In a little book recently published, an attempt is made to show that British trade is being knocked to pieces by German competition, that already the sun has set on England’s commercial supremacy, and that if we are not careful the few crumbs of trade still left to us will be snapped up by Germany. This depressing publication, aptly entitled “Made in Germany,” has received the quasi-religious benediction of an enterprising and esoteric journalist, and the puff direct from a sportive ex-Prime Minister. Thus sent off it is sure to be widely circulated, and, being beyond dispute well written, to be also widely read. Unfortunately—such is the nature of the book—it cannot be so widely criticised. It consists largely of quoted statistics and deductions therefrom, and few readers will have the means at hand for verifying the many figures quoted, while fewer still will have the patience to compare them with other figures which the author omits to mention. As a necessary consequence, a large number of persons will believe that Mr. Williams has proved his case, and some of them will jump to the conclusion, which is evidently the conclusion to which Mr. Williams himself leans, that the only way to prevent the commercial downfall of our country is to reverse the Free Trade policy which we deliberately adopted fifty years ago.

THE ART OF EXAGGERATION.

That may or may not be a wise thing to do, but at least let us be certain before taking action, or before taking thought which is preliminary to action, that we know our facts, and all our facts. The second point is as important as the first. On hastily reading Mr. Williams’s book for the first time, my impression was that he had only erred by overlooking facts which told on the other side. On general grounds, considering the signs of prosperity on every side, it seemed to me impossible that the condition of our foreign trade could be so bad as the author of “Made in Germany” paints it. A cursory glance at a few staple figures convinced me that my general impression was a sound one, that our trade was not going to the dogs, and that Mr. Williams had only succeeded in producing so gloomy a picture by fixing his gaze on the shadows and shutting his eyes to the sunlight. On this supposition I began a more critical examination of his book, not with a view to refuting his positive statements, but with a view to showing that in spite of the ugly facts which he had, on the whole usefully, brought to light, there were counterbalancing considerations from which we might draw, at any rate, partial consolation. This I propose to do, but in addition I shall be able to show that many of Mr. Williams’s alleged ugly facts are not in reality so ugly as he makes them look, and that what he has done, in his eagerness to prove his case, is to so choose his figures and so phrase his sentences as to convey in particular instances an entirely false impression. How this is done will be shown in detail later on. For the present it is sufficient to state that it is done, and that some of the most alarmist statements in “Made in Germany” will not bear critical examination. In a word, the author, in his polemical zeal, has sinned both sins—he has suggested the false and he has omitted the true; he has misrepresented, in particular instances, the facts to which he refers, and he has not referred at all to facts which refute his general argument.

THE WHOLE TRUTH.

It is with these that I propose first to deal, with the facts which show that our trade is in a very healthy condition, and that though Germany is also doing well and hitting us hard in some trades, there is no reason to believe that her prosperity is, on the whole, injuring us. And to guard myself, at the outset, against a temptation to which Mr. Williams has frequently succumbed—the temptation of picking out years peculiarly favourable to my argument—I propose to take the last ten or the last fifteen years, for which statistics are available, and to give wherever possible the figures for each year in the whole period. The figures that will be here quoted are all taken from official records, except when otherwise stated.

OUR TOTAL TRADE FOR TEN YEARS.

The first point to attack is the question of the total import and export trade of the United Kingdom. The figures are contained in the following table:—

Ten Years’ Trade of the United Kingdom

(Exclusive of Bullion and Specie).
In Millions Sterling.

These figures may be illustrated as follows:—

These figures hardly bear out the statement that “commercial dry rot,” to use one of Mr. Williams’s favourite phrases, has already laid hold of us. In spite of the fall in prices, the money value of our trade, both import and export, has fully maintained its level. It is true that the year 1886, with which the diagram starts, was a year of depression, but the point which I wish to bring out by the diagram is not that 1895 was a better year than 1886, but that the general course for the whole period of ten years shows no downward tendency. Later on I shall give a diagram, covering a period of fifteen years, which brings out the same point even more clearly. It is important, however, at once to point out that the mere comparison of the money totals of our trade in different years is necessarily inconclusive, because no account is taken of prices. To get a true comparison between any two years, say 1895 and 1890, we ought to calculate what the value of our trade in 1895 would have been if each separate commodity had been sold at the prices of 1890. Were this done, it would probably be found that 1895, instead of showing a decline, would show an immense advance. A similar comparison has been privately worked out in one of the Government offices for the years 1873 and 1886 with startling results, which I am permitted to quote. It must be premised that only certain articles are entered in our returns by quantity as well as by value, and it is therefore only between these that such a comparison as I have indicated can be made. In 1873, the total declared value of our exports of these articles was 172 millions sterling; in 1886, it was 131 millions, showing an apparent fall of 41 millions. But if these exports of 1886 had been declared at the prices of 1873 the total value would have been 215 millions. In this sense, then, our aggregate trade in these commodities in 1886, instead of being 41 millions worse than 1873, was 43 millions better. This is undoubtedly an extreme illustration, for the prices of 1873 were exceptionally high, and those of 1886 exceptionally low. Nevertheless, the illustration is most instructive as showing how extremely misleading it may be to compare values only, without taking account of quantities. Unfortunately, when we are dealing with the total trade of a country, a comparison of values is the only comparison possible, for there is no other common denominator by means of which varied articles—say, steam ploughs, cotton piece-goods, and patent medicines—can be brought into our table.

