and opinions vary greatly amongst agriculturists themselves, whether they would not lose much more than gain under a system of protection. Danish farmers certainly have resisted all attempts to impose a protective system, and have found a solution in co-operation and economy in bringing their produce to the market, a policy under which they appear to be thriving.

The danger of all protective systems, as far as we can learn from experience, is that, once established, it is most difficult to get away from them, and that they have a constant tendency to grow. The result must be to lead to higher prices all round, and consequently to general loss, and higher prices must mean diminution in our exports, which we wish to increase. What Protection means, further, is the bringing in of commercial questions into the political arena, of tariffs and bounties being made the battle-cries of contending parties, of instability and insecurity in all commercial transactions, and rapid fluctations and variations in prices, bringing loss to the many and large gains to the few, of the growth of Kartels, and trusts, of which modern industrial life in protected countries affords so many illustrations. Germany and the United States are pointed out as countries which have prospered under a system of Protection. Go to Germany or to the United States and talk with the best informed and you may hear a different tale; look at the condition of life of the working classes in Germany, and not only of the working classes, but of the vast number of people with moderate incomes, and you will find lower wages, lower salaries, longer hours of work, dearer food, dearer house-rent, and you will then have your explanation of the vast increase in the socialist vote apparent at every election. I hear from a prominent German banker that Germany is watching our discussion over this fiscal question with intentional silence on the part of the Press, but with secret joy, and hope that a change in our fiscal system will take place, and that as soon as we put restrictions and impediments in the way of trade they will secure a large slice of it, and will

No. 40. XIV. 1.-JAN. 1904.

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success.

be able to compete with us in neutral markets with all the more In Germany there are many who would be only too glad to reduce all these restrictions, and to relieve the people from the burdens they impose; and the same tendency prevails quite as markedly and perhaps even more so in the United States. Some months ago I referred to a conversation I had in 1901 with the late President McKinley, in the course of which he expressed his opinion that his own tariff had done its work, and that gradually but inevitably the American tariff would be reduced. I further stated that this was an opinion which was gaining ground more and more amongst the American people. From the way in which a great part of the American press noticed my remarks, and challenged them, I am led to conclude that there was more ground for them than they desired to admit, and I have since had ample confirmation of the prevalence of this movement from Americans in all stations of life. In the face of these possibilities, of the tendency and desire of protectionist countries to remove obstacles in the way of trade which they know hinder them, is it wise for us, unless absolute proof were given of the necessity for doing so, to reverse a policy, during the continuance of which we have admittedly been prosperous? An American of large business experience summed up the situation in these words: "You are going to hoist the white flag just as relief is in sight."

NEED FOR SCIENTIFIC AND TECHNICAL EDUCATION, AND IMPROVED METHODS.

I am not one of those who maintain that all is for the best, that our manufacturers have done as well as they should have done, that our exports are as expansive as they should be, and as they might be; but unless absolute proof to the contrary were given to me, I cannot see that the remedies which I see suggested can bring about the desired result. Is it not our business methods that have to be adapted to modern condi

tions? When Germany commenced to expand, and to nurse her industries carefully, the first thing she did was to adopt the gold standard, to create the Imperial Bank, and put it on a basis which enabled it to powerfully assist in the commercial development of the country, and to reform her system of weights and measures; she adopted the metric system, and this step alone assisted her materially in her export trade. Of German scientific methods, as adapted to her industries, I cannot do more than make a passing mention, but it is well known that the applications of science to industry, and not tariffs, enabled her to wrest many trades away from us which we ought to have retained. I might quote the opinions of Sir Henry Roscoe,1 Lord Kelvin,2 Sir Norman Lockyer, men prominent in the scientific field on this point. And from other eminent scientific experts I have obtained information which I regret space does not admit of doing justice to on the present occasion, and the clearest evidence that it is not so much due to the lack of means of obtaining the very best scientific training that so many of our industries have fallen behind, but to the unwillingness of employers to avail themselves of the services of scientific experts. The student on leaving college, fully equipped, has the greatest difficulty in obtaining employment in our industrial establishments, where a system of apprenticeship based on the payment of premiums prevails. In the United States and Germany industrial establishments are constantly on the look-out for the most promising students as they leave the university.

The possible and necessary improvements in the methods of carrying on our trade, and making it attractive to those whom we wish to be our customers, might well form the subject of a separate paper, but nothing could be more emphatic on this point than the Blue Book published in 1898, called Foreign Trade Competition, and embodying the opinions of H.M.

1 MONTHLY REVIEW for November 1901. Speech at Cardiff, November 12, 1903.

* Presidential Address to the British Association, September 9, 1903,

Diplomatic and Consular Officers on British trade methods. It is interesting and melancholy reading. I wonder what the circulation of this Report has amounted to, and whether its lessons have gone home. There is also a publication, issued weekly, at the price of one penny, by the Board of Trade called the Board of Trade Journal, which gives most useful information about Foreign and Colonial Trade. I am informed, on very good authority, that the demand for this journal from Germany is much greater than the home demand. Space only prevents me from enlarging on this topic, but, from personal experience, I could tell many a tale of trade being positively driven away through mere neglect and carelessness; also, of trade that had been lost, being actually recovered where the need for effort had been recognised and met. The company promoter has much to answer for; for it must be admitted that in many cases where private firms have been turned into limited companies, the personal interest previously taken by the partners, the pride of a business handed down from father to son, has disappeared. Where the personal element disappears, no undertaking is likely to prosper. There has been, during the last decade preceding the years of the war, a desire to grow rich too rapidly, and the slow but sure methods, constant attention and careful watching of opportunities, have, perhaps, been left too much out of sight.

"DUMPING": RETALIATION.

Two points I have not yet touched upon: dumping and retaliation. Dumping is the sale to a foreign purchaser by the producer in a protected country of an article below the cost of production, which he is enabled to effect by obtaining from the consumer in his own country the enhanced price which Protection makes it possible for him to charge. This is certainly an undesirable and injurious proceeding, injurious principally to the consumers in the protected countries. Some of our own industries are certainly exposed to loss through the sales of these results of over-production, just as

they are exposed to loss through over-production on the part of home competitors. It is difficult to know how to meet the evil, and it is one which must correct itself, for the total of such sales below cost price can only be a small proportion of the total output; and it will only occur when the producing country is passing through a period of depression, so that the home demand is not equal to the output. Such periods of depression occur, as we all know, from time to time. And it is certain that some of our industries have derived considerable benefit, through being able to procure some of their raw material below the actual cost of production. They have thus often been able even to sell the manufactured article to the very country which has given us better terms than their own countrymen; and the feeling in protected countries against this system is so strong that it does not appear likely that it will be permitted to continue very long. If we were to take steps to prevent these imports, the country determined on dumping would dump their goods elsewhere, that is, on neutral ground, and thus compete with us to an equal extent without our having had at least the incidental advantage of making use of the cheap material so to be obtained. The system is a bad one, but while it lasts we may as well get as much good out of it as circumstances admit. Something, by the way, has also been heard about colonial dumping, which is possible through a system of bounties prevailing in some of them, and I do not know if it has been suggested that this also should be dealt with.

As to retaliation, it is impossible to express any opinion without precise definition of what that term means; it is entirely a matter of application and degree. No Government would be worthy of the name that did not make every legitimate effort to minimise, as far as possible without injury to ourselves, the effect of hostile tariffs; and to negotiate commercial treaties in such a way as to bring about that result. But in making such effort regard must be had to the question whether the injury resulting from any new duties is not greater than any advantage derived from them.