Imperialism and social reform english Social-Imperial Thought 1895-1914



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NEO-MERCANTILISM


If we consider the basic conceptions underlying the policies of the mercantilist statesmen of the sixteenth through eighteenth centuries, we can appreciate the similarities between the doctrine of the Tariff Reformers and that of the older mercantilists. Gustav Schmoller, one of the leaders of the German school of economic history, has described mercantilism as an agent of unification, as a nation-creating force which operated against the medieval combination of universalism and particularism. 11 One of the leading British economic historians, William Cunningham, who was to become an adherent of the 'imperialism of protection,' thought of mercantilism primarily

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10

Fiscal Blue Book 1903, pp. 32-33.

11

Gustav Schmoller, The Mercantile System and its Historical Significance ( New York, 1910).

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as a system of power. 12 Eli Heckscher, the historian of mercantilism, combined these concepts when he spoke of as twin mercantilist objectives the effort 'to secure the state's power internally against particularist institutions' and the strengthening of 'the external power of the state in relation to other states.' 13 Neo-mercantilism accepted both these objectives. Can it not be said that the 'neo-mercantilism' of the Tariff Reformers had for its goal the construction of a national and imperial economy in opposition to the Liberal, Cobdenite synthesis of cosmopolitanism and individualism? Furthermore, Tariff Reform aimed not only at building up state power against laissez-faire individualism but also -- using the mercantilist instrument of a tariff -- constructing a protective rampart against foreign economic invasion.

The mercantilist thought first of all about national power not necessarily about national wealth. Sir Francis Bacon has been quoted as asserting the necessity of 'bowing the ancient policy of this estate, from consideration of plenty to consideration of power.' Even Adam Smith was enough of a child of the mercantile age to say that 'defence is of much more importance than opulence.' In line with these ideas concerning power, the mercantilist had set the goal of self-sufficiency and hoped that a colonial empire might help the state in its attainment. Furthermore, for the mercantilist, once again quoting Heckscher, the 'well-being of the subject had the function of furnishing the necessary support for the power of the state.' The mercantilist considered a large and healthy population essential for the defence of the state. 'People,' Davenant had written in the seventeenth century, 'are the real Strength and Riches of a Country.' Early marriage and large families were encouraged. The mercantilists set up employment as a criterion of national well being and, believing unemployment largely a result of a surplus of goods, argued that only by outright prohibition of imports or by tariff restrictions could employment be set aright. In 1671, the mercantilist theorist Coke had concluded that 'the end of Trade is threefold, viz. Strength, Wealth, and Employment for all sorts of People.'

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12

See infra,Chapter X, infra.

13

See Eli F. Heckscher, Mercantilism ( London: Allen & Unwin, 1935), II, p. 15.

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Since employment was so important, the mercantilist favoured exports of manufactured goods rather than raw materials. The mercantilist thought primarily of the interest of the producer of goods not the consumer, espoused the so-called gospel of high price which Child, Cary, and Defoe extended into a gospel of high wages. 14

Was all this not like the programme of the Tariff Reformers? The alliance between the imperialists -- determined to respond to colonial offers of a preferential system, especially in view of colonial hesitancy to enter into closer political and defensive ties -- and the manufacturers, hard-pressed by foreign competition, produced a neo-mercantilist imperialism. It was an imperialism of a self-contained empire, sheltered by high tariff walls. The tariff would be used as a retaliatory batteringram by the empire to enter protected markets; preference would guarantee markets within the empire. The Tariff Reformers regarded with cynicism the oft-quoted Board of Trade statistics which indicated growing British prosperity. They were convinced this 'prosperity' was being achieved at the expense of the national welfare and security. They subordinated wealth to considerations of power just as their mercantilist predecessors had. Their emphasis was not upon ephemeral profits but upon what they considered the more abiding features of national strength. The title of a pamphlet written by a leading Tariff Reformer -- Money-power and Manpower 15 -- described in Tariff Reform terms the difference of attitude between the opposing systems. The Tariff Reformers were populationists, concerned about the growing unemployment. Dividends from an Argentine railway, they felt, might add to the national income, as reported by the Board of Trade, but did not add one whit to the national welfare: the railway did not give employment to one of Britain's thousands of unemployed; its existence did not in any way make Britain more secure against its enemies; the men whom it employed would not serve in British armies. Such an investment they

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14

The quotations cited from the writings of the mercantilist economists were derived from Ibid., II, pp. 16, 20, 49, 159.

15

H. J. Mackinder, Money-Power and Man-Power: The Underlying Principles, Rather Than the Statistics of Tariff Reform ( London, 1906).

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regarded as first-class evidence of the pursuit of profit regardless of the national interest.

The mercantilist goal of the Tariff Reformers was to secure a 'self-sustaining' Empire. 16 The Tariff Reformers spoke of the necessity of changing the character of British trade. Bonar Law, speaking at Newcastle in 1907, referred to the need that 'a larger and larger proportion of our imports should consist of raw materials, to be worked up at home, and that a larger and larger proportion of our exports should consist of manufactured goods which have given employment to our own workmen.' In discussing British exports of coal with this Newcastle audience, Bonar Law warned that 'coal is capital, and when once it has been removed it cannot be replaced.' 17

The Tariff Reform view of international trade -- like that of the mercantilists -- was derived from their view of the world, a world in which all nations selfishly and ruthlessly applied their power to further their national interests. Free Trade had assumed an international division of labour and was cosmopolitan in outlook. For the Tariff Reformer, as for the mercantilist, a nation's welfare could only be purchased at the expense of her rivals -- and the neo-mercantilist could base his economics upon 'scientific' Social-Darwinism! The Tariff Reformer regarded trade as war, not the war of cannon and sabre perhaps, although this might at times be necessary in the interests of trade, but an unending duel for raw materials and markets. Armies and navies and the threat of the use of force inherent in them were instruments in this war. So were tariffs and reciprocity and preferential arrangements. The very vocabulary of the Tariff Reformers demonstrated these modes of thought. An article in the Fortnightly Review which discussed this subject spoke of Tariff Reformers who stood 'entrenched behind their tariff walls and bombarded each other with exports. . . . Markets are "invaded," "captured," "held," etc., the "killing power of capital" shows itself in the dead and dying industries,' and so on. 18

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16

See, for example, Blackwoods Edinburgh Magazine, CLXXIV, July 1903, pp. 145-164.

17

Bonar Law, The Fiscal Question ( London, 1908), pp. 37-38.

18

W. M. Lightbody, "The Protectionist Ideal of Foreign Trade",in Fortnightly Review, February 1, 1904, 81/75:308-309.

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