Front Page Titles (by Subject) CHAPTER III: MR. CHAMBERLAIN'S STATEMENTS AND THE CUSTOMS HOUSE RETURNS - The Comedy of Protection
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CHAPTER III: MR. CHAMBERLAIN’S STATEMENTS AND THE CUSTOMS HOUSE RETURNS - Yves Guyot, The Comedy of Protection 
The Comedy of Protection, trans. M.A. Hamilton (London: Hodder and Stoughton, 1906).
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MR. CHAMBERLAIN’S STATEMENTS AND THE CUSTOMS HOUSE RETURNS
I. English Trade—II. Cotton—III. Wool—IV. Profits in the Steel and Iron Trade.
All Mr. Chamberlain’s arguments are based on the Balance of Trade. In the Glasgow speech he described the growth of imports—which had risen from 63 millions in 1892 to 149 millions in 1902, an increase of 86 millions—as a national danger.
As a matter of fact, figures prove the continuous development of English trade.
and the last period, 1900-04, exceeds all the others. But, say the Protectionists, the increase in foreign trade is an increase in imports, and these twentieth-century politicians believe with Colbert that imports spell ruin.
Thus between the first and last period imports have increased 84 per cent., exports 60 per cent.
The significance of figures depends upon what they represent.
From the first group, five millions must be subtracted for tobacco: thus, while 75 per cent. of the imports are food and raw materials, 81 per cent. of the exports are manufactured goods, to which postal parcels may be added. The partisans of the Balance of Commerce evidently find that their countrymen eat too much: that is why Mr. Chamberlain is anxious to put a tax on food.
Comparing the imports of textile raw material with the exports of textile manufactures, we find:—
Thus the value of the exports of textile manufactures is £35,000,000, or 43·7 per cent. above the value of the raw materials, a figure which is far from representing the difference in value between the materials and the manufactures, since the forty-one million inhabitants of the United Kingdom keep part for their own use. Between 1886 and 1905 there is an increase of £229,000,000 in the consumption of raw cotton; but had there been no increase, had there even been a diminution in the consumption of raw cotton, that would not prove that the cotton industry was therefore on the verge of that abyss which Mr. Chamberlain describes. Since 1874 the speed of the spindles has continually augmented, and thus produces finer and finer thread, requiring less and less raw material in proportion to the length produced. In England the consumption of cotton is 33 to 34 lbs. per spindle to 65 abroad.
In June, 1905, the Imperial Tariff Committee, got up by Mr. Chamberlain to prove his case for Protection, published a report on cotton; a few days before it appeared Mr. Chamberlain said at St. Helens, “Cotton is stationary”; its report gives statistics to the contrary. In 1892-94 cotton exports rose to £65,400,000; in 1903 to £73,300,000; in 1904 to £83,900,000, an increase of 28 per cent.
The Free Trade League in Manchester replied to the report of the Tariff Commission on the Cotton Industry. The answer was given in the clearest and most precise form by Mr. S. J. Chapman, Professor of Political Economy at Manchester University, but it was in no sense the work of pure theorists: the men in whose name it was published were for the most part engaged in the cotton trade, men whose object was profit. Had Mr. Chamberlain held out a profit to them they would have accepted it; that they do not enthusiastically accept his presents proves them of little value. Like prudent men they waited to examine his promises before swallowing them greedily. They did not despise economic truth any more than a merchant, anxious to discover his real position, despises accounts; and they were not to be frightened by a few figures such as the diminution in the export of cotton yarn at the end of 1901. In 1901 it fell from 233,000,000 lbs. to 170,000,000; in 1902 to 166,000,000, in 1903 to 151,000,000, and in 1904 to 164,000,000. What a decline! cry the Protectionists, thinking only of the Balance of Trade, as usual. But the question is, Does this decline indicate a decline in the industry? It does not; since there is an increase in the number of looms. All that it does mean is this: in the last few years the price of raw cotton has been very high, rising to 6·03d. per lb. in 1903, and 61/2d. in 1904, an increase which, naturally affecting the price of cotton yarn, has reduced foreign demand. Cotton yarn has become much finer, and thus export can no longer be measured by relative weight but rather by length. The reply to the report estimates the increase in the value of the export of cotton, with respect to quality and fineness, at 7·33 per cent. The export of sewing cotton has increased from 11,600,000 lbs. in 1876-80 to 24,300,000, in the proportion of 100 to 210, but since the cotton has grown increasingly fine weight alone does not give an exact measure of the export. Were the cotton industry declining the number of looms would not have increased.
The Tariff Commission assumes the increase for 1904 to be more than 3,000,000 looms. At this moment 30 new factories are in course of construction, adding 10 per cent. to Lancashire’s productive power. Including these, the increase since 1885 must be some 10,000,000 looms, or 100 factories with 100,000 looms each, representing a capital of about £12,500,000. Moreover, the power of machinery has been continually on the increase for the last 30 years; it is probably twice what it was 25 years ago: assuming it to be only in the proportion of 3 to 2, production must have increased about 40 per cent.
There is an increase in the number of power looms:—
The number of hands has diminished:—
but examining the details of this diminution we find it has mainly taken place in the employment of children below 15 and adults below 20 years of age. Adult labour both of men and women has increased:
The result, then, of the Tariff Commission’s Report on cotton is an approximate increase of 100-146 from 1876-80 to 1904.
