it with great pride to one of my friends in the Seventh Cavalry, explaining how valuable it would be when I got into the wilds of the mountains. He looked at it and said— Guess I should not take that with you, I asked why. He said— It will be of no good to you. A revolver is only of good to a man who is prepared to shoot first, and you will not use it. The effect of showing it would be that the man would shoot you, because he would shoot at you first. I left that revolver with my cavalry friend and went into the mountains and was very safe. If the noble Marquis will apply the moral of that anecdote to his ministerial duties he will find in the end it will be the safest and best course for him and the country too. But, my Lords, I do protest against these various warlike figures we are all so fond of using. I admit having used them myself, but I think they are entirely out of place when we are discussing a question of commerce. I would rather take the line followed only last year at the Iron and Steel Institute by the Prime Minister himself. He said— The riches of one nation conduce, believe me, not to the poverty but to the wealth of another nation, and if we could double or treble, by the stroke of a fairy wand, the wealth of every other nation of the world but our own, depend upon it our nation would greatly benefit by the process. I think that is a much better spirit to work in when dealing with other nations, rather than adopting the warlike similes and actions of retaliation. As a matter of fact retaliation does not reject nor does it even bar the way to full protection. On the contrary, I hold that retaliation is absolutely the path towards protection; that it is its very forerunner. Whether you call it protection, or colonial preference, or retaliation, they all mean the same thing—they all mean the restriction of our markets. Surely that is not what is to the advantage of this country; surely it is better for the British manufacturer to have as many customers as possible in every part of the world; surely it is better for him to be able to buy and sell in unrestricted markets all over the world; surely it is better for the consumer to do the same; and surely it is better for the producer, equally, to have as many markets as possible open to him. My Lords, to sum up, it is better to have a free market rather than a tied market.

My Lords, there is one other point. Retaliation, it seems to me, involves the taxation of food just as much as protection or colonial preference do. For retaliation to be effective it must be put in force against the principal exports of that particular country against which action is proposed to be taken. My noble friend has already given figures regarding Russia and America, but Mr. Wyndham, the other night, put the case very clearly. He said that hostile tariffs ranged from 25 per cent. in Germany to 75 per cent. in the United States and 131 per cent. in Russia. Surely if you are going to begin to retaliate against any nation, if you are to take this action against any nation at all, you will have to begin against those particular nations which have the greatest amount of duty imposed on your goods. These nations are Russia and the United States, and, as my noble friend has shown, the proportion of manufactured goods sent to us from Russia is practically nil, whilst the proportion sent from America is not 10 per cent. I think it seems only common sense to ask you to admit that if you are going to effectively use retaliation against Russia or the United States you must use it by imposing duties on raw materials or food sent to us by those two countries. But if that is attempted away goes your repudiation of the idea of putting a tax on your foodstuffs. And if you are going to tax your foodstuffs you are going to adopt a very serious and, I believe, a most injurious course. Taking the average of the last five years, it appears that you only take from your Empire about one-fifth of the whole of your wheat and flour—some 19,000,000 cwts. from your colonies and dependencies as against a total of 100,000,000 cwts. Though you get this amount from your colonies it is practically only from a single colony that you can really get a good supply. India and Australia and Canada send us foodstuffs. But you cannot rely on India and Australia, for in India a famine will cause the whole of the produce there to be used up, while in Australia they are subject to droughts. Therefore it is only from Canada that you can depend upon getting a regular supply. One-fifth of your food supply you get from your colonies. How long will it take for you to make up from your Empire the remaining four-fifths which have to be obtained and which it is I necessary to ask for? If you leave the question of bread stuffs and come to meat the case is even stronger still. Although the importation of bread stuffs and wheat has about doubled in the last thirty years, the importation of meat has quadrupled, the figures being 14.6 lbs. per head in the year 1872, as against 56.6 lbs. per head in 1902. And of all this meat there is barely a one-sixth part that comes from your Empire. Considering that here in this country you get three-fourths of your bread stuffs from abroad and two-thirds of your general food supply from abroad, surely it is the same sense of self-preservation and self-interest that should secure that these products should be brought into the country as cheaply and from as many different parts of the world as possible.

My Lords, it is said that this policy of protection is going to increase employment; it is said to be going to relieve distress in this country. But do we find that employment is greater and that distress is less in the countries whom we are now invited to copy I Let us take Germany and France. Prove your case; show us that in Germany, that in France, employment is more regular; show that there is less distress. Can you do so? Show that the wages are higher. Take the very Blue-book you have laid on the Table of the House. There you will see proved to demonstration that wages in both France and Germany are lower, and considerably lower, than they are here. You will find it also proved as distinctly that the prices of all the necessaries of life to the workmen here in this country are lower than they are to the workmen in Germany and France. It is not only the fact that the British workman gets a higher wage; he not only gets more shillings every week but more shillings buy more goods than the shilling of the French or German workman. My Lords, the Blue-book further shows you that, during the last thirty years, the change in the price of commodities in this country has been no less than this, that that which cost £100 in the year 1871 can now be bought for £78 16s. Now about the question of regularity of employment. There you have, just as before, a cry of distress and want of employment in Berlin as you have in London, and even greater. I know that the figures for Germany cannot be exactly given, but all our Consuls and other authorities report that the amount of distress and non-employment in Germany is very large indeed, and they also report that the consequences of that distress is great agitation and great unrest amongst the poorer population of Germany. In the case of France, we are in a better position to judge, because there they have the same sort of returns from the various trades unions as we have in this country. Taking these returns you find that undoubtedly in France there is a want of employment which is double that shown by the Board of Trade trades unions returns in England, and you also see, if this be the case in these countries which have adopted protection as a permanent rule, as their rule, that it will be a great deal worse here if we adopt the intermittent form of protection which you will adopt if you adopt retaliatory measures under such conditions as you propose. I understand your proposal is this. You are only to use retaliatory powers not for permanent, not for protective purposes, but only in order to induce foreign countries to lower their duties on the goods you send to them. What will be the effect of that operation? Suppose you put a duty on a particular manufactured article that comes from Germany into this country—a heavy duty—in order to obtain certain advantages from Germany. The result of that is that you encourage in this country the manufacture of that particular article on which you have to pay a duty in Germany, and from that date you raise the price of the imported article from Germany. The result would be that the trade in that particular article in this country would be encouraged; that men would be called in to that particular sort of manufacture; that capital would be put into it and factories would be built for it. Let us suppose that at the end of five or six years your retaliatory duty is successful and that Germany takes off the duty against which you aimed the retaliatory step. I suppose that then you would take off the retaliatory duty. The result will be that you will destroy the very manufacture you have built up in this artificial manner in this country. The capitalists will lose their money, and the workmen, and all trade adjuncts, will be thrown out of work, but they will no longer be able to compete with the German article, which will again come in without duty. I say the evils of intermittent protection are more likely to prove worse than the evils of regular protection which can be counted upon to go on as part of the general commercial system of the country.

My Lords, after all, this policy of retaliation is not a new one. It is nothing that we did not know all about. It has been customary in this country in the past; it is customary in different countries all over the world. And what has been the result of the experience that we have had of retaliation? My contention is that, in the case of all Continental nations, they have never procured the privileges of retaliation without impoverishing the people of their own country. It may be said—Is there a method by which you can adopt the policy of retaliation without having the evils which have attached to it in the past, and which attach to it still in other countries? If so, let it be offered to us, let it be explained by His Majesty's Government how they propose to mitigate the evils or avoid the evils which have been bound to result from retaliation when applied in so many foreign countries. There are two or three questions I should like to put to His Majesty's Government. I should like to know for how long you intend to impose these retaliatory measures, You deny that you intend to put them on as permanent protective duties. Surely there must be some term to which you will limit the duty. Will it be five years or ten years or fifteen years or twenty years? How long do you propose to leave on these duties, supposing a foreign country does not fall in with your way of thinking? For if you are proposing to leave them on continuously you are simply proposing a protective measure. What are you going to do in this matter with regard to your own colonies? It seems difficult to find any foreign country more determined than our own colonies to exclude British manufactured goods in favour of goods they can possibly manufacture for themselves. We have heard a great deal about this from the Colonies, but we have never yet heard of any offer having been made by them which would show that they were willing to take the duties off British goods in order to allow them into the Colonies, at the risk of injuring colonial manufacturers. Unless you can clear up some of these difficulties, unless you can show that the difficulties which are pointed out can be avoided, you cannot expect to get the free hand to deal with retaliation, which you are asking for. I think it would be difficult to find any set of statesmen who will be trusted by the nation with a blank cheque in this respect, unless they are prepared to come boldly into the open and state fully and explicitly the details of the policy which the country is asked to adopt.

* LORD HYLTON

My Lords, I should be very loth on any occasion to take up the time of the House, and especially at this hour, therefore I will only delay your Lordships a very few moments. But if ever an occasion justified it, I think it is the present crisis. There has been proposed, not by His Majesty's Government, but by a powerful party in the country, a complete reversal of the fiscal policy which has obtained in this country for the last two generations. New organisations, my Lords, have sprung up all over the country both in favour of this new policy and against this new policy. A Cabinet has broken up on this subject and His Majesty's present advisers do not hold altogether identical opinions upon it. Therefore, my Lords, I think that private Members are entitled to say a few words and to justify their votes by some expression of their opinion. I am not going back to the controversies of 1846 nor will I attempt to speak on the arguments for or against protection or free trade that were brought forward at that time, if for this reason alone that the predictions of that day have been completely falsified on both sides. Some of the free-trade party at that time predicted that, once we had free trade in this country, every other nation would follow in our suit. They were wrong. The Tories at that day predicted that if free trade was adopted universal ruin would befall the country, and they too were wrong. And no one at that time, my Lords, foresaw the great changes that would be caused by the gold discoveries which took place shortly after the introduction of free trade. The fact is that the general improvement in the condition of the people of this country since 1846 has been too marked, and the general increase in the prosperity of these kingdoms has been too evident to require any dwelling on. One exception to that general prosperity there does unfortunately exist; the profits of agriculture have unfortunately diminished since that date, and many of your Lordships, I might say all of you, regret that circumstance very much. But I cannot admit that that circumstance detracts from the truth of my statement that the general prosperity of this country has been widely increased since the year 18 46, and that, if not entirely, it is mainly due to the adoption of the principle of free imports introduced by Sir Robert Peel, extended by Mr. Gladstone, and supported by every Chaneellor of the Exchequer, and by every Government, Conservative or Liberal, since that date. I believe further, my Lords, that the internal tranquillity of these kingdoms during the long reign of our late revered Queen was largely due to the amelioration of the condition of the people, for when the people, the bulk of the working classes, find that then-condition is being ameliorated in every possible way, they are not anxious to seek great political changes. Therefore I think I may claim further that the maintenance of the Constitution of the kingdom since 1846, in practically its ancient integrity, has been largely due to the benefits derived from free trade.

