by Smart
[Front Matter and Google Digitization Notice]: Standard Google Books digitization notice explaining the public domain status of the work and usage guidelines for the digital file, followed by the original book's title page and publication details. [Title Page and Dedication]: The title page of 'The Return to Protection' by William Smart, including a quote from Adam Smith and publication information for the second edition (1906). [Preface to the Second Edition]: William Smart updates his work during his service on the Royal Commission on the Poor Laws. He argues that the case for Free Trade has strengthened, emphasizing that competition benefits the working classes and consumers while warning that protectionism threatens political purity and imperial stability. [Preface to the First Edition]: Smart explains the origins of the book as a series of lectures responding to the protectionist proposals of Chamberlain and Balfour. He defends the 'men of theory' (economists) and highlights his own practical experience as a manufacturer in both Free Trade and Protected environments. [Table of Contents]: A detailed list of the twenty-eight chapters and appendix covering the theory of trade, the mechanics of protection, retaliation, dumping, and colonial preference. [Chapter I: What Trade Is]: Smart defines trade as a mutual exchange of services, where competition is merely the outward form of co-operation. He argues that the goal of industry is 'cheapness' or 'abundance,' and that international trade is simply the struggle to serve on a global scale, where shutting out competition means shutting out service. [Chapter II: Our Foreign Trade]: An analysis of British foreign trade as an extension of home trade. Smart details the specific commodities imported and exported, emphasizing that trade is conducted by individuals for profit and that payments are settled via contra-accounting (bills of exchange) rather than gold transfers. [Chapter III: The Balance of Trade]: Smart explains the statistical excess of British imports over exports. He introduces the concept of 'Invisible Exports,' specifically shipping freights and insurance (estimated at £90 million) and banking commissions, alongside the returns from capital invested abroad (estimated at over £62 million), which naturally take the form of imports. [Chapter IV: The Equivalence of Imports and Exports]: This chapter argues that while total national imports and exports must balance (the equation of indebtedness), there is no reason for trade to balance between any two specific countries. Smart explains how the network of international banking and 'triangular' exchange allows debts to be settled through third parties, using the example of Canadian wheat and Manchester cotton. [Chapter V: Some Conclusions and a Moral]: Smart refutes the idea that Britain is 'living on its capital' or 'bleeding to death' by selling securities to pay for imports. He points to rising income tax returns from foreign investments as proof of increasing national wealth and concludes that the balance of trade is not a sign of decay. [The Balance of Trade and National Prosperity]: Smart argues that the Balance of Trade is a poor indicator of national prosperity. He explains that Britain's apparent trade deficit is balanced by 'invisible exports' like shipping and banking services, as well as returns on large foreign investments. He further notes that a surplus of exports in other nations, like the United States, may simply reflect different industrial stages or borrowing needs rather than superior economic health. [The Causal Relation Between Imports and Exports]: This segment explores the fundamental economic principle that imports and exports are mutually dependent. Smart argues that checking imports inevitably checks exports because foreign trade is an exchange of goods and services; if a country refuses to buy, it destroys the mechanism by which others can pay for its own exports. He cites historical data from Peel's reforms and the repeal of the Corn Laws to demonstrate that increasing imports leads to a proportional rise in exports. [Chapter VI: The Rival Policies]: Smart defines the difference between Free Trade and Protectionist policies. A Free Trade country imposes duties solely for revenue, ensuring that imported goods are taxed at the same rate as domestic goods (excise). In contrast, Protectionism seeks to favor the producer over the consumer. From a theoretical standpoint, Smart argues that Free Trade aligns with the global division of labor, treating international borders as irrelevant to industrial efficiency. [The Geopolitical and Social Context of Protectionism]: Smart examines why continental nations and the United States maintain protectionist policies despite economic theory. For Europe, it is often a matter of national security and self-sufficiency in the face of potential war. For the US, the argument shifts to protecting the producer and ensuring steady employment. Smart acknowledges the moral and social importance of work but questions whether government intervention via tariffs is the effective way to provide it. [Chapter VII: The Mechanics and Fallacies of Protection]: Smart critiques the 'Infant Industry' argument, noting that protected industries rarely 'grow up' and instead become powerful vested interests. He illustrates how tariffs penalize consumers to provide extra profits to manufacturers or to sustain inefficient industries. While acknowledging Mill and Sidgwick's theoretical concessions for temporary protection, Smart argues that in practice, such measures are rarely withdrawn and lead to permanent economic friction. [The History of Protection in France and the United States]: Smart provides a historical overview of protectionism, tracing it from Colbert's mercantilism to the American Civil War. He explains that Britain's move to Free Trade