Essays in Liberalism

The pre-war tariffist argued, when he dealt with the problem, that tariffs would suffice at will to keep out manufactured goods and let in only raw material. To that the answer was simple. An unbroken conversion of the whole yield of exports and freight returns and interest on foreign investments into imported raw material to be wholly converted into new products, mainly for export, was something utterly beyond the possibilities. It would mean a rate of expansion of exports never attained and not only not attainable but not desirable. On such a footing, the producing and exporting country would never concretely taste of its profit, which is to be realised, if at all, only in consumption of imported goods and foods. It is no less plainly impossible to discriminate by classes between kinds of manufactured imports on the plea that inequality in the exchanges gives the foreign competitor an advantage in terms of the relatively lower wage-rate paid by him while his currency value is falling. Any such advantage, in the terms of the case, must be held to accrue to all forms of production alike, and cannot possibly be claimed to accrue in the manufacture of one thing as compared with another, as fabric gloves in comparison with gold leaf. In a word, the refusal of protection to gold leaf is an admission that the argument from inequality of currency exchanges counts for nothing in the operation of the Safeguarding of Industries Bill. In the case of any other import, then, the argument falls.

Members One of Another

But that is not all. The case of Russia alone has brought home to all capable of realising an economic truth the fact that the economic collapse of any large mass of population which had in the past entered into the totality of international trade is a condition of proportional impoverishment to all the others concerned. He who sees this as to Russia cannot conceivably miss seeing it as to Germany; even tariffist hallucinations about a “losing trade” under German tariffs cannot shut out the fact that our trade with Russia and the United States was carried on under still higher hostile tariffs. The unalterable fact remains that industrial prosperity rises and falls in the measure of the total mass of goods handled; and men who realise the responsibility of all Governments for the material wellbeing of their populations can come to only one conclusion. Trade must be facilitated all round for our own sake.

Once more we come in sight of the truth that the industrial health of every trading country depends on the industrial health of the rest—a Free Trade truth that is perceptibly of more vital importance now than ever before. It is in the exchange of commodities, and the extension of consumption where that is required on a large scale, that the prosperity of the industrial nations consists. And to say that, is to say that until the trade exchanges of the world in general return to something like the old footing, there cannot be a return of the old degree of industrial wellbeing. Not that industrial wellbeing is to be secured by the sole means of industrial re-expansion: the question of the need of restriction of rate of increase of population is now being more and more widely recognised as vital. But the present argument is limited to the fiscal issue; and it must suffice merely to indicate the other as being of the highest concurrent importance.

Adhering, then, to the fiscal issue, we reach the position that, just as foreign trade has been a main source of British wealth in the past, and particularly in the Free Trade era, the wealth consumed in the war is recoverable only on the same lines. It is not merely that British shipping—at present so lamentably paralysed and denuded of earning power—cannot be restored to prosperity without a large resumption of international exchanges: a large proportion of industrial employment unalterably depends upon that resumption. And it is wholly impossible to return to pre-war levels of employment by any plan of penalising imports.

The Dyestuffs Act

How then does the persistent Free Trader relate to the special case of the “key industry,” of which we heard so much during the war, and hear so little to-day? I have said that the question of maintaining any given industry on the score that it is essential for the production of war material is a matter of military administration, and not properly a matter of fiscal policy at all. But the plea, we know, has been made the ground of a fiscal proceeding by the present Government, inasmuch as the special measure known as the Dyestuffs (Import Regulation) Act of 1920 forbids for ten years the importation of dyestuffs into this country except under licence of the Board of Trade. Dyestuffs include, by definition, all the coal-tar dyes, colours, and colouring matter, and all organic intermediate products used in the manufacture of these—the last category including a large number of chemicals such as formaldehyde, formic acid, acetic acid, and methyl alcohol. The argument is, in sum, that all this protective control is necessary to keep on foot, on a large scale, an industry which in time of war has been proved essential for the production of highly important munitions.

What has actually happened under this Act I confess I am unable to tell. Weeks ago I wrote to the President of the Board of Trade asking if, without inconvenience, he could favour me with a general account of what had been done in the matter of issuing licences, and my letter was promised attention, but up to the moment of delivering this address I have had no further reply. I can only, then, discuss the proposed policy on its theoretic merits.1 The theoretic issues are fairly clear. Either the licensing power of the Board of Trade has been used to exclude competitive imports or it has not. If it has been so used, it is obvious that we have no security whatever for the maintenance of the industry in question in a state of efficiency. In the terms of the case, it is enabled to persist in the use of plant and of methods which may be inferior to those used in the countries whose competition has been excluded. Then the very object posited as the justification for the Act, the securing of a thoroughly efficient key industry necessary to the production of munitions, is not attained by the fiscal device under notice. If, on the other hand, there has been no barring of imports under the licence system, the abstention from use of it is an admission that it was either unnecessary or injurious or was felt to be useless for its purpose.

