such an argument was of even higher importance to a nation which contemplated, rather than shunned, war. 152. As an explanation of agricultural protection all this is relevant. There was no other insurance to a nation which did not possess great Colonial resources or command of the sea, and whose nearest granary-Russia-was the ally of her most probable enemy-France. What area is "under the protection of the guns" of a Colonial and Sea Power is naturally a different thing; the main insurance of Britain has been its shipping and its fleet. And comparison of the position as regards defence requires therefore an estimate of what is justifiable as a main or first insurance, in the one case, and of what is justifiable as an extra insurance in the other. 153. The tariffs of Germany and France are general tariffs, and this has further reactions on agriculture. General protection affects all prices, those at which the farmer buys other things as well as those at which he sells his produce. But in Germany agricultural produce had before the war been especially favoured; and agriculture stood to lose least by the reactions of general protection, since foodstuffs are an essential requirement. 154. The second aspect is that the agricultural tariffs of France and Germany are themselves general, falling on the crops which are feeding stuffs as well as on foodstuffs. This is inevitable. The protection of staple grains has been the chief method of maintaining arable cultivation and employment; but since this involves taxation of the crops which are feeding stuffs, the offset of duties on meat becomes necessary. The only cereal taxed in Belgium is oats, and this is offset by a duty on meat. Though these were not imposed at the same time, the meat duty being prior, the meat duty alleviates the incidence on the industry of the duty on oats. 155. Further, a tariff which aims at the maintenance of arable cultivation, must prevent the mere substitution of one crop for another. Since Belgium placed a duty on oats in 1895, this is the only cereal crop whose acreage has increased, there having been a great decline in the other cereals from 1880 to 1912. A duty on even one cereal will, of course, increase the profitableness of farming; but if the aim is more arable cultivation and employment the effects of such a limited policy are doubtful A duty on one use of one cereal-as on malting barley-may not even increase the area under that cereal, since the foreign supplies excluded from that use may be offered for the other use, in this case feeding stuffs, and depress the price. A partial tariff, for the purpose of maintaining arable land, is therefore likely to extend. 156. The effects of the tariff on production, and the willingness to bear the charges it imposes, are affected by the nature of agricultural tenure. Where a large proportion of the land is cultivated by its owners, any benefit accrues to the land; while in a country or a district where land is cultivated by tenants holding under the owners this result is less certain. It is the belief that benefit will accrue to the landlord that besets many suggestions to relieve agriculture in this country. In the case of Germany and France there has been a further important aspect of the question of tenure. It is held that the small cultivator gains least by protective measures, since he sells least in proportion to his product, while the smallest of them have to buy, at the protected price, a margin over their output. On the other hand, the level of prices which the tariff is meant to maintain may, by the ordinary psychology of production, stimulate even the small cultivator. The smallest holders are the least likely to be benefited. It is important not to overlook this relation of agricultural tariffs to the prosperity of small cultivators. 157. With regard to the terms of our Reference. It is plain that in old countries where the land is already taken up, the effect of protection which is specially favourable to agriculture is to create the possibility of more intensive cultivation. As a typical measure of this influence, the German tariff on wheat was over 30 per cent. of the British price before the war; this must react strongly on the gross acreage production. And therefore, in international comparisons of acreage production, degrees of protection must not be overlooked. 158. It is assumed that the effects of special agricultural protection on national economy as a whole are realised. The effects of protection on prices, and the charge which it places on the community as a whole, are accepted by countries whose conditions have led them to believe that prices of food are one consideration, which must be related to certain other advantages which in their circumstances seemed equally important. The amount of these advantages-such as national defence has to be weighed by each country, according to its general national policy and conditions, against the cost imposed. 159. The application to Britain of this method is considered later, in relation to the problem of the arable area. The general consideration is that a very strong measure would now be necessary to maintain or increase that area; and that the sufficient occasion for examining the relation of our first to any second insurance would be the decline of the arable area to a point which endangered food supplies in time of war, through the decline of arable tradition and practice. SUMMARY OF PART II. 160. It is a matter of some difficulty to discuss the relations of the chief of these methods to each other. The debate turns on the question how far agricultural employment and production can be maintained by methods of organisation alone. And in endeavouring to decide this, it is necessary to have regard to differences in the general economy of the nations concerned. This is a consideration which applies specially to the comparison of the typical instances of Denmark and Germany. 161. Denmark is the country which shows most clearly the possibilities in agriculture of organised intensive cultivation. In other countries, where there is even more intense labour, as in Germany and Belgium, the effects cannot be separated from those of fiscal policy. The effect of organisation on Danish agriculture since 1880 is shown by her power to export, though her cultivation is arable and her labour is wage-paid. Denmark is a flat, wind-swept country, with a thin soil and a short summer, without coal or water-power; and the result of her inability to be a great exporter of manufactured goods might only have been that she had to fall back on her own resources, to support her own people from her soil, and to buy her coal at a high labour cost. But instead of this she exports on a great scale. This result can hardly be attributed to her own practice of free imports of agricultural produce; speaking broadly, she has nothing to protect her home agriculture against. The fact which has made her agriculture prosperous is the union of work and organisation, the latter including methods of education which have inspired her farmers and peasants with national ideals. It is for this reason that she has become, in respect of the possibilities of organisation, the demonstration plot of Europe. 