in 1846 was a revolutionary break from the past, whereas other nations remained tied to protectionist systems due to the massive scale of their vested interests, such as the French peasantry. He details how American protectionism was fueled by the disruptions of the War of 1812 and later the revenue needs of the Civil War. [Chapter VIII: The Principle of a Protective Tariff]: Smart examines the search for a 'principle' behind tariff rates, finding none but the influence of warring political interests. He critiques McKinley's goal of total prohibition and Roosevelt's 'pauper labour' argument. He also discusses Professor J.B. Clark's proposal to equalize costs of production, but concludes that in practice, tariffs are 'grotesque compromises' resulting from lobbying by groups like the French 'Beetroot and Wine' interests or American manufacturers. [Chapter IX: Possibility of a Scientific Tariff]: Smart analyzes the practical impossibility of creating a 'scientific' tariff. He explores the contradictions in taxing food (which raises the 'cost of production of Man') and the extreme difficulty in defining 'raw materials.' He demonstrates how the finished product of one industry (like yarn or pig-iron) is the raw material of another, meaning that any attempt to protect one stage of production inevitably penalizes the next. The segment concludes with examples of the absurdities found in customs classifications. [Chapter X: Conclusions as to Protection]: Smart summarizes his objections to Protectionism into four main points: the impossibility of a fair tariff, the inevitable decay of political morality as legislators become agents for private interests, the rise of commercial immorality (smuggling and bribery), and the increase in domestic costs which ultimately hampers a nation's ability to export. [The Handicap of Protection on Exports]: Argues that Protection increases the cost of living and production at home, thereby handicapping a nation's ability to export unless natural resources or scale outweigh the burden. It critiques the use of 'drawbacks' as a mischievous machinery that results in charging domestic consumers more than foreign ones. [Chapter XI: Protection as Indirect and Delegated Taxation]: Defines taxation as a price for common services and argues that Protection is a form of delegated taxation where the government allows producers to levy 'taxes' on consumers via high prices. Smart contrasts revenue-generating customs duties (where the state receives the funds) with protective duties (where the home producer pockets the difference due to the lack of an excise tax). He uses the history of monopolies, the establishment of the police force by Sir Robert Peel, and municipal services in Glasgow to illustrate that while taxes should be transparent and for the public good, Protection functions as a private subsidy at the public's expense. [Chapter XII: Protection Judged by the Canons of Taxation]: Evaluates Protection against standard economic principles of taxation, specifically equity and the 'ability to pay.' Smart argues that protective duties act as a regressive income tax that falls most heavily on the poor, who cannot avoid purchasing protected necessities. He critiques the 'Infant Industry' argument as a perpetual burden on consumers and uses the American tinplate industry to show how protecting one trade can parasitically damage others, such as the canned fruit trade. He concludes that the British system of direct income tax and death duties is far more scientific and equitable than the opaque and arbitrary price-raising of Protection. [Chapter XIII: Retaliation]: Analyzes the concept of Retaliation, distinguishing between responses to hostile foreign tariffs and responses to 'dumping.' Smart questions the morality and efficacy of 'hitting back,' suggesting that the British policy of open ports was a deliberate choice for its own benefit, not a bargain. He introduces the idea that Retaliation is often proposed as a means to force other nations into freer trade, but warns that the term often masks destructive motives. [Chapter XIV: Retaliation on Protective Tariffs: Prospects of Success]: Examines the historical failure of retaliatory tariff wars, citing examples between Russia and Germany, France and Switzerland, and France and Italy. Smart argues that Great Britain is uniquely ill-equipped for such a policy because it lacks the administrative machinery for flexible duties and because the 'Most Favoured Nation' clause ensures that any hard-won concessions would benefit competitors as much as the UK. He contends that Protectionist nations view their tariffs as domestic policy rather than international hostility, making them unlikely to yield to threats. [Chapter XV: Retaliation on Protective Tariffs: Method and Effects]: Discusses the practical difficulties of implementing retaliatory duties. Smart categorizes potential targets for taxation—monopoly goods, food, and raw materials—and explains how taxing each would inevitably harm the British consumer or manufacturer. He warns that since British industry is built on the foundation of cheap global inputs, any retaliatory duty risks adding a third injury to the two already caused by foreign protectionism. [The Practical Difficulties and Economic Costs of Retaliation]: Smart examines the practical obstacles to a policy of retaliation on manufactured goods. He argues that most imports from major rivals like Russia and the United States consist of food and raw materials, leaving a very small field for retaliatory duties. He highlights the administrative nightmare of searching all ships for minor items like toys or musical instruments and warns that temporary retaliatory duties create artificial price spikes and encourage the growth of vested interests that are difficult to dismantle without harming domestic producers. [The Ineffectiveness