Unseen Hand in British History - Ian D. Colvin




XVII. Two Cases in Point

In the time of Elizabeth, Hakluyt remarked on the great advantage which falling rivers gave to the woolen manufacture of England. They furnished the power for the "walk mills" for the dressing and fulling of English cloth. One invention begets another. Early in the eighteenth century we hear of marvelous machines being used in England for silk spinning, and the spinning both of wool and cotton was accelerated almost infinitely by the use of the jenny. Arkwright set up a spinning-mill with horse-power at Nottingham in 1771, and a little later used water-power for the same purpose in his mill at Cromford in Derbyshire. Crompton's watermule was invented in 1775. "Through these changes," says Dr. Cunningham, "the carding, roving, and spinning of cotton were no longer continued as cottage employments, and weaving was the only part of the manufacture which was not concentrated in factories."

Water-power was followed by steam at Nottingham in 1785 and at Manchester in 1789; by 1784 there was a "factory problem." Although the weaving of the cotton was not done by machinery until the beginning of the nineteenth century, machine-spun yarn gave England a great advantage thirty years before. In 1771-1775 the annual importation of cotton-wool was 4,764,000 Ib.; in 1776-1780, 6,706,000; in 1781-1785, 10,941,000, and in 1786-1790, 25,443,000.

This great cotton industry had been founded not upon Free Trade but upon Prohibition. By a series of statutes from the beginning of the eighteenth century the British Government had prohibited the importation of cotton goods and printed calicoes from India, except for re-export. As Manchester is no longer Free Trade, it is unnecessary to remind her that her industry was founded upon Protection.

In the woolen trade the spinning- jenny came in, rather slowly, about 1785; but, as we have seen, fulling-mills had long been in use, and the growth of the industry was limited only by the supply of raw material.

In the hardware trades the expansion was even more remarkable. England led the way in applying coal to the smelting of iron, and so obtained an advantage over the rest of Europe.

English industry, secure in its home market and world-empire, protected by tariffs and navigation laws and a Government closely in touch with its interests, commanding a great store of raw materials, had expanded in every direction until it supplied almost the whole world. Its only rival was the industry of France, and towards the end of the eighteenth century the English manufacturer realized that he could now produce more cheaply than his French competitor in almost every manufacture except silk. In that industry alone the French command of the raw material gave France the advantage. In everything else the almost prohibitive duties of the French Customs were barely sufficient to keep out the flood of English manufactures.

Unfortunately for France the statesmen of Louis XVI had embraced with enthusiasm the teaching of Quesnay and his brother economists. They believed that agriculture was the only indispensable industry, and were prepared to sacrifice manufactures on the altar of physiocracy. An opportunity was offered for an experiment in these glorious principles by the Treaty of Peace of 1783, which provided for a Treaty of Commerce. In 1785 the French Government invited Mr. Pitt to send a plenipotentiary, and Mr. Pitt chose William Eden, afterwards Lord Auckland.

Eden, like a wise man, first consulted the English manufacturers, and after hearing the views of Sheffield, Birmingham, Manchester, Norwich, Essex, Yorkshire, Gloucestershire, and the rest, he went to France prepared to seek what our manufacturers wanted, "a fair and simple reciprocity." He found in the French Ministry "every appearance not merely of fairness but of extreme facility." He was puzzled. "It is neither unjust nor discreditable to them," he wrote to Carmarthen, "to presume that in the plan they are pursuing they look to the advantage of France and not to that of Great Britain." He wondered what could be their motive. Did they want an alliance against some other Power? Was there "any finesse and game in what they are doing"? "But whatever may be the prevalent motive, it seems beyond a doubt that the immediate consequences are highly eligible for the interests of His Majesty's subjects."

As the negotiations proceeded Eden became more and more mystified. Was it right to take advantage of these simple Frenchmen. It seemed, as Mr. Bonar Law would put it, "like stealing candy from children."

"There are," he wrote to Pitt, "great plans going forwards here for settling warehouses at Bordeaux, Marseilles, etc., to supply English goods to all the world. I think it right to throw cold water on the zeal of some individuals who are very alert in such speculations."

And again: "I am firmly convinced that the proposed duty will give us a full access to the French markets and will be thought so low here as to be the subject of much outcry."

As the French showed themselves facile, the English Ministers increased their demands. Eden wrote to protest that he could not "with a fair face" advance such outrageous proposals. Yet they were granted. In the end all English manufactures were admitted at from 10 to 12 percent, although England prohibited the silks of France. All that France gained in return was a reduction on French wines and brandies, on brandy from 9s. 6d. to 7s. per gallon, and on wine from £96 4s. 1d. to £45 19s. 2d. per tun. This reduction brought French wines to the same level as the wines of Portugal; but the Methuen Treaty was safeguarded by a condition that England was free to lower the duty on Portuguese wines by the stipulated proportion.