Believing the truth of these statements, yet I, in common with all my fellow-countrymen, have watched with the greatest interest the campaign that has been started in the country by Mr. Chamberlain and by his supporters. He urges protection on the country on four great grounds as I understand. In the first place Mr. Chamberlain claims that certain interests and certain industries have been entirely ruined. In the second place he claims that what is called the balance of trade is against this country. In the third place he has pointed out the evils of dumping; and in the fourth place he has urged the great necessity for this country of keeping our colonial markets. My Lords, I will endeavour to deal with each of these four points. As regards the ruin of certain industries which has undoubtedly taken place, I am sure your Lordships, every-one of you, will sympathise very deeply with the ruin of any industry. Nothing can he a more melancholy sight, in my opinion, than to see deserted workshops, rusting machinery, rootless cottages, and a general air of desolation where at one time a whole population has lived and flourished. But, my Lords, I think that in every age and in every country certain industries have decayed and perished. In one instance it may be the forces of nature that Have caused the ruin of an industry, in another case it may be the caprices of fashion. I do not know whether any of your Lordships are acquainted with the region of the Mendip Hills. There for hundreds of years thousands of men enjoyed prosperity through working in the lead mines. That region is now still and deserted. Look at Sussex, where, in former days, the chief iron industry of the country was established. Look at Norfolk, where, in the middle ages, a great population obtained a livelihood by means of the wool trade. I remember, my Lords, a striking passage in a speech of the late Lord Salisbury in which he alluded to decaying nations. And as there are decaying nations so there are decaying industries and ever have been. In the days of protection certain industries decayed and perished. When guns came in armour went out. The railways of course, my Lords, killed stage coaches, and one of the great arguments used in Parliament against the legislative sanction of Parliament being given to railways was that it would undoubtedly bring ruin upon whole classes of the community connected with stage coaches, country inns, the breeding of horses, and so on. I cannot admit that the extinction of single industries can be considered a valid argument for abolishing the whole system of free imports. I then come to the argument advanced as to the balance of trade being against us. It is, I understand, argued that the imports into this country largely exceed the exports; that thereby a great deal of the trade of this country must inevitably be in a suffering state. In the eighteenth century this theory was advanced of the balance of trade and that if imports were larger than exports it was bad for a country. That theory was advanced in the eighteenth century, but I believe that ever since that time political economists of all shades of opinion have come to the conclusion that it was entirely a fallacious theory. It struck me with some surprise that this antiquated theory should have been exhumed by the advocates of protection in the present campaign.

My Lords, coming to the question of dumping, of course if raw materials for any industry can be dumped into this country so much the better for the manufacturers. As to the dumping of finished articles, if that did threaten ruin to any of our industries I should gladly see the adoption by any Government of measures of exceptional legislation against it. Then as to the question of keeping our colonial markets. Everyone must value to the highest degree the trade with our colonics, but the noble Lord, Lord Balfour of Burleigh, put so clearly the difficulties that would attend any system of giving preference to colonial imports, that I need not dwell upon them. I think from these four arguments of the protectionists that their contentions are inadequate. But even granting that they were adequate what would be the effect of the tariffs that are proposed by the protectionists? The effect on the general body of consumers of a general tariff would, of course, be, as I think would be admitted by noble Lords on both sides of this House, to increase the price of every article and injure the general body of consumers. What would be the effect of a tariff on the producers of this country? Any benefit that the producers might gain in one pocket they would lose in the other, for it must not be forgotten that every producer is at the same time a consumer. As regards the effect of tariffs on revenue, I cannot see that any great benefit is to be anticipated, for an integral portion of Mr. Chamberlain's scheme is to reduce the duties on tea and sugar, and the revenue would thereby lose what it might gain from the import duties. My Lords, I come to another point. It was urged that if these tariffs could be brought into effect that wages would rise in the country. Where, I ask, is the increased wage fund to come from?

If, my Lords, I cannot for a moment range myself on the side of Mr. Chamberlain and his proposals, I see no reason whatever for not giving my vote on behalf of His Majesty's Government. The Government, as I understand, propose no tax [on foodstuffs, and no colonial preference, and I think it has been stated in another place, no general 10 per cent. import duty on manufactured articles. Whilst, therefore, in the main, I am a supporter of free-trade principles, yet I see no reason why I should not, when His Majesty's Government have brought forward in detail their measures of retaliation, give my hearty and cordial support to such measures. The noble Lord opposite who last spoke, warned the noble Marquess of the dangerous effects of using revolvers in a careless manner, but I think that the foreign revolver has been let off at us so continually already that we are fully justified in making reprisals, as we were not the first people to shoot. We have been peppered over and over again by the foreign revolvers. I admit that there are, of course, great difficulties in the way of retaliation. Noble Lords opposite have stated that, and, I think, the noble Marquess has admitted it. The cases of Russia and the United States have been quoted. They are the two countries whose tariffs are the highest against us, and they send to us almost entirely food stuffs. It would be very difficult, I think, to see how we are to retaliate against them. I have seen British ship after British ship passing up the Bosphorus towards Odessa with their hulls high out of the water, with no cargo because it was very difficult for us to export anything into Russia on account of the enormous tariff against us. They came back laden heavily with foodstuffs and raw materials for England. There is a great deal of difficulty in applying retaliation to those tariffs and also those of the United States. The noble Lords opposite made it a great reproach against the Government that they had not fully disclosed what their intentions are, and that a division of opinion seems to exist among Ministers. I believe that the Government are fully entitled not to be called upon to disclose their plans at present. And that on historical grounds, my Lords. From the beginning of the last century down to 1829, Catholic emancipation was allowed to remain an open question in every Cabinet. In the thirties and the forties the reform of the Corn Laws remained an open question very largely. Lord Melbourne, for instance, was strongly opposed to the repeal of the Corn Laws, and many of his colleagues were in favour of it. In Lord Palmerston's last Government he was absolutely opposed to, and refused to entertain, any idea of Parliamentary reform, when his first-lieutenant, Mr. Gladstone, and others were strongly in favour of it. I do not think, my Lords, that it can be fairly brought against the Government that it is an absolutely new and unprecedented situation that on one subject the details of their scheme should not yet be brought before Parliament. This question,I understand is to be treated as the noble Marquess said, as a vote of confidence in the Government, and I shall most cordially and cheerfully go into the lobby in support of the Government.

LORD BYRON

My Lords, like the noble Lord who has just sat down, I propose to trouble your Lordships for a few moments only. I should not have done so but for a remark which fell from the noble Lord the Marquess of Salisbury. It is a remark, my Lords, that has been widely circulated for some time, and one which, no doubt, he has taken up with the rest. He says that this question of reciprocity is likely to be the only one before the country at the next general election. May I ask the noble Marquess how he knows that?

THE MARQUESS OF SALISBURY

If the noble Lord will allow me, what I said was that retaliation was the policy which His Majesty's Government would submit to the electors at the next general election.

LORD BYRON

How does the noble Marquess know that it will be the only question before the country?

THE MARQUESS OF SALISBURY

I do not think that I said that.

LORD BYRON

Just so; let us assume that the Liberal Party bring forward a question. Let us suppose it is the question of Parliamentary reform. Where would the retaliation policy be then? I do not think it would be heard of at all. But then with regard to the Government; we were told only the other day that as Bright and Cobden took as long as they chose about the repeal of the Corn Laws, so the Government to-day should be allowed to take just as long time as they chose to bring forward the details of their policy. I saw that stated only the other day in a speech in the House of Commons. Suppose, my Lords, on this question of reciprocity, that we take the statement of one of their own professors. Professor Ashley says the question will be discussed for a whole generation. Are we to wait a whole generation while the question of reciprocity is agitated. As the House is now rapidly emptying, and I understand that the noble Lord below me (Lord Ribblesdale) desires to move the adjournment, I do not propose to detain the House any longer. It only occurred to me that this question was one which might be well considered by His Majesty's Government.

LORD RIBBLESDALE

On behalf of my noble friend Lord Brassey, I beg to move that the House do adjourn till nine o'clock.

On Question Motion agreed to, and Sitting suspended till Nine o'clock.

