Unseen Hand in British History - Ian D. Colvin


The time has come when we must once more draw our shallop to the shore of history. It has been a swift voyage through two centuries and there has been time only to glance at the great features of the landscape. At our setting out we saw England "under the thumb" of the Hanseatic League, the economic serf of the old German Empire. We were the witnesses of her liberation by two organized forces working in harmony the State and our national commerce. Neither would have succeeded without the other. And when we hear abuse of monopolies or trusts, it is worth remembering that a regulated company, embracing almost our whole English export trade and working upon national lines, was the chief weapon in our greatest war for freedom.

We saw the national system of England, founded upon production and security, break to pieces the commercial system of Holland, founded upon trade and upon wealth. Then we saw the long and doubtful conflict between the two national systems of England and France, ending in the victory of England when France betrayed those polissons her craftsmen, whose "exquisite knowledges" were and still are the chief glory of that nation of genius.

In those great conflicts we find that England hammered out a national policy upon the anvil of experience, in the fiery stithy of war. It is the policy of the unknown poet of the Libel, the policy of Sir Thomas Gresham, of Burghley, of Francis Bacon, of Thomas Mun, of Oliver Cromwell, of Chatham, and not only of those writers and statesmen but of the whole body of Englishmen who conducted our commerce and affairs. It is a policy which has been caricatured, and in particular its theories as to treasure and the balance of trade have been misrepresented.

Adam Smith was ignorant of a time which the founders of Mercantilism remembered, when the Hanseatic and Imperial trade system by its monopoly of the precious metals brought about the "undoing" of the realm. To get in the hands of our own merchant bankers such a supply of treasure as should make England independent of any foreign Power was the most urgent need of Elizabethan England; and the balance of trade an excess of exports over imports was thought to be a practical means to that desirable end. But the Mercantilists are justified by modern example and by the severest of all tests.

In the present war our Free Trade financiers and statesmen were reduced to the same expedient: a whole series of prohibitions of export supported the exchange. That a high duty was not imposed was a consequence of mere bigotry. Our Free Trade rulers, in their Prohibition-without-Protection policy, might indeed be said to resemble an austere spinster who should reluctantly decide that war-babies are essential to the State, but remain firmly resolved nevertheless that no mere man should reap any profit or pleasure from her departure from the strait path of virtue.

And now let me sum up the main ends of this traditional English policy:

  1. To be independent in all necessities of war; and therefore
  2. to feed England as far as possible from her own soil;
  3. to work up our own raw materials into manufactured goods;
  4. to keep our own market for our own wares;
  5. to import raw materials and treasure in exchange for manufactured goods;
  6. to keep an open "vent" for our manufactures abroad; and therefore
  7. to secure ourselves against competing nations at such points as the Netherlands, the Straits of Gibraltar, and the Sound of Denmark; for which purpose
  8. to maintain our supremacy at sea, and
  9. the balance of power in Europe.
  10. By union to secure the safety of our base in these islands.

In my brief account of this policy I have said too little of the great industry of agriculture, which has always been and still is the chief interest of England. It is unfortunate that agriculture has too often been in conflict with a combination of the other interests: the revolutions, civil wars, and party struggles of our English story are always in some measure due to this great conflict.

In the eighteenth century, when agriculture had more to fear from the Baltic than the Bourbons, the Tory landed interest limped painfully behind the aggressive foreign policy of the commercial Whigs. But when England was in danger, the true-blue English countrymen sank everything but patriotism and rallied to the national banner under the two Pitts, and on that glorious foundation of unity England rose to the supreme height of her national power.

Agriculture saved England in the Napoleonic wars both by furnishing Wellington with men and by feeding the industrial population, yet commerce under the unhappy inspiration of the cotton-spinners betrayed the landed interest in a vain endeavor to stop Tariff Reform in Germany and the United States. The dog lost the bone in snatching at the shadow: British tillage, the best nursery for the race, the best market for our manufactures, the best insurance against the perils of war and of famine, was ruined to no purpose.

And so we come to the resurrection of the German Empire, after its long sleep of two hundred years. We are only now, said Bismarck, getting over the Thirty Years' War. In the eighteenth century, so low had Germany fallen, that ships leaving German ports were often ballasted in sand scornfully called in France "le produit d'Allemagne."