OUR IMPORTS OF GOLD AND SILVER.

To return to our diagram—it may be asked, “How does it happen that there is such a large and growing excess of imports over exports? Surely that is a bad sign.” On the face of it, why should it be? It only means that we are, apparently, getting more than we give, and most people do not in their private relations regard that as a hardship. There are, however, people to be found who, seeing that we every year buy more goods than we sell, will jump to the conclusion that we must pay for the difference in cash. Where we are to get the cash from they do not pause to think. Hitherto the Welsh hills have resolutely refused to give up their gold in paying quantities, and as for the silver which we separate from Cornish lead, it is worth something less than £50,000 a year. The notion then that we pay for our foreign purchases with our own gold and silver may be dismissed at once, although a hundred years ago this same delusion had not a little influence in shaping our commercial policy. As a matter of fact, instead of sending gold and silver out of the country to pay for our excess of imports, we almost every year import considerably more bullion and specie than we export. The actual figures are given in the following table:—

The Movements of Bullion and Specie.

In Millions Sterling.

EXCESS OF IMPORTS OVER EXPORTS.

The movements of gold and silver then, instead of helping to explain the excess of imports over exports, only increase the need for explanation. Happily, the explanation that can be given, though it cannot be statistical, is fully sufficient. It is fourfold. In the first place the Custom House returns do not include in the tables of exports the large export which we every year make of ships built to order for foreign buyers, so that our exports appear smaller than they really are by at least five millions a year. Secondly, an allowance must be made for the profit on our foreign trade. If, in return for every pound’s worth of British goods sent out from our ports, only a pound’s worth of foreign goods came back, our merchants would make a better living by selling penny toys along the Strand. What the average profit is on our foreign trade there is no means of knowing, but putting it as low as 10 per cent. on the double transaction, we at once account for some £30,000,000 sterling in the difference between our exports and imports. The third item in the explanation is the sum earned by British shipowners for carrying the greater part of the sea-commerce of the world. This sum has been estimated at £70,000,000 a year, but that is only a guess, and it is certainly a high one. Lastly, we have the enormous sum annually due to this country for interest on the money we have lent abroad. The amount of this annual payment can again only be guessed at, but it probably exceeds £100,000,000 a year. Adding then these four items together, and making every allowance for over-estimates, we not only account for the whole excess of imports over exports, but have a balance over, which means that we are still exporting capital to foreign countries. The capital we export goes out in the form of mining machinery to South Africa, steel rails to India, coal to South America; the interest due to us comes home in the form of American wheat, Argentine beef, Australian wool, Indian tea, South African diamonds.

THE WORLD’S TRIBUTE.

Of what do the Protectionists complain? Would they have us forego the interest we are owed? Apparently Mr. Williams would, for he says (page 19) that we ought not to spend all our income from foreign investments “in foreign shops.” How else, in the name of the Prophet, are we to receive all or any part of what is due to us from foreigners, whether it be due for interest on investments, or for goods carried, or for ships sold? Does Mr. Williams mean that we are to compel foreign nations to pay us a couple of hundred millions a year in actual gold and silver, and then dig a hole in the ground and sit on our hoard like an Indian cook who has saved money out of the perquisites of his profession? Gold and silver are useless to us beyond a very few millions every year; if more bullion were sent the market would reject it. If we are to be paid at all we must be paid in foreign commodities, and the mechanism of commerce enables us to select just those commodities which we most want. This is the whole story of our excess of imports over exports. Furthermore, that excess would be even greater than it is did we not every year send fresh millions abroad on loan to our Colonies and foreign countries, to produce in due course (it is to be hoped) additional hundreds of thousands in the way of interest.

OUR ENTREPÔT TRADE.

There is one other important point to be dealt with in considering the movement of our trade as a whole. It is this—that part of the enormous quantity of goods we import is not consumed by ourselves, but is re-exported to foreign countries or to our Colonies. For many reasons it is interesting to distinguish these re-exports from the exports of goods produced within the United Kingdom. The separate figures for the last fifteen years are given in the following table:—

Our EntrepÔt Trade and our Home Trade.

In Millions Sterling.

There is not much to grumble at in these figures. Our entrepÔt trade, which was supposed to be slipping away, seems somewhat to halt in the process, in spite of the notorious and not entirely unpleasing fact that our Colonies are now doing a larger direct trade with foreign countries than ever before. At the same time the figures for the exports of our own goods are most satisfactory if we take into account the lower range of prices at which our manufacturers are now working. Altogether there is nothing in the general figures of our trade to justify the wild statements that “dry rot” has set in, and that “the industrial glory of England is departing.”