* LORD BRASSEY

The fiscal controversy embraces a wide field and may be approached from many points of view. Its colonial aspects are necessarily of the deepest interest to those who have served in responsible positions in the Colonies. I do not propose to offer any observations on that part of the subject. They will come more fittingly on the Motion of my hon. friend and former colleague in Australia, Lord Beauchamp. In the present debate we deal with retaliation. Why is retaliation, or perhaps, to speak more correctly, protection, pressed at this time, an urgent and vital necessity? It is said that, in the race of progress, we have failed to keep pace with our industrial rivals, and that at some not far distant time we shall be left behind in the race. During the last quarter of a century the condition of British trade and the progress of foreign countries has been closely watched by the Board of Trade. Every five years we have had their impartial and authoritative reports, and in each of those reports testimony is borne to our commanding position. In the last report, presented two sessions ago, as in the first, we are assured that we still preponderate greatly as a country manufacturing for export. In considering the relative progress of British and foreign trade we have to consider the state and condition of industries at the dawn of free trade. Perhaps I may venture in this connection to refer to my traditions and my early recollections. They carry me back to the commencement of railway enterprise in France. At that time our nearest neighbour was far behind us in nearly every branch of industry. The first railways and the first locomotives constructed in France were constructed by English workmen. Such a state of things could not continue. We all recognise the industrial ability of France. If for a time the progress in France exceeded our own, it would not justify those pessimistic views regarding ourselves. The rise of industries in Germany came later, as the result of German unity, assisted by the payment of the large war indemnities. When Germany woke up the progress made was by leaps and bounds. The start was made with every advantage, with a full knowledge of our inventions and our methods, and with all the experience of long established industries elsewhere. Of late Germany has not done more than hold her own with the United Kingdom. Perhaps I may be allowed to refer to the figures in the Blue-book. The exports of manufactures for the last five years are given in the Blue-book: 1896, £115,000,000; 1901, £144,600,000. To Germany and the United Kingdom the increase is precisely the same, namely, £29,600,000, but, as we have reason to believe, with widely different financial results. The trade of the United Kingdom was on a sound commercial basis. In Germany, as we know, a severe crisis has recently been experienced, which is now happily passing away.

How and where has the progress, the satisfactory progress, of British commerce been maintained? It is true that we have lost ground in the protected countries. In the unprotected countries, chiefly within or near the tropics, our gains have more than made good what we have lost in the protected countries. We have gained our commanding position by the cheapness and quality of our goods. If we reverse our fiscal policy we shall lose all the advantages we have hitherto enjoyed under free trade in this country. Our vast trade with tropical countries is a prime factor in adjusting the balance of our indebtedness in the direct trade with the protective countries. The excess of our imports from France and from the United States represent payments for freights, payments on dividends for British investments, and to a large extent payments for tropical produce supplied to foreign countries by British merchants. Free trade does not deprive us of the power of retaliation. It is more true to say that it places a more powerful weapon in our hands, if it is to our advantage to use it. In the present state of our trade relations, we should be a loser in a war of tariffs.

Viewing retaliation as an instrument of negotiation, there is one observation which I should like to make. By hostile tariffs we may exclude goods from our markets, but this is certain, that our part in the supply of manufactured goods to meet the home demand of such countries as Germany can never be large. It is vital for the industrial people of such countries to manufacture for themselves. The increase of their urban population is even greater than ours, and that urban population depends upon the activity of trade and manufactures. The home market is, as I have said, of vital importance, and. as yet, neither Germany nor any other of our competitors has found an outlet such as we have in India, in foreign countries, and in our British possessions for the sale of their surplus manufactures. In applying a policy of retaliation we must take care that we do not injure ourselves. The opinion of the trader must certainly be taken with considerable reserve. Nor is the judgment of politicians, described by Adam Smith as insidious and wily animals, altogether infallible. The approval of a Parliament in which every interest is represented, should be obtained. It is our only safeguard. I confidently support the Motion which my noble friend has moved.

* LORD AVEBURY

I was delighted to hear the noble Marquess earlier in the evening, in a speech upon the ability of which I should be glad if I may congratulate him. I was glad to hear him speak so cordially and so heartily in support of free trade. He also pointed out very clearly the great injury which was being done to the trade and commerce of the country by being left in a state of uncertainty. But that, my Lords, is exactly the position in which we now find ourselves. If, in reality, the fiscal policy which has been followed for so many years in this country is going to be entirely reversed, it cannot, I think, be questioned for a moment that many industries which are now highly remunerative and prosperous will find themselves hampered, if not entirely ruined. I do sincerely trust, therefore, that as soon as possible His Majesty's Government will tell us exactly what it is they propose to do and the changes they desire to make. It is not too much to say that the fiscal problem brought forward by His Majesty's Government is one of vital importance to the country. It is most important, therefore, that we should know the decision of the Government and the country. The present state of uncertainty is very injurious to our manufacturing interests. They have no doubt told us that it is no part of their policy to put duties upon either food or raw materials. But what does the Government include under raw materials? The Board of Trade returns place semi-manufactured and manufactured articles under one head, which includes, for instance, sawn timber and pig-iron. I do not know that they could do otherwise, but semimanufactured articles are really the raw materials—to use Cobden's expression "the daily bread" of other manufactures. The principal complaint appears to be that some things are, as it is said. "dumped" on us. But this is certainly not an unmixed evil. We buy these goods because we want them. For instance, the Board of Trade memorandum quotes Ryland's Circular as regards the iron trade. The circular says— We require all the steel and pig-iron they, i.e., the Germans, are sending us, as it is impossible to get from our own blast furnaces and steel works sufficient ingots, blooms, or forge pig-iron to keep our works going. To get these semi-manufactured articles cheap is a great advantage in many ways. It has immensely assisted our shipbuilders, and in 1901 we built over 980,000 tons of shipping, against 102,000 in Germany, 106,000 in France, and 469,000 in the United States. We are able, moreover, to construct houses, factories, warehouses, and railways, more cheaply than would otherwise be the case. The report of the Cologne Chamber of Commerce observes that Germans are really themselves the sufferers from this "dumping." The result they point out is— That by supplying manufacturers abroad, i.e., Germany, with materials at low prices, the Germany syndicates make it possible for these foreigners to compete on favourable terms with their rivals in Germany in regard to the sale of finished products. Our able Consul at Frankfurt has recently told us that— Under cover of the protectionist duties, the syndicates were enabled to keep up prices at home in spite of the limited demand. The difference of prices, however, fixed by the same works for sale at home and sales abroad became so great that it produced very strong comments, even in the Diet… They sold raw material and half finished goods abroad at low prices, so that the home industries, which worked off such raw materials were severely handicapped. These asserted, and not without reason, that the consumers of German materials in foreign countries, especially in Holland and Belgium, were, by these prices, placed in such an advantageous position that it was most difficult, if at all possible, to compete against their prices. Some cases actually transpired in which German finishing manufacturers had to decline orders owing to the exorbitant prices of raw materials, which orders subsequently passed to Holland, Belgium, and the United Kingdom. Processes are so much divided that many manufacturers buy semi-manufactured materials and turn them into manufactured articles. To them in their business these are really raw materials. Take the shipbuilders. We build, as I have just mentioned, more ships than all the rest of the world put together, and one great reason is that our shipbuilders get the semi-manufactured articles which are the raw materials of their business more cheaply than their rivals in protectionist countries. If you tax these semi-manufactured articles you strike a blow at their trade. But the same argument really applies to manufactured articles. In a sense they also are raw materials. Steam engines, for instance, to a cotton spinner, to a railway company, to a coal mine, to an electric lighting company, in fact to most manufacturers, are one of the most necessary adjuncts of their business. If you tax a manufacturer £1,000 it matters little whether you put it on the steam engine he uses or the raw material he employs. The argument against taxing raw material applies to machinery, and indeed to manufactures generally.

The Prime Minister tells us that he wishes to impose duties in order to assist in foreign negotiations. But this would impose additional uncertainties and complexities on our manufacturers. Suppose, for instance, that in consequence of any action by Germany, we, in retaliation, put a heavy duty on toys, and induced capitalists to manufacture them here. Our capital and labour is all employed, so that the first effect would be to divert a certain portion of each from more remunerative employment. Suppose, then, that Germany gave way. The grounds on which we took action being removed, I presume the duties would be taken off, but the manufacturers who had been induced by the duties to set up works and machinery, would be heavy losers, and would certainly consider that they had reason to complain.

Moreover, we have already tried this system without effect. Mr. Gladstone has recorded that when he was at the Board of Trade— From 1841 to 1844 we were anxiously and eagerly endeavouring to make tariff treaties with many foreign countries. Austria, I think, may have been included, but I especially recollect France, Prussia, Portugal, and, I believe, Spain. And the state of our tariff, even after the law of 1824, was then such as to supply us with plenty of material for liberal offers. Notwithstanding this, we failed in every case. I doubt whether we advanced the cause of free trade a single inch. Mr. Gladstone's opinion on matters of commerce is, of course, most important. This, moreover, is not a matter of opinion, but a statement of fact. Lastly, it must be remembered, that protectionist countries are even now trying this system. It is certainly not a success, but if France or Germany secured any advantage, we should, under the favoured-nation clause, share it with them.

Mr. Chamberlain is under the impression that countries which have adopted protection have prospered "in an infinitely better proportion." Let us then compare our exports and population with those of protectionist countries. France has about the same population, but her exports are about £120,000,000 less than ours. Germany, of which we hear so much, though it has 16,000,000 more people, exports £58,000,000 less than we do The Germans are an intelligent, capable, and hard-working people. We might well be satisfied if, man for man, our exports were equal to theirs, but as a fact, while our population is much smaller, our exports are much greater; and yet we are invited to abandon our own system and adopt theirs. In fact, per head, our exports are the largest in the world. Those of the United States are £2 18s. per head: of Germany, £3 7s.: of France, £3 15s.: ours, £5 19s.

Look again at our trade with protectionist countries as against theirs with one another. In 1901 we sent £24,000,000 into France, as against £15,000,000 from the protectionist country, Germany; and £18,000,000 from the United States. Into the protectionist market of the United States of America we sent £28,000,000 as against £20,000,000 from Germany and £15,000,000 from France. Lastly into Germany nearly twice as much as France. Protection, therefore, has not given France, Germany, or the United States any advantage in each other's markets as against us.