And the common-sense verdict on the whole matter is that if continuous and vigilant research and experiment in the chemistry of dye-making is held to be essential to the national safety, the proper course is for the Government to establish and maintain a department or arsenal for such research and experiment, unhampered by commercial exigencies. Such an institution may or may not be well managed. But a dividend-earning company, necessarily concerned first and last with dividend earning, and at the same time protected against foreign competition in the sale of its products, cannot be for the purpose in question well managed, being expressly enabled and encouraged to persist in out-of-date practices.

This being so, the whole argument for protection of key industries goes by the board. It has been abandoned as to agriculture, surely the most typical key industry of all; and it has never even been put forward in regard to shipbuilding, the next in order of importance. For the building of ships of war the Government has its own dockyards: let it have its own chemical works, if that be proved to be necessary. Protection cannot avail. If the Dyestuffs Act is put in operation so as to exclude the competition of foreign chemicals, it not only keeps our chemists in ignorance of the developments of the industry abroad: it raises the prices of dyestuffs against the dye-using industries at home, and thereby handicaps them dangerously in their never-ending competition with the foreign industries, German and other, which offer the same goods in foreign markets.

The really fatal competition is never that of goods produced at low wages-cost. It is that of superior goods; and if foreign textiles have the aid of better dyes than are available to our manufacturers our industry will be wounded incurably. It appears in fact to be the superior quality of German fabric gloves, and not their cheapness, that has hitherto defeated the competition of the native product. To protect inferior production is simply the road to ruin for a British industry. Delicacy in dyes, in the pre-war days, gave certain French woollen goods an advantage over ours in our own markets; yet we maintained our vast superiority in exports by the free use of all the dyes available. Let protection operate all round, and our foreign markets will be closed to us by our own political folly. Textiles which are neither well-dyed nor cheap will be unsaleable against better goods.

The Paris Resolutions

It is of a piece with that prodigy of self-contradiction that, when the Liberal leaders in the House of Commons expose the absurdity of professing to rectify the German exchanges by keeping out German fabric gloves, a tariffist leader replies by arguing that the Paris Resolutions of the first Coalition Government, under Mr. Asquith, conceded the necessity of protecting home industries against unfair competition. Men who are normally good debaters seem, when they are fighting for a tariff, to lose all sense of the nature of argument. As has been repeatedly and unanswerably shown by my right hon. friend the Chairman, the Paris Resolutions were expressly framed to guard against a state of things which has never supervened—a state of things then conceived as possible after a war without a victory, but wholly excluded by the actual course of the war. And those Resolutions, all the same, expressly provided that each consenting State should remain free to act on them upon the lines of its established fiscal system, Britain being thus left untrammelled as to its Free Trade policy.

Having regard to the whole history, Free Traders are entitled to say that the attempt of tariffists to cite the Paris Resolutions in support of the pitiful policy of taxing imports of German fabric gloves, or the rest of the ridiculous “litter of mice” that has thus far been yielded by the Safeguarding of Industries Act, is the crowning proof at once of the insincerity and ineptitude of tariffism where it has a free hand, and of the adamantine strength of the Free Trade case. If any further illustration were needed, it is supplied by the other tariffist procedure in regard to the promise made five years ago to Canada that she, with the other Dominions, should have a relative preference in our markets for her products. In so far as that plan involved an advantage to our own Dominions over the Allies who, equally with them, bore with us the heat and burden of the war, it was as impolitic as it was unjust, and as unflattering as it was impolitic, inasmuch as it assumed that the Dominions wanted a “tip” as a reward for their splendid comradeship.

As it turns out, the one concession that Canada really wanted was the removal of the invidious embargo on Canadian store cattle in our ports. And whereas a promise to that effect was actually given by the tariffist Coalition during the war, it is only after five years that the promise is about to be reluctantly fulfilled. It was a promise, be it observed, of free importation, and it is fulfilled only out of very shame. It may be surmised, indeed, that the point of the possible lifting of the Canadian embargo was used during the negotiations with Ireland to bring the Sister State to terms; and that its removal may lead to new trouble in that direction. But that is another story, with which Free Traders are not concerned. Their withers are unwrung.

Science and Experience

On the total survey, then, the case for Free Trade is not only unshaken, it is stronger than ever before, were it only because many of the enemy have visibly lost faith in their own cause. The Coalition, in which professed Liberals were prepared to sacrifice something of Free Trade to colleagues who were pledged in the past to destroy it, has quailed before the insuperable practical difficulties which arise the moment the scheme of destruction is sought to be framed.