Those, however, who are anxious to revenge themselves on English Free Trade by proving that England has been ruined by it hasten to say, “The cotton industry has advanced more rapidly in other countries than in England.” The Tariff Commission, Mr. Chamberlain’s Tariff Commission, says in its report: “The witnesses and manufacturers examined are of opinion that the progress of the industry in England has been equal or greater than that in other countries; with whatever nation it is compared the evidence is unanimous. In spite of the lowering of the hours of labour weekly piecework wages have maintained their level, thanks to the development and increased output of machinery. The Commissioners are of opinion that, apart from industry and transport, England’s commercial organisation is superior to that of foreign countries. Although they may possess particular advantages, when everything is taken into account there remains a balance in favour of English industry.”
Thus the Commission’s Report refutes Mr. Chamberlain’s allegations. The Commissioners, however, having been appointed by him, felt that they must be faithful to their trust; they therefore added the following caution: “The witnesses, however, deposed that both with regard to the organisation and output of the cotton industry, foreign nations are catching up Great Britain and even passing it in certain respects.” The United States, they said, will soon absorb the total cotton harvest; but according to Mr. Young’s reports and that of the Moseley Commission the output of American workmen is not equal to the English, even when the comparison is confined to the North. As for France, the output of labour is so much smaller, that, on an equal production, low wages are compensated for by very large employment of labour. Without Protection, France would continue to export the artistic commodities in whose production she excels.
In Germany wages are lower and hours longer; they enjoy the advantage of cheapness and of national skill in bleaching, dyeing, and printing. After this admission the report adds that they enjoy no superiority in methods of procuring and administering capital; that, while their commercial travellers are remarkable for their enterprise and energy, their methods are rather dubious—they allow extended credit and enter on tricky operations. The Free Trade League considers that the Tariff Commission has greatly overestimated the importance of German industry; its output is lower and not so highly specialised as the English. Wages in Germany are two-fifths and in France two-thirds of the United Kingdom standard; they are higher in the United States, but they have not risen so much in the last twenty years as they have in England. Hours of labour are shorter in England than in America, France, and Germany.
Countries under the Protectionist régime incur expenses which prevent their competing effectively with Great Britain. The following tables only include yarn, the raw material of the textile trade; but the argument can be extended. Drawn up and verified by experts, they can be taken as exact.
Fixed charges for a factory of the same type, employing 262,000 looms, in different countries:—
To equalise the charge wages in each country must be as follows:—
If the same total were spent on wages in a factory of this type in England, France, Germany, and the United States—leaving out of account the much larger number of workmen and supplementary machines in France and Germany—there would be an annual surcharge of £13,000 in France, more than £15,000 in Germany, and £22,000 in the United States. The higher total of hours and the lower total of wages in France and Germany do not outweigh this surcharge. The total wage bill is often as high as that in England because a greater number of workmen have to be paid to attain the same result. The witnesses heard by the Tariff Commission confirmed these estimates. One of them, showing the influence of Protection on the cost of production in protected countries, said of the United States: “As long as they maintain their tariffs, and specially the 45 per cent. duty on machinery, they cannot compete with us abroad.”
The export of cotton from the principal Western nations has increased 38 per cent. between 1891-5 and 1901-2; of the total Great Britain claims 62·5 per cent., Germany comes next with 12 per cent. European competition is confined to fancy and new-fashioned goods; that of the United States to coarse or very fine cottons. The population of the neutral countries is so great and their consumption of cotton so small that there is room for a great increase in the export of yarns and textiles.
Turning now to the cotton yarn kept for home consumption we find:—
From 1884-1904 the number of cotton-spinning companies rose from 60 to 90; over the whole period, fifteen years, show a gross profit of £2,689,000, six years a gross loss of £266,786; the net profit, then, for the whole industry is £2,423,000, or £116,000 a year. An industry in this condition is not ruined.
Wool, according to Mr. Chamberlain, is doomed.
The consumption of raw material shows an increase:—
i.e., an increase of £131,000,000.
A diminution in the export of wool would prove not the decline of the industry, but an increase in home consumption of woollen goods; such an increase disturbs the calculations of those who believe in the Balance of Commerce, and they, therefore, refuse to take it into account. Their countrymen must never buy, never consume, only sell to the foreigner; they are condemned to asceticism while all the useful or pleasing products of their country are despatched across the frontier.
A country’s exports are only a part of its activity; the United States absorb their whole output of iron and steel. Profits on industrial enterprise are an element; there is depression when they fall like card houses, but as long as dividends are paid, reserves increased, depreciation written off, and large amounts of capital ready for disposal, there is no danger.
Profits in the Iron and Steel Trade.
The Economist of May 26, 1905, gives the following statistics showing the position of 12 iron and steel factories in 1903-4 and 1904-5:—
The dividends vary for different firms. Bolckow, Vaughan, & Co. have given 5 per cent. for the last 4 years, and the profits for the year ending June 30, 1905, are £213,000, of which £56,000 goes in increased plant. Guest, Keen, & Nettlefolds gained a net profit of £337,000 on the year ending June, 1905, and on the preceding year £333,000, and since its establishment it has paid 10 per cent. dividends.
Such an industry is not ruined. Germany itself recognised the supreme position of the English steel and iron industries, when, in the three years Rail Syndicate, concluded in 1904 between England, Germany, Belgium, and France, the following share assignment was made on a total of 1,300,000 marks.