CHAPTER XI HOW TO KEEP FOREIGN TRADE
The problem is how to keep our foreign export trade.
We are told that unless we can compete in price with foreign nations we must lose our foreign trade; and we are told that the only means of competing with foreign nations in price is to lower the wages of the British worker.
We will test these statements by looking into the conditions of one of our great industries, an industry upon which many other industries more or less depend: I mean the coal trade.
At the time of the great coal strike the colliers were asked to accept a reduction of wages because their employers could not get the price they were asking for coal.
The colliers refused, and demanded a "living wage." And they were severely censured by the Press for their "selfishness" in "keeping up the price of coal," and thereby preventing other trades, in which coal was largely used, from earning a living. They were reproached also with keeping the price of coal so high that the poor could not afford fires.
Now, if those other trades which used coal, as the iron and the cotton trades, could not carry on their business with coal at the price it was then at, and if those trades had no other ways and means of reducing expenses, and if the only factor in the price of coal had been the wages of the collier, there might have been some ground for the arguments of the Press against the colliers.
But in the iron trade one item of the cost of production is the royalty on the iron. Royalty is a kind of rent paid to the landlord for getting the iron from his land.
Now, I want to ask about the iron trade, Would it not be as just and as possible to reduce the royalty on iron in order to compete with foreign iron dealers as to reduce the wages of the iron-worker or the collier?
The collier and the iron-worker work, and work hard, but the royalty owner does nothing.
The twenty-five per cent. reduction in the colliers' wages demanded before the great strike would not have made a difference of sixpence a ton in the cost of coal.
Now the royalties charged upon a ton of manufactured pig iron in Cumberland at that time amounted to 6s. 3d.; whereas the royalties on a ton of manufactured pig iron in Germany were 6d., in France 8d., in Belgium 1s. 3d. Now read this—
In 1885 a firm in West Cumberland had half their furnaces idle, not because the firm had no work, but simply owing to the high royalties demanded by the landowner. This company had to import iron from Belgium to fulfil their contract with the Indian Government. With a furnace turning out about 600 tons of pig iron per week the royalties amounted to £202, while the wages to everyone, from the manager downwards, amounted to only £95. This very company is now amongst our foreign competitors.
The royalties were more than twice the amount of the wages, and yet we are to believe that we can only keep our iron trade by lowering the wages.
The fact is that in the iron trade our export goods are taxed by the idle royalty owner to an amount varying from five to twelve times that of the royalty paid by our French, German, and Belgian competitors.
Now think over the iron and cotton and other trades, and remember the analysis we made of the cost of production, and tell me why, since the rich landlord gets his rent, and since the rich capitalist gets his interest or profits out of cotton, wool, or iron, the invariable suggestion of those who would retain our foreign trade by reducing the cost of production amounts to no more nor less than a reduction of the poor workers' wages.
Let us go back to the coal trade. The collier was called selfish because his demand for a living wage kept up the price of coal. The reduction asked would not have come to 6d. a ton. Could not that sixpence have been saved from the rents, or interest, or profits, or royalties paid at the cost of the production of other goods? I think you will find that it could.
But leave that point, and let us see whether there are not other factors in the cost of coal which could more fairly be reduced than could the wages of the collier.
Coals sells at prices from 10s. to 30s. a ton. The wages of the collier do not add up to more than 2s. 6d. a ton.
In the year before the last great coal strike 300,000 miners were paid £15,000,000, and in the same time £6,000,000 were paid in royalties. Sir G. Elliot's estimate of coal owners' profits for the same year was £11,000,000. This, with the £6,000,000 paid in royalties, made £17,000,000 taken by royalty owners and mine owners out of the coal trade in one year.
So there are other items in the price of coal besides the wages of the colliers. What are they? They may be divided into nine parts, thus—
1. Rent.
2. Royalties.
3. Coal masters' profits.
4. Profits of railway companies and other carriers.
5. Wages of railway servants and other carriers' labourers.
6. Profits of merchants and other "middlemen."
7. Profits of retailers.
8. Wages of agents, travellers, and other salesmen.
9. The wages of the colliers.
The prices of coal fluctuate (vary), and the changes in the prices of coal cause now a rise and now a fall in the wages and profits of coal masters, railway shareholders, merchants, and retailers.
But the fluctuations in the prices of coal cause very little fluctuation in rent and none in royalties.
Again, no matter how low the price of coal may be, the agents, travellers, and other salesmen always get a living wage, and the coal owners, railway shareholders, merchants, landlords, and royalty owners always get a great deal more than a living wage.
But what about the colliers and the carriers' labourers, such as railway men, dischargers, and carters?
These men perform nearly all the work of production and of distribution. They get the coal, and they carry the coal.
Their wages are lower than those of any of the other seven classes engaged in the coal trade.
They work harder, they work longer hours, and they run more risk to life and limb than any other class in the trade; and yet!——
And yet the only means of reducing the price of coal is said to be a reduction in the collier's wage.
Now, I say that in reducing the price of coal the last thing we should touch is the collier's wage.
If we must reduce the price of coal, we should begin with the owners of royalties. As to the "right" of the royalty owner to exact a fine from labour, I will content myself with making two claims—
1. That even if the royalty owner has a "right" to a royalty, yet there is no reason why he, of all the nine classes engaged in the coal trade, should be the only one whose receipts from the sale of coal shall never be lessened, no matter how the price of coal may fall.
2. Since the royalty owner and the landlord are the only persons engaged in the trade who cannot make even a pretence of doing anything for their money, and since the price of coal must be lowered, they should be the first to bear a reduction in the amount they charge on the sale of it.