of Retaliatory Threats]: A brief metaphorical critique of using the threat of retaliation as a diplomatic tool, suggesting that without a willingness to follow through on harmful economic actions, the policy is merely an undignified bluff. [Chapter XVI: Dumping]: Smart defines 'dumping' as the practice where protected Trusts or Kartells sell surplus goods abroad at or below cost while maintaining high prices at home. While acknowledging the disruption this causes to home manufacturers due to its intermittent nature, he argues that dumping provides significant compensations by supplying cheap raw materials to secondary industries like shipbuilding and tinplate manufacturing. He provides evidence that this often results in a 'Nemesis' for the dumping country, as their own manufacturers are undersold by British firms using the dumped materials. [Chapter XVII: Retaliation on Dumping]: Smart critiques the proposal to use import duties as a remedy for dumping. He argues that such duties are essentially protectionist and may fail to stop dumping if the foreigner's home market is large enough to absorb the loss. He also points out the extreme difficulty in defining 'cost' or 'unfair' prices, noting that even British colonies like Canada have accused Britain of dumping. He concludes that every claim for counter-duties would require impossible levels of government investigation and invite corruption. [Chapter XVIII: Tests of Prosperity]: Smart presents a statistical defense of the UK's economic health under Free Trade. He cites rising national income, declining pauperism, increased real wages, and growing bank deposits and shipping tonnage as evidence of widespread prosperity. He argues that the material conditions of the 'Good Life' in Britain are superior to almost any other nation, evidenced by shorter working hours and the prevalence of luxuries like leisure travel and bicycles among the working classes. [Chapter XIX: Exports as a Test of Prosperity]: Smart challenges the notion that export figures are the primary measure of national prosperity. He argues that a flourishing country may see its capital and labor diverted into internal improvements, such as house building and municipal infrastructure, rather than foreign trade. He posits that a decline in exports might simply reflect a more profitable employment of resources at home rather than industrial decay. [Chapter XX: The Stagnation of Exports]: Smart addresses the 'stagnation' of British exports by critiquing the choice of 1872 as a base year for comparison. He explains that the early 1870s were years of abnormal 'boom' and inflated prices caused by the Franco-German War and massive railway expansion. By using quinquennial averages and accounting for the increased purchasing power of money, he demonstrates that British exports have actually grown significantly and that the UK maintains a substantial lead in exports per head compared to its rivals. [The Movement of Prices and the Fallacy of Export Values]: Smart argues that comparing export values from 1872 to the early 1900s is misleading due to a massive fall in the general price level. He attributes this decline to increased efficiency in transportation (Suez Canal) and a contraction in the money supply following the collapse of the bimetallic system in 1873. By adjusting for these price changes using Sauerbeck's Index Number, he demonstrates that the volume of British exports has actually increased significantly despite appearing stagnant in nominal value. [The Fallacy of Percentages and International Comparisons]: This section critiques the use of 1872 as a baseline for economic comparison and exposes the 'Fallacy of Percentages' used to suggest British decline. Smart explains that smaller or newer economies (like Japan or a newly unified Germany) naturally show higher percentage growth rates than a mature economy like Britain's. He also highlights statistical inconsistencies in German trade data and the unique circumstances of the United States to argue that nominal increases in rival exports do not prove British failure. [Prosperity and Exports Per Head]: Smart shifts the focus from aggregate national exports to exports per capita, arguing that the prosperity of the individual is the true measure of economic health. He provides data showing that Great Britain maintains a significant lead in exports per head over France, Germany, and the United States. He concludes that absolute increases in rival nations' trade are a natural result of their faster population growth rather than a sign of superior trade policy. [Chapter XXI: Employment as Affected by Exports and Imports]: Smart addresses the protectionist claim that Britain is losing employment by exporting raw materials (like coal) and importing manufactures. He argues that coal production actually involves a higher percentage of labor/wages than many manufactures and that imports are paid for by domestic industry, merely shifting labor between sectors. He cites Mill and Marshall to explain that the 'National Dividend'—the total product—is the true source of demand for labor, and that protectionism merely diverts capital into less efficient, artificial channels. [Chapter XXII & XXIII: Preferential Tariffs and the Canadian Experience]: Smart examines the proposal for Imperial Preference, using the Canadian experience as a case study. He notes that despite Canada granting a preference to British goods since 1897, the growth of imports from non-preferential countries (like the US and France) has outpaced British growth. He argues that Canadian tariffs remain high enough to protect their own manufacturers against British competition, making the preference 'altogether disappointing' as a tool for expanding British trade. [The Potential and Price of Colonial Preference]: Smart analyzes the statistical limits of potential gains from colonial