Bearing and Importance of Commercial Treaties in the Twentieth Century

by Thomas Barclay

Bearing and Importance of
Commercial Treaties in the
Twentieth Century

A LECTURE

DELIVERED ON 6TH DECEMBER, 1905

BY

SIR THOMAS BARCLAY.

MANCHESTER
AT THE UNIVERSITY PRESS
1906

Bearing and Importance of Commercial Treaties in the Twentieth Century.

Scope of a Treaty or Commerce.

I must begin with a definition.

It is usual to think of Treaties of Commerce as restricted to tariffs. Nothing is more erroneous and no popular error is more detrimental to an intelligent understanding of the subject. One unpropititious consequence of the error is that treaties of commerce are popularly supposed by some to be a counterblast to free trade, by others as a step towards it. In reality, treaties of commerce are simply agreements between States relating to trade carried on between them. Through them States bring order into their commercial intercourse, and order is as essential to the security and prosperity of international intercourse as it is to our domestic intercourse.

It is with treaties of commerce in this general and, so to speak, more correct sense that I propose to deal, and not merely, though also, with questions involved in tariff restrictions upon imports.

Anglo-French Treaties as an Example.

Let us take our relations with France as an example of the different matters concerned.

When the negotiations for a new tariff treaty broke down in 1882, and the then existing period of prolongation of the old treaty of 1860 came to an end, France, with a spontaneity which she has never lacked in moments of great emergency, immediately passed an Act of Parliament granting the most favoured tariff to British commerce, and the day following, February 28th, 1882, a treaty of commerce and navigation was signed between the two countries regulating all matters except Customs duties. Under this treaty we enjoy as between the United Kingdom and France and Algeria in all other matters but Customs duties, the treatment of the most favoured nation, and thus no immunity, favour, or privilege in matters of trade or industry can be granted to the subjects or citizens of any other country, so long as this treaty remains in force, without British subjects have unconditionally the benefit of it. This treaty deals with all matters of transit, warehousing, patterns, samples, ships, cargoes, port dues, brokerage, Customs formalities, trade marks, merchandise marks, spurious imitations, temporary restrictions of import, export, or transit, arms and munitions of war, and the holding and disposal of property and legal rights generally. Since then, several of the matters mentioned in it have been more specifically regulated by international conventions entered into, not only between France and England, but by groups of States forming a Union on the model of the Postal Union. Instances of such conventions are the Industrial Property Union, created by a Convention concluded in Paris on March 20th, 1893, which gives the subjects and citizens of the contracting States, as regards patents, trade marks, designs, models, and trade names the same protection as native subjects and citizens, and certain rights of priority for registration in the contracting countries of claims registered in the native country; the Copyright Union, created by the Berne Convention of September 9th, 1886, which governs the trade in books and artistic productions of which the authorship can be proved; a Union formed by a Convention dated July 5th, 1890, for the prompt publication in English., French, German, Italian and Spanish of all Customs tariffs, and all modifications thereof; and the North Sea Fisheries Convention of May 6th, 1882, for the regulation of the police of the Fisheries in the North Sea outside territorial waters. All these affect our relations with France.

There is also a convention between Great Britain and France relative to Joint-Stock Companies, signed at Paris April 30th, 1862, by which Great Britain and France, "having judged it expedient to come to an understanding in order to define, within their respective dominions and possessions, the position of commercial, industrial, and financial companies and associations constituted and authorised in conformity with the laws in force in either of the two countries, grant to all companies and other associations, commercial, industrial, or financial, constituted and authorised in conformity with the laws in force in either of the two countries, the power of exercising all their rights."

Again, there are international arrangements affecting the trade of both countries, such as the Convention of October 29th, 1888, neutralising the Suez Canal; the West African General Convention of February 26th, 1885, providing for free trade in the basin of the Congo; and numerous other petty agreements affecting our common trade interests in all parts of the world.

Our Customs relations with France are governed, I have said, by a law promulgated on February 27th, 1882, the day before the signing of the treaty of commerce and navigation I have referred to. By this law it was declared that from its date goods of English origin or manufacture would be liable on their entry into France to the same treatment as those of the most favoured nation, with the exception of colonial produce, which, it was declared, would remain subject to the general Customs tariff. Since then, under an agreement relating to trade between France and Canada, the most favoured nation treatment has been granted to the latter in exchange for certain concessions in the Dominion tariff in respect of French produce.

