SOME FISCAL HISTORY

Evening Post, Volume CXIII, Issue 30, 5 February 1932, Page 7

SOME FISCAL HISTORY

FREE TRADE IN BRITAIN

The beginning of the new tariff era in Britain should not blind one to the fact that the history of free trade iv the country has been fairly brief. It has, it is true, accompanied the period of great expansion, and it has led to the foundation of a national economy presenting unique advantages in finance, for instance, but it has nevertheless been of relatively short du:-ation. Britain emerged from the mercantile policies of the seventeenth and eighteenth centuries with a tariff system which was extraordinarily complicated and confused. It applied high rates, also, and the first steps towards radical change were taken by Pitt. In 1786 he arranged a commercial treaty with France, and in the following year he codified the extraordinarily intricate mass of inconsistent duties which then existed. After 1815 English tariff history was marked by two great changes, one the modification and final repeal of the corn laws, the other the steady succession of acts which gradually cut down the duties of other goods and led eventually to the adoption of complete free trade. The corn laws were first strengthened, then experiments were made with sliding scale duties, designed to keep the, price of corn stable, finally the laws were wiped out at the time of the Irish famine of 1846. Though they had political support from the classes which benefited by them, industrially the laws were vulnerable, and inevitably collapsed in a time of crisis.

The second series of events trending towards free trade began with Huskisson's measures of 1824, which reduced duties especially on such raw materials as wool, and went on with a succession of measures until the last vestige of protection disappeared in 1860. Peel's Acts of 1842 and 1846, the famous Gladstone Budget of 1853, and finally, in 1860, the removal of the silk duties, the last of the protective duties to be retained, were the major events in the movement. For half a century after this Britain was the stronghold of free trade. The system was suited to her industrial development • during the period, enabling her manufactures to develop at an extraordinary rate, while foodstuffs and raw materials were imported in increasing volume. The system seemed entrenched beyond possibility of attack, despito the fact that the landed interests were hard hit by the decline in agricultural prices from 1873 to the close of the century. ' Yet in 1903 there rose a notable figure who issued a challenge to the existing system; Joseph Chamberlain, fresh from his winter in South Africa, with his plea for closer economic bonds within the Empire, and his suggestion of an Imperial Zollverein. There had been hints of "broadening the basis of taxation," there was then complaint against "dumping," and there was Chamberlain's commanding position in the Cabinet to ensure respect for his suggestions. For two years after the campaign developed outside Parliament public life in England became unprecedentedly vivid and active. Mr. Lloyd George, among others, gathered'laurels for his Cobdenite speeches. Finally Balfour resigned, after having pulled his party through the first shock of the controversy, and in the election which followed there was a Liberal landslide, the Campbell-Bannerman Government being returned with a possible maximum majority of 374. The world war saw another change, however, for in 1915 England went off the free ; trade basis, certain duties (the "McKenna Duties") being imposed on luxuries. These duties: wero at the rate of 33 1-3 per cent, on watches, pleasure motors, cinema films, etc. Immediately after the war some more changes were made in the same direction. In 1919 Imperial preference was granted on tea, coffee, cocoa, sugar, and in 1920 the import of dyestuffs and coal-tar dyes was completely prohibited, this being designed to ensure the domestic, production of materials needed for explosives and other cardinal materials. In 1921 came the Safeguarding of Industries Act, which went a slep further, imposing a duty of 33 1-3 per cent, on so-called "key industries" snch as optical instruments, barometers, wireless apparatus, etc. In the same year came the Anti-Dumping Act, imposing a 33 1-3 per cent, duty on all goods sold in England below cost or sold at low prices because of depreciated currency. Some of these duties wero ended by the Labour Government in 1924. All were re-enacted in 1925, however, and the Baldwin Government then took steps which for the first time were not for clearly discernible political or military reasons 1110, 6,* s Pecial emergencies. In 1925 the McKenna Duties were restored, ana the safeguarding duties wore widened m scope. So the way was paved for the final campaign, and controversy within the Conservative Party itself finally led to united action last October.