preferences, finding the total addressable foreign trade in colonial markets to be relatively small (around £28 million). He then discusses the 'price' of such a system: the necessity of taxing foreign food and raw materials. He argues that even a small tax on corn is a form of indirect taxation that will either raise prices for the poor or unfairly burden specific domestic classes (like bakers or millers) to provide a marginal benefit to colonial producers. [The Failure of Preference Without Price Increases]: Smart argues that if a small tax on foreign grain does not raise the market price in Great Britain, the proposed Imperial Preference fails its primary objective. Without a price increase, Canadian farmers have no financial inducement to expand production or settle new land, meaning the 'preference' provides no actual benefit to the colonies while potentially hurting foreign producers like the United States without aiding the British colonist. [The Economic Cost of Food Taxation to the Consumer]: An analysis of the financial burden placed on British consumers if food taxes successfully raise prices. Smart calculates that a 2s. duty on grain would cost consumers over £8 million, with only a fraction reaching the Colonies as a 'gift,' while the rest benefits the home agricultural interest or the Exchequer. He critiques Chamberlain's suggestion that reducing tea and sugar duties would offset these costs, labeling it a 'passing mention' of an ingenious but flawed calculation. [Chapter XXVI: How Preference Will Affect Agriculture]: Smart warns that artificial price supports for wheat will lure British farmers back into a vulnerable industry, repeating the mistakes of sixty years ago. While the Colonies have virgin soil, British expansion requires cultivating more costly, marginal lands; when global prices eventually fall due to increased colonial supply, British farmers will face ruinous losses as they did after the repeal of the Corn Laws. He advocates for the 'beneficent revolution' of modern farming—pasture, dairy, and fresh produce—over artificial wheat protection. [Chapter XXVII: The Price of Empire]: This chapter examines the political and social costs of using preferential tariffs as a bond for Empire. Smart argues that demanding a 'quid pro quo' from the mother country—which already provides defense, capital, and free markets—is unreasonable and risks colonial disintegration. He highlights the logistical impossibility of creating a 'fair' tariff that satisfies diverse colonial interests (e.g., wheat vs. wool) without causing internal bickering and loss of fiscal liberty for all members of the Empire. [Chapter XXVIII: Taking Stock - The Conditions of Trade]: Smart reflects on the year-long discussion of Free Trade, concluding that while the case for it remains unshaken, it is merely a 'condition' of trade. Success depends on how a nation uses its freedom; factors like natural resources, technical education (as seen in Germany), business methods (American Trusts), and social habits (sobriety and efficiency) can outweigh fiscal policy. He argues that British manufacturers must adapt to modern competition by improving methods and labor efficiency rather than relying on protection. [Changing Circumstances since 1846]: Smart argues that while Free Trade was undeniably beneficial in 1846 when Britain held a manufacturing monopoly, the global landscape has changed. He discusses the rise of foreign competition and the impossibility of Britain remaining the sole 'workshop of the world' as other nations develop their own industries. Includes a significant footnote by Professor Marshall on the historical advantages of British industry. [The Limits of National Production and the Hardships of Competition]: The author examines the physical limits of British production capacity and the natural tendency of growing nations to develop internal trade. He acknowledges the 'hard side' of international competition and the domestic social costs of industrial progress, such as the displacement of home-based workers by factories, while maintaining that internal protection is never the solution. [The Role of the Employer and International Adaptation]: Smart discusses how Free Trade compels workers and employers to be resourceful and adapt to global changes. He cites examples like the motor car and footwear industries where British makers successfully adapted to foreign innovations. He defines the employer's function as organizing capital and bearing the brunt of change, arguing that those unfit for this task should not be subsidized by protection. [The Political Value of Free Trade and the Open Door]: The concluding argument focuses on the political advantages of Free Trade. Smart asserts that the British Empire's expansion is tolerated by other nations because Britain maintains an 'Open Door' policy, throwing open new ports to all nations rather than keeping them as private preserves. This policy aligns commercial gain with the universal interest in stable government. [Appendix: The Abuse of Shipping Statistics]: A technical appendix critiquing the use of shipping statistics in the protectionist debate. Smart explains the differences between gross and net tonnage and actual carrying capacity. He argues that simple tonnage comparisons used by Joseph Chamberlain are fallacious because they ignore vessel efficiency, age, and the inclusion of non-competing local traffic (like American lake steamers) in foreign statistics. [Index]: Comprehensive alphabetical index of subjects, authors, and concepts discussed throughout the book, ranging from 'Abundance' to 'Workshop of the World'. [Publisher's Advertisement: Studies in Economics]: Advertisement for William Smart's 'Studies in Economics', including a preface excerpt where the author discusses his transition to the doctrines of the Austrian School and the theory of value.