This may be taken as a sample of the most imperfectly regulated international relations. The treaties and conventions between Great Britain and France are both ill-drawn and incomplete. They have grown up as occasion required, and should be overhauled and co-ordinated, and many things dealt with that are at present completely left out.

German-Austro-Hungarian Treaty.

Let us now take a specimen of a treaty of commerce of a highly-developed character, such as the German-Austro Hungarian Treaty of December 6th, 1891, amended and completed by the treaty of January 25th, 1905.

It deals with almost every conceivable item of the commercial relations of these two countries in well-drawn articles which leave little or no discretion to official busybodies to tamper with the provisions by way of construction or interpretation.

Briefly, the treaty may be summarised as follows:It begins with stating that the contracting Powers engage not to restrict mutual commercial intercourse, by prohibition of importation, exportation, or transit, in any articles except—(a) Tobacco, salt, gunpowder, and other explosives, or articles of State monopoly; (b) For hygienic reasons; (c) War materials in exceptional circumstances.

Then follow regulations as to the carriage of salt and saline products, the carriage of munitions of war, agricultural diseases, the Hall-marking of plate, and some other special matters. Article 2 provides that no more favourable conditions in respect of import, export, or transit duties shall be granted by either party to a third Power than are accorded to the other party; and that any concessions of this kind made to a third Power shall at once be applied to the other.

The exceptions are: (a) Concessions granted by either Power to a neighbouring State, to facilitate traffic in certain frontier districts and for the inhabitants of certain parts of the realm; (b) Any concessions granted by either Power in consequence of Customs Union. Barley, rags, etc., and the sugar convention are specially dealt with.

Article 3 relates to tariffs, excise and tariff regulations.

Article 4 provides that goods sent from either country in transit through the other shall be exempt from any transit dues, even though they have to be transhipped or stored en route.

Article 5: That to facilitate mutual traffic, the following goods, if properly identified, may pass free of duty both ways:—(a) Goods sent from either country to fairs or markets, or on the chance of sale in the other; also commercial travellers' samples, provided they are returned unsold within a predetermined time; (b) Cattle sent from either country to market in the other, and returned unsold.

Article 6 deals with frontier district traffic.

Under Article 7, to facilitate the Customs handling of goods, accompanied by waybills, the formalities of taking off the fastenings, replacing them by others, and unpacking the goods, on crossing the frontier, shall be discontinued provided the following requirements are fulfilled:—

(a) Goods presented for import and forwarding at the Customs station must be accompanied by a Customs certificate that they were placed under officia1 seal at the point of departure. (b) This seal must be found intact on examination. (c) The declaration must be made in writing and in such form as to obviate the necessity for examination on account of insufficiency; and everything must be done in such a manner as to preclude the suspicion of attempted evasion. If the seals are found intact, the unloading and re-weighing of the goods may be dispensed with.

Under Article 8, wherever possible, the neighbouring Customs houses on both sides of the frontier shall be moved, so that the formalities on crossing the frontier may be gone through simultaneously on both sides.

Article 9 forbids either Government to impose domestic taxes which shall bear more hardly on the similar products of the other country.

Article 10 grants mutual assistance in the detection and punishment of smuggling.

Under Article 11, ships belonging to either country and their cargoes receive the same treatment as those under the national Hag. Reciprocal recognition of measurement certificates is also provided for.

Article 12 provides that ships of either party, driven into ports of the other, through accident or need, shall be exempt from navigation or harbour dues, unless their stay is unduly prolonged or used for transacting business, and that sea-damaged or stranded goods discharged from ships of either Power shall, except for salvage dues, be exempt from dues levied by the other, unless they enter the country for consumption.

Article 13: That boats and their crews of either Power shall be granted the same facilities as those of native origin in the internal waterways of the other, and pay only the same dues on vessel and cargo.

Article 14 relates to equal frontier tolls, etc.

Article 15 forbids any discrimination in point of freight rates or despatching by the railways of either Power against the goods of the other conveyed in transit or otherwise.

Article 16 promises mutual assistance in the granting of through rates on passengers and goods as circumstances require.

Article 17 relates to other matters of international railway traffic.

Under Article 18, where direct railway connection across the frontier exists and the rolling stock can be transferred from one system to the other, goods in suitable closed trucks are to be exempt from examination at the frontier, on presentation of the waybill, and to be examined at the most convenient Customs station in the interior.

