THE FISCAL CONTROVERSY-SOME NOTICEABLE FACTS AND EXTRACTS. By THE ORGANISATION OF THE ADMIRALTY AND WAR OFFICE. BY Admiral LONDON EDUCATION. By Sidney Webb THE NEGRO PROBLEM IN THE UNITED STATES. By John A. Hobson THE DELETERIOUS EFFECT OF AMERICANISATION UPON Right Hon. Lord Burghclere WOMEN IN THE MEDICAL PROFESSION. By Mary L. Breakell MR. CHAMBERLAIN'S SCHEME. By Benjamin Taylor BRITISH EAST AFRICA. By the Right Hon. Lord Hindlip Charles L. Eastlake SHIFTING SCENES IN RURAL WORKHOUSES. By Edith Sellers AUGUSTA: PRINCESS OF WALES. By W. H. Wilkins THE NONCONFORMIST UPRISING. By the Rev. Dr. J. Guinness Rogers George T. Lambert THE SUCCESS OF THE SUBMARINE. By Archibald S. Hurd. CHARLES DICKENS. By Walter Frewen Lord THE LADIES OF THE ITALIAN RENAISSANCE. By Mrs. Ady CRITERIA. By C. B. Wheeler THE STORY OF ARISTAEUS (FROM THE GEORGICS OF VIRGIL). By the At Meerut during the MUTINY. By Kate Moore FOREIGN TARIFFS and WELSH INDUSTRIES By F. W. Gilbertson HISTORY AND WAR OFFICE REFORM. By the Hon. John W. Fortescue THE ADMINISTRATION OF THE NATIONAL GALLERY: A RETROSPECT. By THE CARLSBAD CURE AT HOME AND ABROAD. By Henry Cunynghame THE FOREIGN FRUIT TRADE IN BRITAIN. By Sampson Morgan THE WOMAN WHO TOILS' IN AMERICA. By Mrs. Frederic Harrison ENGLISH STYLE AND SOME FRENCH NOVELS. By Mrs. Margaret L. Woods In the midst of the din of preferential tariff discussion which Mr. Chamberlain has so effectually stirred up, two questions have to be distinguished. One is the economic question. Should we, or should we not, on economic grounds, adopt the view so prevalent in the self-governing Colonies, that the wealth of the Empire, and each part of it, is to be promoted by a system of mutual trade preferences? This is the view of Mr. Chamberlain which excites so much hostility. What opinion are we to hold of it? The answer will not finally determine the question of policy, as other issues are involved. Even if we disapprove economically, we may have to assent for political reasons to the colonial policy. But a clear view of the proposal and its consequences in the economic aspect will nevertheless be of assistance in the political question itself. VOL, LIV-No. 317 B The other question is the political one. How far may the federation or union of the Empire be wisely promoted by the consent of the Mother Country to the partial acceptance of a trade policy fundamentally distasteful to it and demonstrably injurious as far as it goes? The Colonies, or some of them, rightly or wrongly choose to give a preference, or are willing to give a preference, to imports from Great Britain as compared with imports from foreign countries, partly to induce us to do the like, partly as a reward for what we have done, and in order to promote the consolidation of the Empire; and this action brings on them reprisals, or threats of reprisals, from foreign countries which claim to have equal treatment with the Mother Country in these Colonies. What is the Mother Country to do? Naturally enough the Colonies expect to be backed up in a way they understand. Not believing that free trade is its own reward, they look to the Mother Country both to give a return for what they are doing and to retaliate on the foreigner, and they resent any indifference we may show. The political question, then, is undoubtedly serious, all the more if we cannot see our way to approve of colonial ideas. Our own attachment to free trade is no answer to the Colonies. Accordingly we have to face the possibility of a departure from a fiscal policy of which we have long been proud for the sake of the unity of the Empire. It will be convenient to take these questions in their order. First, then, are our colonial friends, and Mr. Chamberlain with them, right in the idea that a system of mutual trade preferences between the Mother Country and the Colonies will benefit both, and so strengthen and consolidate the Empire? On this head I cannot but repeat the opinions expressed a year ago in an article on 'The Dream of a British Zollverein' in this Review. While a Zollverein properly speaking is itself impossible, a general system of trade preferences would be of no conceivable advantage economically, either to the United Kingdom or to the Colonies, and would contribute to wrangling and differences tending rather to disruption than to union and consolidation. A closer view of anything that has been suggested, or that can be suggested, surveying the whole field of colonial and inter-imperial trade, entirely supports the conclusion as to the smallness of the possible benefit and the deceptions to which both sides in giving preferences will be exposed. It is admitted that raw materials cannot be taxed, and that we can only give preferences to the Colonies on the food we import from them. Let us take, then, by way of example, the proposition which finds so much favour in Canada that we should levy a sensible duty on imports of wheat from foreign countries and admit colonial wheat free. According to the last statistical abstract, we imported 1 See Nineteenth Century and After, May 1902. from foreign countries and British possessions 101,000,000 cwts. of wheat and wheat flour of which the quantity from British colonies and possessions was as follows: Thus not quite 20 per