Eden in the midst of his triumph remained uneasy. When the French Government asked for a lowering of the English duties on silk he had replied that the British Government dared not do it for fear of riots among the weavers of Spitalfields. Yet the French Government admitted English gauzes; one of the few silk manufactures in which England excelled France.

"The Comptroller-General (Colonne) lamented rather warmly," he reports to Pitt, "and in a sort of speech that you would not find it practicable to open the silk trade. M. Vergennes informed him that there are 'trente mille polissons dans la ville de Londres qui ont une voix sur ce chapitre,' to which he answered that there were above double that number at Lyons, who would execrate him for admitting all the numerous manufactures of England, by the same instrument which will exclude the only well-established manufacture of France."

Eden reproaches himself with "having urged on the French Ministers on some of the most material articles a lower duty than is just or right." As they had accepted them, there was sure to be trouble in France.

"This is not a business," he wrote to Lord Carmarthen, "in which I feel solicitous for the applause and triumph of the moment. It is impossible that the treaty can go forwards with any permanent execution if this country is to be overwhelmed with English manufactures, and is not at the same time enabled to send wines, brandies, cambrics, linens, etc., to pay for them." 1

It was a sagacious foreboding. The treaty was signed on September 26, 1786. On November 8, 1787, Eden wrote to Pitt:

"M. de Montmorin has talked again with me about the commercial treaty. He says that the representations from the different parts of Normandy, and even from Bordeaux also, against our pottery and against the cottons, are urgent to a degree of clamor and violence; and it is said that in Normandy above 4000 manufacturers are begging in the streets of Rouen, etc. I wish that we had set these two articles at 15 percent. It is now impracticable to do anything . . . I really think that, unless something is done, the rage against the Treaty here may grow too strong to be resisted."

Eden, nevertheless, mourned the cupidity of our English manufacturers, who had induced him to ask too much. Surely a remarkable phenomenon this sagacious diplomatist reproaching himself not only for asking but for receiving too much on the ground that the completeness of his victory must imperil its permanence!

The truth is that the teaching of Quesnay was not the only factor in these surprising negotiations. Upon the English side was the English fleet and the Prussian armies. Holland, it may be remembered, had sunk under the influence of France, a situation dangerous to the interest of England. An insult to the Princess of Orange gave Pitt his opportunity. Our Minister at the Prussian Court advised the King to avenge the insult to his sister. Prussian troops were pouring into Holland at the very moment when Eden was negotiating the Commercial Treaty. Peace and war trembled in the balance. Pitt insisted not only upon an end to French interference in Holland, but the reduction of the French navy to a peace footing. Montmorin, who succeeded Vergennes, told Eden that he would rather have risked war than assented to such an accommodation. He had, however, been overruled by the Finance Minister, the Archbishop of Toulouse, whose influence prevented war, but "many thought sealed the fate of the French monarchy."

And so it was. English manufactures poured into France in a devastating flood. The great manufacturing centers became centers of poverty, idleness, and revolution. A bad harvest was added to bad trade. Those starving polissons, the poor betrayed artisans of France, poured into Paris. The wildest rumours were circulated as to the motives which had influenced the Ministry to betray the interest of France. It was reported that Rayneval, who had negotiated the commercial treaty on the side of France, and the young Comte de Vergennes had been speculating in the English funds.

The late Mr. J.W. Welsford, in his great little book, The 'Strength' of Nations, gives an admirable account of the havoc wrought in France by the commercial treaty, and its results in precipitating revolution. He quotes Arthur Young, who was in France in 1787 and found all the French manufacturers:

"great politicians, condemning with violence the new commercial treaty with England." At Amiens he was told that "Amiens would be ruined, and that on this point there was but one opinion." At Beauvais: "the opinion universally among the manufacturers here is, that the English fabrics are so superior in cheapness, from the wise policy of the encouragements given by Government, that those of Beauvais, should they come in competition, must sink . . . and they think that the most mischievous war would not have been so injurious to France as this most pernicious treaty." At Lille, "I nowhere met with more violence of sentiment relative to the treaty than here; the manufacturers will not speak of it with any patience; they wish for nothing but a war; they may be said to pray for one as the only means of escaping that ideal ruin which they are all sure must flow from the influx of English fabrics to rival their own. This opinion struck me as an extraordinary infatuation."

And Arthur Young thus summarized the effects of the treaty:

"The rivalry of the English fabrics in 1787 and 1788 was strong and successful . . . the general mass of the consumption of national fabrics sunk perhaps three-fourths. . . . The inevitable consequence was turning absolutely out of employment immense numbers of workmen."

