Relations of Employers and Employed.-I should not leave this subject without some reference to the labour question, but as that has to a large extent been dealt with in the lecture delivered here by my friend, Mr. Daniel Jones, my reference must be of the briefest.

You have already been informed of the happily friendly relations that prevail in the iron and steel industries of this country, owing to the establishment and successful working of boards of arbitration and conciliation. In no industry with which I am acquainted have such boards won greater triumphs over so long a period. This is no mere accident of the character of the work, which is exceedingly laborious, and taxes both the physical and the mental powers of the selected workmen to an unusual degree. We have within recent recollection had great labour conflicts in the United States, leading to riot and bloodshed. In both France and Germany labour disputes in the iron industry are not unknown. The immunity from any general strike of iron and steel workers which we have enjoyed in this country for a quarter of a century has been due partly to the prudence and sweet reasonableness of the employers, led by such men as Sir Benjamin Hingley, Sir David Dale, and Mr. William Whitwell, and partly to the strong common sense and wisdom in the past of such workmen's representatives as the late John Kane and Edward Trow, with both of whom I was well acquainted, and Mr. Aucott and Mr. Cox at the present day. I may here recall the fact that some two years ago, when summoned by Mr. Ritchie, then the President of the Board of Trade, to attend a private conference to consider the most likely and successful means of bringing employers and employed into more harmonious relations, I had much satisfaction in bearing my testimony to the exceptionally friendly and harmonious

character of the relations prevailing in the iron and steel industries. The exact words I used, when Mr. Ritchie had unfolded his plans, were that so far as the iron. trade was concerned, he was preaching to the converted. No one can doubt that these amicable relations have done much to assist the iron industry of this country to pass through periods of great stress and strain.

Geographical Position and Shipping Facilities.-In one respect Great Britain is, or at any rate should be, the most favoured nation in the world for carrying on a foreign trade. We have an unique command of shipping ports and of shipping resources. All other things being equal, this consideration alone should almost settle the race for commercial supremacy in our favour. While Germany has only Hamburg and Bremen, Belgium only Antwerp, France only Marseilles, Havre, Brest, and one or two others, Italy only Genoa, Naples, and Palermo, among ports of the front rank, we have in this country more than fifty ports whence shipments can be made, and ten to twenty ports of the first importance. Even the United States, with its enormous seaboard, cannot compete with England in respect of port and harbour facilities; for on the Atlantic seaboard the only ports that can be described as first-class are New York, Baltimore, Boston, Philadelphia, Pensacola, and Galveston. Another splendid endowment of British commerce is the comparatively short distances that separate our centres of manufacture from the sea. In the United States the chief centres of the iron industry are, in the order of their comparative importance, Pittsburg, which is 460 miles from the sea; Chicago, which is 950 miles; Cleveland, which is over a thousand miles; and Philadelphia, which is not more than 100 miles from the sea. The Quaker city, however, is hardly an iron trade centre in the sense in which the

other cities are, although important steel works are carried on at Pencoyd, Midvale, and Lukens, all within a few miles of Philadelphia. In this country, as I need hardly point out, there is no centre of the iron or of any other industry more than 60 to 80 miles from a port. The district of which Birmingham is the centre is farther than any other, but even here there is a choice between Bristol, Gloucester, Liverpool, and London. The natural advantages of the British islands are altogether exceptional. Those advantages, unfortunately, are neutralized by artificial conditions, such as exceptionally high railway rates and charges, heavy port charges, and shipping rings and conferences, which compel manufacturers to sacrifice much of the advantage which they should have in respect of topographical and geographical conditions.

Protection v. Free Trade.-The British iron industry differs from that of every other iron-making nation, except Sweden, in respect of being carried on under a system of free trade. This is a fact that dominates the whole situation, alike in respect of home and of foreign trade. It is therefore of the utmost importance that its significance should be understood by those who propose to go into the business, and by those who are already in it. The commanding importance of having control of home markets needs not to be insisted on. Only a few days ago I had an interesting letter from Mr. A. Carnegie, in which he used the following words :

"I am dead sure about one thing: give me the big home markets, and surplus will take care of foreign orders, if ever, unfortunately, needed. Foreign trade is poor at best."

This view of the case has not hitherto been generally entertained in this country, but when we remember that the home markets absorb by far the largest part of the

output of the different iron-making countries, ranging from 65 to 98 per cent., there is much to be said for Mr. Carnegie's proposition.

It is comparatively an easy matter to guarantee the possession of home markets to the home producers of countries that have a high-tariff system. It is a totally different matter in countries like our own, with a freetrade system. Under high protection, the foreigner may be, and sometimes is, entirely shut out, and prices are determined entirely by home conditions. Under free trade the foreigner is admitted without let or hindrance; and it is the price at which he is prepared to sell that often determines the price at which the home producer must sell, and the profit which the home producer is allowed to make. This being so, it is conceivable that a country like our own may have the most magnificent natural resources, the most highly skilled workmen, the most capable and enterprising administration, the most up-to-date and economical plants, the most admirable and reasonable systems of transport, and yet be unable to compete with countries differently placed in all these matters, either in our own or foreign markets. In other words, success in such circumstances is not necessarily a function of either resources or deserts. You will ask why this should be so, and you are entitled to a reply.

In most protectionist countries arrangements are in force whereby the prices of iron and steel are regulated by syndicates, or so-called "cartels;" and they may be fixed at any level that the producer may determine, within the limits permitted by the tariff. Practically, in the United States, it is the decision of the Steel Corporation that governs the prices of iron ore, coke, pig-iron, and finished products. In Germany prices are similarly governed by syndicates in every important branch of the iron industry. In Austria-Hungary the

cartel system of uniform regulated prices has recently been applied to practically every iron manufacturing concern in the country. The same system is in operation in France and other iron-making countries. In effect, therefore, it may be said that the prices of iron and steel are subject to the control of the producers in every country except our own. Here they are subject to such control only as foreign competition will permit.

While, therefore, foreign countries can always, subject to the limitations imposed by their respective tariffs, raise or lower prices at will to their home consumers, this country has no such liberty, but must be content with the prices determined by the surpluses which competitive countries like Germany and the United States dump on our shores, in order to keep their industries fully occupied. This principle has been carried so far, that some two or three years ago it was admitted in Germany that in one important case the loss made by selling surplus abroad-mainly in British markets—was almost as large as the profit realized by sales in the German home markets. Quite recently an organization by German manufacturers is supposed to have entered into a compact to reimburse the losses of those of their number who ship iron and steel to this country at less than the cost of production. In the recent Report of the British Iron Trade Commission on American Industrial Conditions and Competition, I give a number of examples of the same thing being done by American manufacturers, showing differences of 60 to 90 per cent. against the home consumer, and in favour of the foreigner. No secret, indeed, is made of the fact that surplus, socalled, is to be disposed of at any price it will bring, irrespective of the cost of production.

Now let us consider for a moment where this situation may land us. The present capacity of the