All that has resulted, after four and a half years, is a puerile tinkering with three or four small industries—a tinkering that is on the face of it open to suspicion of political corruption. To intelligent Free Traders there is nothing in it all that can give the faintest surprise. They knew their ground. The doctrine of Free Trade is science, or it is nothing. It is not a passing cry of faction, or a survival of prejudice, but the unshakable inference of a hundred years of economic experience verifying the economic science on which the great experiment was founded.

On the other hand, let me say, the tactic of tinkering with Free Trade under a system of special committees who make decisions that only the House of Commons should ever be able to make, is a “felon blow” at self-government. It puts national affairs under the control of cliques, amenable to the pressures of private interests. Millions of men and women are thus taxable in respect of their living-costs at the caprice of handfuls of men appointed to do for a shifty Government what it is afraid to do for itself. It is a vain thing to have secured by statute that the House of Commons shall be the sole authority in matters of taxation, if the House of Commons basely delegates its powers to unrepresentative men. Here, as so often in the past, the Free Trade issue lies at the heart of sound democratic politics; and if the nation does not save its liberties in the next election it will pay the price in corrupted politics no less than in ruined trade.

INDIA

By Sir Hamilton Grant

K.C.S.I., K.C.I.E.; Chief Commissioner, North-West Frontier Province, India; Deputy Commissioner of various Frontier districts; Secretary to Frontier Administration; Foreign Secretary, 1914-19; negotiated Peace Treaty with Afghanistan, 1919.

Sir Hamilton Grant said:—I have been asked to address you on the subject of India, that vast, heterogeneous continent, with its varied races, its Babel of languages, its contending creeds. There are many directions in which one might approach so immense a topic, presenting, as it does, all manner of problems, historical, ethnological, linguistic, scientific, political, economic, and strategic. I do not propose, however, to attempt to give you any general survey of those questions, or to offer you in tabloid form a resumé of the matters that concern the government of India. I propose to confine my remarks to two main questions which appear to be of paramount importance at the present time, and which, I believe, will be of interest to those here present to-day, namely, the problems of the North-West Frontier, and the question of internal political unrest.

Let me deal first with the North-West Frontier. As very few schoolboys know, we have here a dual boundary—an inner and an outer line. The inner line is the boundary of the settled districts of the North-West Frontier Province, the boundary, in fact, of British India proper, and is known as the Administrative border. The outer line is the boundary between the Indian Empire and Afghanistan, and is commonly known as the Durand line, because it was settled by Sir Mortimer Durand and his mission in 1895 with the old Amir Abdur Rahman. These two lines give us three tracts to be dealt with—first, the tract inside the inner line, the settled districts of the North-West Frontier Province, inhabited for the most part by sturdy and somewhat turbulent Pathans; second, the tract between the two lines, that welter of mountains where dwell the hardy brigand hillmen: the tribes of the Black Mountain, of Swat and Bajur, the Mohmands, the Afridis, the Orakzais, the Wazirs, the Mahsuds, and a host of others, whose names from time to time become familiar according as the outrageousness of their misconduct necessitates military operations; third, the country beyond the outer line, “the God-granted kingdom of Afghanistan and its dependencies.”

Now each of these tracts presents its own peculiar problems, though all are intimately inter-connected and react one on the other. In the settled districts we are confronted with the task of maintaining law and order among a backward but very virile people, prone to violence and impregnated with strange but binding ideas of honour, for the most part at variance with the dictates of the Indian Penal Code. For this reason there exists a special law called the Frontier Crimes Regulation, a most valuable enactment enabling us to deal with cases through local Councils of Elders, with the task of providing them with education, medical relief etc., in accordance with their peculiar needs, and above all with the task of affording them protection from the raids and forays of their neighbours from the tribal hills. In the tribal area we are faced with the task of controlling the wild tribesmen. This control varies from practically direct administration as in the Lower Swat and Kurram valleys to the most shadowy political influence, as in the remote highlands of Upper Swat and the Dir Kohistan, where the foot of white man has seldom trod. Our general policy, however, with the tribes is to leave them independent in their internal affairs, so long as they respect British territory and certain sacrosanct tracts beyond the border, such as the Khyber road, the Kurram, and the Tochi. The problem is difficult, because when hardy and well-armed hereditary robbers live in inaccessible mountains which cannot support the inhabitants, overlooking fat plains, the temptation to raid is obviously considerable: and when this inclination to raid is reinforced by fanatical religion, there must be an ever-present likelihood of trouble.