162. Between Denmark and Germany Belgium is an intermediate case. She has become an industrial nation, so that, although her cultivation is more intense than that of Denmark, and though her organisation as regards credit, and voluntary association of all kinds is very complete, she has protected her agriculture by a partial tariff on oats and meat. But it is not very considerable; and it is not clear that she really desires to maintain arable cultivation. Her agriculture is going the same way as that of Britain, the arable area having declined, while grass greatly increased between 1880 and 1912. 163. The relative effects of organisation and of protection in Germany cannot be distinguished from each other. It is a matter of industrial psychology whether the high and broad tariff has, through a sense of security, encouraged her farmers to better efforts than they would otherwise have made. Every argument which throws doubt on the part played by science in German agricultural prosperity is double-edged, since it may imply that protection has been a substitute for these other measures. She has maintained her arable area, though not her agricultural employment, by a tariff which increased five-fold on her chief cereals between 1880 and 1887, and which before the war was slightly higher. Otherwise, her manufacturing development would have endangered what was regarded as nationally desirable, a large home production of food. In this respect, she was placed in conditions entirely different from those of Denmark. 164. The case of Britain is similar to that of Germany; except that, as regards food production, the British Empire is a different idea from the German Empire. A degree of selfsufficiency in Britain, taken by itself, is obviously not comparable with the same degree of self-sufficiency in Germany, taken by itself. But Germany has made fuller use than Britain, apart from protection, of methods of organisation whose value is proved by Denmark, their employment in both countries being facilitated by the prevailing conditions of land tenure. That the fuller use of such methods-as are indicated in the beginning of this Report-will realise latent economies in agriculture seems beyond doubt; but when the utmost use is made of them, the problem which remains, of the amount of arable cultivation we ought to maintain in Britain, is one peculiar to our own Imperial assets and conditions of defence, and no foreign country can assist us in solving it. PART III. INTERNATIONAL COMPARISONS. 165. There are some international comparisons which may be made to show the effects of the methods of policy that have been discussed. In proceeding to this part of the Enquiry, it is necessary to state that the treatment of the statistical material is beset with many difficulties. In agriculture, far more than in the case of manufacturing industries, the results are affected by differences of original conditions which policies cannot overcome. Further, the methods by which the data are obtained, and the manner in which they are officially presented, have created problems of interpretation, some of which are referred to, while others have led to the abandonment of work which could only be presented with excessive qualification. The statistics employed in the argument which follows have been subject to much criticism in detail, but it is impossible to discuss every consideration that has arisen. A.-Productivity. 166. International comparisons of productivity are affected to a greater degree than in manufacturing industries by fundamental conditions of climate, soil and area. An acre is not a qualitatively constant unit of comparison; neither is a head of stock. England has special facilities, which are much envied, for growing grass, and it is because they are business men that the farmers exploit these facilities. Comparisons of the produce of an average 100 acres in a few countries might be used to indicate relative efficiencies, if soil and climate were nearly the same, and labour as well paid, since the distribution between grass and arable would then be a matter of the farmers' skill. But if, in some cases, the larger labour requirements of arable are covered by fiscal measures, while in another case they are not, a comparison based on the yield of an average 100 acres is inadequate, since this 100 acres is differently distributed between grass and arable for reasons not depending on skill of farming. 167. The case of small countries is of some interest in this connection. For certain crops, and especially for wheat, they show very high yields, but these are obtained on comparatively small areas. For example, the total wheat area of Belgium, Sweden, Holland, Denmark and Switzerland--all of which have high yields-was altogether less than that of Great Britain before the war by about 30 per cent. It would usually be held that, other things being the same, the area over which a yield was obtained was a material fact. But the problem of average yield in relation to area and to changes in area is a complex one, depending both on the gradient of fertility and on the gradient of costs. The land which is first lost to a crop is not necessarily that with lowest yield but that with lowest yield in relation to the cost. It could not be said that all the wheat land lost to Britain had lower yields than all that which remains under the plough. It is important to remember this in international comparisons of changes in yields in relation to changes of area. 168. It is obvious, however, that small countries must have relatively small areas under each crop, and in order to make the best allowance which the statistics permit both for yields per acre, and for areas cultivated, a method has been adopted of obtaining an index figure, which is explained as follows: "Six crops wheat, oats, rye, barley, maize and potatoescomprise the bulk of crop production in most countries of the world. Of the total area in cultivated crops before the war, excluding hay and grass crops, they comprised in Germany approximately 82 per cent; in France, 75 per cent.; United Kingdom, 72 per cent.; Denmark, 79 per cent.; Holland, 70 per cent.; Belgium, 75 per cent. Although these figures are only approximations, they are sufficiently accurate to indicate that index numbers of the relative yields per acre of these six products combined would fairly represent the relative per acre productivity of the various countries. For each country the average yield per acre for a series of years was obtained, and these yields were reduced to their percentage of the average yield of all countries. The percentages for each country were combined, weighted in proportion to the relative acreage of the various crops in the country to obtain the index number of production."* 169. The following statement is based on this method, the corn (or maize) crop being excluded, and the standard being the European yield per acre. The figures of actual yields and areas * United States Yearbook of Agriculture, 1919, p. 735. |