But has our trade been prosperous? In their impartial and authoritative Report the Commissioners of Inland Revenue say— The growth of income in recent years has been so remarkable that we venture to offer a few observations on the subject. They show that since 1870, that is to say, in thirty-five years, our income returned for income-tax has increased from £398,000,000 to £867,000,000, a gigantic increase of £468,000,000 ! In the last six years it has increased £90,000,000.

I do not deny that there are some cases in which we have just reason to complain, and which would fully justify retaliation. The Resolution asks what steps the Government propose to take to give effect to their policy of retaliation. I should like also to inquire what steps they have taken to redress the grievances of which they complain? What representations have been made to foreign countries. And what replies have been given? Will any Papers be laid on the Table? Take, for instance, shipping. We allow United States vessels to take goods from any of our ports to another. They refuse us the same freedom. This is manifestly unjust and unfair, and we should be interested to know what representations have been made, whether a suggestion so fail' and reasonable has been refused, and if so, on what grounds. From information given me I am disposed to believe that our merchants on the Congo have great reason to complain, but negotiations are pending, and I fully Trust that justice will be done. But the most flagrant case, perhaps, is that of some of the Central American States. They have shamefully swindled English investors? They are large exporters of coffee, but other coffee is just as good, and a duty on coffee coming from those dishonest countries might be well worth considering and would be fully justified. There are therefore, I fully believe, cases which would justify retaliation, but we should be interested to hear under what conditions, and in what manner, it is to be applied. I trust it will only be, firstly, after every effort has been made by friendly representations and negotiations; secondly, if there is reasonable ground for expecting that it will be effective; thirdly, if it will not do more harm than good to British Commerce; and finally, that it should be, as suggested in the Resolution, subject to the assent of Parliament. But these are exceptional cases. They are no sufficient reasons to reverse our fiscal policy.

The protective policy of other countries no doubt unfavourably affects us, but it is a much greater injury to themselves. If they to some extent close their markets to us, they shut themselves out of other markets. If to some extent they are less good customers, they are far less for midable rivals. This fiscal agitation is greatly to be regretted, not only because it unsettles our commerce and manufactures, but also because it tends to deter foreign countries from lowering their duties. Abroad they naturally conclude that we are going to abandon free trade and this encourages protectionists all over the world. It surely is evident that the progress made by the United States and our colonies has not been owing to protection, but in spite of protection. It they had not forced the industry of their countries into artificial channels, they would have been richer and more prosperous than they are. The farmers in America and Australia are paying to bolster up other industries. Under free trade our manufactures and commerce have grown, are growing, and, believe, will grow. As a humble supporter of His Majesty's Government I would express an earnest hope that they will not commit themselves to a commercial war with other countries, that they will not ask us to reverse the fiscal policy on which the prosperity of the country and the welfare of our people so greatly depend, or to adopt a course which would inevitably and gravely injure those industrial and commercial interests which both they and we desire to strengthen, to promote, and encourage.

* THE UNDER-SECRETARY OF STATE FOR WAR (The Earl of DONOUGHMORE)

The noble Lord who has just sat down must always, of course, be listened to with very great interest in your Lordships' House on any commercial subject which may come before us. Your Lordships will have noticed in the speech he has just delivered, and to which I listened very carefully, that practically the whole of his speech was an attack against the policy of introducing protection into this country. I know that your Lordships are always very generous to any speaker who addresses this House, and who does not stick very closely to the point. I would remind your Lordships, however, that this evening we are discussing the policy that His Majesty's Government have announced, and which they are prepared to place before the country at the next general election. Now it has been most strongly and clearly stated that protection has nothing whatever to do with that policy. Noble Lords opposite have refused to recognise that fact, and no doubt | they will continue to refuse to recognise it. The noble Lord opposite, Lord Crewe, suggested that our difference upon protection was merely one of a technical nature. Lord Tweedmouth maintains that protection is in Mr. Balfour's mind, and we have had a still more general comment on this point from the noble Earl on the Cross Benches in a speech he delivered at Edinburgh, when he said that retaliation covers a multitude of things. The policy of His Majesty's Government is most distinctly laid down in a pamphlet which has been written by the Prime Minister, and which is published at a price well within the reach of all your Lordships. On page 11 of that pamphlet it is most distinctly stated— I approach this question as a free-trader—that is, with a desire to promote free-trade as far as contemporary circumstances permit. That clearly recognises that we approach this subject as free-traders, and I do not know what clearer words could be found in the English language to explain our position. In discussing the fiscal question it is possible to discuss it from many standpoints. One can approach it as a protectionist or as an advocate of preference. We have not heard the subject approached from that position yet in the course of this debate, but there is another standpoint from which it is possible to approach it, and we have heard a great deal from that standpoint; it is the standpoint which is perfectly contented with the present state of things, or at any rate is not prepared to come forward with any remedy. Noble Lords opposite have, it is true, suggested one remedy, namely, the remedy of education. I need not remind your Lordships that two years ago an Education Bill was introduced into your Lordships' House. It was a Bill which in the main was designed to vastly improve the educational system of this country, and experience has shown that in many parts of the country where that Bill is now working without the interference of political agitators, the educational system of this country has been improved. I do not remember any very great anxiety and keenness on the part of noble Lords opposite to accept that Bill when it was introduced two years ago, but, be that as it may, I fail utterly to understand, and I shall be glad to be convinced, how education, even the highest technical education, is to help the British workmen to get his goods into a country that has tariff walls 100 per cent. higher than our own. I call that remedy, with great respect, a very feeble one. I cannot believe that it will help us very much in the near or the distant future. Noble Lords see foreign nations putting up their tariffs and they make no protest whatever. In fact it seems to me that they almost rather rejoice in it,' because one of the indirect results is that we get a certain amount of goods back from that country a great deal cheaper. That is not the sort of free-trader that I ever hope to show myself in addressing your Lordships. There is another sort of free-trader, a sort that I maintain we, the members of the Government, are, and it is the sort of free-trader that the great reformers of sixty years ago were. They looked round and saw that Europe had been devastated with a great war. They saw opportunities for commerce and industrial expansion which since then have been fully realised, and they set before themselves a great ideal which was embodied in the word free trade, but what was that free trade? I was permitted a few weeks ago to look into an old autograph book, and I came across the following entry under the date of the 5th of December, 1845— Ours the triumph be Round social earth to circle fair exchange, And bind the nations in a golden chain. Beneath those words were the signatures of Richard Cobden and John Bright. Their idea was "to circle fair exchange" throughout the world, but that is not the sort of free trade we have got now. Mr. Cobden and Mr. Bright were undoubtedly men of great ideals. Certainly Mr. Cob-den's ideas on the Colonies were not such as we generally find amongst statesmen at this moment, and Mr. Bright held opinions as to the possession of India which might at the present moment have driven him into the wigwam of Little England. They were men who did a great deal to carry out great ideals, although they were extremely bad prophets. The noble Lord opposite said he thought they were lather good prophets, but there is a prophecy made by Mr. Cobden—it is rather old, and I do not want to bore the House with it—he did prophecy that after ten years the whole world would be free-traders according to his ideal, which was fair exchange. We have had a very remarkable admission from the noble Earl who spoke first this afternoon. We have actually had an admission—no, I am wrong, and I beg his pardon, it was an admission by the whole of the Opposition in answer to a Question put by the noble Marquees behind me—that British trade is not absolutely at its zenith at the present moment. The noble Marquess asked—Is there anyone who will maintain that contention, and he received no answer. It has certainly been part of the campaign which has been directed against all fiscal reform, that nothing has been so perfect as British trade at the present moment. A most distinguished politician prescribed for our present condition "commercial repose,' and when the Board of Trade returns came out it was found that the returns of exports and imports were greater than anything we had had before, and this was received with a chorus of admiration by a few papers which support noble Lords opposite, and they adduced this as a convincing proof that no change of any sort was necessary. I am not one who maintains that British trade is on its last legs, and I believe myself that there is a great deal of life in the old dog yet. But there are disquieting things, and I think we should be lacking in our duty if we did not make some, attempt to grapple with them. Mention has been made of the total volume of our trade. The noble Lord opposite also quoted it during various years, and maintained and thought he proved from that that the state of our trade was satisfactory at the present moment. Well, my Lords, I do not think that it is a proper comparison to compare our present trade with our past. The proper comparison, I submit, is to compare our present trade with the present trade of cur rivals abroad. If your Lordships will give me your patience for a few moments I should like to do that. My noble friend Lord Brassey appealed to the Board of Trade Returns, and for that reason I may be allowed to refer to a Board of Trade Blue-book presented in 1902 by Sir Alfred Bateman. In the last paragraph of his Memorandum upon the trade of the United Kingdom he says— The increase of population in Germany and the United States has recently been greater than the increase in the United Kingdom, and these countries have rapidly developed manufacturing and industrial power. As with ourselves, so with these countries, the set of population has been to the towns; necessarily therefore there has been a more vigorous search than formerly for an outlet for the power above referred to. We are still ahead of either country in our power of manufacture for export, but, beginning from a lower level, each country is travelling upwards more rapidly than we are, who occupy a higher eminence. If peace is maintained both Germany and the United States are certain to increase their rate of upward movement, their competition with us in neutral markets, and even in our home markets, will probably, unless we ourselves are active, become increasingly serious. That is not the position we ought to contemplate with perfect equanimity or treat by prescribing repose. We are losing our former share of the trade of the world, and I am still of opinion that in the future the British share should be a lion's share, and I think it is our duty to try and keep it that size.