Article 19 secures the trading rights of individuals; merchants and other business men on their giving proof of payment of the trade taxes in their country of domicile, are exempt from similar dues when visiting the other country, personally or by their travellers, and accompanied by samples, for the purpose of buying or selling. Natives of either country entering the other in pursuit of their calling as supercargoes, or as masters or crews of vessels plying on river or sea, shall not be subject to any trading tax in the other country.

Joint-stock companies and other commercial, industrial, or financial associations, including insurance companies, domiciled in either country and established according to law, may pursue in the other country (in accordance with the conditions of the law of the land) their legal rights, especially as plaintiffs or defendants in lawsuits. How far such companies and associations may acquire real or other property in the other country is to be determined by the law of that country; and this also applies to permission to carry on business there. In any case they shall enjoy the same rights as any at present existing similar companies, subjects of any third Power.

Article 20 provides that, with regard to the exemption of consuls from taxation, it is mutually agreed that this shall apply only to professional consuls, not to subjects of the State wherein their functions are discharged;

And Article 21, that each Power will instruct its consuls abroad to protect and assist subjects of the other Power in places where the latter has no consular representative, in the same manner and on equally favourable terms as its own subjects.

Article 22 allows each Party the right of sending officials to visit the Customs stations and inspect the methods of doing business and watching the frontier, and reciprocal information is to be given as to the accountancy and statistics of both Customs services.

Lastly, Article 23 provides that any differences as to the interpretation or application of the tariffs or supplementary conditions concerning them, or the application of the most-favoured-nation clause, shall be referred to arbitration, if desired by either Party.

Germany has entered into similar treaties with Russia and Italy. In the case of Italy, further provision is made for an arrangement assimilating the conditions of employment of workmen migrating into the contracting parties' dominions.

Our Tariff Questions with France and Germany.

I have brought our own rather chaotic arrangements with France into juxtaposition with the systematic provisions of the German-Austro-Hungarian treaty to show how far-reaching a treaty of commerce may be made and how the tariff may only be one item in the variety of matters a treaty of commerce may deal with.

The tariff item, however, is a very big one and looms out in the subject of treaties of commerce, especially in general public interest, as involving, perhaps, the greatest economic problem of the age. It involves a series of alternatives beginning with Protection, pure and simple, and descending by Retaliation and Reciprocity and the most-favoured-nation treatment to Free Trade.

I do not propose to contrast and discuss the respective merits of these alternatives en bloc, but only incidentally to deal with them in reference to the three great countries—France, Germany and the United States—with which we do the bulk of our international business.

Our treaty relations with France I have already described. In 1877, when Sir Louis Mallet was in Paris negotiating the renewal of the Treaty of 1860, I followed, as then economic correspondent of the Times, the vicissitudes of the efforts made on both sides to bring about an understanding. There was no question that if at that time we had had a tariff, and been in a position to grant reductions, we should have been able to obtain reductions. Sir Louis Mallet was of this opinion, but I well remember his adding that the advantage we should have had from the point of view of negotiation would have entailed the sacrifice of a system under which this country had flourished, and that British statesmen of both parties considered the blessing of cheap food and clothing for the masses as out of all proportion of greater moment to the country as a whole, than reductions of duty in a foreign market which other countries had better means of negotiating than we. Events have shown the truth of this anticipation, and we have the full benefit of the lowest tariff her neighbours, with all their Customs house artillery, have been able to wrest from France.

Still, the position of being dependent upon an Act of Parliament for the application of the most-favoured-nation clause, is not satisfactory, and the sooner negotiations are opened with France for placing Anglo-French business on a more stable footing, the better it will be for the development of our trade. If negotiations should be opened up for this purpose under the Liberal Administration, it will be well to keep in mind that the tarii is not the only matter which requires to be placed on a more satisfactory footing.

Sometimes reference is made to a difficulty in connection with negotiations with France, viz.: that she has bound herself under Article 11 of the Treaty of May 10th, 1871, commonly known as the Treaty of Frankfort, to grant Germany the most-favoured-nation treatment in perpetuity. This was thought to be a great achievement on the part of M. Pouyer-Quertier, the great French protectionist, who never dreamt the day would come when it might clog the footsteps of his own country.