Schmoller, the favorite economist of the present Emperor, thus describes the sad state of Germany in the seventeenth and eighteenth centuries:

"Those Hanseatic towns that were not ruled by Dutch business managers were in slavery to English creditors. . . . In the period from 1670 to 1750, the bitterest lamentations were heard in Germany about this commercial dependence, about French manufacturers, about the traders from every prince's land that overran the country: the torrent of complaint touching the pitiable condition of the Imperial Government increased like an avalanche. . . . At last all the voices, alike of scholars and of the people, came together in unison. There is but one way out of it; we must do what Holland, France, and England have done before us; we must exclude the foreign wares; we must once more become masters in our own house. Facts had taught them, with inexorable clearness, that at a time when the most advanced nations were carrying on the collective struggle for existence with the harshest national egoism, with all the weapons of finance, of legislation, and of force, with navigation laws and prohibition laws, with fleets and admiralties, with companies, and with a trade under State guidance and discipline those who would not be hammer would assuredly be anvil."

Free Trade and the lack of national unity and a national policy based upon a secure home market and native production had brought Germany to this terrible pass. The Hanseatic cities were mere depots for the English manufactures and every German city had its colony of English merchants. So also in the United States where every store sold English wares and the whole country supplied itself with English goods.

Happy days! Only one little Maximin the gods defied. And that was poor, persecuted, unhappy Friedrich List, the national economist who inspired the commercial policy of two of the greatest nations of the world, and died miserably upon a drift of snow. He had a cold welcome, poor List, and a cold exit imprisoned and exiled, driven from one State to another, because he dared to think of the economic independence of his country. He was the implacable enemy of England, yet I might almost call him comrade, for what he detested was the commercial penetration of Germany by England, and what I detest is the commercial penetration of England by Germany.

List worked as secretary of the German Commercial League with the object of securing protection for German manufacturers, and he bitterly complained of pro-British tactics in the ports and cities of Germany.

"It is notorious," he wrote, "what a powerful means of controlling public opinion abroad is possessed by the English Ministry in their secret service money not accustomed to be niggardly where it can be useful to their commercial interests. An innumerable army of correspondents and leader-writers, from Hamburg and Bremen, from Leipzig and Frankfort, appeared in the field to condemn the unreasonable desires of the German manufacturers for a uniform protective duty, and to abuse their adviser in harsh and scornful terms, such as that he was ignorant of the first principles of political economy as held by the most scientific authorities, or else had not brains enough to comprehend them. The work of these advocates of the interests of England was rendered all the easier by the fact that the popular theory and the opinion of German learned men were on their side."

It is a curious experience to read List at the present time. I feel as if I were reading my own writings, only everything is reversed as if it were through the looking-glass. Put Manchester, Bradford, and London in the place of Hamburg, Bremen, and Frankfort, and List's writings might be used very well for our Protection propaganda. It is noteworthy how he insinuates that the leader-writers of the German Free Trade Press are in the pay of the English importers. Then he praises our power of organization, the mutual support of Government and industries, the intelligence and vigor of our commercial policy, the thrift and skill of our workmen, the productive power of our agriculture. He gazes with awe upon the totals of our production in the various industries. "England now," he says, "manufactures more iron and steel wares than all the other nations on earth" her cloth manufacture, her linen manufacture, her silk manufacture, her leather goods they are all supreme. Although he hates us, he cannot but sing our praises. He speaks of England as

"a world's metropolis which supplies all nations with manufactured goods . . . a treasure-house of all great capital a banking establishment for all nations, which controls the circulating medium of the whole world, and by loans and the receipt of interest on them makes all the peoples of the earth her tributaries . . . an example and a pattern to all nations in internal and in foreign policy, as well as in great inventions and enterprises of every kind, in perfecting industrial processes and means of transport," etc. etc. But was Germany to submit to English domination and English culture? Think of how England had treated Germany: "Germany was that which Franklin once said of the State of New Jersey, 'a cask which was tapped and drained by its neighbors on every side.' . . . In vain did the Germans humble themselves to the position of hewers of wood and drawers of water for the Britons. The latter treated them worse than a subject people . . . To fill up the measure of their contempt, the doctrine was taught from a hundred professorial chairs, that nations could only attain to wealth and power by means of universal free trade."

Yet in recent years owing to the Tariff of the Zollverein (then partly created) things were improving. The Zollverein Tariff was protective at least in regard to the heavier articles:

"Let us freely confess it, for Dr. Bowring has incontrovertibly shown it, that the Zollverein Tariff has not, as was before asserted, imposed merely duties for revenue . . . let us freely admit that it has imposed protective duties of from twenty to sixty percent, as respects the manufactured articles of common use."

That was a beginning; but Germany must go further; she must wholly discard Adam Smith and the "cosmopolitan school." The Commercial Union and the Tariff, these were the foundations: upon these ". . . a union flag, the possession of a navy and mercantile marine" and everything else necessary to German unity and greatness would surely follow.

It is recorded that during the Corn Law agitation List came over to London to study our politics on the spot. Cobden met him and said in ignorant complacency, "Well, List, I suppose you have come over here to change your opinions." To which List replied that what he saw made him more confirmed in his opinions than before.