Frontier Raids

Few people here in England reading of raids on the North-West Frontier in India realise the full horror of these outrages. What generally happens is that in the small hours of the morning, a wretched village is suddenly assailed by a gang of perhaps 50, perhaps 200, well-armed raiders, who put out sentries, picket the approaches, and conduct the operation on the most skilful lines. The houses of the wealthiest men are attacked and looted; probably several villagers are brutally murdered—and probably one or two unhappy youths or women are carried off to be held up to ransom. Sometimes the raid is on a larger scale, sometimes it is little more than an armed dacoity. But there is nearly always a tale of death and damage. Not infrequently, however, our troops, our militia, our frontier constabulary, our armed police, or the village chigha or hue-and-cry party are successful in repelling and destroying the raiders. Our officers are untiring in their vigilance, and not infrequently the district officers and the officers of their civil forces are out three or four nights a week after raiding gangs. Statistics in such matters are often misleading and generally dull, but it may be of interest to state that from the 1st April, 1920, to the 31st March, 1921, when the tribal ebullition consequent on the third Afghan war had begun to die down, there were in the settled districts of the North-West Frontier Province 391 raids in which 153 British subjects were killed and 157 wounded, in which 310 British subjects were kidnapped and some £20,000 of property looted. These raids are often led by outlaws from British territory; but each tribe is responsible for what emanates from or passes through its limits—and when the bill against a tribe has mounted up beyond the possibility of settlement, there is nothing for it but punitive military operations. Hence the large number of military expeditions that have taken place on this border within the last half century.

Now this brings us to the question so often asked by the advocates of what is called the Forward policy: “If the tribes give so much trouble, why not go in and conquer them once and for all and occupy the country up to the Durand line?” It sounds an attractive solution, and it has frequently been urged on paper by expert soldiers. But the truth is that to advance our frontier only means advancing the seat of trouble, and that the occupation of tribal territory by force is a much more formidable undertaking than it sounds. We have at this moment before us a striking proof of the immense difficulty and expense of attempting to tame and occupy even a comparatively small tract of tribal territory in the Waziristan operations. Those operations have been going on for two and a half years. At the start there were ample troops, ample equipment, and no financial stringency. The operations were conducted, if a layman may say so, with skill and determination, and our troops fought gallantly. But what is the upshot? We managed to advance into the heart of the Mahsud country on a single line, subjected and still subject to incessant attacks by the enemy; but we are very little nearer effective occupation than when we started; and now financial stringency has necessitated a material alteration in the whole programme, and we are reverting more or less to the methods whereby we have always controlled the tribes, namely, tribal levies or khassadars belonging to the tribe itself, frontier militia or other armed civil force, backed by troops behind.

Frontier Policy

And for my own part I believe this is the best solution. We must not expect a millennium on the North-West Frontier. The tribal lion will not lie down beside the district lamb in our time, and we must deal with the problem as best we can in accordance with our means, and to this end my views are briefly as follows:—

(1) We should do everything possible to provide the younger trans-border tribesmen with all honourable employment for which they are suited: service in the army, in the frontier civil forces, and in the Indian police or similar forces overseas, and we should give labour and contracts as far as possible to tribesmen for public works in their vicinity. For the problem is largely economic. Unless the lion gets other food he is bound to cast hungry eyes on the lamb.

(2) We should do all that is possible to establish friendly relations with the tribal elders through selected and sympathetic political officers, to give them, by means of subsidies for service, an interest in controlling the hot-bloods of their tribe, and, where possible, to give them assistance in education and enlightenment. We must remember that we have duties to the tribes as well as rights against them.

(3) We should extend the khassadar or levy system; that is, we should pay for tribal corps to police their own borders, arming themselves and providing their own ammunition and equipment. In this way we give honourable employment and secure an effective safeguard against raiders without pouring more arms into tribal territory.

(4) We must have efficient irregular civil forces, militia, frontier constabulary, and police, well paid and contented.

(5) We should revert to the old system of a separate frontier force in the army, specially trained in the work of guarding the marches. Those who remember the magnificent old Punjab frontier force will agree with me in deploring its abolition in pursuance of a scheme of army reorganisation.

(6) We should improve communications, telephones, telegraphs, and lateral M.T. roads.

(7) We should give liberal rewards for the interception and destruction of raiding gangs, and the rounding up of villages from which raids emanate.

(8) We should admit that the Amir of Afghanistani for religious reasons exercises a paramount influence over our tribes, and we should get him to use that influence for the maintenance of peace on our common border. It has been the practise of our statesmen to adopt the attitude that because the Amir was by treaty precluded from interfering with our tribes, therefore he must have nothing to do with them. This is a short-sighted view. We found during the Great War the late Amir’s influence, particularly over the Mahsuds, of the greatest value, when he agreed to use it on our behalf.

(9) Finally, there is a suggestion afoot that the settled districts of the North-West Frontier Province should be re-amalgamated with the Punjab. I have shown, I think, clearly, how inseparable are the problems of the districts, the tribal area, and of Afghanistan; and any attempt to place the districts under a separate control could only mean friction, inefficiency, and disaster. The proposal is, indeed, little short of administrative lunacy. There is, however, an underlying method in the madness that has formulated it, namely, the self-interest of a clever minority, which I need not now dissect. I trust that if this proposal should go further it will be stoutly resisted.