With Germany, as with France, we have depended since 1897, when the old Treaty of May, 30th, 1867, was denounced, on a revocable enactment, granting us the benefit of the most-favoured-nation treatment.

For two years back the German Government has been ready to enter into negotiations with this country for the conclusion of a new treaty. When I was in Berlin in February of last year I had opportunities of discussing Anglo-German commercial relations with many leading members of the Handelstag, as well as with the competent official authorities, and I found the ground was ripe for negotiations. Even if the work of getting a treaty with Germany involved the exchange of notes and memoranda on the scale of the 3,700 exchanged during the two and a half years of negotiation between Berlin and the capitals of the seven Powers with whom she has just signed treaties, the mere fact of meeting with the object of trying to remove the difficulties, which stand in the way of developing trade with each other, can do nothing but good, especially as we have no blunderbuss arguments to put forward and both sides would be forced to view the question in the light of reason and respect for each other's difficulties and interests.

Incidentally, I may say it is my experience that reason and honest, straightforward conduct in international relations always eventually come out victorious, just as the reasonable, straightforward, honest man in business is always eventually appreciated in his trade. A leading German man of business recently observed to me, "We would rather do business with an Englishman at a slight diminution of profit than with men of any other nation." I have heard the same thing said in France. Why? Because the Englishman is not a chicaneur: because he does not resort to tricks to get out of his bargain, if it does not suit him to go on with it: because he values his self-respect and his fair-mindedness as an asset in his business, and has confidence that they pay better in the long run than the shams and pretences and other poorspirited, hypocritical, unmanly methods of some of his competitors.

United States Tariff Policy.

Let us now examine our relations with the United States of America, which are in sore need of treaty regulation.

The Dingley Tariff Act, it will be remembered, was passed at an extraordinary session called by President McKinley, in March, 1897. It is entitled "An Act to Provide Revenue for the Government and to Encourage the Industries of the United States." It contained a clause, "That for the purpose of equalising the trade of the United States with foreign countries and their colonies producing and exporting to this country" (i.e., the U.S.A.) "in respect of the following articles:—Argols or crude tartar or wine lees, crude; brandies or other spirits manufactured or distilled from grain or other materials; champagne or other sparkling wines; still wines and vermouth; paintings and statuary; or any of them, the President be and he is hereby authorised, as soon as may be, after the passage of this Act and from time to time thereafter, to enter into negotiations with the Governments of those countries exporting to the United States the above-mentioned articles or any of them, with a view to the arrangement of commercial agreements, in which reciprocal and equivalent concessions may be secured in favour of the products and manufactures of the United States; and wherever the Government of any country or colony, producing and exporting to the United States the above-mentioned articles, or any of them, shall enter into a commercial agreement with the United States or make concessions in favour of the products or manufactures thereof, which, in the judgment of the President, shall be reciprocal and equivalent, he shall be and he is hereby authorised and empowered to suspend during the time of such agreement or concession, by proclamation to that effect, the imposition and collection of the duties mentioned in the Act, on such article or articles so exported to the United States from such country or colony and thereupon and thereafter the duties levied, collected, and paid upon such article or articles shall be as follows:—"Then follow duties reduced on an average by 20 to 25 per cent.

On the other hand, a clause, relating to coffee, tea, and tonquin, tonqua, or tonka beans and vanilla beans, allowed free entry under the tariff, gave the President power to suspend this free 'entry and levy certain duties, where the country exporting these products to the United States, imposed duties or other exactions upon the agricultural, manufactured, or other products of the United States.

Lastly, power was given to the President to levy extra. duty on any bounty-fed products exported to the United States.

Also, under the Tariff of 1890, certain articles, raw sugar, molasses, coffee, tea and hides were made duty free, but the President was authorised to suspend the freedom of entry as against any countries which imposed unreasonable duties on American products.

On these provisions is based the now time-honoured American interpretation of the most-favoured-nation clause which is, that it is not applicable to reciprocity treaties. Thus, when the United States grants concessions to another State in return for compensating concessions, the United States Government holds that a third State is only entitled to obtain extension of the concessions to itself by granting similar concessions. In other words, concessions granted to any co-contracting State are only allowed gratuitously to third parties, when nothing is given for them; the clause does not cover any advantages granted in return for advantages.