I would like to turn your attention for a moment to one or two other points which I submit are disquieting causes. First, as regards our imports. I was taught at Oxford, when I first waddled down the paths of political economy, that imports always paid for exports and vice versa. Possibly that is so, at least I dare not have written anything else in my papers on political economy. The amounts never tally, and some of the discrepancies are explained, firstly by freights and insurance; and, secondly, by the addition of interest on the amount of our capital invested abroad. I have not been able to find any evidence that freights have very greatly increased of late years, but there is no question that the discrepancy between our imports and exports has greatly increased, and we are continually importing more than we are exporting to pay for them. I may be wrong in my deduction, but my natural deduction from this must be that our foreign investments must be on the increase. Now is that a satisfactory state of affairs, and does it not rather point to a blot on our industrial system that British capital finds more attraction abroad than at home. This is proved from the fact that British capital is going abroad in increasing quantities every year. Now I turn to another point, namely, to the tariff walls. I do not wish to weary your Lordships with the subject, because I suppose noble Lords opposite will admit that these high tariff walls do us a great deal of harm. There is one point however mentioned by Lord Tweedmouth to which I should like to refer. He mentioned at the end of his speech that the Colonies are more keen to keep our goods out of their markets than anybody else, and he asked what was the Government going to do with the Colonies? Were they going to retaliate against the Colonies? Members of the Radical Party always seem very keen to embroil us with the Colonies, and I have never known the reason for this. I he noble Lord has shown that he has read his Blue-book with very great care; but I have found one page which he has evidently not read. This page gives the estimated average or ad valorem equivalent of the import duties levied by certain countries and colonies on the principal articles of export from the United Kingdom—and the figures given ad valorem are, Russia, 131 percent.: United States, 73 per cent.; France, 34 per cent.; Germany, 25 per cent.; Austro-Hungary, 35 per cent.; Belgium, 13 per cent. New Zealand 9 per cent.; and Australia and the South African Customs Union 6 per cent. I confess that in the face of these figures I do not think there need be any great hurry on our part to consider retaliatory duties against our colonies in order to force ourselves into their markets.

I do not wish to detain your Lordships at great length, but I think there are a great many other subjects which give us room for dissatisfaction. Lord Goschen, who I regret is unable to be with us owing to the prevailing epidemic, quoted certain figures in your Lordships' House last year to show the prosperity of the country, and in doing so, with regard to some of them. I notice he pursued the usual anti-Government method of comparing the present with the past instead of comparing the present stale of affairs in this country with that of foreign countries. He quoted saving banks returns. They had gone up, but now they are only £4 a head of the population. In Germany they are £7 per head, and in many other countries they are higher than in this. I am informed that where our income tax returns have increased 10 per cent. the Russian income tax returns have increased 45 per cent. Our population is increasing slower than that of any other great country except France. The number of small bankruptcies in this country have increased to nearly double what they were forty years ago. My Lords, all these are disquieting things, and call upon us to wake up from the sort of commercial repose that is prescribed for us.

Now, my Lords, I want to refer to another small matter. The noble Lord opposite spoke of our commercial treaties, and I have heard our commercial treaties spoken of as the sheet anchor of the present fiscal system. I should not call them a sheet anchor, I would rather prefer to call them a volcano. Our present policy, which is declared to the world, is that the Government does not interfere in trade beyond making these most-favourednation clauses. Well, my Lords, I would remind your Lordships that the United States Treaty of 1815, the Russian Treaty of 1859, the Austrian Treaty of 1886, and the Italian Treaty of 1883 are all liable to be denounced at twelve months notice, and that if any of these or all of them are denounced at twelve months notice you have absolutely no weapon, if you discard retaliation, by which you can persuade those countries to give you any better terms than those they chose to throw at your heads. My Lords, we have been asked for different examples of the way in which we shall carry out this policy. Of course we cannot lay down any hard and fast rules. Every individual case must depend upon the individual distinctions of that case, and upon nothing else. Now, my Lords, before I sit down I wish to say a few words upon this subject that form a totally different point of view, and a point of view which I think has not yet been mentioned. I mean the Irish point of view of this question. Ireland has never up to this moment received very much consideration from the fiscal point of view. Originally, a century ago, our growing industries were practically swamped by the policy of the British Government of that time, and the only industry that was left to us, agriculture, was ruined by the free-trade policy of this country. Now, my Lords, I am not arguing this subject from the Irish point of view that you should bring back protection. But I do urge that this is the first occasion upon which Ireland has had a chance of being fiscally considered, if I may use the phrase, at one and the same time with, and as part of the United Kingdom of Great Britain and Ireland. Noble Lords opposite have remedies for us in the way of education, but I cannot help remembering also that noble Lords opposite have a policy which must result in the end in cutting us off from any benefit that may accrue to us from any improvement in the English fiscal system. I do not wish to trouble your Lordships' House further. I hope your Lordships will reject the Motion of Lord Grewe and support the Cabinet, which has shown itself ready to help our people in the struggle for national life to which they are all naturally committed.

* LORD COLERIDGE

My Lords, the noble Lord who has just sat down made a sort of complaint against the noble Lord who preceded him for not adhering to the point which is the point of discussion to-night. The noble Lord in his own speech has shown that the old proverb, "Imitation is the sincerest flattery," is only too true. We were treated to a homily on the dreams of Cobden and the views on India of Mr. Bright; to the conditions of Ireland; and then to the usual jeremiad on free trade; as to how we were being, ruined by the size of our imports, and what a terrible thing it was for this country that we should make so much money as to be able to invest that money abroad. I do not propose to follow the noble Lord into these disquisitions, which, no doubt, are interesting, but which certainly are not pertinent to this discussion, but there was one thing which I noticed from the speech of the noble Lord and that of the noble Marquess who spoke before him, representing the Government. They told us the time had come for a reversal of our fiscal policy, but they carefully abstained from answering the questions put to them as to what were the measures they proposed. I should like again, if it would not be troubling the House, to appeal to the noble Earl who is going, I believe, to follow me in the debate this evening, and to ask him, although, I am afraid, in vain, I put the question, on what, and against whom, are we going to retaliate. The Prime Minister, whose views in favour of free trade or protection I do not wish to refer to now, has told us fairly and frankly that he does not propose to retaliate either on the importation of food or raw materials, nor does he propose to retaliate on any of our colonies, therefore, he sets great limits to the possibilities of retaliation. With regard to the Colonies, we are apparently, so far as I can see, to take it lying down. We must therefore strike, as I understand it, at the imports from foreign countries alone, and not on food or raw material from those countries. These, then, are the limits of the policy of our retaliation. Now, my Lords, just let us see what the state of things is that we are fighting when we eliminate the imports from our colonies. The imports from foreign countries, and I take the year 1901, when they were at their highest, are returned at £417,000,000 in round numbers, of that amount, and I again take round numbers, £110,000,000 or £111,000,000 are eliminated from retaliation as raw material. £220,000,000 represent food, so that that again is eliminated from retaliation. Therefore we find that £330,000,000 odd, out of a total of £416,000,000 odd, of imports from foreign countries consists of food and raw material, and are eliminated from retaliation, and there is a miserable remnant of only some £86,000,000 or so, on which it is possible to retaliate. That may be taken to represent the importation of manufactured goods from protected foreign countries. Now, what about our exports of manufactured goods? Our exports to foreign countries of manufactured and part manufactured goods amount to £128,000,000. We all know that that sum has to be greatly increased, because the sum representing our exports does not include freight, insurance and other charges, elements which would bring that £128,000,000 up to a very much larger figure. At any rate, the exports, it will be seen at once, are much larger than the imports of foreign manufactured goods. Therefore there are countries who take from us much more manufactured goods than we take from them. Now, supposing we were to tax these imports heavily, they have a far more dangerous weapon in their hands if they retaliate upon us; but supposing they do, and supposing we adopt this policy, does retaliation produce the desired effect? My Lords, it is easy to speculate and say that it would, and it is equally easy to speculate and say that it would not. Therefore let us take a concrete instance, and it is the only instance—the best instance that I can find. In 1807 Canada offered preferential trade advantages to all countries fulfilling certain trade conditions of reciprocity; that is to say, Canada, having the weapon of retaliation in her hand in the shape of protective duties, offered to relax them in return for certain reciprocity in the importation of her goods. That is the same position that we should be in if we had imposed a retaliatory duty and offered to take it off if other countries fell in with our views and relaxed their duties in our favour. Now what was the result? Germany had a very high protective duty against the Canadian imports. Did Germany reduce her tariff in favour of Canada? We know she did not, and more than that she did not remain idle, because by the Treaty of 1865 Germany was entitled to the same treatment from the British colonies as from Great Britain, and she claimed from us the benefit of that treaty. And what was the result? My Lords, we were forced to denounce that treaty and we did denounce it in 1893. What did Germany then do? Germany immediately proceeded to refuse the benefit of the most favoured-nation treaty to Canada; and more than that, she is now threatening actually that if any other British colonies follow the example of Canada she will refuse the most-favoured-nation treaty to the mother country itself. Could you, my Lords, have a more speaking instance of the result of retaliatory duties? And that, my Lords, is retaliation in its least offensive form. Well, my Lords, if retaliation in its least offensive form has failed, how can we seriously argue in favour of retaliation in a more offensive form?