In fact it was no infatuation; the treaty ruined France. The English manufacturers were amazed at their own success. A Glasgow manufacturer wrote:

"It seems strange infatuation in the French to allow woolens to be imported from a sheep country . . . iron from the only country in the world which has ironstone, iron ore, coal, and lime (the four compounding parts of iron) often in the same field and in the neighborhood of the sea . . . strange that they should receive pottery from a country full of coal and of the finest clays in the world next to China . . . cotton from a nation that has West India settlements. . . . The price of cotton goods depends now a good deal upon machinery, where we have a solid superiority over the French from the cheapness of our coal, by which the steam-engine has an hundred advantages over works conducted by wind or water. This last observation ensures us in the superiority of woolen, for although Mr. Arkwright has as yet applied his machine only to cotton, yet there can be little doubt that it will be equally applied to woolen."

It was indeed strange, so strange that the twice "trente mille polissons" of Lyons, the four times "trente mille polissons" of Paris, felt themselves sold, and determined to have "une voix sur ce chapitre." They were reduced to famine; they threatened to eat their Deputies; they raged against King, Queen, and Ministers. The guns of the Bastille, then almost as obsolete as the Tower, were trained upon the industrial quarter of Paris. All the demands of the National Assembly were granted; but as these demands were for constitutional reforms they had no influence at all upon the situation. Empty bellies are not filled with Acts of Parliament. The Bastille was stormed; Monarchy fell; the Directorate blindly avenged the wrongs of France upon the wrong people; Napoleon succeeded, and proceeded to restore the industries and markets of France, all too late, by invading Holland and shutting out the manufactures of England.

II

Let us draw our next example from a period a little later. The Napoleonic Wars had been fought. Napoleon had been defeated and driven out; the continental system had been laid in the dust, but France continued to protect, by a policy of prohibition, the tender young industries which Napoleon had succeeded in rearing upon the ruins wrought by the Eden Treaty.

England, however, continued to regard Germany and the United States as the favored preserve of her commerce. Germany especially was the happy hunting ground of the English commercial traveller. Hamburg was again almost an English city; the Frankfort and Leipzig Fairs were full of English merchandise; the Prussian farmer and the Prussian grenadier clad themselves in English woolens. In these happy circumstances the establishment of the Zollverein seemed to the British manufacturer an impious disturbance of a state of nature ordered by Providence.

On March 22, 1833, a Treaty of Commercial Union was concluded between Prussia, Bavaria, Wurtemberg, the Electorate of Hesse, and the Grand Duchy of Hesse. At first the Prussian Government allayed British fears by promising to impose only a low duty on foreign manufactures, but as time went on these promises were found to be, as the diplomatists say, "illusory." Many British manufactures were even prohibited by the height of the tariff, and British trade, especially the cotton and woolen trades, languished in consequence. In these painful circumstances the British Government sent over Sir John Bowring to make representations and to report on the subject.

Sir John Bowring was, according to his lights, a very intelligent man. He dabbled in literature and was the author of a hymn which is still sung with gusto in evangelical circles. He twice engaged in business; but on both occasions "sought official employment in consequence of commercial disaster." Like his friend Cobden, he was better qualified for directing public business than his own, and he was one of the principal agitators against the Corn Laws, one of the most eminent and respectable apostles of Free Trade.

This excellent gentleman wrote an admirable report on the Zollverein, which he presented to Lord Palmerston in the year 1840. It was a document at once alarming and conciliatory: it warned the British manufacturers of the danger of German protection and instructed the German people in the advantages of British Free Trade. The word "sinister" occurs several times in the course of the report, and in every case it is used to describe the efforts of the German manufacturer to protect himself against British competition. He is benevolent towards the Zollverein. It is "the substantial representative of a sentiment widely, if not universally, spread in Germany that of national unity." He had the foresight to see its great political importance:

"The intimate connection between commercial and political interests is obvious, and the advocates of the League did not fail to perceive that no political alliance would be so strong as that based upon a community of pecuniary and social interests. Under a wise direction the machinery of the Zollverein would become a very mighty political engine which would be brought to bear with great power upon the future concerns of Europe and the world at large."

There were dangers, however:

"The peril to its beneficial results will grow out of the efforts which will be made and which are already made to give by protections and prohibitions an undue weight to the smaller and sinister interests of the Verein. But if its tariffs be so moderate and so judicious as to allow full play to the interests of the consumers in the fields of competition if there should be no forcing of capital into regions of unproductiveness if the claims of manufacturers to sacrifices in their favor from the community at large be rejected if the great agricultural interests of Germany recover that portion of attention to which they are justly entitled if the importance of foreign trade be duly estimated." in short, if the German market be kept open to British manufactures "the Zollverein will have the happiest influence on the general prosperity."