Cobden was a demagogue: List was a student of affairs and a student of history. Looking into the past he saw, as we have seen in our brief survey, that trade between nations is not an exchange equally beneficial to both parties, but a constant struggle and exploitation, in which stronger nations profit by the weaker, and in which there are the elements of victory and defeat.

Adam Smith borrowed from French philosophy an ideal world and an ideal past. He thought in terms of that pervasive eighteenth-century fiction the noble savage or the simple life. List was too well acquainted with history and affairs to make such a mistake. He knew the power of the Hanseatic League, its struggle with Elizabeth, the rise and fall of Venice and of Holland, the commercial and naval policy of England; he had studied all the elements of the commercial struggles between nations, and realized well that the political organization and policy of a State could not be separated without error in thought and disaster in practice from its economic life.

Unhappy List did not live to see the Zollverein vindicated by results. It might be interesting to trace the economic and political development of Germany from List to the present day; but the task must be reserved for a future occasion. Prussia, we should have to note, was at first the chief obstacle to Protection. Not until American grain began to compete with Prussian grain did the agrarian policy swing round into agreement with the industrial. But the Zollverein, owing to the construction of its Tariff, was protective in its effect from the beginning. Bismarck, at first a Free Trader, changed with the Prussian junkers to Protection, and united the two great interests of agriculture and manufactures in 1879, declaring also for the protection of labor, so that the rise of German industries may be said to correspond with the development of the German protective and productive national system.

No one who knows anything of economic history would suggest that Protection is the only means of fostering manufactures and that all a nation requires for the growth of its industries is to clap on a high duty. List put the matter fairly when he described customs duties as the "chief means of establishing and protecting the internal manufacturing power." But it must be used with skill and with knowledge, and these being granted the larger the Free Trade area it surrounds the more likely it is to be successful. Its value lies not only in protection but in negotiation. The Germans looked back with admiration upon that masterpiece of English statecraft, the Methuen Treaty with Portugal, and used their tariff to the same end the exchange of their manufactured goods for the natural products of other countries. Germany has beaten us in commercial treaties because her statesmen had something in their hands whereas ours had nothing to offer. But Germany has also defeated protected nations both in commerce and industry, because her strength in the other powers of a State is better developed and more skillfully used than theirs.

The tariff has another political advantage no less important, it unites and harmonizes national interests. It gives all interests a certain bias which unites them against the foreigner. Our sharp party divisions, when fairly considered, are a struggle between production and importation: a tariff throws the balance of power, where it should be, on the side of the producer. The producers of a State, being altogether committed to its interests, are the best fitted to control its policy. A merchant or a shipper, who lives by importation, is often more interested in the success of the country from which he draws his goods than of that in which he sells them.

A tariff, then, tends to create and strengthen the national sentiment and combines all interests in the general interest of the country. A tariff, in fact, is the foundation, as it is the chief weapon of a national policy.

This fact should not tempt our producers to despise all the other means by which the Germans have overtaken us in industrial power their guild system which unites master and workman; their exporting system which unites shippers and manufacturers; their linked company system which enables various industries to cooperate for the capture of foreign markets; their banking system which regulates, nourishes, and supports their industries; their co-operative banking, buying, and selling which strengthen and unite their agriculture; their patent laws and their technical education, their State railways and shipping subsidies with the advantages they offer to the home producer.

All these are important; but they all rest upon the secure base of the Imperial tariff. It is not only that Germany uses heavy guns and quick-firers and high explosives against our lighter and slower artillery; but that the German industries are entrenched whereas ours fight on the open ground.

This is the lesson we are relearning now by hard experience. The Germans learned it long ago. The Free Trader who studies history is faced by a long series of most uncomfortable coincidences. When the German Empire was rejecting a national economic system, England was forging such a system under the guidance of the Tudors. The one rose to greatness, the other fell into ruin.

"By her Free Trade," says Schulze-Gaevernitz, "England has done us more good than whatever harm she has done us by her political opposition. Where would the German sugar industry be the pioneer of our industrial progress; where the German textile and iron industries; where the whole body of the new German finance without the rich and all-absorbing English market? Carried on her back by Free Trade England, we ventured to reach out for English world-power. . . . Really we cannot reproach the Briton!

"And not for economic dominion only, but for naval dominion. It was the power gained by her national policy of production that tempted Germany to emulate the proud boast of the Hanseatic League "Mein feld ist die weld" ("My Field is the World.")

Modern Germany erected a tariff and became strong; modern England abandoned protection and became weak.

If security be more important than opulence, who can refuse to accept the moral? We must return to a national system founded upon production. We must protect British industries and agriculture with a British tariff in order to recover our security, our strength, and our economic independence.