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In a sense, there are new fiscal "circumstances." But I can assure my young friends that they are just the kind

of circumstances which were foreseen by their seniors in pre−war days as sure to arise when any attempt was

made to apply tariffist principles to British industry. As a German professor of economics once remarked at a

Free Trade Conference, it is not industries that are protected by tariffs: it is firms. When a multitude of firms

in various industries subscribed to a large Tariff Reform fund for election−campaign purposes, they

commanded a large Conservative vote; but when for platform tariff propaganda, dealing in imaginative

generalities and eclectic statistics, there are substituted definite proposals to meddle with specified interests,

the real troubles of the tariffist begin. You might say that they began as soon as he met the Free Trader in

argument; but that difficulty did not arise with his usual audiences. It is when he undertakes to protect hides

and hits leather, or to protect leather and hits boot−making, or to help shipping and hits shipbuilding that he

becomes acutely conscious of difficulties. Now he is in the midst of them. The threat of setting up a general

tariff which will hit everybody alike seems so far to create no alarm, because few traders now believe in it.

Still, it would be very unwise to infer that the project will not be proceeded with. It served as a party war−cry

in Opposition for ten years, and nearly every pre−war Conservative statesman was committed to it−−Earl

Balfour and Lord Lansdowne included. Even misgivings about Lancashire may fail to deter the tariffist rump.

Some of the people who even yet understand nothing of Free Trade economics are still found to argue that, if

only the duty on imported gloves is put high enough, sufficient gloves will be made at home to absorb all the

yarns now exported to German glove−makers. They are still blind, that is to say, to the elementary fact that

since Germany manufactures for a much larger glove−market than the English, the exclusion of the German

gloves means the probable loss to the yarn−makers of a much larger market than England can possibly offer,

even if we make all our own gloves. In a word, instead of having to furnish new Free Trade arguments to meet

a new situation, we find ourselves called upon to propound once more the fundamental truths of Free Trade,

which are still so imperfectly assimilated by the nation.

So far as I can gather, the circumstances alleged to constitute a new problem are these; the need to protect

special industries for war purposes; and the need to make temporary fiscal provision against industrial

fluctuation set up by variations in the international money exchanges. Obviously, the first of these pleas has

already gone by the board, as regards any comprehensive fiscal action. One of the greatest of all war

industries is the production of food; and during the war some supposed that after it was over, there could be

secured a general agreement to protect British agriculture to the point at which it could be relied on to produce

at least a war ration on which the nation could subsist without imports. That dream has already been abandoned by practical politicians, if any of them ever entertained it. The effective protection of agriculture

on that scale has been dismissed as impossible; and we rely on foreign imports as before. Whatever may be

said as to the need of subsidising special industries for the production of certain war material is nothing

further to the fiscal purpose, whether the alleged need be real or not. The production of war material is a

matter of military policy on all fours with the maintenance of Government dockyards, and does not enter into

the fiscal problem properly so called. But to the special case of dyes, considered as a "key" or "pivotal"

industry, I will return later.

How then stands the argument from the fluctuations of the exchanges? If that argument be valid further than

to prove that all monetary fluctuations are apt to embarrass industry, why is it not founded on for the

protection of all industries affected by German competition? The Prime Minister in his highly characteristic

speech to the Lancashire deputation, admitted that the fall of the mark had not had "the effect which we all

anticipated"−−that is, which he and his advisers anticipated−−and this in the very act of pretending that the

further fall of the mark is a reason for adhering to the course of taxing fabric gloves. All this is the

temporising of men who at last realise that the case they have been putting forward will bear no further

scrutiny. The idea of systematically regulating an occasional tariff in terms of the day−to−day fluctuations of

the exchanges is wholly chimerical. A tariff that is on even for one year and may be off the next is itself as

disturbing a factor in industry as any exchange fluctuations can be.

Nor is there, in the nature of things, any possibility of continuous advantage in trade to any country through

the low valuation of its currency. The Prime Minister confesses that Germany is not obtaining any export

trade as the result of the fall. Then the whole argument has been and is a false pretence. The plea that the

German manufacturer is advantaged because his wages bill does not rise as fast as the mark falls in purchasing

power is even in theory but a statement of one side of a fluctuating case, seeing that when the mark rises in

value his wages bill will not fall as fast as the mark rises, and he is then, in the terms of the case, at a

competitive disadvantage.

But the worst absurdity of all in the tariffist reasoning on this topic is the assumption that in no other respect

than wage−rates is German industry affected by the fall of the mark. The wiseacres who point warningly to

the exchanges as a reason for firm action on fabric gloves never ask how a falling currency relates to the

process of purchasing raw materials from abroad. So plainly is the falling mark a bar to such purchase that

there is prima facie no cause to doubt the German official statement made in June, that foreign goods are

actually underbidding German goods in the German markets, and that the falling exchange makes it harder

and harder for Germany to compete abroad. We are dealing with a four−square fallacy, the logical implication

of which is that a bankrupt country is the best advantaged for trade, that Austria is even better placed for

competition than Germany, and that Russia is to−day the best placed of all.