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THE IMPERIAL

AND

Asiatic Quarterly
Quarterly Review,

AND ORIENTAL AND COLONIAL RECORD.

JANUARY, 1906.

THE TEA DUTIES.

BY SIR ROPER LETHBRIDGE, K.C.I.E.

THE NEW YORK
PUBLIC LIBRARY,

ASTOR, LENOXK AND TILDEN FOUNDATIONS,

THE brief Report on the recent history of Tea Culture in Assam, lately issued as a Blue-book by Mr. Kershaw for the Government of Assam, accompanied by voluminous returns for the year 1904, is a record of work that may well make us feel proud of our race. Read with the "Tea and Coffee" Blue-book laid before the Imperial Parliament by the Board of Trade in August last, it shows the planting community of India bravely and resolutely struggling against the most intolerable fiscal oppression-oppression that is all the more galling because it is gratuitous and unnecessary, benefiting no one, hated even by those who impose it, and maintained simply in deference to the fanatical prejudices of the slaves of an antiquated and obsolete economic fetish.

Like all other Indian producers, the tea-planter contributes heavily to the Imperial exchequer of India, not merely, or even mainly, in the shape of the direct taxation imposed upon him, but indirectly by reason of the currency and exchange policy of the Government. Everyone is agreed that this policy is a right and necessary one for India, and therefore for the Empire; but due consideration should be shown towards the interests that suffer from its THIRD SERIES. VOL. XXI.

A

adoption. And let it not be forgotten that this policy, with its restrictions on the coinage of silver, acts as a direct protection to the teas of China with its free silver. Of that there can be no doubt in the world, though the Cobden Club would howl if this rank protection of China, naked and unabashed, were mitigated by even the smallest preference given to the teas of India and Ceylon.

This unfair burden would be uncomplainingly borne by the Indian and Ceylon planters, from patriotic motives, if only they were treated with ordinary decency in the other fiscal arrangements of the Government. So, too, they have always cheerfully acquiesced in humanitarian labour legislation, feeling that the results are worth some immediate sacrifice. And it has long been admitted, even by those who are accustomed to look with suspicion on "pioneers of Empire," that there does not exist in the whole world a more humane, a more generous, or a more high-minded body of men as a whole than the planting community. Burdens such as those which I am now speaking of, which have at any rate an intelligible raison d'être, for they are felt to be burdens of Empire and of humanity, have been readily and cheerfully borne. But there are, and ought to be, limits to this patriotic complaisance. And surely those limits have been reached and passed when an industry that has resuscitated a British colony, that has created an Indian province, that has provided a livelihood for vast numbers of our Indian fellow-subjects, is impoverished and strangled for no better reason than the gratification of a well-meaning but exceedingly foolish British prejudice. These Blue-books prove beyond the possibility of a doubt that directly in the markets of the United Kingdom, indirectly in colonial and foreign markets where India is not permitted to negotiate-Indian and Ceylon tea is penalized to an extent that is simply appalling, while the most worthless rubbish of Chinese production is proportionately protected, merely in deference to the Cobdenite fanaticism of a portion (probably a small portion) of the

British electorate, and to the foolish and unreasoning dread of that fanaticism that is entertained by a certain number of British politicians who pose as Free Fooders.

For these papers show most clearly that, in the wrong done to the tea industry, the fons et origo mali is to be looked for simply and solely in the working of our British and Indian fiscal systems. Under the existing British fiscal system, which Mr. Balfour's sarcasm has christened. "Insular Free Trade" much insularity, and very little Free Trade! British-grown tea is subjected to every possible discouragement. It is hit both ways by our insular methods. For insularity refuses to remember that it is grown within the Empire, and therefore is really a domestic product. It treats Indian and Ceylon tea as a foreign product that cannot be grown within our insular limits, and that consequently may be taxed up to the hilt without any reproach of Protection. There is hardly any other commodity of general consumption that can neither be grown in "British" soil nor worked up in "British" factories, if by "British" you mean "insular British."