Next to the landlords and royalty owners I should place the railway companies. The prices charged for the carriage of coal are very high, and if the price of coal must be reduced, the profits made on the carriage should be reduced.
Third in order come the coal owners, with what they call "a fair rate of interest on invested capital."
How is it that the Press never reproaches any of those four idle and overpaid classes with selfishness in causing the poor workers of other trades to go short of fuel?
How is it that the Press never chides these men for their folly in trying to keep up profits, royalties, and interest in a "falling market"?
It looks as if the "immutable laws" of political economy resemble the laws of the land. It looks as if there is one economic law for the rich and another for the poor.
The merchants, commission agents, and other middlemen I leave out of the question. These men are worse than worthless—they are harmful. They thwart; and hinder, and disorder the trade, and live on the colliers, the coal masters, and the public. There is no excuse, economic or moral, for their existence. But there is only one cure for the evil they do, and that is to drive them right out of the trade.
I claim, then, that if the price of coal must be reduced, the sums paid to the above-named three classes should be cut down first, because they get a great deal more, and do a great deal less, than the carriers' labourers and the colliers.
First as to the coal owners and the royalty owners. We see that the whole sum of the wages of the colliers for a year was only £6,000,000, while the royalty owners and the coal owners took £17,000,000, or nearly three times as much.
And yet we were told that the miners, the men who work, were "selfish" for refusing to have their wages reduced.
Nationalise the land and the mines, and you at once save £17,000,000, and all that on the one trade.
So with the railways. Nationalise the railways, and you may reduce the cost of the carriage of coal (and of all goods and passengers) by the amount of the profits now made by the railway companies, plus a good deal of the expense of management.
For if the Municipalities can give you better trams, pay the guards and drivers better wages for shorter hours, and reduce penny fares to halfpenny fares, and still clear a big profit, is it not likely that the State could lower the freights of the railways, and so reduce the cost of carrying foods and manufactured goods and raw material?
Our foreign trade, and our home industries also, are taxed and handicapped in their competition by every shilling paid in royalties, in rents, in interest, in profits, and in dividends to persons who do no work and produce no wealth; they are handicapped further by the salaries and commissions of all the superfluous managers, canvassers, agents, travellers, clerks, merchants, small dealers, and other middlemen who now live upon the producer and consumer.
Socialism would abolish all these rents, taxes, royalties, salaries, commissions, profits, and interests, and thereby so greatly reduce the cost of production and of carriage that in the open market we should be able to offer our goods at such prices as to defy the competition of any but a Socialist State.
But there is another way in which British trade is handicapped in competition with the trade of other nations.
It is instructive to notice that our most dangerous rival is America, where wages are higher and all the conditions of the worker better than in this country.
How, then, do the Americans contrive so often to beat us?
Is it not notorious that the reason given for America's success is the superior energy and acuteness of the American over the British manager and employer? American firms are more pushing, more up-to-date. They seek new markets, and study the desires of consumers; they use more modern machinery, and they produce more new inventions. Are the paucity of our invention and the conservatism of our management due to the "invincible ignorance" or restrictive policy of the British working man? They are due to quite other causes. The conservatism and sluggishness of our firms are due to British conceit: to the belief that when "Britain first at Heaven's command arose from out the azure main" she was invested with an eternal and unquestionable charter to act henceforth and for ever as the "workshop of the world"; and say what they will in their inmost hearts, her manufacturers still have unshaken faith in their destiny, and think scorn of any foreigner who presumes to cross their path. Therefore the British manufacturer remains conservative, and gets left by more enterprising rivals.
A word as to the superior inventiveness of the Americans. There are two great reasons why America produces more new and valuable patents. The first cause is the eagerness of the American manufacturer to secure the newest and the best machinery, and the apathetic contentment of the British manufacturer with old and cheap methods of production. There is a better market in America for inventions. The second cause is the superiority of the American patent law and patent office.
In England a patentee has to pay £99 for a fourteen years' patent, and even then gets no guarantee of validity.
In America the patentee gets a seventeen years' patent for £7.
In England, out of 56,000 patents more than 54,000 were voided and less than 2000 survived.
In America there is no voiding.
One of the consequences of this is that American firms have a choice of thirty-two patents where our firms have one.
According to the American patent office report for 1897, the American patents had, in seventeen years, found employment for 1,776,152 persons, besides raising wages in many cases as much as 173 per cent.
These few figures only give a view of part of the disadvantage under which British inventors and British manufacturers suffer.
I suggest, as the lawyers say, that British commercial conservatism and the British patent law have as much to do with the success of our clever and energetic American rivals as has what the Times calls the "invincible ignorance" of the British workman who declines to sacrifice his Union to atone by longer hours and lower wages for the apathy of his employers and the folly of his laws.
I submit, then, that the remedy is not the destruction of the Trade Unions, nor the lowering of wages, nor the lengthening of hours, but the nationalisation of the land, the abolition of royalties, the restoration of agriculture, and the municipalisation or the nationalisation of the collieries, the iron mines, the steel works, and the railways.
The trade of this country is handicapped; but it is not handicapped by the poor workers, but by the rich idlers, whose enormous rents and profits make it impossible for England to retain the foremost place in the markets of the world.
So I submit to the British workman that, since the Press, with some few exceptions, finds no remedy for loss of trade but in a reduction of his wages, he would do well to look upon the Press with suspicion, and, better still, to study these questions for himself.