In a despatch of July 17th, 1886, to the American Minister in China, Mr. Bayard explained the American view in the following terms:—

"In its commercial aspects the expediency of an unqualified favoured-nation clause is questionable. The tendency is towards its formal qualification, by recognising in terms what most nations hold in fact and in practice, whether the condition be expressed in the clause or not, that propinquity and neighbourliness may create special and peculiar terms of intercourse not equally open to all the world; or by providing that the most-favoured treatment, when based on special or reciprocal concessions, is only to be extended to other Powers on like conditions."^[1]

This is still the United States view as is set out in a luminous article in the November (1905) number of the North American Review, on the "Alternative of Reciprocity Treaties, or a Double Tariff," by Mr. John Osborne, chief of the Bureau of Trade Relations, State Department, and late Secretary of the Reciprocity Commission, a gentleman eminently competent to describe the contemporary American standpoint. Mr. Osborne maintains that "it is evident that the gratuitous extension to third Powers of commercial advantages exchanged in reciprocity between two countries, is absolutely inconsistent with the true principles of reciprocity, as understood in the United States; it would not only seriously impair and even tend to destroy the value of the original grant, but it would also involve duty reductions upon the entirety, or, at least the bulk, of importation: from the world, of the articles of merchandise affected, thus constituting a serious sacrifice in national revenues."

"If this policy," he goes on, "were adopted by our Government, it would, to be sure, simplify the reciprocity question, but the internal economic effects would be practically the same as if Congress were to revise and reduce the tariff, the only difference being that our foreign trade interests would be benefited by the employment of diplomacy, whereas simple tariff revision would ensure no immediate betterment in that respect. It will be perceived, therefore, that the American interpretation of the most-favoured-nation clause is essential to American prosperity.'

The result of the American interpretation of the clause is that each tariff has to be dealt with and applied separately. An article is taxed in as many different ways as there are contracting countries; an independent tariff is applicable to every taxed article according to its place of origin. Mr. Osborne, however, observes in his article, "These considerations make American reciprocity negotiations unusually difficult, but by no means impossible." He does not examine the difficulties of application. At the same time, he seems to foreshadow some attempt at change in the United States tariff policy when he writes: "If Congress were to establish a scale of maximum duties by a horizontal increase of the present rates, to the extent of, say, 20 per cent., such maximum tariff could be applied to those countries which wilfully discriminate against the United States, while the regular tariff could be applied to all other countries, and, at the same time, be used, as occasion should arise as the basis of special reductions of duty through the medium of reciprocity." The three countries which discriminate at present against the United States are France, Spain and Switzerland.

This is very significant, meaning apparently that in United States Government circles there is a leaning to the French system of a double tariff.

Now, this very French system was provoked into existence, so to speak, by the United States Tariff of 1890. Under the regime of M. Meline, the organizer of protection in France, the new general tariff, a very high, almost prohibitive, one, was to be applied wherever not reduced by treaty. The conventional one is composed of the minimum duties which have been granted to any nation; it applies to all who have the benefit of the most-favoured nation treatment. I may mention that the differences between the general and the minimum tariff range from about 50 to 70 per cent. The coercion of the United States was in the first instance the motive of the French tariff reformers. Now, the Americans are likely to adopt the same method against France. The method it is seen seems very far from smoothing the way to reductions of tariff! This brings us, in fact, to retaliation as a method generally.

The Retaliation Method.

I do not think I am wrong in saying that there is not a solitary instance of retaliatory tariffs in our time ever having led to a serious reduction of duties. On the contrary, I only see one result, viz., that States retaliate against retaliators by ever-higher and farther-reaching duties; that they thereby more and more cripple their own industries, because there is hardly any article that is not the raw material of some other industry; that they promote great industrial trusts to the detriment of that free competition which is the very sap and nerve of healthy industrial development; that they artificially increase the cost of the necessaries of life, which, with the growth of democratic power, influence and demand for a fuller share of the good things of this life, can only become a cause of popular discontent, of strikes and combinations for higher and higher wages, of industrial failures, financial crises, an overwhelming increase of the unemployed, even revolution. This is no overdrawn picture. Read the only history of the French Revolution, based on unassailable facts, Taine's Origines, and you will see how tampering with the economics of Nature works out; how quackery breeds quackery, till the whole body politic is so weakened and undermined by "remedies" that when the shock comes, it crumbles, as the old regimé crumbled.

