trade, and that from 1897 to the present date there has been a period of unusual activity due to the opening up of the Yukon territory, the rapid extension of railways, the great increase in population, and the liberal expenditure of public revenue by an energetic government. It follows that the conditions for a comparison of trade figures over long periods, such as we find in the Colonial Office memorandum and the Canadian reply in the report of the colonial 'conference of 1902 (Cd. 1299, 1902), are not normal. But the conditions during the period from 1897 to 1904 offer a fair basis for deduction from the figures given in the Blue-books. The following tables give us a fairly clear idea of the course of trade during these six years and of the general effect of the preference given by Canada :—

From these tables it seems to be clear that while, so far as regards British trade with Canada, the results of the preferential policy have been successful, as regards Germany and the West Indies Great Britain has no special cause for rejoicing. She has shared, indeed, in the expanding trade of Canada; but the United States have shared much more largely. She has, indeed, the one substantial advantage of one third off the duty collected under the Preference clause ($7,454,733); but whether this advantage is sufficient to justify her in altering the conditions on which a trade of more than 903,000,000l. sterling with all the world is conducted, is a point about which it is impossible to entertain any doubt.

That any further reduction of the customs duties of Canada on the manufactures of Great Britain can be expected is quite out of the question. The Canadian ministers made that clear in their memorandum in reply to the Colonial Office memorandum presented to the conference of 1902 in criticism of the operation of the preferential tariff of Canada. They said :

'In this connexion it might be noted that the Canadian Government has been attacked by Canadian manufacturers on the ground that the preference is seriously interfering with their trade. The woollen manufacturers have been foremost in the attack, and they have made very bitter complaints to the effect that the industry is threatened with ruin through the severe competition from Britain brought about by the operation of the preference. In brief, these manufacturers claim that the rates on woollens are too low to be protective of their industry.'

any

That the free list can be extended so as to be of further service to Great Britain is equally unlikely, for Vol. 202.-No. 403.

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the reasons laid down by the ministers in the same document. They said :

"The policy of the Canadian Government is (and the necessities of the country require it) to admit free of duty, as far as possible, raw materials for the manufacturing industries, and necessaries for agricultural, mining, fishing, and other great industries. These raw materials and necessaries are largely produced in the United States. Many lines are not produced in Great Britain at all, and many others cannot be obtained by Canadians there to advantage. Great Britain cannot hope to compete in the Canadian market to any appreciable extent in the raw materials we require. It should be observed at this point that the free list of the Canadian tariff is open to all countries. There are no restrictions.'

It is not particularly consoling to be told that there are no restrictions when we are told also that we have no chance to compete. And our confidence in the existence of a controlling body of Canadian opinion in favour of Preference is not increased when we are told that the Canadian Government is attacked by the manufacturers for the preference already accorded.

The advocates of preferential trade in the Colonies are face to face with the intellectual difficulty, which deters even the dervishes of the new faith in Great Britain, viz. how to reconcile Preference with Protection in the Colonies, and how to reconcile Preference with Free Trade at home. In Great Britain there is, on the part of the official preferentialists, a great show of respect for Free Trade

'(Free Trade's) the King he caps to,
Laughing in his sleeve.'

But the official respect is qualified by enough concessions to retain the support of those who have no respect at all. In the Colonies the official respect is for Protection, with enough reservations to retain the support of those who look upon Preference as a step to Free Trade, at least within the Empire. When the colonial preferentialist is asked if he is willing to abandon any part of the present fiscal freedom of the Colonies, or any part of the protection afforded to local industries, his answer -prompt, peremptory, and without exception-is, 'not

6

a particle.' If pressed upon the subject, he takes refuge in the familiar platitude that 'some plan can be formed at a conference.' This was the statesmanlike attitude of Mr Micawber, who always hoped that something would turn up.' There have been four conferences, and nothing has yet been evolved. But the hopes of Mr Micawber remain unshaken.

One point remains for consideration. What prospect would there be of continuity in a policy which must at once alter the whole commercial policy and practice of the United Kingdom and change the business methods of millions of business men? Once embarked on a policy of inter-Imperial Protection, the ingenuity of the whole outer world would be stimulated to defeat us. We have seen, not so long ago, the United States endeavouring to secure at least the trade of the West Indies by preferential offers; and the West Indies were ready to yield to the temptation. The British Government, however, felt bound to reject the proposals of the United States (C. 4340, 1884-5) on various grounds, public and private, but ostensibly on the ground that the proposed arrangement is deficient in the element of stability which Her Majesty's Government consider to be essential to the value of any commercial treaty.' We have seen the same country, in 1893 and in February 1905, making official efforts to detach Newfoundland from Canada commercially by preferential offers. The British Government, after an angry protest from Canada, interfered to check the negotiations in 1893 (Bond-Blaine treaty); and the Senate of the United States, contrary to the policy of the administration, but in assertion of its own peculiar position as the treaty-making power under the constitution, has saved the Imperial Government the trouble of a second interference by rejecting the Bond-Hay treaty in February last. Other nations would be equally solicitous to seduce or to coerce the separate members of the new Zollverein, which has, for its own part, neither the promise nor the potency of universal domination.

What defence would Great Britain enjoy? She would have a 'treaty' with the Colonies, subject to revocation at any time. She would have a series of tariffs openly declared to be subject to revision at every meeting of a colonial legislature whenever the changing conditions of

manufactures, or colonial political exigencies, seemed to call for a change. For example, since the Canadian tariff of 1897 was enacted there have been nine separate Acts altering in some particular the original tariff. As an additional example, take the Preference clause itself. It was originally contained in the tariff of 1897. It had to be altered and enlarged in 1898; it was again altered and enlarged in 1900; it was changed again in order to impose the surtax against Germany in 1903; it was changed again in 1904 in order to make it apply to importations to Canadian ports, and in order to provide a 'dumping clause'; and in the first month of 1905 the dumping clause had to be altered by order in council.

This last alteration suggests another source of trouble. In all the Colonies the tariff is subject to various forms of alteration-(1) by the Governor in council; (2) by order of the Minister of Customs or Commerce; (3) by the Board of Customs. All these alterations have to be closely watched by exporters to Canada and other colonies who do not wish to involve themselves and their consignees in serious practical difficulties. The Parliament of the United Kingdom would have to follow suit; but it could never be certain from year to year what the tariff would be. Every budget of the Chancellor of the Exchequer would be looked for with anxiety. Contracts for any period longer than a season would be hazardous. The whole capital of the country embarked in manufactures would be liable to sudden risks by changing legislation, at home, in the Colonies, and abroad. The whole situation would become intolerable.

As

To sum up, we have in Canada a country committed since 1858 to a policy of increasing Protection. In 1843 she tried the experiment of a preferential tariff with Great Britain: the result was disaster in 1846. In 1854 she tried a treaty of reciprocity which was preferential as regards the United States: the result was disaster in 1866, qualified by the formation of the Federal Union of 1867. regards the present scheme we have before us the declarations of ministers-(1) that they are in a general way favourable to it as an idea; (2) that they do not hope for its speedy acceptance in Great Britain; (3) that they will take no further steps till after the general election in Great Britain; (4) that the scheme, when propounded,