Standard Google Books digitization notice explaining the public domain status of the work and usage guidelines for the digital file, followed by the original book's title page and publication details.
Read full textThe title page of 'The Return to Protection' by William Smart, including a quote from Adam Smith and publication information for the second edition (1906).
Read full textWilliam Smart updates his work during his service on the Royal Commission on the Poor Laws. He argues that the case for Free Trade has strengthened, emphasizing that competition benefits the working classes and consumers while warning that protectionism threatens political purity and imperial stability.
Read full textSmart explains the origins of the book as a series of lectures responding to the protectionist proposals of Chamberlain and Balfour. He defends the 'men of theory' (economists) and highlights his own practical experience as a manufacturer in both Free Trade and Protected environments.
Read full textA detailed list of the twenty-eight chapters and appendix covering the theory of trade, the mechanics of protection, retaliation, dumping, and colonial preference.
Read full textSmart defines trade as a mutual exchange of services, where competition is merely the outward form of co-operation. He argues that the goal of industry is 'cheapness' or 'abundance,' and that international trade is simply the struggle to serve on a global scale, where shutting out competition means shutting out service.
Read full textAn analysis of British foreign trade as an extension of home trade. Smart details the specific commodities imported and exported, emphasizing that trade is conducted by individuals for profit and that payments are settled via contra-accounting (bills of exchange) rather than gold transfers.
Read full textSmart explains the statistical excess of British imports over exports. He introduces the concept of 'Invisible Exports,' specifically shipping freights and insurance (estimated at £90 million) and banking commissions, alongside the returns from capital invested abroad (estimated at over £62 million), which naturally take the form of imports.
Read full textThis chapter argues that while total national imports and exports must balance (the equation of indebtedness), there is no reason for trade to balance between any two specific countries. Smart explains how the network of international banking and 'triangular' exchange allows debts to be settled through third parties, using the example of Canadian wheat and Manchester cotton.
Read full textSmart refutes the idea that Britain is 'living on its capital' or 'bleeding to death' by selling securities to pay for imports. He points to rising income tax returns from foreign investments as proof of increasing national wealth and concludes that the balance of trade is not a sign of decay.
Read full textSmart argues that the Balance of Trade is a poor indicator of national prosperity. He explains that Britain's apparent trade deficit is balanced by 'invisible exports' like shipping and banking services, as well as returns on large foreign investments. He further notes that a surplus of exports in other nations, like the United States, may simply reflect different industrial stages or borrowing needs rather than superior economic health.
Read full textThis segment explores the fundamental economic principle that imports and exports are mutually dependent. Smart argues that checking imports inevitably checks exports because foreign trade is an exchange of goods and services; if a country refuses to buy, it destroys the mechanism by which others can pay for its own exports. He cites historical data from Peel's reforms and the repeal of the Corn Laws to demonstrate that increasing imports leads to a proportional rise in exports.
Read full textSmart defines the difference between Free Trade and Protectionist policies. A Free Trade country imposes duties solely for revenue, ensuring that imported goods are taxed at the same rate as domestic goods (excise). In contrast, Protectionism seeks to favor the producer over the consumer. From a theoretical standpoint, Smart argues that Free Trade aligns with the global division of labor, treating international borders as irrelevant to industrial efficiency.
Read full textSmart examines why continental nations and the United States maintain protectionist policies despite economic theory. For Europe, it is often a matter of national security and self-sufficiency in the face of potential war. For the US, the argument shifts to protecting the producer and ensuring steady employment. Smart acknowledges the moral and social importance of work but questions whether government intervention via tariffs is the effective way to provide it.