My Lords, we are told to think Imperially. The noble Lord who has just sat down has accused us, upon these Benches, of wishing to embroil the mother country with the Colonics. I do not think that he is accusing us seriously of doing that, but merely playfully, and I take his accusation in that spirit, and I obey the almost royal command to think Imperially, and I will think of a country which is rather left out of calculation in this discussion. I will think of our great dependency of India. Now, in a minute which was dated the 22nd of October, 1903, the Government of India set out their views at length on the dangers of retaliation to them in these words— If the United Kingdom should eventually resolve to adopt the policy of preferential tariffs or retaliation it is conceivable that the device of attacking her through her chief dependencies might receive further development at the hands of foreign countries. My Lords, that is a very wise minute from a very important quarter, and, as India exports more than she imports, she is in the very happy position that the noble Lord would have this country to be in. India is a debtor country, she is paying a debt by excess of her exports over imports. My Lords, the immediate effect on that country of any retaliatory taxation by foreign countries against Indian imports to them, would injure if not wreck the financial stability of the country. Take the case which has already been mentioned in this debate, a small case, that has been urged in favour of retaliation. Take the case of the Sugar Convention. In the course of the negotiations which took place on that Convention, we undertook to prohibit the importation of raw sugar coming from any country which imposed a bounty. We had a contest with Russia as to whether or not she did give a bounty. We held that she did, she held that she did not, but we, holding that she did, prohibited the importation of Russian sugar. We thought it was a very innocent thing on our part, because we thought that really she was exporting nothing but the minutest quantity of raw sugar into this country. What was the result. She retaliated and raised her duty on Indian tea, which was already 250 per cent. ad calornn. It is quite true, my Lords, that the importation of Indian tea into Russia is a very small amount, but the financial adviser of the Indian Government, in the memorandum which has just been published, pointed out that, though small, it was a growing trade, and I do not think the Government were aware when they prohibited Russian sugar that in fact 800,000 lbs. of Indian tea goes to Russia annually, though it goes through London and Germany, but however it goes it gets there. Now this action on the part of Russia stops the growing market of the 120 millions of the greatest tea-drinkers in the world: people who might very likely, in times ahead, be clamouring to drink the greatest product that India can produce, her tea, and the result of this insane act, as I call it, financially insane on the part, of the Government, has been to put an absolute stop to the growth of the trade. What is the result, we propose to put back again—it is like a game of tennis, we propose to put back again a higher duty on the importation of Russian petroleum into India, thereby making petroleum much more expensive to the Indian, the poorest subjects in the King's dominions. And so, my Lords, the game goes on. What has been the net result of these contentions. We have both entered into a retaliatory war, and there is no prospect even now of drawing closer to the ideals of free trade, which is, I believe, the object noble Lords put before them as the ideal for their action.

Now all these theories about retaliatory duties assume that you will conquer your opponents when you put your duty on. But supposing you do not, and if noble Lords opposite think that is absurd, will the noble Lord who is going to reply to me quote to us a single concrete case in which the imposition of retaliatory duty has led to the, withdrawal of the duty which it was intended to combat. If the noble Lord can do this, he would advance his argument some way; if he cannot, how can he prevent us from believing that the duty we impose will not have the desired effect and therefore will remain. But we shall have a tariff war, and in the meantime large vested interests will arise through the industry protected by the duty, which will clamour loudly of the extinction of their industry when the duty is finally taken off. I do not wish to enter into a general discussion now, but I think these questions have a bearing upon the whole subject and I shall be very glad if the noble Lord can answer any one of them.

* THE FIRST LORD OF THE ADMIRALTY (The Earl of SELBORNE)

I cannot make any complaint as to the Question that has been asked me by the noble Lord opposite, but I think I shall be able to show your Lordships that the noble Lord has very far from presented the whole case, and that there is an answer to the Question that he has asked. He began by asking against whom the Government proposed to retaliate, and how they proposed to do it; and he then went on to show by the process of exhaustion that the possible area of retaliation was reduced to about £86,000,000 of foreign imports into this country. I have no means of checking those figures, and I assume they are correct, so that the noble Lord's conception is that that sum represents the limit of our influence in this matter. If it were so, that sum is no small one, but the fact is that the trade with the United Kingdom is as a whole of infinite value to those nations, which have far more to lose than we have, if we look at the markets open to them. All that side of the case is ignored by the noble Lord. Then he takes the case of Germany and Canada. I may point out that the interest of Germany in Canadian trade is very little compared with the interest of Germany in its trade with the United Kingdom. Then to my astonishment the noble Lord went further and said that Germany was far from giving way to Canada, for Germany actually threatened to retaliate against this country if any other of our Colonies offered us special preference. My Lords, that is quite true. Germany did threaten, but when we showed we would not submit, Germany withdrew her threats. That is an absolute instance of what may be done, not only by retaliation, but by the mere whisper of retaliation. Then, my Lords, the noble Lord proceeded to state the case of India. I agree with him in so far that the Indian case has not received the attention it deserves. In dealing with this question, we cannot be too careful to bear the interests of India in mind; but, my Lords, I would ask those who have not yet had the opportunity of reading the despatch of the Indian Government on this subject, to suspend their judgment until they have done so, because the presentation of the case by the noble Lord fails very far short of completeness. My Lords, he quoted the despatch of the Indian Government, but quite forgot to mention that Sir Edward Law, the financial member of the Council, goes through the countries with which India is trading, and shows how impossible it would be for any of those countries to retaliate against India. Further, in the Blue-book, there is a case of the effective result of negotiations between France and India on the lines of Mr. Cobden's French treaty, which enabled India, at a small sacrifice, to gain a considerable advantage. In respect to that story of the tea, although the noble Lord quoted the despatch of the Government of India with approval in one place, he forgot to mention that his views with regard to the tea controversy are not those of the Government of India. He then asked, as clinching his argument, whether I could name a case where retaliatory duties had been imposed and were successful in their object, and were finally withdrawn. Yes, my Lords, I can quote a case. I do not quote it with approval, I quote it as an historical answer to the Question of the noble Lord. I refer to the famous tariff war between Russia and Germany. In that case a retaliatory duty was imposed; a tariff war ensued, negotiations supervened, an arrangement agreeable to both countries was arrived at, the duties were withdrawn and a great increase in the volume of trade followed. I think that is a fair answer to the Question.

The noble Lord, Lord Avebury, in the course of his speech—I do not quote his exact words—implied that the most-favoured-nation clause was the sheet anchor of British commerce. I do not believe there is much truth in such a suggestion. I believe that that belief is a delusion, and for the reason that when Continental nations make those treaties the very last country whose interest they consider is the United Kingdom. France, when she makes a treaty with Germany—I take a hypothetical case here of the course she would take with regard to the woollen and cotton industries—she not only makes terms which are convenient to herself, but she very carefully considers whether those terms will give as little advantage to British woollen and cotton goods as possible: and the extreme sub-divisions with regard to this class of goods are such as to make it possible to make a treaty of no advantage to any country but the con-tries who are parties to the making of the treaty. The noble Lord was guilty, if I may say so, of the same inconsistency that I detected in the speech of Lord Tweed-mouth. The noble Lords say, suppose you put on a retaliatory duty, and after some time you withdraw it, having gained your object, think of the difficulties of the industries which have grown up under that treaty, and the difficulty of the capitalists and the employment of the workmen ! But, in the next breath, they tell us that dumping is good for this country and they never think of the capitalists who are undersold, or the workmen who have lost employment, through dumped goods. What is sauce for the goose is sauce for the gander, and the same interest as is shown in the industry fostered by retaliation should attach to the native industry undermined by dumped goods. Lord Avebury made the point that our trade is bigger than that of Germany; so it is, but how much bigger was it twenty-five years ago? I will come to that point at more length presently, but in the whole consideration of this question the Government take their stand on what the Prime Minister said, that we have to study on this occasion the dynamics and not the statics of the case.

Now I should like to say a word or two as to the remarks of the noble Lord, Lord Tweedmouth. He compared my noble friend Lord Balfour of Burleigh to a leaf. He spoke of the divergence of opinion in the Government on this question with the sympathy which could only be shown by one who had himself passed through deep waters. He said he had not the faintest idea what the policy of the Government was, but he proceeded to explain that he was definitely opposed to it. The noble Lord begged the whole question by stating that retaliation and preference both mean the restriction of wages, and then he passed on to press us in the form of the Motion of the noble Lord Crewe for a clear definition of our aims. Now, on this point there is no possibility of the Government and the Opposition seeing the case from the same point of view. Let us have that clear understanding between us. You do not believe in the policy of retaliation, we do. You want to wreck it; we want to preserve it; and therefore we consider and study your arguments and cross-examinings from that standpoint. Now my Lords, I must ask your Lordships to pardon me if I try to establish what I may call the basis of the Government's position in this matter, and also the basis of the opposition of our opponents. Our opponents say the country is in a state of great prosperity, why not leave things alone? We admit that prosperity. You ask us still more pointedly, "Then why not leave things alone." We ask you, "Are there no bad signs; are there no signs so bad as to be absolutely omnious",? After all, in private life, if on a summer's day a black cloud comes upon the horizon it is not considered to be the most sensible thing for a man to say, "It has been fine; it is fine, and therefore it will be fine." Of all the optimistic statements that I have heard for some time the statement of the noble Lord, Lord Avebury, was the most optimistic, and I shall ask your Lordships to consider with me at some little length whether there are signs which can fairly be described as ominous and foreboding. Lastly, my Lords, there are those among your Lordships, who say "Even if there are bad signs the remedy proposed is worse than the disease, because the whole of the prosperity-of this country is founded on a system of free imports." Indeed there are people—I do not say there are any in your Lordships' House—who are so prejudiced upon this subject that they would lead one to think that every step in the development of the human race from the conception of the Ark to the discovery of radium was due to free imports. I ask your Lordships to consider with me, is this a true description of the basis of our prosperity, and whether there are or are not ominous signs on the horizon.

