Sir,--The force and brilliancy of your correspondent, Mr. A. G. Hales, are so captivating, and his knowledge of facts so extensive, that when he makes a mistake it is very important that it should be at once corrected; more especially when, as in his yesterday's article, entitled "Our Alliance with Japan: Some of its Perils," he seeks to show that if Japan comes victoriously out of this war her energy and skill in manufacture, combined with her command of inexhaustible supplies of cheap labour, will be our commercial ruin. He says: "May Providence pity our workpeople when once the Yellow competitor takes the field." And he urges through his whole article that we ought to wish for, and help so far as we can, the success of Russia rather than that of Japan. But how or why her failure in the war would also lead to her failure as a commercial competitor he does not attempt to show.

     Let us consider this point for a moment before going on to the more important one. If Japan wins, nobody supposes that the victory will be final and conclusive. Russia will simply bide her time till she has everything ready for a better organized and more terrible attack. Japan will not only be seriously impoverished by the war, but she will have to strain every nerve to keep up her army and navy to its fullest possible power, to build and arm forts along the frontier of Corea, and to strengthen her own forts and harbours. This will not be a condition of affairs to cause any rapid increase of her foreign trade. But if she loses, and Russia gains Manchuria, including Port Arthur, and probably a large part of Corea also, there will probably be some European intervention safeguarding the integrity of the Japanese Empire for the future. Japan will then sink to the position of a second-rate war Power, will not need to keep up an enormous army, and will be better able to turn her whole attention and energy to the arts of peace. It is at least an arguable position that we have more to fear (if we need fear at all) from a defeated than from a victorious Japan.

     But the chief object of this communication is to point out the total fallacy of the proposition that the cheap labour possessed by Japan, combined with manufacturing skill and energy, will have any injurious effect whatever on our foreign trade. I will give such references to "Mills' Political Economy" (People's Ed., 1880) as to enable any intelligent person to satisfy himself of the complete fallacy of Mr. Hales' argument. To take merely the headings of sections in Mills' work, we have, at page 278, "Wage not an element in cost of production, except in so far as they vary from employment to employment." At page 347, "Cost of production not the regulator of international values." At p. 348, "Interchange of commodities determined by differences, not in their absolute, but in their comparative, cost of production." Finally, we have Chapter XXIV. (pp. 410-414), "Of the Competition of different Countries in the same Market," in which it is shown that though low wages are one of the causes which enable one country to undersell another, yet this is not the case when the low wages are common to all the industries concerned.

     Mill sums up the conclusion from this long-continued argument, in which all the complications of modern international commerce are fully discussed, in these striking words: "General low wages never caused any country to undersell its rivals, nor did general high wages ever hinder it from doing so." This goes to the very root, not only of the bogey of yellow cheap labour, but also of nine-tenths of all the perpetual discussions on the subject of foreign competition, in which the opposite of this demonstrated conclusion is always assumed to be true.--Yours, etc.,

Alfred R. Wallace.
Broadstone, Wimborne, August 30.