MR. BALFOUR AND PREFERENCE.
IT is impossible to read Mr. Balfour's speech delivered to the Primrose League on Friday, May 3rd, without feeling that he has dealt a heavy blow to the cause of Unionist reunion, and has tended to give new sources of strength to the present Government. When the partisan talk about the " real reasons " for the great Unionist defeat of 1906 is examined, the plain fact that stands out above all others is that the Unionists were beaten because a considerable body of men in every constituency who had previously been accustomed to vote Unionist supported the Liberal candidate, and did so because they realised that to vote for his Unionist opponent must mean the triumph of Protection and the abandonment of our Free- trade system. The man whom Lord Goschen was wont to call the balancing elector, the man who turns the scale at elections, inclined the balance to the Liberal side because he was against the abandonment of Free-trade. This means that if the Unionists are to get back to power and to turn out the present Government, they must re- capture and re-enlist those who temporarily refused to serve under the Unionist banner at the last Election. But this can only be done in one way :—by sinking the proposals
that divide the party and by giving prominence to those that unite it. Mr. Walter Long, whose wise and states- manlike speech we noticed the other day, evidently realises this fact, for he reminded us that the strength of a chain is its weakest link, and declared that the pace at which the Unionist Party should march must be one which would allow all Unionists to keep the ranks.
Mr. Balfour unfortunately appears to have abandoned the notion that it is part of his business as leader of the Unionist Party to sink differences and to dwell upon points of agreement. No doubt he made an attempt to represent the differences of opinion in the Unionist Party as diminishing, and indeed declared his belief that it was now possible to present a case which would reduce them to the vanishing-point. He must, however, have been well aware that such words could only be used in a Pickwickian sense. If they had been seriously meant, and were based upon realities, he would have first ascertained that they would be received with satisfaction by the Duke of Devonshire and those who support him. Further, they would have been followed by some declaration on the part of the Duke and the chief Unionist Free-traders that their difficulties in regard to Preference and Protection were now at an end, and that they were willing to co-operate once more on all points with Mr. Balfour. Instead of any such result, we get a letter, signed by two gentlemen whose right to call themselves Unionist Free-traders can probably never have been very obvious, full of frank Protectionism, and of the old fallacy that taxes on commodities do not raise prices. The first to sign this letter is Mr. Hayes Fisher, who has never been a member of the Unionist Free-Trade Club, the official organisation of the Unionist Free-traders, over which the Duke of Devonshire presides ; while the other, Mr. Yerburgh, has never, as far as we know, taken any active part na the work of the club, though we understand his name is on its books. In these circumstances, it would be ridiculous to regard the letter in question as a sign of Unionist reunion on tho basis of Preference.
The authentic voice of the Unionist Free-traders is to be heard in the excellent letters contributed to the Times by such staunch Unionists as Mr. Arthur Elliot and Mr. Cameron Corbett. Bbth of them repudiate in the strongest terms the notion that Unionist Free-traders acquiesce in Mr. Balfour's speech, or in the action taken by Mr. Hayes Fisher and Mr. Yerburgh. Mr. Arthur Elliot in his letter to Thursday's Times shows how entirely remote from the aims and objects of the Free-trade Unionists are the views expressed by Mr. Balfour to the Primrose League. The policy of the Unionist Free- traders has been officially declared to be a " practical one,—viz., actively to support Free-trade, and equally energetically to oppose Protection in all its forms and under whatever names it may be put before the electors." Whether the Duke of Devonshire, the president of the Unionist Free-Trade Club, and his colleagues the vice- presidents, Lord Balfour of Burleigh, Lord James of Hereford, and Lord George Hamilton, will think it worth while on the present occasion to deal with Mr. Balfour's speech, or with the letter of Mr. Hayes Fisher and Mr. Yerburgh, we cannot say; but of one thing we are certain. If the Duke of Devonshire and the vice-presidents of the Unionist Free-Trade Club do express their opinion, they will give no encouragement whatever to those who think that by some miracle the policy of Preference can be adopted without the abandonment of ' Free-trade, or without taking the first step in the direction of complete Protection. The Duke of Devonshire will never be found among those who think that Free-trade can be maintained in conjunction with " a practical programme " which involves taxes on corn and other foodstuffs.