Tea is as much, and as essentially, "food" as corn is. But if you tax foreign corn you might benefit the British farmer, and that, say the Free Fooders, would be Protection. Now, revenue must be raised somehow. There must be some indirect taxation, for incomes are already taxed at a shilling in the pound, and the income-tax and the death duties between them are rapidly tending to destroy thrift. And indirect taxation, to be adequate, must be levied on articles of general consumption. So the soi-disant Free Traders, and also paradoxical as it may seem-those very foolish and illogical persons, the Free Fooders, have quite made up their minds that on these grounds tea is a commodity on which you may without reproach impose an import duty more than ten times as heavy as that which would be cursed by the Cobden Club if it were imposed on corn.

But to anyone who will take the trouble to examine the

statistics of the tea trade, whether as given in these Bluebooks, or as very lucidly explained in Mr. Stanton's excellent paper read before the Society of Arts, it will at once be evident that they completely knock the bottom out of every one of the Free Fooder's leading contentions-contentions that are usually put forward with a contemptuous air of cocksureness that altogether disdains to argue with such inferior mortals as Conservatives or Tariff Reformers.

For instance, take the contention, maintained by most Free Fooders as if it were a mathematical fact, that all import duties are paid by the consumer, and that consequently Indian tea-planters need not bother about British. import duties, except in so far as they check consumption. Well, as to the import duty checking consumption, the figures yield a somewhat dubious return; for whilst the imports of Indian tea into the United Kingdom during the year 1904-1905 (the year of highest duty) were 2 million pounds less than in 1903-1904, they were nearly 16 million pounds more than in 1902-1903. But as to the consumer paying all, or (in this particular case) any part, of the import duty, we find that the price obtained from the consumer in London averaged under 7d. per pound in 1904-1905, as against 7d. per pound in 1903-1904, and as against 73d. per pound in 1902-1903! Of course, every political economist knows perfectly well that, while it may properly be said that, ceteris paribus, an import duty may be paid by the consumer, and may therefore tend to check consumption, yet the fact is, in this world of sin and woe, there is never, or hardly ever, such a state of affairs as

ceteris paribus. And Lord George Hamilton-though (strangely enough) something of a Free Fooder himself— with his usual straightforwardness frankly acknowledged this fact at Mr. Stanton's meeting at the Society of Arts; for he said: "Of course, there are other influences and agencies far more potent than taxation in regulating prices." He went on to minimize this admission, but these words of his are quite sufficient for my present contention. In every

case, and in regard to every commodity, there will probably always be dozens of factors that will enter into the determination both of price and of consumption. And opinions, even of competent experts, will generally differ as to which is the predominant factor. For instance, the Assam Government says: "The fall in price has been very generally attributed to the increase in the home duty, which is said to have lessened the demand for the better qualities of tea;" though we do not find any considerable increase in the price of the lower qualities to console us for the fall in the better qualities. We simply find that large quantities of the cheaper sorts of the China tea that is protected by its free silver poured in to keep even these prices down. My old friend, Mr. J. D. Rees, I.C.S., C.I.E., in the admirable paper* which he read last year before the East India Association on this subject, was evidently distressed to have to confess that, as a matter of fact, it was the planter chiefly, and possibly the merchant and distributor in a less degree, who pay the tea duty, and not the consumer at all. For he explains the phenomenon by the anxiety of blenders to keep down prices in order to avoid a check in consumption; and since competition between the blenders (as well as, it may be hoped, commercial morality) forbids the supposition of any general fraudulent substitution of the lower qualities for the better, it is obvious that Mr. Rees's explanation simply amounts to a confession that competition has compelled the planters and the distributors to pay the duty.

If we take a longer period of years, the fact becomes still clearer that, owing largely to the effective competition of the protected China tea, the duty is mainly paid by the planters and by the distributors, and not by the consumers. This is what the newly-published Blue-book has to say on the point:

"In 1884 the value of the tea landed in this country averaged 113d. per pound; in 1904 it averaged about 71d. The value of the tea imported from British India was, in 1884, 14 12d. per pound; in 1904 it was 7.30d. The value

* See Asiatic Quarterly Review, October, 1904, pp. 277-295.

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