Unfortunately these sinister tendencies had already made sinister progress: "The avowal of the Prussian Government that it was their intention only to levy a moderate duty of from 10 to 15 percent, is by no means carried into effect by the rate of the duties levied." Cotton goods had to pay from 30 to 120 percent, woolens from 20 to 50 percent. Owing to the German method of levying duties by weight,

"the general result of the tariff is to exclude the foreign articles of low quality and general consumption and thus to keep the large demand exclusively for the home manufacturer." The evil results were already evident. At the Leipzig Fair, "houses which had been large importers of British goods . . . had to substitute home-made for foreign manufactures in their warehouses."

Frankfort-on-Main was suffering most of all, as it was a great entrepot for British goods. The sales of British cotton goods had diminished about a third in a single year, and at its annual fair many of the warehouses were to let. It would, of course, hurt the German manufacturer because it:

"removed . . . a large portion of that competition whose impetus is so favorable to improvement. . . " nevertheless, "the shifting of demand from the foreign to the native fabrics is everywhere obvious."

And Sir John Bowring proceeds to give an example which must have made the hair of John Bright and his other friends to stand on end.

"There was a district," he says, "in Berlin frequently called Petty Manchester, in the Spandauer Street and neighborhood, in which were many large warehouses of British cotton goods. They have almost wholly disappeared. The owners have retired from a losing trade, either on their savings, or have engaged in other adventures some even in manufactures competing with England so that all their influence, which was once on the side of Free Trade, is now flung into the protecting and prohibitory scale."

Sir John was a little comforted by the belief that: "the tendency of opinion in Germany is towards Free Trade"; that "almost every author of reputation represents the existing system as an instrument for obtaining changes in favor of commercial liberty," and that "one of the most distinguished writers on the Commercial League, in cautioning the capitalist from embarking his wealth in the protected branches of industry, says: '. . . You are erecting edifices upon sand.'"

He had hopes, too, from the Hanse towns, Lubeck, Hamburg, and Bremen, whose Free Trade policy attracted the "great interest and sympathy" of "all who desire to see commerce unfettered," etc. The Hamburg warehouses would be ruined if she entered the Zollverein:

"Whatever facilities the Hanse towns might obtain from the Zollverein, they can never be in a situation more favorable than they now enjoy from direct intercourse with foreign countries."

Sir John's chief hope, however, was based upon a change in English policy. If only the British Corn Laws could be abolished it would strengthen the agricultural and Free Trade interest in Germany:

"Were foreign markets accessible to the German agriculturist, there is no doubt the flow of capital towards German manufactures would be checked, first by the increased demand for agricultural labor, and secondly by the loss of the advantages which the German artisan now possesses in the comparative cheapness of food."

This is the scheme to which Sir John again and again returns: British agriculture is to be deprived of protection on the chance that Germany will change its policy to Free Trade. Otherwise he fears that although protection is "not at all likely to promote the future well-being and permanent interests of Germany," it will nevertheless continue.

"There is in fact only one course to be adopted, unless it is intended that a trade of many millions sterling per annum shall be finally sacrificed. The tariffs of Great Britain must be modified pari passu with the tariffs of the Commercial League. Such modifications are so obviously, so essentially, so permanently in the interest of the fifty millions of Britons and Germans whom they would bring more closely and unite more firmly together that . . . I cannot but persuade myself that important changes will be welcomed on both sides."

It must, however, be done at once:

"The sinister interests opposed to a more enlarged intercourse do indeed wax stronger and stronger; for though, on the whole, the reception of a British Commissioner at Berlin was most kind and cordial . . . yet there was also an outbreak of feelings naturally generated in the minds of those who profit by monopoly, whose object it was to throw distrust on all my proceedings, to awaken jealousies, to irritate the worst elements of rivalry and nationality. . . . Our own restrictions, our own high duties, our own prohibitions were constantly thrown into my path, and were undoubtedly the greatest difficulties with which I had to grapple in the progress of discussion."

Only the "liberal" tendencies of recent British legislation enabled Sir John "in some respects to modify the friendly impressions which our custom-house laws convey to foreign nations."

Poor Sir John Bowring! With all his cuteness, even Englishmen perhaps even Free Traders will admit that he cuts at this distance rather a mean and contemptible figure. The Germans, in spite of his blandishments, persisted in their policy. The sacrifice of English agriculture was made in vain. Germany accepted the free market for Prussian corn, but gave nothing in return. On the contrary, she built herself up on a policy of Union and Protection, until her organized strength overshadowed the world.