One of the chief difficulties in the way of making retaliatory tariffs effective for the purposes of negotiation with other States is that a duty cannot be reduced after it has been in operation for any time without injuring the trades wich have come to rely on it. They thus obviously either introduce into the commercial policy an element of instability or are without effect for the purpose for which they are instituted.

Our Food Supplies.

We are frequently reminded of the higher national necessity of fostering our agricultural industries and making this country less dependent on supplies from overseas.

Germany has just dealt with this question; but she is in a different position from us as regards her food supplies. She would have to depend on her territorial neighbours, if her American supply were cut off, as it probably could be even by France. To make Germany, in the main at least, self-dependent for the elementary food of her rapidly-increasing population is a matter of the deepest import to her statesmen; but it is a matter for them, not us. 'On the other hand, we hear often enough that our stupendous Navy is indispensable for the assurance and protection of our food supply. No doubt it is; but if one of the advantages of duties on wheat and meat would be to increase the production of both at home, it would be interesting to know if these taxes on the food of this country would save us any expenditure on battleships. I have never heard it suggested that it might. There are other reasons, however, connected with the question of taxing food and thereby increasing the cost of production in our own industries which bring me to a great new departure and method which, like many other great departures and methods, has originated in Manchester.

A New Departure.

Practical business men must often remark the tendency among politicians to attempt solutions of economic problems en bloc: to find a remedy of general application instead of trying to itemise the difficulties and deal with each item separately. Surplus stocks of goods no doubt do End their way to the British markets and force down prices of home-made goods of the same quality. On account of this circumstance in connection with certain trades, an inconstant circumstance, a remedy is proposed which would apply to all our trades alike and be constant. It is easier to argue on generalities than, as Mr. Macara has done with regard to the cotton industries, to go to the roots and foundations of a question.

Cotton Spinners' Association.

The following passage of his report of the joint conference of the "Cotton Employers' Parliamentary Association" and the principal officials of the "United Textile Factory Workers' Association," held in Manchester, on July 21st, 1903, points the way in which such questions require to be handled for any useful and effective purpose:—

"Protective tariffs," he said, "are only one form of legislation. The legal hours for running machinery in one country differ very widely from those of another country, and this plays an important part in our international competition. The rate of wages paid, cost of living, climatic conditions, etc., are also important factors that have to be reckoned with. Broadly, however, it may, I think, be taken that intelligent and fostering legislation, harmonious relationship between capital and labour, enterprise to secure a plentiful supply of raw material, energy, ability, and skill on the part of both employers and work-people, and economy in the cost of production, are the main factors that will enable us to continue to secure a fair share of the world's trade in cotton goods. I venture to express the opinion, at all events, that these conditions form the most secure basis any great industry could rest upon, which is dependent upon for foreign trade for 80 per cent. of its employment. The moderate return on the capital invested in the British cotton industry presents (except in small special sections) the greatest source of danger, as there is only a narrow margin between prosperity and adversity; but this applies to most staple industries, and what is applicable to our staple industries is equally so to those of our foreign rivals. This renders it all the more necessary that any change in our fiscal policy which might place us at a. disadvantage with our foreign competitors should be strenuously resisted. The conditions, taken as a whole, under which the labouring classes in the British cotton industry now live are, I think, generally conceded to be superior to those existing in any other country of the world. But there are distinct evidences in various directions that the workers in the cotton industry in other countries are wakening up to the advantages of more perfect combination and shortening the hours of labour and improving the conditions under which their work is carried on. This movement, I am of opinion, is likely to develop rapidly in the near future, and will remove one of the advantages which the foreign capitalists engaged in this industry have enjoyed in the past. I have endeavoured to show that there is only a narrow margin between prosperity and adversity in the cotton industry—how numerous are the processes through which cotton has to pass—how each process depends on the other—what a large amount of labour is involved—and how many interests there are dependent on it. I think there can be little doubt that the increased cost of production would render it impossible for us, in face of the existing severe competition, to continue to secure the large share of the world's trade in cotton goods which we have at present, and would thus bring ruin upon an industry which supplies the means of livelihood for millions, and in which millions more are indirectly interested."

What Mr. Macara says of the cotton industry of this country, so far as I have been able to ascertain, applies to practically all British industries, and this, at any rate in large part, explains that in spite of shorter hours of labour, higher wages, a higher general standard of comfort, we can still wrestle favourably with protected competitors in most of the markets of the world.

A Wider Lesson.