Read full textSmart critiques the 'Infant Industry' argument, noting that protected industries rarely 'grow up' and instead become powerful vested interests. He illustrates how tariffs penalize consumers to provide extra profits to manufacturers or to sustain inefficient industries. While acknowledging Mill and Sidgwick's theoretical concessions for temporary protection, Smart argues that in practice, such measures are rarely withdrawn and lead to permanent economic friction.
Read full textSmart provides a historical overview of protectionism, tracing it from Colbert's mercantilism to the American Civil War. He explains that Britain's move to Free Trade in 1846 was a revolutionary break from the past, whereas other nations remained tied to protectionist systems due to the massive scale of their vested interests, such as the French peasantry. He details how American protectionism was fueled by the disruptions of the War of 1812 and later the revenue needs of the Civil War.
Read full textSmart examines the search for a 'principle' behind tariff rates, finding none but the influence of warring political interests. He critiques McKinley's goal of total prohibition and Roosevelt's 'pauper labour' argument. He also discusses Professor J.B. Clark's proposal to equalize costs of production, but concludes that in practice, tariffs are 'grotesque compromises' resulting from lobbying by groups like the French 'Beetroot and Wine' interests or American manufacturers.
Read full textSmart analyzes the practical impossibility of creating a 'scientific' tariff. He explores the contradictions in taxing food (which raises the 'cost of production of Man') and the extreme difficulty in defining 'raw materials.' He demonstrates how the finished product of one industry (like yarn or pig-iron) is the raw material of another, meaning that any attempt to protect one stage of production inevitably penalizes the next. The segment concludes with examples of the absurdities found in customs classifications.
Read full textSmart summarizes his objections to Protectionism into four main points: the impossibility of a fair tariff, the inevitable decay of political morality as legislators become agents for private interests, the rise of commercial immorality (smuggling and bribery), and the increase in domestic costs which ultimately hampers a nation's ability to export.
Read full textArgues that Protection increases the cost of living and production at home, thereby handicapping a nation's ability to export unless natural resources or scale outweigh the burden. It critiques the use of 'drawbacks' as a mischievous machinery that results in charging domestic consumers more than foreign ones.
Read full textDefines taxation as a price for common services and argues that Protection is a form of delegated taxation where the government allows producers to levy 'taxes' on consumers via high prices. Smart contrasts revenue-generating customs duties (where the state receives the funds) with protective duties (where the home producer pockets the difference due to the lack of an excise tax). He uses the history of monopolies, the establishment of the police force by Sir Robert Peel, and municipal services in Glasgow to illustrate that while taxes should be transparent and for the public good, Protection functions as a private subsidy at the public's expense.
Read full textEvaluates Protection against standard economic principles of taxation, specifically equity and the 'ability to pay.' Smart argues that protective duties act as a regressive income tax that falls most heavily on the poor, who cannot avoid purchasing protected necessities. He critiques the 'Infant Industry' argument as a perpetual burden on consumers and uses the American tinplate industry to show how protecting one trade can parasitically damage others, such as the canned fruit trade. He concludes that the British system of direct income tax and death duties is far more scientific and equitable than the opaque and arbitrary price-raising of Protection.
Read full textAnalyzes the concept of Retaliation, distinguishing between responses to hostile foreign tariffs and responses to 'dumping.' Smart questions the morality and efficacy of 'hitting back,' suggesting that the British policy of open ports was a deliberate choice for its own benefit, not a bargain. He introduces the idea that Retaliation is often proposed as a means to force other nations into freer trade, but warns that the term often masks destructive motives.
Read full textExamines the historical failure of retaliatory tariff wars, citing examples between Russia and Germany, France and Switzerland, and France and Italy. Smart argues that Great Britain is uniquely ill-equipped for such a policy because it lacks the administrative machinery for flexible duties and because the 'Most Favoured Nation' clause ensures that any hard-won concessions would benefit competitors as much as the UK. He contends that Protectionist nations view their tariffs as domestic policy rather than international hostility, making them unlikely to yield to threats.
Read full textDiscusses the practical difficulties of implementing retaliatory duties. Smart categorizes potential targets for taxation—monopoly goods, food, and raw materials—and explains how taxing each would inevitably harm the British consumer or manufacturer. He warns that since British industry is built on the foundation of cheap global inputs, any retaliatory duty risks adding a third injury to the two already caused by foreign protectionism.