cent. of the wheat and wheat flour we import comes from British colonies and possessions. Suppose, then, we impose 58. a quarter (or 1s. 3d. per cwt.) upon imports of wheat and wheat flour from foreign countries-and it would take such a duty at least to produce sensible effects-we should burden the consumers in this country to the extent of the charge on foreign wheat, or a sum of 5,094,000l. altogether, plus a further sum of 1,219,000l. by which the price of colonial wheat would be raised in our markets, and a further sum of probably about 2,000,000l. as the enhanced price of wheat produced at home-total 8,313,000l. This seems rather a large price for consumers at home to pay in order to give the Colonies a bonus of no more than 1,219,000l. Of course, strictly speaking the sum raised from the foreigner would remain in the country and might either go to the reduction of other taxation or to old-age pensions or other public purposes, while the enhanced price of home-produced wheat would also remain in the country. But there would nevertheless be an immediate burden on the consumer of the amount stated, which he might or might not get back eventually in indirect ways, all to give the Colonies a fractional bonus by comparison. This does not seem very good business. It will be urged, of course, that the imports from the Colonies are an increasing proportion of the total imports, that this proportion may be expected to increase, and that the goal of a self-supporting empire will be more quickly reached by the stimulus thus to be given. But this is pure speculation. These considerations, moreover, compel us to look at the proposal from another point of view. If colonial production is to be stimulated, then as the stimulus takes effect, the bonus itself disappears-long before the point, it is probable, when colonial will displace to any extent the foreign production. The reason is that even a slight increase of production owing to a special stimulus will depress the general market price, as was found in former times when we gave the West Indian Colonies the dubious benefit of a differential duty against slave-grown sugar. The price of foreign wheat may sink for a time, just as the price of slave-grown sugar did, so that foreign wheat plus the duty may be as cheap or nearly as cheap, as it was without the duty. Foreign countries will be damnified so far, but neither our Colonies nor our home producers will obtain quite the calculated advantage, as the West Indian Colonies, in fact, gained nothing from their differential sugar-duty. So far there will be a gain to the people of the United Kingdom, who will pay the new duties out of the surplus given them by cheaper wheat, at the expense, however, of a general disturbance of the world's corn-trade with consequent reactions on the purchasing power of foreign customers which may cost us far more than the initial gain. Mutatis mutandis, the same remarks would apply to preferential duties on other articles of food imported from abroad. Assuming these articles to come in the same proportion from foreign countries and British colonies and possessions as wheat itself does (and the proportion generally seems rather less), then from 101,500,000l. of duty-free articles, and 109,000,000l. of dutiable articles-total 210,500,000l.-which we imported in 1902, we might deduce at the outside about 40,000,000l. as the contribution of the Colonies. So that if we imposed a 10 per cent. ad valorem charge on imports from foreign countries, we should burden our consumers to the extent of 21,000,000l. (apart from the higher price to home producers) in order to give the Colonies a bonus of 4,000,000l. only; while the sum available for reducing taxation, or for old-age pensions or similar purposes, would be about 17,000,000l. Here, again, the business does not seem very good. The bonus to the Colonies is not really large, considering their resources, while it might disappear in practice, as above explained with regard to the bonus on wheat alone. It is quite clear, moreover, that no such bonus will add so greatly to the purchasing power of the Colonies as to affect sensibly the demand for English manufactures. The aggregate income of the populations of Canada and Australia, according to colonial calculations, may be placed at, say, 250,000,000l. each; India cannot have less than 500,000,000l.; and adding 200,000,000l. for other British colonies, we have a total annual spending power of 1,200,000,000l., to which we propose to add a sum of 4,000,000l., or one-third of 1 per only, by way of stimulating the demand for English manufactures; and even this small fraction may not be devoted to purchases of such manufactures at all, but will no doubt be distributed equally over the whole range of colonial wants. cent. Of course we may give a larger bonus to the Colonies by piling up our taxes on food. Suppose we give a bonus of 8,000,000l. by taxing ourselves 42,000,000l.; that would still be an infinitesimal sum to add to the purchasing power of the Colonies. Even by taxing ourselves 60,000,000l. we could only add 1 per cent., or 12,000,000l., to the purchasing power of the Colonies, which would not be devoted, except in the smallest proportion, to the purchase of English manufactures. |