There is another and wider lesson to be learnt from the Master Cotton Spinners and Manufacturers' Association. It is the advantage of an understanding among the interested parties in different countries. Instead of applying for State-aid, this Association, under the energetic guidance of Mr. Macara have made a new departure in economic history by going straight to their competitors across seas. A beginning has been made in the formation and periodical meetings of an International Committee for the examination and consideration of their common as well as respective interests, which can only lead to a widening of the scope of international understandings. What Mr. Macara, in the passage I have quoted from his report, said of the interdependence of our different home industries will necessarily be found to exist among the industries engaged in international commerce, and we may, in the not-distant future, see the industries of different nations arranging their affairs in a spirit of peace and amity as nations as a whole have begun to do. They may do so by international private cartels or by international treaties. They may have their own courts of arbitration, or be referred, under the arbitration clause it is now universal to insert in treaties of commerce, to the Hague Court. Whichever way it will be done, a new era is looming into view in which international commercial understandings, call them what we may, are likely to regulate interests of employer and employed, of producer, manufacturer and consumer, and perhaps even of State and citizen, and take the place of State remedies. If so, protection and retaliation may disappear out of the political pharmacy as mere products of past ignorance, laziness and greed.

Other Private Efforts.

In the same order of ideas, societies exist in France and in Germany for the promotion of the international interests of French and German trades. The Federation des Industries et des commercants francais is an especially vigorous body which publishes a monthly bulletin recording the progress of its useful activity. In Germany the Handels-Vertragsverein (Commercial Treaties' Association) follows more or less the example of the French society. In conjunction with it, recently, I was successful at the Liege Congress of the Chambers of Commerce of Europe, in getting a committee formed for the organization of such congresses at regular intervals. At these congresses common international interests will be discussed and the basis laid of treaty regulations which will help forward the business of the exchange of goods between nations, for all nations wish to do business with their neighbours and must sell and make a profit before they can buy.

Technical and Commercial Education.

May I suggest that we ought to examine our methods and compare them with those of foreign nations. Let us see what France and Germany and the United States are doing to improve their human machinery, which is a far more important matter than even the tools it uses, and is infinitely more important than any theoretical experiments with Customs duties. If we are lagging behind, it is distinctly in the education of those on whose efficiency as producers and distributors our prosperity is dependent. We must aim more at suppleness than memory in our education, more at reasoning than knowledge, more at self-dependence than books, more at skilful fingers, accurate eyes and quick mental calculation than the elementary smatterings prescribed by wholesale syllabuses—an education adapted to local wants, but especially adapted to produce first-class skilled workmen, as in France and Germany and the United States to which we are losing for want of them, many of our skilled industries.

Then we want facilities for the study of foreign languages and foreign countries, of foreign markets and their needs, men of technical knowledge and ability like the German commercial traveller. But all this is beyond the scope of this lecture, however useful it may be to discuss it, and though I am lecturing under the auspices of a faculty which is doing admirable work in this very direction.

A Ministry of Commerce.

Do we not also need a special department whose mission shall be to watch over the interests abroad of our trade treated as a national interest—a department at which all its details shall be centralized—a department directed by competent men, trained in the methods of business men who shall be selected for knowledge, acquired by study on the spot, of our business relations in every market of the world—masters of the technical language of our own time and of the language of the countries they will be called upon to deal with—a chosen body of energetic, well-paid men whose reputation will rest solely on the admirable work they do for their country.

Let technical and commercial education be understood to be an essential branch of the work of developing the resources and forces of British industry, and be connected with this department.

Let our commercial department be in constant and daily touch with the trade interests of the country, be accessible to every man, as in the United States and our colonies, and accessible to workingmen as well as to employers.

Peace and Goodwill among Nations.

In fact we must always have before our mind's eye that there is a common national interest which is the resultant of the resultants of our individual, class and industrial interests. We shall infallibly find that that resultant is in favour of law and order and peace and goodwill in our relations with other nations, for what is true of the individual in private life and of the community in municipal life, can only be true of the nation in international life. The way by which that law and order and peace and amity can be obtained is by making friends with our neighbours and discussing our respective interests with them in that spirit of mutual understanding of each other's wants, which is the basis on which enduring friendship must always rest, whether the relations we are cultivating are local, national, colonial, or with foreign nations.

1. See Wharton's Digest of the International Law of the United States, sec. 134.