Mr. Balfour's speech was not only disappointing to those who, like ourselves, ardently desire Unionist reunion, and the formation of a political body capable of preventing the country being hurried by the present Government into Socialism of a dangerous kind. It was also profoundly disappointing from what we may term the intellectual point of view, for it shows' that Mr. Balfour has not even yet taken the trouble to understand what Free-traders mean by Free-trade, and why they are opposed to Preference as to all other forms of Protection. Mr. Balfour seems to imagine, in the first place, that
Free-traders object to Preference because it will be injurious to the foreigner, and that they are unwilling, in the second place, to make the slightest sacrifice in order to consolidate' the Empire. Both propositions are untrue as far as we are concerned, and we believe that the same may be said of the majority of Free-traders. We have no abstract desire to help the foreigner, and should be perfectly willing to give an advantage to the Colonies if we could do so without injuring our own con- sumers and wasting our national resources, and without violating the great practical' principle of the free market, —the principle under which all men, subject to duties for revenue purposes only, are allowed to sell freely anything they have to sell in our markets. Unfortunately, we cannot give a trade preference to the Colonies without doing these things, and therefore without undermining the foundations upon which the Empire rests, for our oversee Empire, like our oversea commerce and our maritime supremacy, is the gift of Free-trade, and must vanish with Protection.
Again, Mr. Balfour seems incapable of understanding the Free-traders' objections to what he calls broadening the basis of taxation. In the abstract, of course, no Free-trader could object to broadening the basis of taxation. When, however, that phrase comes to be considered in the concrete and not in the abstract, it is seen to mean the imposition of indirect taxation under conditions which violate the sound principles of taxation. We Free-traders.believe that the object of a tax is not to manure the soil, to distil riches from the clouds, or to perform any other beneficent and Quixotic act, but to raise money, and, further, to gather into the Treasury the whole of the extra cost which the consumers and taxpayers have to pay owing to the imposi- tion of a tax. Now there are very few objects upon which taxes that obey these simple and necessary rules can be laid,—unless, of course, recourse is had to the cumbrous and difficult device of an Excise equal to Custom-duties. We already tax almost all the articles the taxes upon which will reach the Treasury without a leak, and give to the State the whole of the increased price paid by the consumer. In other words, then, Free-traders object to the broadening of the basis of taxation because in practice it means the imposition of taxes a considerable part of which will flow, not into the Treasury, but into the pockets of private individuals. For example, if we broaden the basis of taxation by a 10 per cent. ad valorem duty on foreign iron girders, only a portion of the enhanced price which the users of girders will pay will find its way into the Treasury. The rest of what ought to be tax-money will go into the pockets of the makers of British girders. In other words, you cannot in the case of this country broaden the basis of indirect taxation without imposing taxes of a Protective character. But Protective taxes are bad taxes, because their whole yield does not flow into the Treasury, like the whole yield of the duty on champagne.
Before we leave the subject of Colonial Preference we desire to say one word more from the Imperial point of view. For ourselves, we do not believe that the unity of the Empire is in the slightest danger owing to the refusal of the Mother-country to abandon the principle of the free and open market and to adopt a policy of Preference. Let us, however, suppose that such danger could be proved, and that we were really face to face with the proposition : " No Preference, no Empire." Given that proposition as an assured and ascertained fact, we are perfectly willing to admit that we should prefer some kind of Preference to the alternative,—i.e., the dissolution of the Empire. But in that case we hold, and hold most strongly, that the proper form in which such Preference should be given is not by means of special taxes on foreign goods, and the abandonment of the free market, but by the granting of such bounties to Colonial products as might be determined to be necessary for the maintenance of the Empire. We are no friends of bounties, and we believe that neither bounties nor duties are in the least necessary to preserve the Empire, but that bounties are greatly to be preferred to duties we do not doubt. In the first place, bounties, instead of injuring the consumer, tend, at any rate if the matter is looked at solely in one aspect, to help him. If we were to give a shilling a quarter bounty on all Colonial corn exported to England, the price of corn would fall in our market, and so with wool and cheese, butter, meat, and so forth. The taxpayer would have to put his hand in his pocket, it is true, but at any rate the consumer
would not have the cost of living increased, nor would the vitalising competition of the fOreigner be so seriously interfered with as under a system of duties. To pay cash down at the ports involves a more serious interference with trade than merely to miss the receipt of a cheque which goes to a more fortunate rival. Another ground for preferring bounties to duties is the fact that the nation would be able to know to a penny what the system of giving preference to Colonial goods was costing it Under a system of preferential duties the taxpayer, ostrich- like, puts his head into the sand and imagines that because he does not see what he is paying he is paying nothing. Under the bounty system he has a businesslike knowledge of the exact financial situation.
It must not be supposed from what we have said that we ourselves advocate bounties on Colonial produce paid by the Mother-country. All we say is that if we are ever forced to adopt a system of Colonial Preference, it will, in our opinion, be the duty of Imperialist Free-traders like ourselves to do all in their power to see that the system chosen is one of bounties rather than of preferential duties,—in the first place, in order that the consumer shall not be injured, at any rate in his capacity as a con- sumer; and secondly, in order that the country shall under- stand exactly what it is doing and what it is paying.
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