FOR

A FREE TRADE SYMPOSIUM

I

A DIALOGUE, BY JANUS BIFRONS

'OR many months our British policies had been going into the crucible of war. It was clear that on the return of peace the main instruments of civil order and industrial life would have to be forged afresh. There had been foolish crowing and perhaps some sinister calculations, but I always noticed notwithstanding a strong tendency among sober and sensible men of all ways of thinking to import an element of candour and fairness into their discussions of the future which was rarely apparent before the war.

When the Report of the Sub-Committee of the Advisory Committee to the Board of Trade appeared, I was moved to put into execution a little plan I had long had in mind. I have two friends, both able men and both outside politics. As disputants they are both singularly open-minded and sincere. When they talk they seek, not victory, but truth. Above all they can and do apply the touchstone of national interest to the matter in dispute. To all these excellent predicates they stand joint subject. But they differ in one respect. F. T. is a Free Trader, while T. R. has long been a believer in Tariffs for national and Imperial ends. I took them for a country walk on a fine Sunday. This is the record of their conversation.

F. T. If I let you tip out the bath-water, will you help me to save the child?

T. R. There is some dirty water then?

F. T. Better that than a dirty child. But I drop metaphor. In our old disputes I never claimed more for Free Trade, and I admit it was a good deal, than that it secures the greatest total economic return for the national output of industrial effort. Of course I also used to say that it was the only possible means of preserving complete theoretic equality of

treatment by the State as between individuals, classes, and interests. I never claimed more, as for instance that

T. R. Just a minute to deal with your second point and get it out of the way in a parenthesis. I know why you say 'theoretic' equality. You Free Traders have to justify interference with individual freedom of contract by factory laws and labour combinations. Some of you used to do it by saying that, if Free Trade is to yield its full advantage, buyer and seller must both be really free to accept or refuse the bargain, and that where such equality does not exist it must be called into existence. Otherwise, you argued, you have in effect a forced sale, and that is not Free Trade. I always thought it rather thin myself. Why not say straight out that, in this case only, the cost of economic laissez-faire is too high, expressed in terms of flesh and blood?

F. T. Many Free Traders did. But you still have the crude fact that any State interference (including your exception if you insist) means, and always must mean, actual transfer by Government of cash from pocket of citizen X to pocket of citizen Y. In old days Free Traders were unwilling to entrust any Government with that power. Since then we have had the case of Old Age Pensions, which is clearly such a transfer and one of the right sort. But that used to be their case, and not a bad one in the old days, when Governments were neither very wise nor fairly representative of all interests.

But to get back: I never claimed for Free Trade that it could secure quasi-military tactical advantages on German lines of trade manipulation.

T. R. But Free Traders have certainly defended it as good international peace strategy.

F. T. They did. It seems rather out-of-date now, but if you want their line of justification you shall have it. If the Kaiser had been only a little wiser, not better, wiserthe event proves it-he would have averted the war. If so, it might have been postponed sine die. But could that be said with any confidence if we had previously embarked on an openly precautionary' and 'defensive' trade policy? Rather a feeble attitude, you think. Perhaps; but the Free Trader was so set on not giving anyone the slightest pretext or excuse for making war-and it was really a very

respectable position—that he simply put his shirt on peace being maintained. Well, it wasn't; so he hasn't got a shirt, not a rag of one, on the strategical point. But the belligerent enemy hasn't got a rag of an excuse either, and that is worth something. And, mind you, there's a great deal more than that to be said for what Free Trade actually did to strengthen our position for the war. I won't make a long story of it, but consider the really topping financial form we have shown from the start, the strength of the City and a free gold market. Is the despised Free Trade system to get no credit for that? What I rate even more highly is the elastic resource and versatility which our industry has shown in putting its machine on a war footing. Not much fly-blown fetichism there, I think. That is one side of the story. The confessions and admissions I made just now are another.