Read full textSmart examines the practical obstacles to a policy of retaliation on manufactured goods. He argues that most imports from major rivals like Russia and the United States consist of food and raw materials, leaving a very small field for retaliatory duties. He highlights the administrative nightmare of searching all ships for minor items like toys or musical instruments and warns that temporary retaliatory duties create artificial price spikes and encourage the growth of vested interests that are difficult to dismantle without harming domestic producers.
Read full textA brief metaphorical critique of using the threat of retaliation as a diplomatic tool, suggesting that without a willingness to follow through on harmful economic actions, the policy is merely an undignified bluff.
Read full textSmart defines 'dumping' as the practice where protected Trusts or Kartells sell surplus goods abroad at or below cost while maintaining high prices at home. While acknowledging the disruption this causes to home manufacturers due to its intermittent nature, he argues that dumping provides significant compensations by supplying cheap raw materials to secondary industries like shipbuilding and tinplate manufacturing. He provides evidence that this often results in a 'Nemesis' for the dumping country, as their own manufacturers are undersold by British firms using the dumped materials.
Read full textSmart critiques the proposal to use import duties as a remedy for dumping. He argues that such duties are essentially protectionist and may fail to stop dumping if the foreigner's home market is large enough to absorb the loss. He also points out the extreme difficulty in defining 'cost' or 'unfair' prices, noting that even British colonies like Canada have accused Britain of dumping. He concludes that every claim for counter-duties would require impossible levels of government investigation and invite corruption.
Read full textSmart presents a statistical defense of the UK's economic health under Free Trade. He cites rising national income, declining pauperism, increased real wages, and growing bank deposits and shipping tonnage as evidence of widespread prosperity. He argues that the material conditions of the 'Good Life' in Britain are superior to almost any other nation, evidenced by shorter working hours and the prevalence of luxuries like leisure travel and bicycles among the working classes.
Read full textSmart challenges the notion that export figures are the primary measure of national prosperity. He argues that a flourishing country may see its capital and labor diverted into internal improvements, such as house building and municipal infrastructure, rather than foreign trade. He posits that a decline in exports might simply reflect a more profitable employment of resources at home rather than industrial decay.
Read full textSmart addresses the 'stagnation' of British exports by critiquing the choice of 1872 as a base year for comparison. He explains that the early 1870s were years of abnormal 'boom' and inflated prices caused by the Franco-German War and massive railway expansion. By using quinquennial averages and accounting for the increased purchasing power of money, he demonstrates that British exports have actually grown significantly and that the UK maintains a substantial lead in exports per head compared to its rivals.
Read full textSmart argues that comparing export values from 1872 to the early 1900s is misleading due to a massive fall in the general price level. He attributes this decline to increased efficiency in transportation (Suez Canal) and a contraction in the money supply following the collapse of the bimetallic system in 1873. By adjusting for these price changes using Sauerbeck's Index Number, he demonstrates that the volume of British exports has actually increased significantly despite appearing stagnant in nominal value.
Read full textThis section critiques the use of 1872 as a baseline for economic comparison and exposes the 'Fallacy of Percentages' used to suggest British decline. Smart explains that smaller or newer economies (like Japan or a newly unified Germany) naturally show higher percentage growth rates than a mature economy like Britain's. He also highlights statistical inconsistencies in German trade data and the unique circumstances of the United States to argue that nominal increases in rival exports do not prove British failure.
Read full textSmart shifts the focus from aggregate national exports to exports per capita, arguing that the prosperity of the individual is the true measure of economic health. He provides data showing that Great Britain maintains a significant lead in exports per head over France, Germany, and the United States. He concludes that absolute increases in rival nations' trade are a natural result of their faster population growth rather than a sign of superior trade policy.
Read full textSmart addresses the protectionist claim that Britain is losing employment by exporting raw materials (like coal) and importing manufactures. He argues that coal production actually involves a higher percentage of labor/wages than many manufactures and that imports are paid for by domestic industry, merely shifting labor between sectors. He cites Mill and Marshall to explain that the 'National Dividend'—the total product—is the true source of demand for labor, and that protectionism merely diverts capital into less efficient, artificial channels.
Read full textSmart examines the proposal for Imperial Preference, using the Canadian experience as a case study. He notes that despite Canada granting a preference to British goods since 1897, the growth of imports from non-preferential countries (like the US and France) has outpaced British growth. He argues that Canadian tariffs remain high enough to protect their own manufacturers against British competition, making the preference 'altogether disappointing' as a tool for expanding British trade.