My noble friend just now quoted a Blue-book which has had much too little attention during this controversy. I do not mean the Blue-book which has just been published, but the one published a year before this controversy began. The memorandum on British and Foreign Trade published by the Board of Trade in 1902, after comparing the decreasing rate of the growth of our population with that of Germany and the United States—this memorandum written a year before this controversy began—goes on in these words— Both Germany and the United Stales have both attained to the position of increasing their non-agricultural population more quietly than the United Kingdom. The conclusion, therefore, would seem to be that the days of the manufacturing and industrial predominance of the United Kingdom, and even of its manufacturing and industrial pre-eminence, seem likely to be far from what they were. My next point is a sign of this decline in our manufacturing and industrial preeminence. In 1880 I find that Germany and the United States combined did not equal our output of pig-iron. Last year they produced more than three times the quantity which we did. That was from 1880 to 1903. I find in 1890 these two countries combined made less than twice as much steel as we did, and now they make more than four times as much. That is in the space of eleven years. I find in the same Blue-book a comparison of the exports of manufactures. The five years average from 1880 to 1884 and from 1896 to 1900. The noble Lord will perhaps allow me to correct him. He said last year was our greatest year for exports. The greatest year was 1900, and therefore the years 1896 to 1900 cover our greatest period of exports. During that period the exports of France increased 12.3 per cent., those of Germany 36.6 per cent., and those of the United States 153.9 per cent., whilst those of the United Kingdom remained absolutely stationary. The observation of the Board of Trade as to these figures is as follows— The fact of large expansion in the case of Germany and the United States taken in conjunction with the stationary condition of affairs as regards the United Kingdom is not so satisfactory as could be wished. The last case I will take I think is the most important of all. This is from the recently published Blue-book. All articles of British produce are divided into sections in the Blue-book, one the exports to the principal protected countries, and one to the non-protected countries and to the British Empire, and we find the exports to the principal protected countries is £100,000,000, but to the non-protected countries and to the British Empire £176,000,000, which is a complete reversal of the position of fifty years ago. Now I want to dwell upon this. Whatever the views of your Lordships may be on this fiscal controversy, not one of you will deny the enormous importance of these figures in regard to this question of non-protected and Imperial markets. By what force do we hold those markets. That is a question I particularly want your Lordships to ask yourselves. By what force do we hold those markets, which are absolutely essential to the existence of our population, because later on in the Blue-book it is shown that from one-fifth or one-sixth of the whole wages bill of this country is due to foreign trade. Now I will divide these markets into three classes. First of all there are the foreign countries, like the South American Republics, which are absolutely independent. It is in their power to become highly protected countries to-morrow, and they could make a reciprocity treaty with other countries, like the United States, to-morrow. We hold those markets wholly and solely by the pure goodwill of those countries. Then there are the markets in the self-governing colonies which we also hold by the pure goodwill of those colonies. They are perfectly free to become more protective or to make a reciprocity arrangement with other countries, and thus ensure that the trade should pass from us. Such an arrangement between Canada and the United States has been frequently mentioned, but I hope we shall never see it put into force. But our tenure of those markets is dependent, not on ourselves, but on the Colonies. Lastly, I come to that part of the Empire which does not enjoy self-government—India, the Malay States, and those tropical and semi-tropical colonies your Lordships know so well, and I class with them China and countries like her, where we hold special treaty rights in respect of trade. What is our tenure of those markets? It is the tenure of the sword and of the sword alone. We hold those markets by the strength of the right arm of the nation, and I wonder, with the Prime Minister, that it has ever been thought compatible that with a system of free imports we should have a small Army and a reduced Navy? Have your Lordships considered how many of these markets have been wrested from us in the last few years. There are the recent losses of the markets of the Phillipines and Hawaii and Cuba and Puerto Rico, and also of Tunis and Madagascar. It is not an exaggeration to say that the unoccupied portion of the world in which we have no treaty rights, or which do not come under the British flag but which are absorbed by another nation, pass into that division of protected markets in which our trade is constantly dwindling. Should we have no opportunity of retaliating again in such a case, may we say, as Madagascar and Tunis? Therefore, I say, in the view of the Government, the case is established. There are black clouds on the horizon, and there are signs which reasonably cause great misgiving.

Now I would ask your Lordships another question. Are we right or are we wrong to revolt, because that is a word that may be fairly used, against this exercise of authority which would debar us from examining as to whether our prosperity is really due solely to this system of free imports? Let us try and get at the historical truth of this matter. Even to-night I have heard expressions which would lead one to suppose that those who use them think that our prosperity only began sixty years ago. I think my noble friend Lord Tweedmouth said it was during this period that London had become the commercial centre of the universe.

LORD TWEEDMOUTH

No.

* THE EARL OF SELBORNE

I beg the noble Lord's pardon. Some other noble Lord used that expression, but let your Lordships consider there was not one of our great industries which was not in existence sixty years ago. Sixty years ago we were commercially supreme, and had no rivals. Sixty years ago London was the commercial capital of the world, as it is to-day. Rut Hamburg and Antwerp to-day are great rivals. Every one of our staple trades—iron, cotton, wool, linen, was established long before sixty years ago, and, my Lords, the truth is not that our prosperity was created by the policy adopted sixty years ago, but that it has greatly increased under that policy. I am glad to see that the noble Duke is in his place. In his speech the other day at the Guildhall the noble Duke used these words— I know there are some who are bold enough to argue that the country was prosperous before free trade. I do not believe anyone will be bold enough to come to the Guildhall and make that assertion. What I want to find out to-night is, what is the historic test in this matter? The first test I apply is the noble Duke's own. test. The noble Duke a little later said— The Board of Trade has made an estimate, an estimate which I have not seen questioned, that, measured by a constant and not by a fluctuating standard, computed at the prices of a certain year, and assuming those prices to remain the volume and quantity of our trade has increased in the last thirty years—as to our imports it has doubled, and as to our exports it has increased by 60 per cent. Now I agree with the noble Duke that this is an interesting test of the measure of prosperity, but I think he forgot to apply that same test and that same standard to the thirty years before free imports. The figures of the Board of Trade for the period, and I have them here, show instead of an increase of (SO per cent., an increase of over 300 per cent., and that is the period as to which the noble Duke says he cannot understand anybody saying there was any prosperity in it. But there are authorities to be found on this matter. Has the noble Duke ever studied the classical work of that time-Porter's "Progress of the Nation?" It is a voluminous work of infinite research, which goes through every trade and class of population; the work of an enthusiastic free-trader and an out and out supporter of Mr. Cobden and of the repeal of the Corn Laws. The author thought the millennium had come because the Corn Laws had been repealed. He was perfectly fair in the treatment of his subject and you will find, my Lords, many allusions to the dark shadows of that time. The misery of the population is depicted in glowing colours; but judging the nation as a whole by the facts as he found them and by the statistics of that time, what is the judgment of this man of the state of the prosperity of the nation? The year is the year 1847, and this is what he says at page 530— Not only is the proportion of persons in the community who pass their lives in active industry labouring with their hands or their heads greater in this than in almost any other well-peopled country in Europe, but the amount of skilled labour performed in a given time by any given number of their countrymen is commonly greater than that accomplished by the like number of any other people in Europe. To this circumstance it is in a great part owing that, with a higher rate of daily wages paid for fewer hours of toil than are required in other countries, our manufacturers have been able under other adverse circumstances to maintain superiority over their rivals. And on page 600 there is this remarkable verdict— This fact appears so amply confirmed by proofs that meet us on every side—proofs admitting of no doubts and incapable of receiving any other interpretation—that it is marvellous how they can escape the notice of any one or fail to produce the universal conviction that if we have not made such progress as our means should have enabled us towards the well-being of all classes of the community, we have yet during the present century, and especially within the last twenty-five years, made great advances in that direction, greater perhaps than were ever before realised by peaceful means and by any community in any equal period of time. Now, my Lords, I think that those quotations prove, that judged by the standard of that time, not by our standard—judged by what the world then knew and the conditions of other countries in the world—England at that time was prosperous. The fact is, that exactly the same argument that is now used against the Government for raising this question and the arguments drawn from the prosperity of the country by the present opponents of the Government are the same as those used by the supporters of the old system against the anti-Corn Law League of that time and no less a person used it than Sir Robert Peel. This is what he said on 11th. February 1839— That statement must have continued those who were formerly wavering in their support of the Corn Laws, must have removed the doubts of those who hesitated and had not made up their opinion, and convinced all men that the manufacturing and commercial interests of this country were in the most flourishing and prosperous condition. On the 15th March, a month later, he made exactly the same speech mutatis mutandis and used the same arguments as Lord Goschen used last July. On 15th March, reverting to the same subject, he went through the trade returns and savings bank returns, in great minuteness, showing how great had been the increase in population and wealth of great cities and in their powers of consumption. Yes, my Lords, but it may be replied to that, that Sir Robert Peel changed his mind a year or two later. That is quite true. Why? Because at the time I spoke of he was looking only at the present prosperity. He shut his eyes to the clouds on the horizon until he was overwhelmed by the storm and had to yield to facts. Perhaps history will repeat itself.

Now, my Lords, dealing with this question of free imports. It is a fair question to ask, and it has never been fairly answered: if all our prosperity has been due to free imports, to what has the prosperity of other countries been due? The noble Lord, Lord Avebury, said that their prosperity was in despite of their fiscal system. I do not think that is a reasonable answer; for most Germans would claim that their prosperity was due to protection, and that would be as fair an argument for them to use as is Lord Avebury's claim, that all our prosperity is due to the system of free imports. The fact is, that the effects of both these systems have been exceedingly over-estimated by their respective advocates. I say that both these fiscal systems have been but small contributors to the aggregate of causes of prosperity. What has been the real operative cause of the great prosperity of this country and of other countries in the last half century? It-is that their natural resources, their position in the world, the characteristics of their people, and the natural products of the soil, all these giant resources have been raised from their long slumber by the fairy touch of steam and of gold. It is the world-wide influence of steam transport with the great lubricating influence of gold that has been at the root of the prosperity of this country and of that of other nations, and it is because we hold this view that we do not propose this policy of retaliation with the fear and trembling of our opponents, and that we do not bar the consideration of this question by the plea of an infallible system. After all, it would have been strange indeed if the system of free imports had produced all the great results attributed to it, considering that no man ever devised the system, and that it was the result of a great though honest miscalculation. We believe Sir Robert Peel improved the system he found; we believe it is in our power to improve the system we find, and we do not believe that the fiscal system is the only part of our political system in which no improvement is possible. We believe in retaliation as a policy and as an instrument. We do not believe it is impossible for us to use it with great advantage. We do not share the views of our opponents that it is a weapon too dangerous to be touched, and we are quite unable to agree with them that in the whole field of human experience the only bargain in which you do better for yourself by having nothing to give and nothing to withhold is, a commercial treaty between two nations. Now, why do we not answer the Questions put to us by our opponents; Questions which endeavour to extract from us in advance the methods by which we shall carry out this policy if the country trusts us? The reason is, my Lords, because we know those questions are only devised with the object of tying our hands. We do not pretend to see all the circumstances which may face us when we come again to power.