T. R. The last are extorted from you by the facts. The facts don't force me to make mine; but they enable me to, without any great sacrifice, because they afford enough support for all that is real in my case. I always wanted Tariffs, because in no other way can you get the balance, organisation, and co-ordination of national industry and Imperial trade which this war has proved to be absolutely necessary. I therefore cheerfully throw overboard all the old arguments, heard, I am afraid, much too often at street-corners, that you can make everybody richer by import duties. When the less thoughtful among my friends tried to prove that, so far from having to pay for the advantages of organising trade on a national footing, there would actually be a larger national dividend expressed in cash, here and now, than under Free Trade, they only did themselves harm, because sensible men couldn't stick it.

But the real point is put better now. You will find it summed up daily in my Press-misdirection of spending power, the subordination of national security to the immediate cash profit of the private consumer, the fruits of laissez-faire and buying in the cheapest market. Many of our present woes are traceable to it. It has got to stop. For instance, in future we must be independent of all possibly hostile sources of supply.

F. T. All right. I accept all that.

T. R. You recognise, in fact, the distinction drawn by

your too-neglected master Adam Smith between greatest profit and greatest national advantage.

F. T. Yes, but when you speak of national advantage be on your guard against continuing to think only of production, because I shall not allow it. There are two ways of getting richer, producing more and consuming less or to better advantage. If you throw national advantage at me I shall say consider first how much of your national consumption is reproductive and enriching in terms of life and energy for further production, and how much is wasteful, or worse, enervating. Let me, for example, press the case against laissez-faire in another quarter where I notice that people who make things to sell never seem inclined to pursue the attack. So much for buying in the cheapest market. But what about selling in the dearest ? Can we afford that either? Or does the war show it to be too costly to national efficiency? Bring it to the test of efficiency in war. T. R. Instance.

F. T. Well, offer any you can think of.

T. R. One would be export of food on private account, when the world price threatens to reach a point which the home consumer cannot pay. The Indian Government regulated that for India last year in the case of wheat.

F. T. Certainly; they stopped private export. That divorced the high world price ruling from the price to the Indian consumer. Then they bought up the exportable surplus at a lower price than the private exporter would have paid, exported it themselves and put it on the market here. Any more instances? Come, the really crucial one. T. R. Well ?

F. T. What do you consider to be our most embarrassing shortage at the moment?

T. R. Merchant shipping, I suppose; fearful freights, coal-diamonds in Italy, less paper, less sugar, less tobacco!

F. T. Why have we got too few merchant ships for an island power at war? Because enough have not been built. Why weren't more built in the ten years preceding the war?

T. R. Because the investor isn't a philanthropist. He would merely have presented the world at large with cheaper freights and gone without the market rate of return on his capital.

VOL. 223. NO. 456.

F. T. Ah! Now we have it. The root cause of this trouble was laissez-faire for the investor, selling his commodity, the use of his capital, in the dearest market. In your own phrase, the misdirection of investing power, the subordination of national security to the immediate cash profit of the private investor.

T. R. Well, what do you propose? Bounties, subsidies, or what? I thought they were anathema to you.

F. T. Before I lost my shirt, perhaps. But I'm not sure even of that. Municipal progressives used to defend ratesubsidised trams. The community gets a cheaper service. Nobody really minds except the gentleman who wants to invest his money in a competing show on strictly laissezfaire principles. At any rate, in our post bellum world subsidies may pass, provided you subsidise the right thing. Before the war I admit, of course, that the row would have been deafening if you had proposed to subsidise all production of the real necessities of national existence (because my argument does not stop at ships) and thereby penalise all production of superfluities and luxuries. But I think I see a way in which this is very likely to come about under the simple pressure of events, without our having to resort to subsidies at all.

on.

T. R. You really begin to be extremely interesting. Go

F. T. After the war, industry must be put back on a peace footing as quickly as possible. What will the process be? T. R. Plant must be reconverted and fresh plant must be laid down.

F. T. And rather quickly too, mustn't it? Remember you will have a large army of returned warriors as well as all their present female and elderly remplaçants, who have in the interval all learned only too well how to live on £3 a week. All these will be waiting breathlessly to operate your new plant and draw wages. Time will be an essential matter. When the stomach of a whole nation is kept waiting only a week you get grumbling. Make it wait a month, you will have riots; a year, perhaps revolution.

T. R. What is this dismal tirade leading to?

F. T. Only this. Will private agency unsupported provide the required credit quickly enough? Give it time and perhaps