Read full textSmart analyzes the statistical limits of potential gains from colonial preferences, finding the total addressable foreign trade in colonial markets to be relatively small (around £28 million). He then discusses the 'price' of such a system: the necessity of taxing foreign food and raw materials. He argues that even a small tax on corn is a form of indirect taxation that will either raise prices for the poor or unfairly burden specific domestic classes (like bakers or millers) to provide a marginal benefit to colonial producers.
Read full textSmart argues that if a small tax on foreign grain does not raise the market price in Great Britain, the proposed Imperial Preference fails its primary objective. Without a price increase, Canadian farmers have no financial inducement to expand production or settle new land, meaning the 'preference' provides no actual benefit to the colonies while potentially hurting foreign producers like the United States without aiding the British colonist.
Read full textAn analysis of the financial burden placed on British consumers if food taxes successfully raise prices. Smart calculates that a 2s. duty on grain would cost consumers over £8 million, with only a fraction reaching the Colonies as a 'gift,' while the rest benefits the home agricultural interest or the Exchequer. He critiques Chamberlain's suggestion that reducing tea and sugar duties would offset these costs, labeling it a 'passing mention' of an ingenious but flawed calculation.
Read full textSmart warns that artificial price supports for wheat will lure British farmers back into a vulnerable industry, repeating the mistakes of sixty years ago. While the Colonies have virgin soil, British expansion requires cultivating more costly, marginal lands; when global prices eventually fall due to increased colonial supply, British farmers will face ruinous losses as they did after the repeal of the Corn Laws. He advocates for the 'beneficent revolution' of modern farming—pasture, dairy, and fresh produce—over artificial wheat protection.
Read full textThis chapter examines the political and social costs of using preferential tariffs as a bond for Empire. Smart argues that demanding a 'quid pro quo' from the mother country—which already provides defense, capital, and free markets—is unreasonable and risks colonial disintegration. He highlights the logistical impossibility of creating a 'fair' tariff that satisfies diverse colonial interests (e.g., wheat vs. wool) without causing internal bickering and loss of fiscal liberty for all members of the Empire.
Read full textSmart reflects on the year-long discussion of Free Trade, concluding that while the case for it remains unshaken, it is merely a 'condition' of trade. Success depends on how a nation uses its freedom; factors like natural resources, technical education (as seen in Germany), business methods (American Trusts), and social habits (sobriety and efficiency) can outweigh fiscal policy. He argues that British manufacturers must adapt to modern competition by improving methods and labor efficiency rather than relying on protection.
Read full textSmart argues that while Free Trade was undeniably beneficial in 1846 when Britain held a manufacturing monopoly, the global landscape has changed. He discusses the rise of foreign competition and the impossibility of Britain remaining the sole 'workshop of the world' as other nations develop their own industries. Includes a significant footnote by Professor Marshall on the historical advantages of British industry.
Read full textThe author examines the physical limits of British production capacity and the natural tendency of growing nations to develop internal trade. He acknowledges the 'hard side' of international competition and the domestic social costs of industrial progress, such as the displacement of home-based workers by factories, while maintaining that internal protection is never the solution.
Read full textSmart discusses how Free Trade compels workers and employers to be resourceful and adapt to global changes. He cites examples like the motor car and footwear industries where British makers successfully adapted to foreign innovations. He defines the employer's function as organizing capital and bearing the brunt of change, arguing that those unfit for this task should not be subsidized by protection.
Read full textThe concluding argument focuses on the political advantages of Free Trade. Smart asserts that the British Empire's expansion is tolerated by other nations because Britain maintains an 'Open Door' policy, throwing open new ports to all nations rather than keeping them as private preserves. This policy aligns commercial gain with the universal interest in stable government.
Read full textA technical appendix critiquing the use of shipping statistics in the protectionist debate. Smart explains the differences between gross and net tonnage and actual carrying capacity. He argues that simple tonnage comparisons used by Joseph Chamberlain are fallacious because they ignore vessel efficiency, age, and the inclusion of non-competing local traffic (like American lake steamers) in foreign statistics.
Read full textComprehensive alphabetical index of subjects, authors, and concepts discussed throughout the book, ranging from 'Abundance' to 'Workshop of the World'.
Read full textAdvertisement for William Smart's 'Studies in Economics', including a preface excerpt where the author discusses his transition to the doctrines of the Austrian School and the theory of value.
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