* ANOBLELORD

That may be a long time.

* THE EARL OF SELBORNE

We have never had any idea of withdrawing this question from the control of Parliament. We could not if we would, and we would not if we could, but, as the Amendment of my noble friend shows, we are not prepared to lay down stringent and minute rules in advance for the guidance of Parliaments which have not yet been born. On this question it has been a great misfortune to us to differ from some of our closest and most intimate political friends. That difference is no light matter. We have not been in close comradeship with them for the last eighteen years without realising the priceless value of their personal and political friendship, and we know from experience that the only motives that guide them in these matters are motives of patriotism and of duty, and we are able to measure the strength of their convictions upon this subject by the magnitude of the risk they are prepared to run. They are prepared to run the risk of putting into power men who, if they could, would undo the work which they themselves have devoted their lives to during the past eighteen years. They are prepared to run the risk of Home Rule for Ireland and of wrecking that educational policy to which we and they alike stand committed. Therefore we are able to measure the strength of their convictions. Why is it so? It is because we are confirmed supporters of retaliation, because we refuse to join in the ban of preference to our colonies. It is one of the principal causes of separation between us that we refuse to join them in banning preferences. They have their ideal, but it seems to us dwarfed by excessive veneration of the past and undue timidity with regard to the future. We know they are genuine, but we, too, have our ideals. It has been insinuated, not in your Lordships' House, or by anyone who has spoken to-night, but it has been insinuated more than once that those who differ from us are the only ones who reckon in any way on the moral forces that makes a nation. That statement is as clearly devoid of truth as it is divorced from charity. We desire that this country should not only remain a great commercial nation, but the predominant commercial nation. We do not desire our population to dwindle. We desire that the rate of growth of population should increase, and we desire by our policy and by our acts to enlarge the area of employment for the people of this country and so continue the process of the development of their welfare, and it is with that object in view that we take up retaliation as a practical means to a practical end. We refuse to join in the ban of preference not because preference is the policy we are putting before the people, but because the future consolidation of this Empire is to us a noble and glorious ideal, and we will not join with those who, whether they share that ideal or not, say in advance that there cannot be any road to progress in that ideal through any form of preference.

LORD MONTEAGLE OF BRANDON

My Lords, not being a financier or an economist, I should not have risen at all in this debate, but that I wish to call attention for a few moments to one aspect of the question which has not yet received much attention either in Parliament or out of doors. The noble Lord, Lord Donough-more, who spoke recently from the Government bench, alluded to the bearing which this question has to Ireland. That is the aspect that especially comes home to me, and I am glad that this sentiment finds an echo on the Treasury Bench. I was somewhat disappointed, after my hopes had been raised by the noble Lord, at his not pursuing the subject a little farther and explaining to us in what way the Government policy would benefit Ireland. But before I go into that more elementary portion of the question I wish for a very few moments to say a few words on the more general part of the subject. My Lords, the noble Earl dealt, in the eloquent speech he has just delivered, largely with retaliation, and his speech also contained a defence, I think, of the principle of protection, because, as I understood, although he did not go the length of saying it, that free imports were responsible for our failure to maintain our predominance in trade, or, at all events, we could not set down to the credit of free imports our commercial prosperity.

* THE EARL OF SELBORNE

I am sorry if the noble Lord misunderstood me. I did not argue in that direction in the least. What I said was that neither the free imports of this country nor the protection of Germany were the true causes of the prosperity of those countries.

LORD MONTEAGLE OF BRANDON

I am sorry if I misunderstood the noble Lord. I understood him to say that free imports and protection had been regarded with undue importance in both countries, and I understood that the moral he drew was that retaliation was the one road to salvation.

* THE EARL OF SELBORNE

No, the moral I drew was that there was not this grave danger lurking behind the reversal of our present fiscal system that others seem to indicate.

LORD MONTEAGLE OF BRANDON

I understood the noble Lord to argue from the state of affairs he presented that there were dark clouds on the horizon and disquieting signs that we must consider, and that, while he did not ban preference, all the Government had to propose for the present was a system of retaliation. Well, my Lords, I confess that, although I have no objection to the principle of retaliation, I cannot see that it will take us very far on. If the state of our affairs is so serious, the way to combat that is by a satisfactory fiscal policy to deal with a great emergency. The Motion of the noble Earl which is upon the Paper deals, I think, chiefly, if not exclusively, with retaliation, and I wish therefore to address myself to that question. As I understood the noble Earl, noble Lords on that Bench are not aganist retaliation in principle if it can be shown to have a fair chance of proving effective, and if it can be shown that you have a chance of carrying it out without incurring greater disadvantages than those which you remove. But I think we all want to know in what spirit retaliation is to be carried on. The Government have put forward a system of retaliation as a road to free exchange, but, my Lords, it is admitted if the threat of retaliation is not sufficient to procure that free exchange, and if you carry out your threat and impose a. retaliatory tax and that is not sufficient to procure a free exchange, that, then, the tax will remain. In that case the tax becomes protective, and, therefore, unless your retaliation is successful it does become protection. That in itself is enough to give serious pause to us before we embark in retaliation as one of the main portions of our fiscal policy. But, my Lords, the Government has been applied to several times to give your Lordships a concrete case where retaliation had been successful, and the noble Earl triumphantly produced the case of the tariff war between Germany and Russia.

* THE EARL OF SELBORNE

I am sorry to interrupt the noble Lord, but the noble Lord rather misrepresents me. I did not in any way stand godfather to the quarrel between Germany and Russia, but gave it as an historical case, and I think it met the question.

LORD MONTEAGLE OF BRANDON

I thought that the Question the noble Lord, Lord Coleridge asked was, whether there was any case of successful retaliation, and I understood the noble Earl to quote this case. I should like to ask the Government now, if no answer has been given to the Question already, can they point to a case of successful retaliation where the retaliation has produced the desired effect which they aim at? As regards the tariff war to which the noble Earl referred I believe, in that case, there was great injury inflicted on both sides, stringent measures were taken, heavy taxes were imposed, neither side would give way, and that condition of things went on for years.

THE MARQUESS OF SALISBURY

For nine months only.

LORD MONTEAGLE OF BRANDON

Well, for however long it lasted, it will not be disputed that large losses were incurred; that the parties arrived eventually at the status quo ante, and that it was really a drawn battle. I do not suppose that the tax of which Germany complained was withdrawn or that Germany attained her ends through that tariff war. But, my Lords, my point is that though I should be quite glad to see retaliation tried as an engine of free trade, I should very strongly object to see it used as an engine of protection. You have then a serious danger of its becoming an engine of protection. How is it to be carried out? I must say that I agree with the Government that it would be very difficult effectively to carry on negotiations between this country and another, unless the Government have something in the nature of a mandate. I think it is only natural that the Government should ask for a mandate, but when we come to consider how this power which is to be given to the Government, if the Government succeed in obtaining the mandate, is to be used, I think the danger of its leading to protection is very great, and that it becomes very important indeed to see what control should be exercised over it. I think the Questions which the noble Earl has asked are extremely pertinent to the issue. When we are asked to trust a Government in this matter we want to know who we are to trust. We know that there are in the Unionist Party two sections, and we are told that we cannot know what is to be done in this matter until after the general election. But when we are asked to accept the policy and asked to write a blank cheque in this way now, I think it is a very dubious proceeding.

Coming to the question as to how retaliation would affect Ireland it seems to me that retaliation can have very little effect in Ireland one way or the other. The only large industries upon which it could have any beneficial effects are the linen and shipbuilding industries. Now, my Lords, everybody knows that the shipbuilding industry would be very seriously injured by any tampering with free imports, and that even dumping is beneficial to the shipbuilding industry, therefore we will put that on one side. Now with regard to linen we find our principal exports in linen from the United Kingdom, I have not the figures with regard to Ireland separately, seem to rise as the duty rises. It is a very curious thing that half the whole exports go to the United States where the duty is very high, £2,000,000 out of £6,000,000 to Germany, where the duty is moderately high, and a proportion to Belgium, acountry which could hardly be called protected and which exports a good deal more linen than she takes. Now the markets most important to the linen manufacturers would no doubt be the American and German markets, but if you were to attempt negotiations on the basis suggested I am afraid we might come off worst, because no doubt other matters like dumped steel would come in, and we might even suffer from further reprisals from these countries. Therefore it seems to me that that great staple trade could not be favoured by retaliation. As regards agricultural exports, the main production of Ireland, there is no case at all in that. Agricultural produce we export mainly to the United Kingdom. If there is no duty against us no duty is to be put on. and, as the noble Lord has pointed out, retaliation can hardly assist the farmer in any part of the United Kingdom. In Ireland there can be no half way house between retaliation and protection. Protection is the only thing the Irish farmer would thank you for, and I hope he will not have the temptation put before him. It is much better, in my opinion, to rely like the Danish farmer on free trade, and with the help of education to develop self-help in the Irish farmer, who would then be able, to give a good account of himself in the future. I will not detain your Lordships longer.

THE EARL OF CHESTERFIELD

On behalf of the noble Lord the Duke of Devonshire I beg to move that the debate be now adjourned.

On Question, Motion agreed to.

House adjourned at half-past Eleven o'clock, till Tomorrow, half-past Ten o'clock.